Mexico's Drug War Turns Into Terrorism After Grenades

By Jens Erik Gould

Oct. 20 (Bloomberg) -- Jose Garcia Guerrero was celebrating Mexico's Independence Day in Morelia's town plaza when he heard the metallic clang of a grenade hitting the ground. Then an explosion knocked him off his feet.

``I turned around and saw total chaos: A lot of people were mutilated, bloody, and there were cries of pain,'' says Garcia, 43. ``Before, you heard about these events in the Middle East, and now they're happening here.''

Garcia's 76-year-old mother, 13-year-old nephew and six others died in the Sept. 15 attack, which the government blames on drug traffickers. The bombing shows how a battle once limited to gangs and police has widened to include terrorist attacks on innocents.

As cartels gain power and the death toll mounts to a record 3,800 this year, Mexico increasingly blames the U.S. for the carnage, which is having a negative impact on the economy. The Bush administration has pledged but not yet delivered $400 million in aid, and critics say the U.S. has done little to stop the flow of arms into Mexico and to curtail demand for drugs at home.

``We're questioning whether the willingness really exists to support our country, given what we're dealing with,'' says Cesar Duarte Jaquez, a member of the opposition Institutional Revolutionary Party and head of Mexico's lower house of Congress.

Mexican cartels sell $13.8 billion a year worth of marijuana, cocaine, heroin and amphetamines to U.S. drug users, according to White House figures. Mexico is the corridor for about 90 percent of the cocaine consumed in the U.S.

Crackdown on Cartels

President Felipe Calderon, 46, came to power in 2006 promising a crackdown on the cartels. He has sent tens of thousands of soldiers to areas where smugglers battle over routes into the U.S.

Retaliating for arrests and record drug seizures, gangs beheaded rival smugglers, assassinated police officials and executed entire families. September's grenade attack, which injured more than 100, was in Calderon's home town, the capital of Michoacan state, 210 kilometers (130 miles) west of Mexico City.

Mexican cartels are also attacking people on the U.S. side of the border, John Walters, director of the U.S. Office of National Drug Control Policy, said Oct. 17 in Mexico City.

``Some of these groups not only engage in crime and violence in Mexico, but they come across and kidnap, murder and carry out assassinations,'' Walters said in a news conference.

`A Very High Price'

The violence is jeopardizing investment in Mexico. Finance Minister Agustin Carstens said last month that deteriorating security is reducing gross domestic product annually by 1 percent in Latin America's second-largest economy. GDP in 2007 totaled 10.5 trillion pesos ($827 billion).

``We are paying a very high price for the consumption of drugs in the U.S.,'' Calderon said during a Sept. 23 visit to New York. ``It's imperative that we find new ways of improving our collaboration in sensitive, delicate areas, such as drug use, arms trafficking and money laundering.''

Arturo Sarukhan, 45, Mexico's ambassador to the U.S. and head of the embassy's counternarcotics office in the 1990s, says the $400 million aid pledge is a good start and he is ``encouraged by the steps the U.S. is taking.''

That so-called Merida Initiative -- named for the city in southeastern Mexico where Calderon and U.S. President George W. Bush first conceived of the aid package -- includes helicopters; funding for surveillance equipment, technology and planes; and programs to modernize Mexican police operations.

`Profound Effort'

The U.S. State Department will distribute the aid once officials from both countries finish negotiating program details, says Susan Pittman, spokeswoman for the department's Bureau of International Narcotics and Law Enforcement Affairs.

``This will be the most profound effort of our two nations to confront the cancer that drugs represent,'' says Tony Garza, the U.S. ambassador to Mexico. ``My government is accepting and sharing its responsibility.''

Javier Gonzalez Garza, head of the Party of the Democratic Revolution in Mexico's lower house of Congress, criticizes the Merida plan as ``breadcrumbs in a billion-dollar business'' because $400 million is equal to less than 3 percent of Mexican traffickers' annual sales to the U.S. His party is the largest opposition party in the lower house and narrowly lost the 2006 presidential election.

Demand for Drugs

Cesar Camacho Quiroz, a member of the Institutional Revolutionary Party and the foreign-relations committee in the lower house, says the U.S. also hasn't done enough to reduce drug use by its own citizens. The Bush administration proposed cutting spending on drug treatment and prevention programs by $73 million, or 1.5 percent, in the 2009 budget, which hasn't been approved yet.

``The prevention campaigns haven't been very successful, and the fight against street-level drug dealing is practically nonexistent in the U.S.,'' Camacho Quiroz says. ``The U.S. lacks intensity, vigor and efficiency in this area.''

The U.S. government counters that it is working to slow drug traffic through investigations such as Project Reckoning, which led to the arrest of more than 500 people connected to Mexico's Gulf cartel, the Drug Enforcement Administration said last month.

U.S. Representative Eliot Engel, a New York Democrat, says the Merida Initiative represents progress. He co-sponsored a bill to help catch arms buyers and sellers by hiring more U.S. border agents and providing equipment to trace firearms.

Weapons Control

More than 90 percent of weapons used in violent crimes in Mexico are brought in illegally from the U.S., according to the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The House passed the measure; the U.S. Senate hasn't considered it.

``For the first time, there have been several members of Congress who have understood the critical importance of shutting down weapons which are feeding into drug syndicates in Mexico,'' Sarukhan says.

Mere understanding isn't enough for Mexicans angered over growing violence. Twenty-four bodies were found dumped in a park outside Mexico City last month. Twelve decapitated men were discovered in Yucatan state in August. Fernando Marti, the 14- year-old son of the founder of retailer Grupo Marti SAB, was found dead in August after being kidnapped, allegedly by police officers. Federal police chief Edgar Millan was killed in May.

Thousands marched in more than 60 cities across the country in August, wearing white and carrying candles, to demand action.

``There are many in Mexico who do feel the U.S. isn't doing enough because they do see bodies piling up on our side of the border,'' Sarukhan says. ``We're not going to be able to change perceptions overnight until we can prove that things like the Merida Initiative can deliver results.''

Election Campaigns

Cartels are using their wealth to penetrate police forces, Interior Minister Juan Camilo Mourino said Sept. 23. Drug traffickers also may be contributing funds to candidates' campaigns for next year's midterm elections, he said.

``The danger in Mexico is that the drug organizations become so powerful they can challenge the federal government,'' says Tony Payan, an assistant professor of political science at the University of Texas at El Paso.

Calderon has submitted an initiative to Mexico's Congress to authorize life sentences for kidnappers, who now face a maximum penalty of 60 years. Another measure would allow small-time drug users to seek treatment rather than being charged for possession and boost coordination between public-security institutions in a bid to reduce police corruption.

Garcia, who suffered a broken foot in the Morelia attack, says innocent people were safer before Calderon's push against traffickers, when gangs usually attacked only each other.

``The level of violence this fight between the government and drug traffickers is generating isn't worth it,'' he says.

To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net