Editor's Note:This week's Security Weekly is a heavily abridged version of STRATFOR's annual report on Mexico's drug cartels. The full report, which includes far more detail and diagrams depicting the leadership of each cartel along with our updated cartel map, will be available to our members on Dec. 20.By Scott Stewart In our 2010 annual report on Mexico's drug cartels, we assess the most significant developments of the past year and provide an updated description of the dynamics among the country's powerful drug-trafficking organizations, along with an account of the government's effort to combat the cartels and a forecast of the battle in 2011. The annual cartel report is a product of the coverage STRATFOR maintains on a weekly basis through our Mexico Security Memo as well as other analyses we produce throughout the year. In response to customer requests for more and deeper coverage of Mexico, STRATFOR will also introduce a new product in 2011 designed to provide an enhanced level of reporting and analysis. In 2010, the cartel wars in Mexico have produced unprecedented levels of violence throughout the country. No longer concentrated in just a few states, the violence has spread all across the northern tier of border states and along much of both the east and west coasts of Mexico. This year's drug-related homicides have surpassed 11,000, an increase of more than 4,400 deaths from 2009 and more than double the death toll in 2008.
The high levels of violence seen in 2010 have been caused not only by long-term struggles such as the fight between the Sinaloa Federation and the Vicente Carrillo Fuentes Organization (also known as the Juarez cartel) for control of the Juarez smuggling corridor but also from the outbreak of new conflicts among various players in the cartel landscape. For example, simmering tensions between Los Zetas and their former partners in the Gulf cartel finally boiled over and quickly escalated into a bloody turf war along the U.S.-Tamaulipas state border. The conflict has even spread to states like Nuevo Leon, Hidalgo and Tabasco and has given birth to an alliance between the Sinaloa Federation, the Gulf cartel and La Familia Michoacana (LFM) called the New Federation. Last December, it appeared that Los Zetas were poised to make a move to assume control over much, if not all, of the Gulf cartel's territory. The Gulf cartel knew it could not take on Los Zetas alone with its current capabilities so in desperation it reached out to its main rivals in Mexico — the Sinaloa Federation and LFM — for help, thus forming the New Federation. With the added resources from the New Federation, the Gulf cartel was able to take the fight to Los Zetas and actually forced its former partners out of one of their traditional strongholds in Reynosa. The New Federation also expanded its offensive operations to other regions traditionally held by Los Zetas, namely the city of Monterrey and the states of Nuevo Leon, Hidalgo and Veracruz. This resulted in Los Zetas being pushed back on their heels throughout the country, and by June it looked as if Los Zetas' days might be numbered. However, a chain of events that began with the July 28 death of Sinaloa Federation No. 3 Ignacio "El Nacho" Coronel served to weaken the alliance and forced the Sinaloa and LFM to direct attention and resources to other parts of the country, thus giving Los Zetas some room to regroup. The situation along the border in eastern Mexico is still very fluid and the contest between the Gulf cartel and Los Zetas for control of the region will continue in 2011. (click here to enlarge image) The death of Arturo Beltran Leyva in December 2009 in a Mexican marine raid led to a vicious battle between factions of the Beltran Leyva Organization (BLO) for control of the group, pitting Arturo's brother, Hector Beltran Leyva, against Arturo's right-hand man, Edgar "La Barbie" Valdez Villarreal. The war between the two BLO factions ended with the arrests of the leadership of the Valdez Villarreal faction, including La Barbie himself on Aug. 30, and this faction has been heavily damaged if not completely dissolved. Hector's BLO faction adopted the name Cartel Pacifico Sur (CPS), or the South Pacific Cartel, to distance itself from the elements associated with Valdez that still clung to the BLO moniker. The CPS has aligned itself with Los Zetas against Sinaloa and LFM and has actively fought to stake a claim to the Colima and Manzanillo regions in addition to making inroads in Michoacan. After being named the most violent organized-crime group in Mexico by former Mexican Attorney General Eduardo Medina Mora in 2009, LFM has been largely a background player in 2010 and was active on two main fronts: the offensive against Los Zetas as part of the New Federation in northeastern Mexico and the fight against elements of the CPS and Los Zetas in southern Michoacan and Guerrero states, particularly around the resort area of Acapulco. LFM and CPS have been locked in a heated battle for supremacy in the Acapulco region for the past two years and this conflict shows no signs of stopping, especially since the CPS appears to have recently launched a new offensive against LFM in the southern regions of Michoacan. Additionally, after the death of Sinaloa leader El Nacho Coronel in July and the subsequent dismantlement of his network, LFM attempted to take over the Jalisco and Colima trafficking corridors, reportedly straining relations between the Sinaloa Federation and LFM. LFM has been hard hit in the latter months of 2010, its losses on the battlefield amplified by the arrest of several senior operatives in early December. The Dec. 10 death of LFM spiritual leader Nazario "El Mas Loco" Moreno Gonzalez will further challenge the organization, and STRATFOR will be carefully watching LFM over the next several weeks for additional signs that it is collapsing. Two former heavyweights on the Mexican drug-trafficking scene have continued a declining trajectory in 2010: the Vicente Carrillo Fuentes Organization/Juarez cartel (VCF) and the Arellano Felix Organization/Tijuana cartel (AFO). The VCF continues to lose ground to the Sinaloa Federation throughout Chihuahua state, most notably in the Ciudad Juarez area. The VCF's influence has largely been confined to the urban areas of the state, Juarez and Chihuahua, though it appears that its influence is waning even in its traditional strongholds (Sinaloa now appears to be moving narcotics through the Juarez smuggling corridor). Following a bitter war between two factions of the AFO, the organization is a shell of its former self. While the AFO faction under the leadership of Fernando "El Ingeniero" Sanchez Arellano emerged victorious over the faction led by Eduardo "El Teo" Garcia Simental, who was a Sinaloa Federation proxy, it appears that Sanchez Arellano has reached an agreement with Sinaloa and is allowing it to move narcotics through Tijuana. In the past, these sorts of agreements have proved to be temporary — one need only look at recent history in Juarez and the cooperation between Sinaloa and the VCF. Because of this, it is likely at some point that the Sinaloa Federation will begin to refuse to pay taxes to the AFO. When that happens, it will be important to see if the AFO has the capability to do anything about it. The death of El Nacho Coronel and the damage-control efforts associated with the dismantlement of his network, along with the continued focus on the conflict in Juarez, forced the Sinaloa Federation to pull back from other commitments, such as its operations against Los Zetas as part of the New Federation. On the business-operations side, Sinaloa has made inroads in other regions and other continents. As noted above, the organization also has reportedly made progress in extending its control over the lucrative Tijuana smuggling corridor and is making significant progress in asserting control over the Juarez corridor. Over the past few years, Sinaloa has gained control of, or access to, smuggling corridors all along Mexico's northern border from Tijuana to Juarez. This means that Sinaloa appears to be the group that has fared the best over the past few years amid the intensifying violence. This would apply more specifically to Joaquin "El Chapo" Guzman Loera and his faction of the Sinaloa Federation, which has benefited greatly by events since 2006. In addition to the fall of external foes like the AFO and Juarez cartels, he has seen the downfall of strong Sinaloa personalities who could have risen up to contest his leadership, men like Alfredo Beltran Leyva and El Nacho Coronel. Sinaloa members who attract a lot of adverse publicity for the federation, such as Enrique "El Cumbais" Lopez Acosta also seem to run into bad luck with some frequency. Additionally, STRATFOR sources continue to report a sustained effort by the Sinaloa Federation to expand its logistical network farther into Europe and its influence deeper into Central America and South America.
Some of the groups that have borne the brunt of the cartel wars, such as Los Zetas, the AFO and the VCF, have seen a decrease in their ability to move narcotics. This has forced them to look for other sources of income, which typically means diversifying into other criminal enterprises. A steady stream of income is important for the cartels because it takes a lot of money to hire and equip armed enforcer units required to guard against incursions from rival cartels and the Mexican government. It also takes money to purchase narcotics and to maintain the networks required to smuggle them from South America into the United States. This reliance on other criminal enterprises to generate income is not a new development for cartel groups. Los Zetas have long been active in human smuggling, oil theft, extortion and contract enforcement, while the VCF and AFO have traditionally been involved in extortion and kidnap-for-ransom operations. However, as these groups found themselves with their backs against the wall in 2010, they began to escalate their criminal fundraising operations. This increase in extortion and kidnapping has had a noticeable effect on businesses and wealthy families in several cities, including Monterrey, Mexico's industrial capital. The wave of kidnapping in Monterrey even led to the U.S. Consulate in Monterrey ordering the departure of all minor dependents of U.S. government personnel beginning in September. Some of the more desperate cartel groups also began to employ improvised explosive devices (IEDs) in 2010. The VCF has made no secret about its belief that the Federal Police are working for and protecting the Sinaloa Federation in Juarez. Following the July 15 arrest of a high-ranking VCF lieutenant, VCF enforcers from La Linea conducted a fairly sophisticated ambush directed against the Federal Police using a small IED hidden inside a car containing a cadaver that the attackers called in to police. The blast killed two Federal Police agents and injured several more at the scene. La Linea attempted to deploy another IED under similar circumstances Sept. 10 in Juarez, but Federal Police agents were able to identify the IED and call in the Mexican military to defuse the device. La Linea has threatened to use more and larger IEDs but has yet to follow through on those threats. There were also three small IEDs deployed in Ciudad Victoria, Tamaulipas state, in August. On Aug. 5, a substation housing the rural patrol element of the Municipal Transit Police was attacked with a small IED concealed inside a vehicle. Then on Aug. 27, two other IEDs placed in cars successfully detonated outside Televisa studios and a Municipal Transit Police station in Ciudad Victoria. The Ciudad Victoria IED attacks were never claimed, but Los Zetas are thought to be the culprits. The geographic and cartel-territorial disparity between Ciudad Victoria and Juarez makes it unlikely that the same bombmaker is responsible for all the devices encountered in Mexico this year. To date, the explosive devices deployed by cartel groups in Mexico have been small, and La Linea and the Ciudad Victoria bomber did show some discretion by not intentionally targeting large groups of civilians in their attacks. However, should cartel groups continue to deploy IEDs, the imprecise nature of such devices will increase the risk of innocent civilians becoming collateral damage. This will be especially true if the size of the devices is increased, as La Linea has threatened to do. The cartels clearly have the skills required to build and deploy larger devices should they so choose, and explosives are plentiful and easy to obtain in Mexico.
The administration of Mexican President Felipe Calderon has dismantled several cartel networks and captured or killed their leaders in 2010, most notably Sinaloa No. 3 Ignacio "El Nacho" Coronel Villarreal and Edgar "La Barbie" Valdez Villarreal. While such operations have succeeded in eliminating several very dangerous people and disrupting their organizations, however, they have also served to further upset the balance of power among Mexico's criminal organizations. This imbalance has increased the volatility of the country's security environment by creating a sort of vicious feeding frenzy among the various organizations as they seek to preserve their own turf or seize territory from rival organizations. Calderon has also taken steps to shift the focus from the controversial strategy of using the Mexican military as the primary tool to wage war against the cartels to using the newly reformed Federal Police. While the military still remains the most reliable security tool available to the Mexican government, the Federal Police have been given more responsibility in Juarez and northeast Mexico, the nation's most contentious hot spots. Calderon has also planted the seeds to reform the states' security organizations with a unified command in hopes of professionalizing each state's security force to the point where the states do not have to rely on the federal government to combat organized crime. Meanwhile, the Mexican Congress has take steps to curb the ability of the president to deploy the military domestically by proposing a National Security Act that would require a state governor or legislature to first request the deployment of the military rather than permitting the federal government to act unilaterally. The successes that the Calderon administration has scored against some major cartel figures such as La Barbie and El Nacho in 2010 have helped foster some public confidence in the war against the cartels, but disruptions to the balance of power among the cartels have added to the violence, which is clearly evidenced by the steep climb in the death toll. As long as the cartel landscape remains fluid, with the balance of power between the cartels and the government in a constant state of flux, the violence is unlikely to end or even recede. This means that Calderon is at a crossroads. The increasing level of violence is seen as unacceptable by the public and the government's resources are stretched to the limit. Unless all the cartel groups can be decapitated and brought under control — something that is highly unlikely given the government's limitations — the only way to reduce the violence is to restore the balance of power among the cartels. This balance can be achieved if a small number of cartels come to dominate the cartel landscape and are able to conduct business as usual rather than fight continually for turf and survival. Calderon must take steps to restore this balance in the next year if he hopes to quell the violence and give his National Action Party a chance to maintain power in the 2012 Mexican presidential elections. In Mexico, 2011 promises to be an interesting year indeed.