“Mexico: On the Road to a Failed State?”

Martin van Creveld’s theory that the 21st century will see the “decline of the State”, a reversal of the long ascent of the State since the Treaties of Westphasia ended the 30 Years War in 1648.  His critics say that there is so far insufficient evidence.  Mexico may soon provide an unmistakable example.

If events in the Middle East deserve the attention they have recieved, how much more should we allocate to stabilizing Mexico — or, as a Plan B, containing the effects of its collapse?

Other articles about Mexico:

  1. Is Mexico unraveling?  (28 April 2008)
  2. “High Stakes South of the Border”  (13 May 2008)
  3. Mexico: Examining Cartel War Violence Through a Protective Intelligence Lens“, Stratfor (14 May 2008)
  4. Crime and Punishment in Mexico: The big picture beyond drug cartel violence“, posted at Grits for Breakfast (18 May 2008)

Please share your comments by posting below (brief and relevant, please), or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

Mexico: On the Road to a Failed State?“, By George Friedman, Stratfor (13 May 2008) — Reprinted with permission.

Edgar Millan Gomez was shot dead in his own home in Mexico City on May 8. Millan Gomez was the highest-ranking law enforcement officer in Mexico, responsible for overseeing most of Mexico’s counternarcotics efforts. He orchestrated the January arrest of one of the leaders of the Sinaloa cartel, Alfredo Beltran Leyva. (Several Sinaloa members have been arrested in Mexico City since the beginning of the year.) The week before, Roberto Velasco Bravo died when he was shot in the head at close range by two armed men near his home in Mexico City. He was the director of organized criminal investigations in a tactical analysis unit of the federal police. The Mexican government believes the Sinaloa drug cartel ordered the assassinations of Velasco Bravo and Millan Gomez. Combined with the assassination of other federal police officials in Mexico City, we now see a pattern of intensifying warfare in Mexico City.

The fighting also extended to the killing of the son of the Sinaloa cartel leader, Joaquin “El Chapo” Guzman Loera, who was killed outside a shopping center in Culiacan, the capital of Sinaloa state. Also killed was the son of reputed top Sinaloa money launderer Blanca Margarita Cazares Salazar in an attack carried out by 40 gunmen. According to sources, Los Zetas, the enforcement arm of the rival Gulf cartel, carried out the attack. Reports also indicate a split between Sinaloa and a resurgent Juarez cartel, which also could have been behind the Millan Gomez killing.

Spiraling Violence

Violence along the U.S.-Mexican border has been intensifying for several years, and there have been attacks in Mexico City. But last week was noteworthy not so much for the body count, but for the type of people being killed. Very senior government police officials in Mexico City were killed along with senior Sinaloa cartel operatives in Sinaloa state. In other words, the killings are extending from low-level operatives to higher-ranking ones, and the attacks are reaching into enemy territory, so to speak. Mexican government officials are being killed in Mexico City, Sinaloan operatives in Sinaloa. The conflict is becoming more intense and placing senior officials at risk.

The killings pose a strategic problem for the Mexican government. The bulk of its effective troops are deployed along the U.S. border, attempting to suppress violence and smuggling among the grunts along the border, as well as the well-known smuggling routes elsewhere in the country. The attacks in Mexico raise the question of whether forces should be shifted from these assignments to Mexico City to protect officials and break up the infrastructure of the Sinaloa and other cartels there. The government also faces the secondary task of suppressing violence between cartels. The Sinaloa cartel struck in Mexico City not only to kill troublesome officials and intimidate others, but also to pose a problem for the Mexican government by increasing areas requiring forces, thereby requiring the government to consider splitting its forces — thus reducing the government presence along the border. It was a strategically smart move by Sinaloa, but no one has accused the cartels of being stupid.

Mexico now faces a classic problem. Multiple, well-armed organized groups have emerged. They are fighting among themselves while simultaneously fighting the government. The groups are fueled by vast amounts of money earned via drug smuggling to the United States. The amount of money involved — estimated at some $40 billion a year — is sufficient to increase tension between these criminal groups and give them the resources to conduct wars against each other. It also provides them with resources to bribe and intimidate government officials. The resources they deploy in some ways are superior to the resources the government employs.

Given the amount of money they have, the organized criminal groups can be very effective in bribing government officials at all levels, from squad leaders patrolling the border to high-ranking state and federal officials. Given the resources they have, they can reach out and kill government officials at all levels as well. Government officials are human; and faced with the carrot of bribes and the stick of death, even the most incorruptible is going to be cautious in executing operations against the cartels.

Toward a Failed State?

There comes a moment when the imbalance in resources reverses the relationship between government and cartels. Government officials, seeing the futility of resistance, effectively become tools of the cartels. Since there are multiple cartels, the area of competition ceases to be solely the border towns, shifting to the corridors of power in Mexico City. Government officials begin giving their primary loyalty not to the government but to one of the cartels. The government thus becomes both an arena for competition among the cartels and an instrument used by one cartel against another. That is the prescription for what is called a “failed state” — a state that no longer can function as a state. Lebanon in the 1980s is one such example.

There are examples in American history as well. Chicago in the 1920s was overwhelmed by a similar process. Smuggling alcohol created huge pools of money on the U.S. side of the border, controlled by criminals both by definition (bootlegging was illegal) and by inclination (people who engage in one sort of illegality are prepared to be criminals, more broadly understood). The smuggling laws gave these criminals huge amounts of power, which they used to intimidate and effectively absorb the city government. Facing a choice between being killed or being enriched, city officials chose the latter. City government shifted from controlling the criminals to being an arm of criminal power. In the meantime, various criminal gangs competed with each other for power.

Chicago had a failed city government. The resources available to the Chicago gangs were limited, however, and it was not possible for them to carry out the same function in Washington. Ultimately, Washington deployed resources in Chicago and destroyed one of the main gangs. But if Al Capone had been able to carry out the same operation in Washington as he did in Chicago, the United States could have become a failed state.

It is important to point out that we are not speaking here of corruption, which exists in all governments everywhere. Instead, we are talking about a systematic breakdown of the state, in which government is not simply influenced by criminals, but becomes an instrument of criminals — either simply an arena for battling among groups or under the control of a particular group. The state no longer can carry out its primary function of imposing peace, and it becomes helpless, or itself a direct perpetrator of crime. Corruption has been seen in Washington — some triggered by organized crime, but never state failure.

The Mexican state has not yet failed. If the activities of the last week have become a pattern, however, we must begin thinking about the potential for state failure. The killing of Millan Gomez transmitted a critical message: No one is safe, no matter how high his rank or how well protected, if he works against cartel interests. The killing of El Chapo’s son transmitted the message that no one in the leading cartel is safe from competing gangs, no matter how high his rank or how well protected.

The killing of senior state police officials causes other officials to recalculate their attitudes. The state is no longer seen as a competent protector, and being a state official is seen as a liability — potentially a fatal liability — unless protection is sought from a cartel, a protection that can be very lucrative indeed for the protector. The killing of senior cartel members intensifies conflict among cartels, making it even more difficult for the government to control the situation and intensifying the movement toward failure.

It is important to remember that Mexico has a tradition of failed governments, particularly in the 19th and early 20th century. In those periods, Mexico City became an arena for struggle among army officers and regional groups straddling the line between criminal and political. The Mexican army became an instrument in this struggle and its control a prize. The one thing missing was the vast amounts of money at stake. So there is a tradition of state failure in Mexico, and there are higher stakes today than before.

The Drug Trade’s High Stakes

To benchmark the amount at stake, assume that the total amount of drug trafficking is $40 billion, a frequently used figure, but hardly an exact one by any means. In 2007, Mexico exported about $210 billion worth of goods to the United States and imported about $136 billion from the United States. If the drug trade is $40 billion dollars, it represents about 25 percent of all exports to the United States. That in itself is huge, but what makes it more important is that while the $210 billion is divided among many businesses and individuals, the $40 billion is concentrated in the hands of a few, fairly tightly controlled cartels. Sinaloa and Gulf, currently the strongest, have vast resources at their disposal; a substantial part of the economy can be controlled through this money. This creates tremendous instability as other cartels vie for the top spot, with the state lacking the resources to control the situation and having its officials seduced and intimidated by the cartels.

We have seen failed states elsewhere. Colombia in the 1980s failed over the same issue — drug money. Lebanon failed in the 1970s and 1980s. The Democratic Republic of the Congo was a failed state.

Mexico’s potential failure is important for three reasons. First, Mexico is a huge country, with a population of more than 100 million. Second, it has a large economy — the 14th-largest in the world. And third, it shares an extended border with the world’s only global power, one that has assumed for most of the 20th century that its domination of North America and control of its borders is a foregone conclusion. If Mexico fails, there are serious geopolitical repercussions. This is not simply a criminal matter.

The amount of money accumulated in Mexico derives from smuggling operations in the United States. Drugs go one way, money another. But all the money doesn’t have to return to Mexico or to third-party countries. If Mexico fails, the leading cartels will compete in the United States, and that competition will extend to the source of the money as well. We have already seen cartel violence in the border areas of the United States, but this risk is not limited to that. The same process that we see under way in Mexico could extend to the United States; logic dictates that it would.

The current issue is control of the source of drugs and of the supply chain that delivers drugs to retail customers in the United States. The struggle for control of the source and the supply chain also will involve a struggle for control of markets. The process of intimidation of government and police officials, as well as bribing them, can take place in market towns such as Los Angeles or Chicago, as well as production centers or transshipment points.

Cartel Incentives for U.S. Expansion

That means there are economic incentives for the cartels to extend their operations into the United States. With those incentives comes intercartel competition, and with that competition comes pressure on U.S. local, state and, ultimately, federal government and police functions. Were that to happen, the global implications obviously would be stunning. Imagine an extreme case in which the Mexican scenario is acted out in the United States. The effect on the global system economically and politically would be astounding, since U.S. failure would see the world reshaping itself in startling ways.

Failure for the United States is much harder than for Mexico, however. The United States has a gross domestic product of about $14 trillion, while Mexico’s economy is about $900 billion. The impact of the cartels’ money is vastly greater in Mexico than in the United States, where it would be dwarfed by other pools of money with a powerful interest in maintaining U.S. stability. The idea of a failed American state is therefore far-fetched.

Less far-fetched is the extension of a Mexican failure into the borderlands of the United States. Street-level violence already has crossed the border. But a deeper, more-systemic corruption — particularly on the local level — could easily extend into the United States, along with paramilitary operations between cartels and between the Mexican government and cartels.

U.S. Secretary of Defense Robert Gates recently visited Mexico, and there are potential plans for U.S. aid in support of Mexican government operations. But if the Mexican government became paralyzed and couldn’t carry out these operations, the U.S. government would face a stark and unpleasant choice. It could attempt to protect the United States from the violence defensively by sealing off Mexico or controlling the area north of the border more effectively. Or, as it did in the early 20th century, the United States could adopt a forward defense by sending U.S. troops south of the border to fight the battle in Mexico.

There have been suggestions that the border be sealed. But Mexico is the United States’ third-largest customer, and the United States is Mexico’s largest customer. This was the case well before NAFTA, and has nothing to do with treaties and everything to do with economics and geography. Cutting that trade would have catastrophic effects on both sides of the border, and would guarantee the failure of the Mexican state. It isn’t going to happen.

The Impossibility of Sealing the Border

So long as vast quantities of goods flow across the border, the border cannot be sealed. Immigration might be limited by a wall, but the goods that cross the border do so at roads and bridges, and the sheer amount of goods crossing the border makes careful inspection impossible. The drugs will come across the border embedded in this trade as well as by other routes. So will gunmen from the cartel and anything else needed to take control of Los Angeles’ drug market.

A purely passive defense won’t work unless the economic cost of blockade is absorbed. The choices are a defensive posture to deal with the battle on American soil if it spills over, or an offensive posture to suppress the battle on the other side of the border. Bearing in mind that Mexico is not a small country and that counterinsurgency is not the United States’ strong suit, the latter is a dangerous game. But the first option isn’t likely to work either.

One way to deal with the problem would be ending the artificial price of drugs by legalizing them. This would rapidly lower the price of drugs and vastly reduce the money to be made in smuggling them. Nothing hurt the American cartels more than the repeal of Prohibition, and nothing helped them more than Prohibition itself. Nevertheless, from an objective point of view, drug legalization isn’t going to happen. There is no visible political coalition of substantial size advocating this solution. Therefore, U.S. drug policy will continue to raise the price of drugs artificially, effective interdiction will be impossible, and the Mexican cartels will prosper and make war on each other and on the Mexican state.

We are not yet at the worst-case scenario, and we may never get there. Mexican President Felipe Calderon, perhaps with assistance from the United States, may devise a strategy to immunize his government from intimidation and corruption and take the war home to the cartels. This is a serious possibility that should not be ruled out. Nevertheless, the events of last week raise the serious possibility of a failed state in Mexico. That should not be taken lightly, as it could change far more than Mexico.

Copyright 2008 Strategic Forecasting, Inc.

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15 thoughts on ““Mexico: On the Road to a Failed State?”

  1. A variation to full legalization would be a government owned company with license to sell drugs in the US. It made be easier to accept than the free market forces. It would give better control over who could buy the low priced drugs and could be combined with a system of helping people quit the habit if they are inclined. It may not fully remove drug smuggling but if it eliminates 70-80 % of the market it may be enough to make life easier in Mexico, Columbia, etc, etc.
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    Fabius Maximus replies: I agree, but nothing like that is even “on the table” today. We love our drug laws like Romans loved lead in their wine.

  2. In recent history, failed states are not accidents, but have often been the result of western economic or military policy (Russia, Yugoslavia, Afghanistan, Iraq, plus many examples in Africa.) Many people have observed how neo-liberal economic policy has consciously undermined foreign governments, as a means of forcing them to open them up to foreign investment, by enmeshing them in loans they can’t possibly repay (see John Perkins’ Confessions of an Economic Hit Man).

    Failed states, like failed businesses to competitors, create the opportunity to rush in and grab some of the pieces. In Mexico’s case, the prize could be oil, again.

    The author mentions the possibility of a US “presence” in Mexico as one possible outcome. Against this, I think he correctly raises the interests of trading partners on both sides of the border. Business and military occupation, no matter how modest, don’t really go together.

    What worries me more, though, is the image portrayed of a possible invasion of Mexican criminal cartels into the US. This sounds like “war on terror” stuff, and if I begin to hear it in the MSM, I will immediately think it’s a pretext for new domestic repression.

  3. Friedman’s analogy between 1920’s Chicago and Mexico is absurd. Al Capone was afraid to kill the Treasury agents working against him. He killed the one member of the “untouchables” that was not a government agent, Ness’ driver (the killer was arrested by the Chicago police and, although there was little evidence, hanged himself in remorse).

    Needless to say, Mexico’s cartels operate more freely.

  4. A real national government of Mexico would aid the drug gangs and then tax them, just like the British did in the nineteenth centaury (Opium War). I won’t say that these shots are the first shots in the liberation of Mexico but they are the rot that is eating at the current proxy-colonial government.

    In few decades Mexico is going to reclaim Texas, Arizona, California, etc. a Mexican empire of North America is the inevitable future; the real failed state is the USA (see: World order, Failed states and Terrorism).

    [Full disclosure: I am not Mexican or Latino, my opinion is based on history and not nationalism]

  5. Legalizing drugs will be the key piece that is going to happen. There are many sympathetic currents that are beginning to gather that will eventually come together to make legalization the smart and reasonable choice. Here are just a few of the other groups who will get together to make it happen.

    GenXers will move into leadership roles in public, private areas who have all done drugs – big surprise the world didn’t end and they all didn’t become junkies. Need I remind you that Obama has openly admitted to using drugs growing up on his way to the Dem. nomination for President? They will propose and pass legalization with the only umbrage coming from aging boomers – if they can hide their stash long enough to keep a straight face.

    Mandatory Drug Sentencing Laws didn’t work – All they did was create prison crowding and turn out an endless stream of “ex-felons” that are hard to employ and criminalize people who instead of having a beer after work smoked a joint.

    Cost of Police enforcement – switch cost center of law enforcement to drug education, treatment and regulatory access enforcement. Must be 21 to smoke.
    Shipment security concerns – combine efforts on border security with smuggling enforcement.
    Create a Revenue Stream – money from taxation and regulation
    Public safety from improved product quality – no more rat poison in the stuff.
    Remove criminal element from schools and streets.
    Remove the incentive to create home brew narcotics, like crystal meth, as innovation moves to Big Pharma – who are desperate for new profit centers as disease curing drugs and research are increasingly drawn into public production and free distribution.
    Creation of a new industry – a $40 billion one at that.

    And finally there’s Mexico. A failed state on the US border is just the ticket to get state number 51, 52, 53, 54… heck half the baby boomers are retiring down there anyway. How long will it be before they start complaining to Washington about the violence?

    It’ll happen.
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    Fabius Maximus replies: Perhaps. But when?

  6. Belief that we could succesful intervene to stabilize Mexico is amazing, on several levels. As Friedman notes, Mexico’s population is over one hundred million people, roughly one-third the size of ours. Their long-standing hostility to us would make intervention potentially explosive. But most of all, this displays no awareness of how the world has changed.

    Since Mao brought fourth generation warfare (4GW) to maturity, foreign interventions have a low rate of success. As 4GW goes,operations in Mexico has many favorable characteristics. We have many Spanish-speaking people in our government and military. If done at the request of Mexico’s government, with them taking the lead, the damage to their legitimacy might not be terminal. Still, Stratfor shows no awareness of the terrible risks involved.

  7. If events in the Middle East deserve the attention they have recieved, how much more should we allocate to stabilizing Mexico — or, as a Plan B, containing the effects of its collapse?
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    Those are the questions, indeed. Inherent in the questions is the assumption there are plans that would either work (in the sense that the blowback would be less bad than the status quo), or would be palatable in the event Mexico descended into significant, sustained violence between the various factions.
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    What’s the U.S. going to do? The federal government is technically insolvent when you count long-term liabilities, so fiscal resources will be limited, especially as more and more Baby Boomers retire. Occupation of segments of the border or of cities would have the potential for complete disaster – see Baghdad, Mogadishu, Basra, et al – and to avoid disaster, it would require huge numbers of troops, many of whom might be sympathetic to their co-ethnics, especially after a few Predator strikes kill twenty or thirty civilians. A Mexico in full-blown meltdown is also a disastrous option – think of the vulnerability of their petroleum and natural gas infrastructure (currently 1.232 MBD as of March 08 of oil goes to the U.S. – kiss much of that goodbye) and the potential for massive refugees to flood north (disease, crime, massive costs, angry population that could easily be swayed by the “Reconquista” and “Aztlan” memes).
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    The list goes on. Drug legalization would be a key step to knee-capping the profits of the drug lords, but that is not in the cards just yet.
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    I’d hate to be a Pentagon planner right about now…
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    Fabius Maximus replies: Perhaps the most revealing aspect of the article is the assumption that our primary response would be military. Wars on Drugs, on Terror, on Cancer, on Poverty. Teen athletes are women warriors (often warrior casualties). Our Police are increasingly para-military warrors (LA is the leader in this), with SWAT teams breaking down doors to serve warrants. Both US government’s intelligence and diplomatic functions are increasingyly adjuncts of the military. Is there a pattern here?

  8. Is there a pattern here?

    Snark: You forgot the Salvation Army. :End_of_snark.,

    There is some sort of will to power in the American psyche. That we can be the authors of our own fate. With enough true grit and determination, like the Little Engine that Could, we chant “I think I can; I think I can; I think I can” we think we get over the mountain. Hence our willingness to engage in various “Wars” on this, that, or the other thing. ( Your bogeyman might not be the same as mine. I might even be yours; or visa versa. )

    One of the wrenching aspects of 21st American life will be learning how to deal with not being authors of our own fate.

    One solution might be to study the Australian experience, where one of their great authors, Henry Lawson, writes about the experience of being ground under by the outback and has spawned a tradition with a similar flavor.

  9. Duncan Kinder wrote: “One of the wrenching aspects of 21st (century) American life will be learning how to deal with not being authors of our own fate.”

    Fabius has raised a similar question many times, when he asks “how will we deal with the idea of defeat in Iraq?” It’s a profound almost metaphysical question, because it doesnt ask “how can we win?”, or how can we prevent change (economic crash, global warming, peak oil, etc.), but how will we deal with inevitable change? It’s a much more interesting, less politically loaded, question than the ones to be found in almost all political, journalist and common speech everyday.

  10. Plato’s Cave: Thank you for your response.

    As an addition to my prior post, another cultural resource – one directly within the American tradition – for dealing with being dealt with a poor hand of cards, is the blues.

  11. The Mexican central government is responsible for the poverty caused by corruption. A failed state, or no state at all can only be an improvement. Why is a rotten, corrupt state better than no state, even if there is some or a lot of chaos? It’s not.

  12. The Mexican central government is responsible for the poverty caused by corruption. A failed state, or no state at all can only be an improvement. Why is a rotten, corrupt state better than no state, even if there is some or a lot of chaos? It’s not.

    Well, it’s the difference between a neighborhood “protected” by a street gang and a neighborhood up for grabs between competing gangs, in my opinion.

    1. A failed Mexico has the potential to create a nasty dynamic in the U.S. If this thing goes 4GW, then all sorts of networks of gangs, sympathetic co-ethnics, charities, etc. will be leveraged north of the Rio Grande to help drive the violence. They will be competing for funding and fighting turf battles in the U.S. as part of the larger war spinning out from Mexico.

    2. The humanitarian aspects of the refugee problem would be horrendous. Texas is having problems dealing with the issues related to 450 kids seized from the FLDS ranch a few weeks ago. How is Texas going to handle 500,000 war refugee?

    3. Refugee camps as a source of instability. Let’s say FEMA and Texas magically are able to handle hundreds of thousands of war refugees (let’s pretend the refugee problem will be an order of magnitude less than the Iraq refugee problem). Now you have teeming refugee camps full of angry, intelligent, motivated individuals with zero economic and social prospects. The camps would be ripe for penetration by a variety of 4GW groups. Just as an exercise, find some maps of the oil and natural gas infrastructure in Texas. Think about how vulnerable that would be as part of an extended MENDesque gang war/4GW conflict that spreads out from Mexico.

    4. Other blowback. Oil exports to the U.S., disease, revolutionary governments, vast pools of drug money, etc. A failed Mexico is a very, very big deal, in my opinion.
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    Fabius Maximus replies: All interesting points, worth some thought! Let’s hope our Mexican neighbors keep things together.

  13. Freedom for individual Mexicans will only be achieved with the destruction of the parasitic central government. Let’s hope our Mexican neighbors have a cleansing revolution.

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