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On May 14, Nicolas Maduro, Hugo Chavez’s hand-picked
successor and democratically elected president of Venezuela, declared a State
of Emergency and yet again expanded his executive powers. As the Bolivarian
government struggles to grapple economic control of the country, social
stability continues to prove elusive.
On May 25, it was reported that Maduro sold $1.7 billion of Venezuela’s gold reserves in order to meet debt payments, dropping the country’s reserves by a third.
In the meantime, Venezuela has refinanced its Chinese loans. Venezuela has borrowed $50 billion in the past decade as the new terms “are adapted to the country’s reality”, according to Miguel Perez, Venezuela’s Economic Vice President.
Oil sales are expected to shrink by another 8%, after diminishing 5.8% the year before. With 95% of export earnings based on oil sales, the current price of oil (at $49 per barrel) would have to shot up to $121 dollars per barrel in order to balance the government’s budget, as $6 billion are still set to paid this year. To make matters worse, Venezuela’s state-owned PDVSA is set to issue $2.5 billion in promissory notes after already issuing $310 million in debt securities.
All of this is just the latest in a slew of actions and reactions that have left Venezuela gasping for air as debt, inflation, and persistently low oil prices drown the country’s economy. Electrical workers have been told to work only two-days a week. Even beer has been added to the list of privations. Needless to say, protests, roadblocks, and looting have become increasingly common has the material necessities of Venezuela’s citizens are not met.
Understanding the Structural Failures of the Bolivarian Revolution
Explanations of what is occurring naturally depend on who one is talking to. We’ve already gone over the political and economic crisis’s roots in the global economic downturn and the oil wars’ race to the bottom.
It is no secret that the Democratic Unity Roundtable (MUD) seeks to upend any of the progressive measures installed by Hugo Chavez that were seen as a means to break away from neoliberal hegemony and move towards a democratic and socialist alternative.
Nicolas Maduro had neither the cunningness nor the requisite political aura to fight back against the rising Right-wing in a context of global market instability and declining oil prices. Over the years since Hugo Chavez was repeatedly elected, the Right-wing certainly fought amongst its own factions, but they played a persistent long-game and unity between these factions (though still shaky) are convinced enough of their common enemy.
The fundamental problem of Chavismo as a political formula is centered on the dependency of a strong executive power. Though Chavez intended and genuinely wanted a Left-wing peoples’ democracy from below, he failed to understand the contradiction of means and ends. Loved and popularly supported by the masses, Chavez always moved just beyond the bases he wished would take over popular power one day.
This is perhaps best illustrated in the bosses’ strike in 2002, when oil bosses and upper management walked off the job on strike in a show of force against the Chavez government. The economic impact was great and it proved the abilities of capitalist interests to effectively organize against the government. But at the same time, it showed that the workers that ran the plants had neither the expertise nor the capabilities to run shop without their superiors.
Hence, while Chavez ultimately wanted a sophisticated and organized working-class, by placing the focus on the power of the government rather than the development of broad society through the “missions” and the communes he created, the relational powers of the people (in their constituent form) and the government (in the power of the sovereign and the constituted government) was far too unequal. Ultimately, the powers of the constituent forms (the popular assemblies and the workers’ councils) rested too heavily and became too dependent on their governmental counter-parts.
This in turn paved the way for a greater possibility and expansion of corruption. In the constant struggle to maintain power within the governmental structures, Chavez fell into the same trap as the Workers’ Party of Brazil. That is, in a rigged game the struggle to maintain power increasingly mirrored the means of opposing forces. Just as in Brazil, corruption became a way to grease the cogs of political insurance. Rather than make its own time and its own practices, the United Socialist Party of Venezuela (PSUV) attempted to compete in a way that was impossible for it to win.
Due to the coercive laws of competition, Chavez had to increasingly rely on methods that threatened the very project he was desperately trying to protect. And in this struggle, Chavez and his party lost sight of the original promise of expanded democracy and popular power. If Chavez had played a smarter game, he would have worked towards diversifying the economic portfolio of the country and sought to establish greater internal consumption that did not depend on an export economy.
Lastly, neither Hugo Chavez nor anyone in the government was ever able to answer one of the systemic issues of capitalism – that is, capital flight. As the government pushed an increasingly aggressive stance against capitalist forces, the natural response by these capitalist forces was to divest and move capital out of the country. The same occurred in Greece with the rise of the left-wing Syriza government. Without having thought of democratic measures to ensure this does not happen, the question of a democratic transition into socialism remains unanswered.
It is most likely that the fate of Venezuela’s PSUV will likely mirror that of Brazil’s PT. Lacking parliamentary support and diminishing popular support, recent calls for a popular referendum will likely win in favor of the Right-wing. The on-going economic siege of Venezuela is likely set to fatigue the popular forces of the PSUV. At the same time however, as we’ve said previously, the socialist rhetoric and anti-capitalist discourse in Venezuela may cash in if the PSUV were to lose power in the form of popular revolt against the Right-wing. There is still a possibility given the popular bases (albeit limited) that were established during the hey-days of the Bolivarian revolution. But in the face of such widespread suffering, it appears more likely that Bolivarian dream may fade away with a whisper.
The people of Brazil have been demanding justice for months through popular protests. Against what many believe, democracy does not currently reign in the South American country. Dilma Rousseff, who heads the once popular Workers’ Party (PT) of Brazil and was elected in 2011 as president, has been found guilty by association and suspended from her role as president. She is now facing trial for breaking budget rules during her re-election campaign in 2014. At a juncture when the Brazilian masses feel unrepresented by an overwhelmingly corrupt political class, Rousseff’s removal is a strategic move, especially because those that spearheaded the initiative are being investigated themselves. Though this political maneuver is posed as democratic, ironically enough, it is hardly exemplary of democracy at all. Indeed, those who win are not the citizens of Brazil but the corrupt political class they clash with. What follows after Roussef is not the dawn of a new democracy but rather the newest phase of cleptocracy.
On May 11, president Dilma Rousseff of Brazil was suspended from office in order to prosecute alleged corruption charges in trial. The presidency has been handed over to Vice President Michel Temer while she remains suspended, up to 180 days of trial or if found guilty, until 2018.
This maneuver strongly resembles that of a parliamentary coup.
As Pablo Vivanco of Telesur explains, the age of military coups has come to an end. In an era when the digital reproduction of media allows for the near instantaneous transmission of news from one point of the globe to another, the use violent force to engender a sudden political upheaval simply does not work. As Vivanco explains, this lesson has been largely heeded since the 2002 coup against Chavez, which only won the Left more favor and credibility.
Vivanco has also argued that a new strategy needed be adopted by the Right-wing, one that largely entailed maintaining control of the legislative branches of government in the case that the executive branch was to be taken by the Left. This in turn allows a democratic and constitutional blocking of progressive agendas.
The situation in Brazil, however, allowed the PT to gain executive control. The party, however, was largely unable to re-configure power within the legislative branch of the government or to sway its representation through popular media outlets. Considering that media as an institution is charged with the distribution of knowledge, it follows that the monopolization of the media under private ownership concentrates a great deal of power in the ability to form opinion.
Glenn Greenwald, founder of the Intercept and the famed lawyer-turned-journalist who broke the Snowden leaks, points to manipulation by the media as the greatest single factor of the downfall of Rousseff and the PT.
Vice President Michel Temer – of the Brazilian Democratic Movement Party – has the most to win out of Rousseff’s impeachment. Last year he proposed an economic plan called “Bridge to the Future” that would be considered a radical departure from the PT’s market heterodoxy based on consumption driven growth through welfare and state spending, basing this future instead on a strict diet of fiscal conservatism.
What makes this case particularly incredible is the fact that Temer is indeed quite a corrupt politician. As Greenwald explains, Temer was “accused by informants of involvement in an illegal ethanol-purchasing scheme” and was “just found guilt of, and fined for, election spending violations and faces an 8-year ban on running for any office.” In fact, he is so unpopular that only 2 percent of the Brazilian population actually supports him in the presidential office.
The contradiction here is that the Right-wing used parliamentary means for very undemocratic ends. Aside from the fact that the allegations of Rousseff’s corruption are weak, the Right-wing controlled parliament has expelled Rousseff to elevate their player into the executive, and now have the governmental capacities to execute what they like – without popular approval.
What is commonly perceived in Brazil as a purging of a corrupt element, then, is in fact the purging of one of Brazil’s least corrupt politicians. As the Guardian points out, “more than 150 deputies are implicated in crimes but protected by their status as parliamentarians.” Corruption is not simply a matter of individuals. Rather, corrupt individuals, in order to be successful, need a system vulnerable to corruption. Hence, even if the accusations against Rousseff were correct, the entire constituted government must itself be on trial if we are to speak of justice.
As to what will happen in Brazil, it is very likely that a program of austerity will be installed. With Temer acting as president, it is likely that the Right will seize the opportunity to withdraw state-sponsored efforts to alleviate poverty and then revert to the market. Yet, if the new government does this too quickly, it could result in a considerable social upheaval from the Brazilian people.
Although Brazil has been rocked by constant protests over the past four years, these are not organized against state-sponsored welfare programs. They actually demand further intervention because the programs put forth by the PT were not enough to address the racial and economic inequality that is greatly concentrated in Brazil. It is a difficult situation that the market has demonstrated it cannot solve. A return to free-market fundamentalism will only spell greater social unrest, especially with such a mobilized and politicized society.
This past April, the world witnessed a historical blow to the offshore world of financial secrecy with the release of the Panama Papers, the biggest data leak ever; much larger than the 1.5GB Wikileak archive, the 3.3GB HSBC Switzerland leak and the 4.4GB Luxemburg archive leak. An entire server totaling 2.6TB of data was basically copied, pasted and later indexed and analyzed during a year’s time by an international group of nearly 300 journalists. The material entails over 11.5 million confidential documents concerning financial and legal client information for the 200,000 offshore companies that since the late ‘70s have been associated with Mossak Fonseca, a Panamanian law and corporate services firm.
The endless list of involved individuals, corporations and financial entities associated with Fonseca - which was principally in charge of keeping its clients’ financial assets hidden from national and international authorities - is needless to say, impressive: not only current and former heads of state but government officials as well as sports and entertainment personalities, banking institutions and all sorts of people involved in both politics and non-government organizations.
Such a diverse range of implicated parties is precisely what makes the Panama Papers groundbreaking: from Primer Minister David Cameron to filmmaker Stanley Kubrick, from world-renown soccer player Leonel Messi to president Mauricio Macri, HSBC and Credit Suisse, Mexican drug dealer Rafael Caro Quintero and President Enrique Peña Nieto. Suddenly, the world’s richest are all connected through offshore financial holdings, tax evasion and for participating in a dubious financial loophole to their own countries’ laws and regulations.
Indeed, following the Panama Papers leak, their previous anonymity is no longer viable: the idea of a global elite continuously accumulating dirty money has ceased to be a mere suspicion to become a confirmed fact.
The logistics of hiding assets could appear complicated but it’s actually quite simple. Take the following example: if a construction company receives a ten million dollar contract to build a new highway but it wants to avoid a $3 million tax deduction at the end of the year, it will seek the assistance of an entity such as Mossak Fonseca. With decades of expertise, the firm will find the easiest, least expensive way to store the company’s money under somebody else’s name in a far-off territory, elsewhere, in a tax-friendly jurisdiction. Another strategy could entail setting up a fund-recycling business through land property transactions. Either way, the expense will be considerably lower - almost minimal - than the amount legally required to be paid if the cash is kept at home.
Yet, a firm such as Mossak Fonseca could also provide services for a different kind of client, perhaps an anonymous entity that is actually a Russian arms dealer looking to store money under a family member’s name through an HSBC branch in London. The firm’s client, moreover, could be a drug-dealer owned Mexican parking meter company that, after receiving a millionaire ten-year government contract through a personal connection to the presidential cabinet, decides to pay off the bribe through a money transfer entailing a secret shell company in order to both avoid being detected and to keep his beneficiary’s identity hidden. The list of possibilities goes on.
The point is that firms such as Mossack Fonseca simply operate without any regard to what the identity of their client might be. No due diligence is expected or practiced by the firm. The absence of due diligence, thus, is not sanctioned. Indeed, as Mossack Fonseca has argued, firms that specialize in the creation of shell companies justify their practices by arguing that it is not illegal for an individual or corporation to store financial assets internationally. The problem is that the most common reason why shell companies are utilized in the first place is to avoid tax sanctions and to obscure illegal proceedings of money. Put bluntly: for money laundering of sorts.
To be sure, the case of Mexico and the Panama Papers is particularly revealing because it is directly related to the financial wrongdoings of President Enrique Peña Nieto and his wife, first lady and ex-TV star Angelica Rivera. The president’s close friend Juan Armando Hinojosa Cantú, infamously known as Peña Nieto’s “favorite contractor”, was confirmed to have solicited and benefitted from Mossack Fonseca’s services for managing an amount close to 100 million dollars. Since 2005, Hinojosa’s conglomerate Grupo Higa has been awarded over 99 government-related contracts in Mexico City and the State of Mexico, the territory surrounding the capital.
His prominent business presence and enormous fortune has clearly been built on his personal friendship with the president - he is Peña Nieto’s son’s godfather - as well as his political alliance with the PRI - Mexico’s ruling party - over the years.
It was during Peña Nieto’s State of Mexico Governor term from 2005-2011 that Grupo Higa managed to construct a fortune that launched Hinojosa to power as one of the wealthiest tycoons of Mexico. Highways, hospitals, athletic facilities, and property development: it was all handed over to then-governor Peña Nieto’s favorite. Furthermore, when Peña Nieto became president in 2012, the contracts - and the profits - concentrated even more for Grupo Higa. They totaled a calculated at 3.5 billion dollars, with a notorious deal to construct a presidential plane hangar worth $74 million.
Interestingly enough, by 2015, Hinojosa was involved in a national scandal revolving around First Lady Angelica Rivera and her purchase of a $7 million dollar home in Lomas de Chapultepec, one of Mexico City’s wealthiest and most prestigious neighborhoods. Though it was rumored - to the Mexican public’s dismay - that Hinojosa had provided the money to acquire the home as a kickback for government contracts, a suspicious investigation conducted by the president of Mexico’s Public Function Office (SFP), Virgilio Andrade – who is also related to Finance Minister Luis Videgaray -, revealed such accusations as false and assured that there had been no wrongdoing in Mrs. Rivera’s purchase.
The presidential family declared the home had been acquired through the first lady’s savings, accumulated during the golden age of her TV-stardom.
Documents found amidst the Panama Papers leak, however, confirmed that Hinojosa has been using offshore trusts and shell companies in order to conceal his wealth away from Mexico and naturally, to avoid legitimate tax fees that would entail a considerable cipher congruent to the radical amount of revenue generated by Grupo Higa through its personal connection to the Mexican government.
Indeed, ghost entities for Hinojosa were set-up by Mossak Fonseca in places such as the Netherlands, Great, Britain, New Zealand, Germany and New York. He is known to hold high-profile accounts with banks such as J.P. Morgan Chase, Deutsche Bank AG and Wells Fargo & Co., amongst others. By using his mother’s and his mother-in-law’s name as well as through Panamanian, Dutch and New Zealand nationals that served as nominee directors within made-up shell companies, Hinojosa managed to hide part of his wealth with the assistance of Mossak Fonseca.
It is unquestionable, consequently, that Hinojosa in fact provided first lady Angelica Rivera with $7 million to purchase her “white house” – as it became popularly known – mansion in 2015, though it was denied by the investigation conducted by PRI’s Virgilio Andrade. Indeed, Hinojosa began to move his money just over a month after investigations about the scandal had begun. Yet, Grupo Higa and Peña Nieto are not the only ones related to Mossak Fonseca: several other Mexican nationals were found to be involved.
Hinojosa’s fortune, for instance, is also related to Ramiro García Cantú’s, who has similarly amassed considerable amounts of wealth through thirty years of contracting for Mexican oil institution, PEMEX. Also from the northern state of Tamaulipas, like Hinojosa Cantú, García Cantú utilized Mossak Fonseca in order to diverge assets from Panamá to Holland, New Zealand and the Republic of Seychelles, a set of islands located near Madagascar.
Likewise, Amado Yáñez Osuna, Martín Díaz Álvarez, Oscar and Francisco Javier Rodriguez Borgio all purchased offshore company services from Mossak Fonseca in the British Virgin Islands. They are all beneficiaries involved in the Oceanografia embezzlement scandal, in which the petrol services company forged receipts and documents for work never truly completed for PEMEX. It received nearly $400 million dollars from Banamex that PEMEX never officially accounted for. Oceanografia’s tax processing company actually opened several shell companies in Miami, clearly utilizing the Panamanian firm to hide money acquired illicitly through bank fraud. Martín Díaz and the Rodíguez Borgio brothers currently have pending arrest warrants.
Emilio Lozoya Austin, additionally, the first PEMEX director under Peña Nieto’s presidential term, has also been found to have requested the services of Mossak Fonseca through a Dubai firm. Ricardo Salinas Pliego - former owner of Iusacell, one of TV-Azteca’s principal shareholders and a main benefactor of retail and credit company Grupo Elektra - is another case-in-point. He effectively signed up for two offshore shell companies, one in the British Islands and another one in the Cayman Islands.
In 2013, on the other hand, kingpin Carlos Hank Rhon solicited Mossak Fonseca’s services for the creation of an offshore firm he intended to use for the concealment of $11 million dollars.
Yet, ironically, in the midst of the Panama Papers release, Aristóteles Núñez, the president of the Mexican Service Tax Administration (SAT), declared that it “isn’t necessary illegal for Mexican nationals to store assets internationally” and that “such individuals may not actually have to move their assets back to Mexico”, effectively showing the blatant disregard for proper law enforcement by Mexican authorities. Núñez even added that those involved in the Panama Papers scandal are still in time to pay their respective taxes in order to avoid penalties.
The matter of fact is, however, is that not a single Mexican national thus far confirmed to have been related to Mossak Fonseca contacted or hired the firm simply to store money. All of the cases undeniably involve an illicit activity of some kind, whether it is tax evasion, money laundering or both. Interestingly enough, even one of SAT’s top employees, Óscar Fernando Trujillo Sandoval, was found to be a prospective customer of the Panamanian firm. Perhaps this is part of the reason why Mr. Núñez’s declarations are so lenient.
Along with Mexico’s top businessmen and politicians, drug dealer Rafael Caro Quintero, for instance, is one of Mossak Fonseca’s earliest clients. Ramón Fonseca himself, one of the founding members of the firm, actually served as the principal beneficiary of Financiera Monte Carlo S.A., Quinter’s personal shell company. Moreover, in 2007, Colombian national Juan Pablo Londoño created Monedeux International Services Inc., which Mossak Fonseca managed well-knowing its relationship to Jorge Milton Cifuentes Villa, a criminal business partner of infamous drug dealer Joaquín “El Chapo” Guzmán Loera, the recently-captured leader of the Sinaloa Cartel. For years, the account was used to store and transfer over 200,000 dollars on a monthly basis.
The Jalisco New Generation Cartel (CJNG), likewise, was found to have utilized Mossak Fonseca for a huge money laundering operation in Uruguay: over 10 million dollars have been laundered since 2011. Gerardo González Valencia and his wife Wendy Dalaithy Amaral Arévalo successfully set up a laundering scheme through real estate investments in the South American country. Several Uruguayan nationals as well as González Valencia’s gardener and housekeeper were used to set up the shell companies.
Again: the underlying reality is that neither Mossack Fonseca nor any of the shell companies created were actually serving the declared purpose of storing money. The fact that criminals of the stature of Quintero or Guzmán Loera, and now the CJNG benefitted from the services of the Panamanian firm surely emphasizes the dimensions of the issue at hand. World leaders such as David Cameron or Vladimir Putin can consequently be placed on the same playing field than drug dealers like Caro Quintero or “El Chapo” Guzmán.
While most of the responsibility should be adjudicated, precisely, to expert offshore company firms such as Mossak Fonseca, it is revealing that so many banking institutions have been involved. More than 500 banks along with their branches and subsidiaries registered at least 15,600 shell companies with the Panamanian firm. Banks such as Safra Sarasin, Rothschild Trust, UBS AG, Experta Corporta, Credit Suisse and HSBC, who created 2,300 shell companies alone. The U.S. Department of Justice has opened up investigations with some of these banks, and as we have previously reported, it has severely sanctioned some of them in the past.
Both UBS Group AG and HSBC Holdings Plc, indeed, have already been fined by the U.S. Department of Justice. What the Panama Papers data has revealed, however, are the details of how these banking institutions strategically “distanced themselves from client’s offshore companies”, as Bloomberg has reported. But the issue of banking transparency is nowhere near resolved, if anything, it is barely surfacing.
As Alan Sheeley from the English Pinsent Masons law firm declared, “banks and professional organizations including accountants and lawyers need to up their game in relation to knowing who their clients are.” This is perfectly relevant, for instance, in an investigation carried out in 2010, when the U.S. Department of Justice attempted to retrieve client information from UBS, who claimed Mossak Fonseca held the information while the latter said the bank withheld it.
UBS and Fonseca had actually decided to simply lighten due diligence on certain top-account holders who were interested in contracting the services of Mossak Fonseca, who in turn would also require less documentation about the client, its financial affairs, and its interest in opening up an offshore shell company. Yet, both UBS and Credit Suisse have continuously declared that they do not accept any client involved with illegal activities. Tidjane Thiam from Credit Suisse, indeed, announced: “we only accept offshore structures and vehicles if they serve legitimate purposes.”
Regardless, UBS has already paid $1.9 billion in fines, UBS has paid over $1 billion in combined fines to the U.S. and Germany and Credit Suisse pled guilty in 2014. The Panama Papers leaked data is likely to reveal further wrongdoing that the banks may have not yet been charged for. The fact is that proper due diligence is something banking institutions have to seriously and professionally develop, much more intensely than they have done thus far. Especially in regards to Latin American clients, whose information has definitely and successfully been concealed in the previous years.
All in all, the Panama Papers leak has been historic. Top world leaders, businessmen and popular personalities alike have been shown to be involved with illicit financial activities through the Panamanian firm Mossak Fonseca. The lack of transparency and impunity for violators is alarming. Proper due diligence has not been conducted by hundreds of renown banking institutions. The case of Mexico particularly is revealing, at least 68 offshore shell companies were created for Mexican nationals. 289 Mexican individuals are indeed involved with Mossak Fonseca, amongst them President Peña Nieto and the First Lady Angelica Rivera. Amongst them are Alejandro González Zabalegui, the Helfon family, Ricardo Henaine Haua, Mauricio Chernitsky, Dionisio Garza Medina, Miguel Angel Barahona Gutierrez and Bertlesmann of Mexico, Forbes Investments, Assembleges and Electronics of Mexico, Cacho Foundation, Silex Capital, as well as Banamex.
In just three months, the city of Tijuana has witnessed 164 homicides, most of them related to organized crime and kidnappings. Against statements issued by part of authorities, crime has not been actually decreasing but growing: homicides in the border city have shot up in the past couple of years. While in 2014 there were 500 reported homicides, the number rose to nearly 700 in 2015. At the current rate, homicides in the city could possibly rise even further. As of now, there are at least 2 taking place each day in Tijuana.
For instance, on March 16th, this past Wednesday, an older couple was attacked and shot in downtown Tijuana: María Nora Enriquez Valenzuela, 56, died on the spot while her husband, who was shot in the neck and face was taken to the General Hospital for emergency care. The incident was a failed kidnapping effort by an unknown band of criminals. Authorities are unsure whether the kidnapping group is an adherent of a larger drug trafficking organization or an independent cell. That same day, a man was shot and killed in the outskirts of the city, in the Cerro Colorado area, in an attempted robbery that went awry.
Likewise, in another part of the city, near the Sánchez Taboada road, authorities found a dead body. None of the assailants in any of these incidents, however, were captured by law enforcement.
To make matters worst, on Thursday March 17th, a decapitated human head was found in a cooler upon the main entrance of Playas de Tijuana, just feet away from a Municipal Police post. Playas is one of the most - if not the most - concurred tourist area of the city as well as the home of some of the city’s wealthiest, meaning that the head was deliberately left there as an intimidation strategy and / or a declaration of war between rivaling drug cartels. It is precisely on that same road that two human heads were found last year. Later that day, a large luggage bag with a dismembered headless body was dropped off in the outskirts of Playas and found by police hours later.
Interestingly enough, authorities apprehended a member of the New Generation Jalisco Cartel (CJNG) three days later. Esteban Ramirez González, also known as “El Gordo” - the fat one - was stopped for a traffic infraction and found to be transporting several high-powered assault rifles, firearms, cartridges and ammo. Police informed that Ramirez González was on route to meet with a small cell from the Arellano Félix Cartel (CAF) in order to propose a collaboration for drug trafficking across the border and into U.S. territory.
Ramirez González is not the only criminal recently apprehended, however. Authorities actually brought down an 11-member drug trafficking cell led by ex- Municipal Police officer Marco Antonio Serrano Jiménez, also known as “El Vampi”. The group was affiliated to the Sinaloa Cartel and was in charge of transporting and distributing drugs such as cristal crack, cocaine and marihuana. Several members of the faction were identified due to declarations issued by captured members in the previous months. Six of them had pending charges and arrest warrants for drug trafficking and homicide. The band was notoriously bloody, known for killing customers, distributors and members of their own faction.
Homicides, kidnappings and crimes are clearly related to the activity of individuals such as Ramirez González and cells such as the one led by Serrano Jiménez. Drug trafficking remains a lucrative and prominent activity in the city of Tijuana, with not just the CJNG, the CAF or the Sinaloa Cartel as active groups but with dozens of other cells that are related, independent, or continuously shifting. As with the case of Ramirez González - who was attempting to merge with the CAF, several other groups constantly switch membership, setting in motion a series of rivalries, confrontations and deadly competition that often results in collateral civilian casualties.
Kidnapping, for example, continues steady in Tijuana. On the 10th of March a 33-year-old man was taken from a popular roundabout in Zona Río, perhaps the most heavily transited part of the city, or at least an area with considerable visibility. The man was exiting the shopping mall Plaza Río when three black SUVS approached his vehicle, blocked the road and forced him out at gunpoint. He remained captive for a week and then taken to the outskirts of the city and then transported to Rosarito, south of Tijuana, along the coast. When the assailants made a stop at a convenience store, the man managed to scream for help and was quickly assisted by civilians in the parking lot.
The identity of the kidnappers remains unknown, but it is clear that the incident is an example of express kidnapping. The perpetrators began asking for a $4,000 USD ransom but lowered their demands to $3,000 as more time elapsed. Express kidnapping is one of the most popular means to make money quickly and effortlessly, a method preferred by small drug trafficking factions or armed dissidents that branch off in order to exclusively dedicate to such activities.
Oscar René Ortega Ibarra, also known as “El Negro”, the leader of an express kidnapping group was arrested in the beginning of March, for instance. He was captured while he guarded a victim of kidnapping in a hotel located on a road connecting downtown Tijuana to Playas. The victim was contacted via social media, asked to meet at a local park and then kidnapped along with two women. They were all forced to take Rivotri, lost consciousness, robbed of all possessions and then kept while a ransom was arranged with family members.
Furthermore, a three-member kidnapping gang was neutralized by law enforcement in late February. Abraham Uribe Conde and Edgar Alejandro Martinez Amador, 28 and 18 years old, were found to be holding a young 17-year-old female who studied criminology at a local university. Both men worked with Dario Mojarro, who was shot and killed by police during the confrontation with anti-kidnapping forces. Mojarro had pressing charges for kidnapping and murder and was the presumed leader of the group. Authorities managed to rescue the female though she was badly beaten and raped by assailants. This is but one of dozens of kidnapping factions currently active in Tijuana.
Indeed, on March 18th, authorities captured another ex-Municipal Police officer turned criminal. Marco Tulio Grande, a police officer since 1995, was one of the principal inside cooperators of the Arellano Felix Cartel, providing information, support and protection for cartel members, especially during the 2004-2008 period. He left the force in 2008 when a police revision found that he has involved with drug trafficking. He had been criminally active since until last week, when he was arrested in his home in Rosarito.
All in all, Tijuana remains a dangerous place where drug trafficking and satellite criminal activities continue to plague social and business interactions. People are simply not safe in the city, not just local residents but particularly travelers and those easily identifiable as foreigners. One the one hand, individuals are exposed due to confrontations between drug cartel themselves or drug cartels and authorities: stray bullets are a common cause of death for innocent bystanders.
On the other hand, nearly any citizen could be a potential kidnapping victim, yet, wealthy individuals are especially at danger: they are the obvious and most sought-after targets of kidnapping groups, many of which will not hesitate to mount a kidnapping attempt in broad daylight or a heavily transited area of the city.
The oil crisis in Venezuela and the right-wing opposition are spelling trouble as the country looms close to default.
Things are definitely not looking good for Nicolas Maduro and supporters of the Bolivarian Revolution of Venezuela. Months of spiraling oil prices and an export portfolio that lacks diversity has spelled out a dangerous economic situation in the infamous country. Tensions continue to rise as access to basic services and goods have become increasingly precarious. With a tense president that continues to do all he can within the constraints of a volatile global economy and a vanishing parliamentary support, the dream of Chavez’s 21st Century Socialist experiment appears to be coming to an end.
With the global over-production of oil, the Venezuelan economy has lost its lifeline as the effect of vanishing revenues has made itself apparent in all facets of everyday life. Basic foodstuffs, electricity and other services have all witnessed shortages or rationing, leaving society’s right and left grassroot groups increasingly tense, and simultaneously making Maduro’s opposition increasingly bold.
On Tuesday, March 7, the country’s right-wing opposition announced the creation of a three-pronged assault on the presidency, aimed specifically to ouster Maduro. The right-wing Democratic Unity coalition (MUD, in Spanish) announced the plan to execute a series of street demonstrations that call for the president’s immediate resignation, a national referendum aimed at ending Maduro’s presidency, and a plan to change the constitution so that Maduro’s term ends early.
Extra-Paramilitary and Parliamentary Means of the Right-Wing
Rousing the rabble won’t be hard: the first protest took place on Saturday, March 12th, and it was aimed at uniting disparate social sectors that have invested interests (though often opposed) in seeing the end of the Bolivarian process. Protests are being coordinated as a key part of the opposition’s strategy to form an extra-parliamentary force.
Furthermore, according to cables published on Wikileaks, there is clear evidence that multiple individuals within the opposition have received support or been coordinated by private and governmental actors from the United States. There are some indications about a deeper coordinated assault by multiple parties interested in reversing the Bolivarian process as soon as possible.
Polarization, it must be said, at the grassroots level, will likely lead to violence as right-wing mobilizations are scheduled. The situation on the ground is reminiscent of Weimar Republic Germany, when political parties had paramilitary wings. In this political setting, Hitler’s Nazi’s had the Storm Detachment (more commonly known as the brownshirts or the SA) and the communists had the Red Front-Fighters. Both engaged in extra-legal violence and clashed at demonstrations.
Similarly, in Venezuela, both the right and Left grassroot groups have been actually known to deploy extra-legal forces. Though the left-wing has received plenty of press and scrutiny, it is just as necessary to note that the right-wing is equally responsible for deploying extra-legal forces.
This is perhaps best illustrated by the passing of the Amnesty and National Reconciliation Bill in Venezeula’s National Assembly on February 18. The bill seeks to retroactively clear a series of violations since January 1, 1999, including political felonies and crimes that range from misdemeanor at a public rally to terrorist acts involving explosive and firearms. As Dr. Francsico Dominguez of Middlesex University points out, Article 4 of the bill would provide amnesty to all who perpetrated illegal acts against the socialist government by pointing directly to the words of the bill itself:
“Amnesty shall be granted to acts regarded as crimes or misdemeanours when such acts have been or might have been committed for participating, organizing or calling demonstrations, protests, or meetings for political purposes, expressing ideas or spreading information for political motives, or making or promoting actions, proclamations, political agreements or statements deemed to be aimed at changing the constitutional order or [sic] the official government, whether or not accompanied by conspiracy actions. In such cases, amnesty shall be granted to the following criminal acts:
a) Incitement to disobey the law, incitement to hatred and crime apology;
b. Incitement to crime;
c. Assault and battery;
d. Violence or resistance to authority, and disobedience to authority;
Whether or not the bill passes is yet to be seen. Though it has already passed the National Assembly, it has yet to be signed by Maduro, who is likely to veto it, of course. If that were the case, it would be sent to Venezuela’s supreme court. However, this is just one parliamentary battle Maduro’s faction is facing.
As the grassroot groups begin to battle on the streets, the constituted power of the right-wing will attempt to make an amendment to the constitution to cut Maduro’s term short in order to hold new elections, however, what stands in their way is that Article 24 of the Venezuelan Constitution does not permit any retroactive modifications to be made.
There are other obstacles that MUD forces have set before them. In the face of increasing economic disaster, Maduro was granted executive powers over the economy in February, following a rejection in January by the MUD-controlled National Assembly to carryout the president’s previous measures. This is the second time in a year that the president of Venezuela has issued such an executive decree that concentrated power in his hands, as in March of last year he had placed all power of matters of public security and defense in his hands. The 60 days granted to Maduro in mid-February, however, are set to expire in another six-weeks.
Maduro currently is also facing numerous economic problems. The economy is set to contract almost 5 percent after an 8 percent contraction in 2015. Exchange rates as of March 6 were officially at 206 bolivars to the dollar, but the black market rate was almost at 1,100 bolivars to the dollar.
While facing incredible inflationary upsets, the government has some major debt payments coming around the corner. As the Financial Times notes, it has nearly $20 billion in debt, all of which divided between the central government, PDVSA (the national oil company), and China, and within this year alone, Venezuela is set to pay almost a billion this year, resulting in Barclays’ calculation that Venezuela would have to spend 90 percent of oil revenues in order to make the payments.
How Maduro plans to make the payments without going into default remains to be seen. He points to the history of his socialist party, saying that they have never missed a payment before, but Venezuela has also never faced an oil crisis like this one. Even though Venezuela made its February payment, making bond gamblers rich as well, it is still unclear whether or not Maduro will continue to be able to navigate this year’s treacherous waters.
The crisis in Venezuela is rooted in the international oil crisis, which has had wide-ranging affects across multiple national markets, including Azerbaijan, Nigeria, Suriname, and Mexico. The former three are resorting to turning to the IMF, who is very likely to demand deeper privatization.
There is a range of possibilities that may pan out in the coming months. If the Venezuelan government goes into default, there is no telling what may happen (and it seems likely enough given its dependence on oil).
It is unlikely that the military will betray the socialist government and perform a coup, as Chavez himself had direct links to it. Yet, this fact does not mean there may not be specific generals that could be persuaded by lucrative offers. Even then, however, it seems that the Venezuelan population as a whole would not accept non-democratic means of empowerment.
More likely still, then, is the possibility of parliamentary avenues that are capable of pulling up a popular referendum that may or may not vote Maduro out of office. If Maduro is voted in, however, the legitimacy of the MUD will be damaged, but that doesn’t mean the grassroots forces will simply disappear.
If Maduro is voted out, however, polarization will surely ensue. According to a recent poll, Venezuelans don’t want austerity measures, and it seems unlikely that the IMF will offer anything but that in exchange for financing. Compliance with the IMF, moreover, may in turn push grassroots forces on the Left to rebel, at which point the new Right government will respond through force. Whether this situation erodes into a civil war or not, is completely unpredictable. But those in favor of the Bolivarian process are indeed many, and their politicization cannot be simply wished away.
Whoever inherits Venezuela, inherits the hopes embodied by Chavez’s Venezuela.
With the US presidential primaries kicking into high gear and as the latest candidate fumble becomes re-run fodder for the Internet, one of the most important trade deals that will directly effect the economic life of millions of people in 12 countries and indirectly effect the lives of countless others has made headway in the Kiwi Nation.
On February 3rd, representatives from all 12 countries signed the finished agreement in New Zealand, leaving it open for parliamentary debate in each of the signatory countries. As of today, only Malaysia has ratified the agreement, while Mexico and Australia have aimed for ratification by the year’s end.
However, all countries have kept a keen eye on the United States as free trade has come under scrutiny in its presidential elections. Whether its Trump, Clinton, or Sanders – at least in what they tell their constituency – there’s a growing consensus among presidential hopefuls that more free trade isn’t good for the United States.
While citizens in countries like Chile have taken to the streets in protest of the act, the American public has met the advancement – albeit symbolic – with a general aloofness. However, for those in decision-making positions, there is a growing unease about what to do next.
The LA Times reports that US Senate Majority Leader Mitch McConnell told reporters that he would not like to pursue the deal until after the election.
Despite its labeling as a multi-lateral trade deal, the United States still has veto power over the act as the entire trade deal depends on American ratification. As Emma Woollacott of Forbes says, “If all the signed-up countries don’t ratify it, it will still come into force after two years as long as at least six – which must between them account for at least 85% of the combined gross domestic product of the 12 – countries do. This effectively means that if the US doesn’t ratify the deal, it won’t go ahead.”
This has put increasing pressure on interested parties to put the coal under the feet of congress. Companies like Deere & Co. have pushed US congress to sign the agreement calling it “a robust U.S. trade agenda” that benefits all. Samuel Allen, chairman and CEO of the tractor company touted the trade agreement’s “transparent and consistent rules for our investments and freer trade for our products.”
The Hindu claims that the TPP has a chance of revitalizing trade on a global scale, “with worldwide trade having slowed sharply since the 2008 financial crisis and now faced with headwinds from China’s slowdown, the deal, yet to be ratified, could provide a much-need fillip to growth.”
However, international organizations like the World Bank are skeptical of the effects. In a recent report published in January of this year, the WTO admitted that while such an agreement may in fact produce the broad-based infrastructural reforms that Deere & Co. claims it will, at the same time, it may create economic imbalances. As the report observes, “competitiveness gains developed in these new blocs could potentially divert trade away from more efficient non-member exporters towards less efficient member ones… a phenomenon called the ‘trade diversion’ effect.”
A key area that the TPP will obviously affect is in the creation of increasingly complex supply-chains. As the report observes “the expertise of advanced country firms – at either the marketing end of the chain, or in providing crucial production technologies at the upstream end of the chain – could contribute to the development of more complex value chains. “Conversely,” the report continues, “supply chains also create interdependencies that can accelerate the transmission of shocks.”
What is most striking however is that the United States and Mexico have the least to gain according to the World Bank. Countries like Vietnam and Malaysia will see the biggest amount of growth (10 percent and 8 percent respectively) as “both countries would benefit from lower tariffs and NTMs [Non-Tariff Measures] in large export markets and at home and from stronger positions in regional supply chains through deeper integration.” The US and Mexico would likely see smaller gains, “on the order of 0.6 percent of GDP,” because “existing barriers to their trade (which is already mostly among them) are already low for the most traded commodities.”
Effectively, the report highlights that the TPP will only deepen the international division of labor, as the United States has little to gain economically – aside from maintaining cheap manufacturing production as China’s wages increase and the necessity to move production to cheaper regions grows. The trade deal opens up possibilities to move manufacturing sites while committing new countries to international trade laws.
Among these the most contentious are protections on Intellectual Property (IP) and “investor-state dispute settlements” (ISDS). The former will create enforceable actions against individuals using pirated materials while the latter will fundamentally, according to Forbes, allow companies to “challenge individual nations’ laws on the grounds that the law are interfering with their ability to carry out their business” which may likely result in economization of sovereignty laws. The toll on democracy is unlikely to be good.
Whatever happens next, it’s clear that the fate of the global market is currently hinging on the US presidential elections. Depending on the outcome, we will have a clearer idea of whether or not the US will be able to wrangle back market hegemony through TTP implementation, securing its interests over China’s.
What should be of greater interest is the fact that the TPP is still moving forward, despite the fact that all the current presidential contenders have declared their opposition to it, due largely in part to increasing popular opposition. The key question here should be why the trade agreement is declared dead in the water.
The implications point to some primary possibilities.
The first possibility is that the bill will be pushed following the presidential election, wherein it will receive sincere opposition from the presidential victor. In such a case, both the senate and the house of representatives will push for ratification, despite executive opposition. If the trade agreement wins a majority in both houses, it will be more likely than not that the president will sign the bill given that few presidents employ executive veto powers so early into their presidential career. Doing such so early, even if there is popular goodwill behind opposing the bill, would open the newly elected president to attacks of “anti-democratic” behavior.
Furthermore, both Hilary and Trump have more reasons than not to back the bill. Hilary is clearly aligned with financial interests, and is effectively running a campaign that denies the possibility of Sander’s social democracy. Hilary has flipped on the subject of the TPP before, and given her “No We Can't” stance, her discourse leaves open the possibility that damning the trade agreement is impossible due to market necessities.
Trump, on the other hand, is thus far leading despite hostility from the Republican Establishment. He has effectively high jacked the republican grassroots apparatus (the Tea Party) and divorced it from its creators. If the Republican Party were to push the bill and Trump were to deny it, it would leave him with few allies in the party. Furthermore, Trump is winning considerable many republican votes due to his firebrand (if not racist) rhetoric. His stance - to the far right of his fellow contenders - is taking the party increasingly to the right, leaving everything to its left exposed to democrats, which makes his election less than likely. Either way, if Trump were to win, it would be more than likely that he passes the bill, under the same tried but historically proven argument that “There Is No Alternative.”
The only candidate that remains to be a wild card is Bernie Sanders. His near victory in Iowa was the closest caucus in history, while his notorious victory in the New Hampshire caucus proves that he is a serious contender for the presidential nomination. Like Trump, if Sanders were to win the presidential nomination, he would not only lack the support of the Democratic Establishment, but he would be vehemently hated by the republican majority House and Senate. Unlike Trump, however, it is very likely that Sanders would actually veto the bill. The only way Sanders would be able to handle the blow back is if he were to maintain his base and create something akin to the Tea Party but for the democratic party. In the same way that the Tea Party pushed the Republican Party to the Right, so too would such a grassroots formation on the Left. However, unlike the Tea Party, it seems unlikely that billionaires would be willing to create such an autonomous left-wing institution.
At this point, the election is really between Sanders and Hilary. It is not unheard of that a candidate is able to win through grassroots gumption (see Obama). Trump has pushed the party too far to the right to actually garner votes from a good deal of the university educated people, women, and minorities. This means that the democratic caucuses are hinging the fate not just of the United States, but directly determining the future of 11 other countries and the reconfiguration of the global market.
Sunday night, a 13-year-old girl was shot and killed
during an armed confrontation between drug traffickers and police and military
authorities in the city of Matamoros.
She was at local shopping mall along with her parents, who were scrapped
by bullets during the shootout but managed to survive. Authorities had been persecuting the
assailants across various sectors of the city for nearly six hours. Seven
criminals were killed by police, who in turn confiscated 6 assault rifles, 23
loaded cartridges, 120 boxes of ammo, bullet-proof vests, tourniquets, and six
pounds of marihuana.
The event is not only indicative of the continuous armed struggle between organized crime groups and authorities in the state of Tamaulipas but of the impressive heights that violence has escalated in Matamoros particularly. Constant police patrolling on the streets accounts to the steady activity of drug traffickers, kidnapping groups and other heavily armed criminals.
More often than not, when police and armed groups meet, violence erupts and civilian by-standers are exposed. Both public and private spaces are frequently compromised. Streets are also often barricaded and excommunicated due to both drug transportation and armed confrontations between rivaling groups.
As of February of this 2016, the state’s governor for the past five years, Egidio Torre Cantú, continues to publically deny the climate of violence and crime that currently dominates Tamaulipas. Yet: nearly 6,000 went missing – or in other words: were kidnapped or killed – in 2015. It is clear the issue will continue to persist in the coming times.
This past 20th of January, a special unit of federal and state police aided ministerial police forces in the capture of a 4-member kidnapping gang. 25-year-old Edgar Alberto Cruz and 18-year-old Jesus Emmanuel Marin, the leaders of the group, are well-known kidnappers wanted for robbery, extortion, express kidnapping and kidnapping of high-ranking businessmen in the city of Matamoros. They were found to be carrying a very large amount of cash that police confiscated.
Marin and Cruz’s gang is but one of hundreds of groups dedicated to the same criminal endeavor. Ten days prior, on the 9th of January, the State Anti-kidapping Coordination (CEA) apprehended a kidnapping group composed by Aristeo Sanchez Aguilar, Humberto Sanchez Acosta and his sister Graciela Sanchez Acosta. Just like the other kidnapping gang – and many others – underage individuals were active participants with the Sanchez Acosta. Tamaulipas is the Mexican state with the largest amount of underage criminals and murder victims.
Corruption within authorities is also persistent in Matamoros. Though some organized crime groups have made accords with various members of police authorities, armed confrontations erupt when criminals encounter law enforcement officials that are not in on the deal. Other law enforcement sectors such as prisons are also riddled with corruption. On the first of February, a penal penitentiary guard was detained while trying to enter a Matamoros penal prison with an astounding amount of cocaine, tidily organized 32 bags with 1,650 doses ready for distribution.
This event definitely sheds light on the fact that detained criminals continue to exercise some form of power even while behind bars. It is clearly not just an issue of police corruption but of continuously active organized crime groups that manage to communicate with imprisoned members and coordinate illicit business. It is also obviously related to the release of certain high-ranking members or members crucial for substantial criminal groups in Matamoros that are able to negotiate their release.
It must be mentioned again that Torre Cantu’s government term has shown that authorities in Tamaulipas are connected to individuals involved with organized crime – ex-governor Tomas Yarrington Ruvalcaba and Eugenio Hernandez Flores, for example – and money laundering. It is interesting, for instance, that upon the arrest of two individuals transporting 830kg of cocaine – nearly 2,000lbs – on the Ignacio Zaragoza highway on February 2nd, no information has been publically provided about the name or the prosecution details against the criminals.
The business sector in Tamaulipas has also expressed ample concerns about the current economic stump that is affecting the state due to the Mexican currency devaluation as well as the climate of violence. Neither are good for business and this January of 2016 was “the worst in several years”, said Ramon Gomez Narvaez, the president of the Enterprise, Commerce and Tourism Council. And though many politicians have officially invited Pope Francis to Tamaulipas since he announced a 2016 visit last year, he has not responded positively and has not formally scheduled a public appearance in the troubled state.
Needless to say, as of this month of February, it is evident than crime and violence, particularly the risk of kidnapping and the risk of getting caught in the middle of a public shootout continue steady in Tamaualipas and especially in the city of Matamoros. Authorities are yet able to curtail these issues and travel care is advised for those in the vicinity or who plan to conduct business and leisure activities in the Matamoros or its nearby areas. Upcoming municipal elections this 2016 may hold a different policy in regards to safety and crime, but it is not until new offices are taken that we will see whether or not the new government makes any necessary changes.
Joaquín Guzmán Loera, known ubiquitously as ‘El Chapo,’ is now in prison for the second time in the past year and it is no secret that it was the bungling Sean Penn who unwittingly sent El Chapo to prison. However, what Penn’s now famous interview reveals – aside from the fact that Sean Penn is indeed no journalist – is a fleeting insight into the war on drugs through the perspective of a drug kingpin.
If one is capable of gleaning through the bad writing in a paper riddled with cheap clichés – “Espinoza is the owl who flies among the falcons”, for instance – there is indeed quite a bit to uncover. The interview manages to present a piercing view through the curtained world of narcotics. In other words, what is important here is not so much who el Chapo is, but rather what el Chapo represents: the narco.
Perhaps one of the most common perceptions among the more progressive spectators is the idea that the public of the United States shares responsibility in the murders that are sweeping across the United States. An idea that Mr. Penn evidently endorses as he wistfully remarks, “are we, the American public, not indeed complicit in what we demonize? We are the consumers, and as such, we are complicit in every murder, and in every corruption of an institution’s ability to protect the quality of life for citizens of Mexico and the United States that comes as a result of our insatiable appetite for illicit narcotics.”
Yet, viewing the narco through this lens is limiting because it is merely two-dimensional: it is equivalent to seeing things strictly through the frame of demand that in turn generates supply. Though it does illuminate more adequately the social question of the narco well beyond the classic rhetoric of “narcos are evil and poisoning our youth,” it indeed fails to genuinely capture the complex reality of the narco and what it truly represents.
It follows that the solution to such a dichotomy can only entail either ending demand or supply: neither approaches have worked thus far, despite an endless “war on drugs” and the equally endless loss of government funds trying to fight drug trafficking. Hence, the Chapo case and drug trafficking in general desperately demands a different kind of analysis.
El Chapo is a Product of the Times
Let’s begin with El Chapo. In the interview, he lays bare precisely the reason why he got involved in drug trafficking: because he came from a very poor family and that in the area of La Tuna, Sinaloa – a predominantly rural state in Northern Mexico – “up until today, there are no job opportunities. The only way to have money to buy food, to survive, is to grow poppy, marijuana. And at that age, I began to grow it, to cultivate it and sell it.”
Other sources claim that el Chapo’s father had been involved in the cultivation of drugs as well, but let us be clear: the cultivation of currently illicit narcotics has always existed. Marijuana was and remains a common herbal remedy for a variety of ailments, including arthritis. The same goes with poppy.
These drugs produced in Sinaloa – as well as other states – were sold through local or regional markets that hardly resembled what they do today. Back then it was a matter of subsistence farming: of producing only that which it is necessary to survive. Production and distribution networks faced considerable spatial challenges in terms of communication, transportation and roads that did not begin to be overcome until demand increased in the 1960s and 1970s due to consumers in the United States.
But if marijuana and heroin production have always existed, the question becomes why did they suddenly drive innovations in production and distribution in these particular decades? The answer is in part a cultural one since it cannot be denied that marijuana and heroin became a cultural icon of sorts for many disillusioned people during those periods.
Of course, disillusionment, poverty, and lack of identity have always been markers of society, so much so that a demand was always there. Just like el Chapo said: “Well, drug trafficking is already part of a culture that originated from the ancestors. And not only in Mexico. This is worldwide.”
What changes in the 1960s and 1970s, and perhaps especially the 1980s, however, are the necessary technological revolutions that could significantly expand supply. In other words, innovations in the unavoidable obstacles of infrastructure, transportation, and communication suddenly made it possible for individuals to expand the market.
Hence, the creation of freeway systems across Mexico and the United States, which were products of the post-war period, literally paved the necessary infrastructure to beat special challenges. This was coupled by revolutions in transportation like the growth of the automobile industry – and the diminishing cost of auto manufacturing that comes with mass consumption –, which made smuggling drugs over the border easier, faster, and more predictable. Innovations in communication such as telephones, satellite phones, and later cellular networks, on the other hand, gave the necessary material structures to further develop sophistication.
In short, none of this would have been possible in any previous period. Even if people wanted to use marijuana and heroin, it would have been far too difficult and costly to transport them from areas where they were grown to the potential market openings. Not to mention, of course, the incredible stigma attached to marijuana and heroin.
With that said, the combination of the material revolutions that overcame problems of space and time with the ideological breakdown of the counter-culture years that re-framed drug usage definitely allowed for a revolution in drug production in Mexico.
El Chapo is a Neoliberal Capitalist
It must be noted that el Chapo based his rise to power as part of the Medellin cartel’s expansion, which in turn can be explained through the 1980’s cocaine trend in drug consumption.
Overtime, due to the focused assaults on drug cartels in Colombia – and especially due to the increasing importance of Mexican cartels as middlemen – the Colombian cartels were eclipsed by cartels like the one run by el Chapo. He secured his future by not only making Colombian cartels dependent on Mexican networks, but due to the previously mentioned transportation and communication innovations that facilitated market expansion.
Yet, the years that saw el Chapo rise were anchored in a changing political and economic atmosphere also particular to the 1980s. It was that decade that saw what has been recognized as a neoliberal project come to fruition. Globalization was set into motion as national Keynesian economies were uprooted and replaced with export-heavy, supply-side economies.
This economic trend – whether or not it was an expected outcome – indirectly aided narco drug traffickers in two ways: 1) increased exportations to the United States allowed for a proliferation of potential avenues to export illegal narcotics, and 2) the massive disenfranchisement that followed the hollowing of the Mexican welfare-state (as problematic and short sighted as it was) created the necessary conditions to expand production.
By denying social services like access to and funding for efficient public education, health services and retirement – amongst others – as well as providing meager, low-wage work, the Mexican state and economy failed to provide apt means of life for a large portion of the population. Both the explosion of migration to the United States and the boom of drug production are evidence that legal avenues for social advancement and mobility are failing in Mexico. They suggest that illegal work is far more successful than legal work in satisfying basic needs and desires of a large number of people.
And though drug trafficking, just like any other enterprise or industry, entails slim chances of getting rich fast, the spectacle that the narcos have constructed is far more representative. El Chapo, of humble origins, grew to become one of the richest people in the world but he managed to do so in a much different way than Carlos Slim or the Hank family of Mexico, who became rich through networks of power.
El Chapo is simply the “common man” who found riches. And yet Chapo also is quite simply the enterprising capitalist who “pulled himself up by his bootstraps”, despite the fact that these boots were placed on the backs of many dead and less fortunate. Just like el Chapo says, “drug trafficking does not depend on just one person. It depends on a lot of people.”
In short, el Chapo feeds off the social exclusion and abandonment that both increased privatization and social austerity measures entail. In a world that tends to benefit people that consume goods, the socially marginalized – which are the majority of Mexicans – find an alternative possibility in the figure of the narco. The narco is a working-class reaction of sorts to the repercussions of a neoliberal economic model. It could be seen nearly as spontaneous as a union formation in the days of laisse faire capitalism, but on the other side of the spectrum. It is a kind of negative mirror of the system itself and its ultimate obstacle a government that forbids people the right to work.
El Chapo is a Feudalist
To make matters worst, despite the entrepreneurialism of el Chapo, he is also heavily embedded with feudal characteristics. Even Sean Penn said that el Chapo is a “Robin Hood-like figure who provided much-needed services in the Sinaloa mountains, funding everything from food and roads to medical relief.” Such notion – coming closely to a kind of narco-populism – is a recipe of approval, especially in times when the State can say, under neoliberal discourse, that private initiatives should take up the cause of providing for individuals. In such a context, el Chapo becomes a sort of white knight who saves the people of Mexico from an illegitimate State. And the feudal similarities run deeper.
As Penn continues, “unlike many of his counterparts who engage in gratuitous kidnapping, El Chapo is a businessman first, and only resorts to violence when he deems it advantageous to himself or his business interests. It was on the strength of the Sinaloa cartel’s seemingly more calculated strategies… that Sinaloa had become dominant among Mexico’s criminal syndicates. .”
Feudalism as a political structure was the king’s God-given right to allow life or to prescribe death. Under such patriarchal structures, the king allowed men to run their household in exchange for protection. For such protection, the king was given part of the peasant’s agricultural production and in return, he gave the right to each father to administer his household as he saw fit. What’s more, if someone in his house were to commit an error – for example, a daughter losing her virginity before marriage, his wife sleeping with another male, his son marrying the wrong female – it was the job of the father to discipline his family in the name of the harmony of the kingdom. This is why cities like Lubeck in Germany hold above their city gates signs that read “Peace in the home is peace in the city.”
Similarly, the management of el Chapo’s enterprise is one that resembles feudal structures. Cells operate in a way that resembles feudal households, and are also principally male dominated. Everything is done in the name of el Chapo and el Chapo himself grants the right to life or the order of death. Power stems through him and it is predicated on the ability and the legitimacy to wield violence. Physical violence becomes the means to ensure continuity and is the means of regulation. In this, el Chapo was wrong when he reduced violence as an individual product of people who “already have grown up with problems and there is some envy and they have information against someone else.” Rather, violence is systemic to the narco drug trafficking order.
What is El Chapo?
El Chapo could not have existed in any previous moment of history and is thus the product of our recent times. Economic reconfiguration (in the form of neoliberalism/globalization) definitely gave way to the necessary social developments that allowed his organization to grow: increased transnational trade networks and precarious citizens. Thus, el Chapo and the narco are a spontaneous result, but one that reflects values similar to those of feudalism. Through such analysis, we see that war on drugs is far more complex than supply and demand: it is an embedded social phenomenon that is here to stay and that will require much more than a costly and unlimited “war on drugs”.
According to the National Register of Missing Persons (RNPED), from 2007-2015, nation-wide, nearly 28,000 people are officially missing in Mexico, or in other words: dead, kidnapped or enslaved. At least 6,000 of those bodies - and thousand others that remain officially unreported - are the result of crime, violence and corruption in the state of Tamaulipas. Several other states in Northern Mexico like Nuevo León and Baja California also rank high. At least 2,500 missing are of unknown nationality, meaning both foreigners and nationals alike.
Currently, armed confrontations between rival drug cartels - along with dead and injured bystanders - keep going strong. Kidnappings, extortions and assassinations are steady. Most alarmingly, however, is the fact that public government officials hold a close-knit relationship not just with members of organized crime but also with individuals known to be involved with money laundering.
Many have noted that under Egidio Torre Cantú’s term - the state’s governor since 2011 - Tamaulipas social climate resembles a war-zone. In May of 2015, there was no doubt that such a comparison is not unreasonable at all: two explosive artifacts were indeed detonated outside the National Electoral Institute (INE) and the Municipal Police headquarters of Matamoros respectively. The event was reminiscent of 2012’s car bomb that killed several police officers just outside the mayor’s office in Nuevo Laredo.
In Reynosa, just last week, armed federal police forces engaged in a public confrontation against an unidentified group of armed criminals - in all likeliness belonging to drug cartels - that attacked a PGR headquarters by ramming a bulletproof vehicle against its garage doors and opening fire at police officers. The event escalated in a high-speed persecution - and shootout - across several areas of the city, leaving a toll of dead and wounded. It is not unreasonable to believe it was retaliation for a deal gone wrong between drug dealers and police forces.
It is definitely an ongoing problem. Many homicides in the state indeed come with the struggle for drug trade and territory control. We must remember that notwithstanding continued military presence and the advent of the Tamaulipas Coordination Group (GTC) - a specialized unit made of both state and federal security and armed forces - since 2014, authorities have been unable to stabilize, much less eradicate violence and the generalized sense of insecurity in several sectors of the state, as we’ve previously reported.
In fact, days after the PGR attack that took place in Reynosa, in the neighbor city of Matamoros, federal police forces seized - in different spots of the city - three vehicles loaded with weapons. Seven assault rifles, 30 magazines, and nearly ten thousand rounds. Interestingly enough - and such is not clear in the police reports - the drivers got away by foot.
Their escape cannot be taken entirely as a surprise: it actually speaks loudly about currently existing accords between organized crime and police authorities. It must be said: along with homicides and disappearances, corruption in the police force is another nation-wide problem that has recently become very visible, particularly in the Northern states of Mexico. Baja California is another example of both: 1,300 missing in 2015 as well as the assassination of several police officers in the beginning of December.
As we’ve mentioned, in Tamaulipas, however, part of the issue can be explained through the continued - and continuously re-shifting - struggle for power and territorial control between rival drug groups Los Zetas and the Gulf Cartel. Their confrontations - a kind of urban war - have not ceased to leave a trail of bodies in their midst.
Early December, for instance, several newspapers received information about the kidnapping and murder of Rogelio Rolando González - known as “Kelin” or “Z-2”, who is one of the original founding members of drug cartel and organized crime group Los Zetas. The Gulf Cartel is allegedly responsible for the incident.
The problem arose when González - shortly after his prison release - set out to dispute control over the Matamoros area and threatened to dispose rival Gulf Cartel leader Odon Azua Cruces, known as “El Gordo Cereza”. The latter had González - along with wife and family - kidnapped and killed. Though the bodies haven’t been found, they simply add on to the vast list - and counting - of disappeared bodies in the Mexican territory. In 2015, 5,700 bodies in Tamaulipas alone have been officially reported missing.
Azua Cruces has come to be known precisely for kidnapping and ransom. His group is but one of example of the 300% increase in kidnappings over the past three years in the state of Tamaulipas. 694% higher than in the rest of Mexico. In January and February of 2015: 40 reported kidnappings. The actual number is unknown since a considerably large number are never reported to authorities, for fear of repercussions and because of law enforcement’s notoriety for being unable to attend kidnappings - or making the situation worst.
Part of their inability to attend the issue can be explained as a lack of interest by part of authorities. Actually, the Specialized Attorney’s Office for the Search of Disappeared Persons declared they only count with 120 public servants that currently work in the search of missing bodies.
In fact, an ex municipal president of Matamoros, Alfonso Sánchez Garza, was nearly kidnapped in August of this year. His lack of trust in authorities to attend the problem was such that after managing to escape from his assailants - who attempted to stop his vehicle in the middle of the road - he simply went home and made a public call through social media about the incident. Such a maneuver has become considerably safer than an official report.
In May of 2015, 47 hostages - 18 foreigners and 29 Mexican nationals - were found in a safe house after an anonymous call supposedly alerted authorities. Last month, in November, 19 kidnappers were apprehended by authorities in the city of Matamoros. Along with two hostages, weapons and drugs were found.
Two of the kidnappers were actually underage. Again, it should be noted that Tamaulipas is the state with a larger amount of underage criminal activity: authorities arrest children for carrying guns, assault rifles and grenades more so than any other place in Mexico. Over 200 children were sanctioned in 2014. Over 30% of disappearances nation-wide indeed account for underage persons from Guerrero and Tamaulipas.
Moreover, streets and roads are increasingly a real danger to travel through. Francisco Rivas, spokesman or the National Citizen Observatory, has accurately explained that traveling the roads of Tamaulipas may very well result in “the entire vehicle” being seized. In the Matamoros-Reynosa highway particularly, robberies and kidnappings have increased since September.
Another recurring issue in the city of Reynosa, in fact, is the theft of gasoline. On the 15th of this month, 3 members of a group were arrested in the vicinity. They were seized along with 65 grams of heroine and 7 thousand dollars in cash. 157 thousand liters of gasoline were also taken from the group. Such events are yet another symptom of crime and corruption in the vicinity.
Yet, Governor Torre Cantú continues to announce the advent of police groups with the declared aim of bettering the situation while simultaneously undermining the issues by saying the wave of violence is merely a “rumor”. But what is there to be done of the daily kidnappings, shootouts, murders, and disappearances?
The relationship between drug cartels and the state’s government is not just known through Torre Cantú’s current term but it has been known through his predecessors’ terms: Tomás Yarrington Ruvalcaba and Eugenio Hernández Flores, for instance, both who have been known for previously held accords and money laundering activities with organized crime.
For instance, the U.S. government is currently investigating Hernández Flores - with whom Torre Cantú holds a public, open relationship - for money laundering and other related offenses. Over 30 million dollars and several assets are in dispute.
From 2005-2010 he collaborated with drug cartels and contributed to laundering their assets. Torre Cantú - during his government’s last State of the Union - expressed that he “really appreciated the company of our state’s ex Governors” Cavazos Lema and Hernández Flores, who were sitting in the audience.
And even though merely two days ago authorities managed to capture regional narco leader Leonel Hernández Bautista – along with weapons, ammo and drugs – in the Valle Hermoso area within Matamoros, both the governor and police forces alike have been unable to curtail criminal activity coming from that particular area in Tamaulipas.
It is undoubtedly one of the most heavily impacted by organized crime. The recent attack on the PGR headquarters, the weapons and ammunition recently seized, the territorial dispute between Los Zetas and the Gulf Cartel, as well as the alarming amount of disappeared people in the region make Matamoros one of the most dangerous and unstable vicinities for both nationals and foreigners alike. The recent kidnapping bust confirms Matamoros’ reputation as one of the hottest spots in the state – and the nation – for kidnapping and extortion.
Things have escalated to such degree that even the maquiladora industry may be stumped in Matamoros. Gerardo Rodríguez Puente from the Mexican Institute of Social Security declared that workers in neighbor city Reynosa are nearly double than those in Matamoros. The necessity to disrupt the climate of violence and corruption in the city is undeniable: something must be done in order to attain greater social security while also stimulating the trust of companies interested in coming in – or continuing - to invest in Matamoros.
Authorities, civil society and newspapers alike have all expressed serious concern upon the deaths of 3 policemen in the city of Tijuana that took place during the concluding week of November and the beginning of December. They bring the number of killed policemen in the city to 6 during this year. It is an alarming way to finish this 2015 as well an invitation to reflect upon what’s at stake in the coming times.
Public shootouts between authorities and organized crime over disputes of narcotic merchandise, dead policemen, bloody corpses laid out on the street, basically: it’s a crime scene much too reminiscent of the notorious wave of violence that dominated public life and shut down business in the northernmost border city of Mexico during the 2008-2012 lapse.
In fact, Tijuana’s ex-police chief from that period, Julián Leyzaola released a video - through local newspaper agencies - titled A message for Tijuanenses, in which he expresses concern for the murdered policemen and warns authorities and civil society about a return to the insecure and volatile times recently overcome.
Leyzaola made another interesting point made well-worth considering: “when an off-duty policeman is attacked it entails a personal issue, mostly related to things he did or got involved with…when violence is executed against an active policeman, the attack is against the corporation”.
Yet, when attacks - both against off-duty policemen as well as the Tijuana police as an institution - become a trend - as it did in these three recent murders -, there is no question that it’s worth investigating because, in all likelihood they are probably related. Though the cases are not necessarily intertwined - after all, the attackers are all different individuals - they are undoubtedly connected in that they speak loudly about police involvement with organized crime.
Indeed, that is an issue that transcends the personal issue related to a single member of the institution: it is also telling of a general problem of corruption - involving many other actors - in various sectors - and areas of city - within the Tijuana police department.
Motorcycle officer José Iván Hernández Contreras, for instance, who was shot to death by four individuals outside his home - while off-duty - was actually actively involved, presumably, with narcos from the Arellano Felix Cartel (CAF) currently operating in Tijuana.
In the beginning of November, Hernández Contreras, along with seven others - 6 of them police officers - breached a CAF safe house and stole a white van filled “unknown” content, meaning: a large amount of drug merchandise. Because everything was filmed, members of the faction - whose current leader is “El piloto” or “the pilot” - sent authorities the surveillance video in which Hernández Contreras and other officers are seen during the robbery.
Precisely because it was not an isolated incident, drug dealers simply requested the merchandise to be returned but neither authorities nor police officers responded or complied. At the time, before the video information had been released, several police authorities declared on the matter, speculating on Hernández Contreras’ “possible involvement with organized crime”.
But it wasn’t just a possibility; it was an actuality that authorities were well aware of. Hernández Contreras, in fact, for years had been actively involved with drug dealers since the time of Eduardo García Simental - “el Teo” - and was presumably well-acquainted with Filiberto Parra Ramos, “La perra”. After becoming a police officer, in all likelihood, he continued to have a relationship with cartel members, hence why his death is a merely a hiccup or communication breakdown, a consequence of an unfortunate decision.
Yet this becomes not just an issue of the authorities’ lack of interest in reviewing and properly running background checks on police officers but of currently existing accords - an illegal business contract of sorts - between organized crime and police authorities.
The deaths of officers Victor Manuel Insunza and his patrol partner Janeth Cocolam Almeda, for instance, are telling of such agreements between certain police sectors - commonly organized in neighborhoods or zones - and corresponding active criminals that work in such vicinities.
They were basically killed because of a misunderstanding, so to speak. After stopping a suspicious black sedan - in Mariano Matamoros, a seemingly unrelated sector of the city - the officers were shot to death after they found the two suspects had an assault rifle in their vehicle.
The assailants were the Castro Aguayo brothers - two firearm traffickers, active in the area - who for over a year had been retrieving, transporting and selling illegal firearms for the Cartel de Jalisco Nueva Generación (CJNG), from the U.S. through Mexico to Guadalajara.
They were well-known in the neighborhood: members of the community declared they were often seen in company of police officers and that it was obvious that local authorities were aware of their activities. In fact, they had been recently arrested and later released - along with the confiscated weapons -, as described by neighbors who noted the incident.
That explains why immediately after killing officers Insunza and Cocolam, the Castro Aguayo brothers went back home, where police authorities retrieved them. They knew exactly where to find them precisely because they had a previous arrangement - a permit to operate, basically -.
The problem was that Insunza and Cocolam were not in on the deal - or had refused to participate - so when they stopped the black sedan they did not what was at stake. Similarly, the assailants of José Iván Hernández Contreras - who shot him nearly a block away from the police station - were never apprehended.
Initial reports note that a vehicle matching the one of Hernández Contreras’ shooters was found along with an individual who operated it, yet nor the vehicle nor the man were brought in to the station. Again, that could be indicative of either a previous arrangement or of the reluctance of other police officers to get involved with something they’d rather not.
Fidel Armas García, on the other hand, - a policeman classified as a commercial officer - was killed in what was presumably an armed robbery to a private company vehicle. He worked for a dairy processing company and was on route to deliver two envelopes with approximately two-thousand dollars cash each when he was approached by attackers, taken to the back of the van and shot. Interestingly enough, only one of the envelopes was taken, along with company documents.
Another interesting fact is that Armas García actually worked as a bodyguard for Jorge Hank Rhon during the 8 years he was the Mayor of Tijuana. Needless to say, the possible connections to organized crime there are definitely vast. His murder is indicative, again, of a connection between police authorities and organized crime.
Though after the wave of violence that for Tijuana began in 2008 – and coincided with the presidency of Felipe Calderon and his war on drugs – police authorities presumably installed a trust and control evaluation mechanism meant to prevent officers to participate in corrupt activities, it is evident that this system has not rendered the necessary results.
Though it is hard to gauge to what degree corruption in the police department today relates to corruption in 2008, it is undeniable that it is still a relevant issue, perhaps now more so than before. According to government data, only 16.5% of police officers nation-wide has actually been subjected to an evaluation. We have to remember, though, that corruption runs not just locally but statewide and in federal terms.
What’s at stake for the coming months? In trying to answer that question we must consider that previous drug cartels have been reconfigured, along with their territories. New factions entail new alliances, new areas, new modes of operation and renewed as well as severed relationships with police authorities and government representatives.
It is also quite interesting that General Augusto Moisés García Ochoa, commander of Baja California’s second division Army, announced last week that over 100 army officials would be working with police authorities in the coming months.
Though he claims this is a move that will “benefit the safety and structure of Tijuana”, it is also undeniable that it is a historical marker for the volatile times recently past, when public life as well as private enterprise became directly affected by the violent confrontations and alliance breaches and agreements between police and military authorities along with competing organized crime groups. The three Tijuana police officers recently murdered necessarily reminds us of persisting issues of corruption and organized crime, as well as the possibility of periods when that climate gets out of hand and becomes a threat to the relative social stability the city manages to maintain.
At a sold-out conference in Berlin regarding the Eurocrisis and the lack of an alternative to back-breaking austerity (a term that implies massive sweeps of privatization in response to irresponsible spending) Yanis Varoufakis gave one important insight: “national politics are kapput, but politics are alive and well.” Throughout the Global North, we are witnessing the erosion of the political middle. Societies are increasingly becoming politically polarized as we reap the benefits of economic polarization. Thirty years of globalization has resulted in unheard of profit gains and equally unheard of dispossession. This has created a feeling among the masses that their voices simply do not matter. In the Left this manifested in two processes: 1) the formation of a number of autonomous (in that they refuse to participate in officially sanctioned political organisms) political currents, and 2) the formation of a number of revamped or new political parties that have increasingly developed aggressive stances. In the Right, this political crisis has developed along two lines: 1) the development of radical wings within established political parties, and 2) the development of a discourse of independence that supports the establishment of new radical right-wing political parties. In either case, what we are currently witnessing is quite similar to the political crisis that developed in the inter-war period of last century – something that we know had incredibly dangerous consequences. What is lost altogether is a faith in the institutions that uphold the middle, as people are attracted to ideas being proclaimed at either end of the spectrum. Meanwhile, Latin America, though connected economically, suffers its own political turmoil. However, whatever happens in the Global North, will eventually affect the Global South.
The Crisis of the Left
Since the financial crisis, the Left has largely had a hard time finding its political footing. Years of assault brought on by neoliberalism and globalization, the failure of 20th century socialism, and a fear of reproducing bad practices that in turn developed into political paralysis, culminated in a weakened position. For years, the Left could hardly articulate, as the Right took back (except in Nordic regions and to some extent Germany) progressive advances that were made from the 1940s to the early years of the 1970s. So when the Great Recession happened in 2007-2008, there was hardly a Left to speak of. Social democratic parties (and even moderately democratic parties like that of the United States) gave in to the will of banks as public resources (taxes) were used to bailout private entities (banks), while no one went to jail. The reasons for this crisis were greatly similar to those of the Great Depression, but what marks the difference this time around is that the Left hardly had any institutional hold going into the Great Recession. Backs then labor unions were growing by the day, labor parties were everywhere, strikes waves struck across countries, and the Communists had taken Russia and spread funding and support around the globe. But when the Great Recession happened, there was hardly any such position for the Left.
However, the Great Recession provided a life saving shock to the Left. What seemed a decrepit and dying dinosaur began to rise like what appeared to be a Phoenix. Occupy burst into the scene across the United States and Great Britain, Blockupy spread across Europe, the indignados huddled in Madrid, jobless students rallied in Cairo, students struck across Chile, protests swarm across Mexico, factory workers struck across China, and students seemingly took Hong Kong. All of this can be classified as an experimental phase in Left politics that began to develop in the early 2000s but manifested in these events at roughly the same time, beginning in 2010. The results were mixed: both Occupy and Blockupy hardly translated into any political achievement other than forcing a rhetorical change wherein politicians acknowledged inequality. The indignados were retreated from Plaza Mayor. The Egyptian revolution produced only a change of government-style, one in which the loss of authoritarianism has given way to a rise of religious dogma. Many of the students of Chile put their faith in the political institutions, only to see change in the form of massive loopholes. Mexico has only gotten worse. While the workers of China went back to work (though with higher wages), and the students of Hong Kong went back to school. The experiment in alternative and autonomous forms of mobilization seemed to demonstrate a political failure.
However, what seemed as a failure, then proved to be a transformation: Left political parties have refashioned themselves according to the desires and politics of the autonomous currents that developed in 2010. The Greek Syriza is again the best example as it was even capable of positioning itself at the seat of power, while sections of the Spanish Left developed Podemos. Both parties held to a new combination of grassroots organizing merged into party organization, capable of simultaneously developing dissent and unity, while being comprised of multiple currents under the same political umbrella. Furthermore, these parties were either marginal or non-existent in 2010, and have since radically transformed the political landscape. Meanwhile in the UK, the Labor Party has elected Jeremy Corbyn as its new party leader, and thus returned to an aggressive anti-capitalist stance that had been missing since the days of Tony Blair. In the United States, where the political center is far more to the right than any other Western country, the rising burn of Bernie Sanders signals a new current within the democratic party. The very existence of Bernie Sanders’ rising star has forced Hilary Clinton to move increasingly to the Left (signaled best by her newfound disdain of the TPP). The current configuration in the institutional Left spectrum of the United States now has Hilary Clinton seated in the center (instead of the Right), and Sanders seated at a moderately social democratic position to her left.
In all cases, we see an increasingly vacant center that appeals less and less to any one, as people recognize the necessity of drastic change. In Europe, the old social democratic parties are hardly able to differentiate themselves from the center or the right, and are thus losing support by the droves.
Better the Devil You Know, Right?
The radical right is normally the historical victor of any moment of crisis. Following moments of revolutionary upsurge, people tend to fear that they’ll lose what they have. The problem of the Left is that its alternatives are simply unappealing (for a number of reasons) and people are unwilling to take the gamble. Normally, that creates a situation where many say better the devil that you know than the one you don’t. Except in a political situation where the middle is evaporating, it’s the radical right that promises a return to the “good ol’ days.” Hitler promised to restore a German giant of Nordic proportions while Mussolini promised to restore the glory of Rome. Today we see similar promises on the hats of Trump supporters (“Make America Great Again”), in the rallies of the Golden Dawn, and in the AfD (Alternative for Deutschland) meetings. Meanwhile, a number of para-political organizations have developed that increasingly commit acts of terror against both the Left and the foreigners of their countries. The center, to these masses, appears equally empty as to the Left but for different reasons. However, their retreat from the center unveils a dangerous political circumstance, given the alternatives being proposed.
Within the Right of the United States, the birth of the Tea Party was largely scoffed at. It was hardly taken seriously by media outlets and there was much confusion as to whether the Tea Party wanted to break from the Republican Party or whether it wanted to reform it. What history has shown is that the Tea Party proved to be an effective mechanism of re-orienting the right-wing establishment, from within and without. It operates as a semi-autonomous organ of the Republican Party. Established by the Koch brothers, the Tea Party provided a grassroots framework to right-wing agitation (one that the Koch brothers can no longer control, seen best by the failure of their candidate, Scott Walker). It has since become a hotbed where racism, sexism, and defense of the common man (typically imagined as a white, heterosexual, Christian male) prevail. Old guards of the GOP have since been dispelled in the growing fervor of the Tea Party, while new ones (like Trump and Carson) have risen to the fore.
Elsewhere in Europe, new political parties have formed that reflects the desires of the Tea Party. The massive migration produced by the concentration of capital in specific city centers and the wars of the Middle East and Africa have provided the historical scapegoat that radical right-wing fanaticism necessitates. In the times of Hitler the public enemy was the Communist and the Jews. Today it is both the anarchists and the Muslim. Across Germany, autonomous, radical right-wing organizations have risen and placed their support in party apparatuses such as the AfD, leaving Merkel increasingly distant from her right-wing base. Though the AfD is still a small party, it bears similarities to the Golden Dawn of Greece. Five years ago the Golden Dawn was hardly worth note, but in September of this year, it won the third highest amount of votes. This, as the Independent Greeks (another new right-wing party) continues to form a coalition with Syriza. The AfD was established by old right-wing industrialists as well as academics (representing the political opportunity of a discontent elite) and gave voice to an unrepresented Right. But since its creation, its party founders find themselves increasingly alien to the base they spurred. A movement on the street, founded under the name Patriotic Europeans against the Islamization of Europe (Pegida) found its political home in the ranks of the AfD. The anti-Europe discourse in combination with a neo-conservative, homophobic and xenophobic value system made the AfD the perfect political arm of the movement. This relationship is best typified by a recent response from Hans-Olaf Henkel, a wealthy industrial who helped found the party and has since stepped away from it, when he admitted in an interview that he and his comrades have created a monster: “Today the Afd is a lighter version of the NPD [the National Democratic Party of Germany, the most radical-right wing party whose name bears an intentional similarity to the National Socialist Party] – maybe they are even identical.” Eastern Germany (which was abandoned by both the State and the Left following the fall of the wall) has become a hotbed for right-wing radicalization, as right-wing organizers moved into the East and began mobilizing constituencies. Today, they are reaping the fruit of their efforts. Like the Tea Party, it was founded as a political maneuver by specific elites, but has since grown out of control.
Meanwhile, the United Kingdom’s Independent Party (UKIP) has been described as the most important new party in Great Britain in a generation. It has been the only party on the island that was able to change the power relations in the parliament in about a century. The rise of the Social Democratic Party (SDP) in the early 1980s did follow a different dynamic since the founding of the party had been the result of internal conflicts in the Labor Party, hence was not a creation of a new party, outside of Westminster.
UKIP was founded in 1993 with a focus on constitutional issues opposing the further development of the European Union as a political project. The party was meaningless for quite some time and barely reached beyond a small circle of academics (parallel to the German AfD, the party was founded by a professor). The single issue ‘EU’ was not able to mobilize needed support in national elections.
In 2011 a change became visible: their poll ratings went up fast and in 2013 local elections they gained massive victories. Their grassroots base had grown to over 30,000 members while the established parties had a strong decline in participation. Under their new leader, Nigel Farage, the party aimed for seats in the British parliament (instead of the European which were the only ones reachable with their single issue politics in the decade before).
Parallel to the Tea Party in the US, most of Farages speeches do not offer any political strategy or solution but rage against “established politicians.” Similar to the situation in Germany – the rise of UKIP comes together with the rise of a movement that claims to fight against the “islamization” of the West. What Pegida is for the AfD is the English Defense League for UKIP. Their nationalist politics are reflected on “the street” by organizations that are openly xenophobic, racist and sexist, covering their hateful speech only under a thin layer of desired “cultural identity.” Even though the UKIP still opposes the Britsh participation in the European Union their argumentation is now formed by the hateful claims brought to the streets by the English Defense League.
What they all share is a call for independence in a globalized era. But this independence is rooted in an intolerant nationalism devoid of any historical or factual reasoning. The answer to the worlds problems here are simple: we should look out for ourselves, we don’t owe anything to anyone, and since we started working together, things have only gotten worse. Throughout Germany the radical-right marches through the streets singing praise for the Fatherland. It some cities it is not tolerated (like Berlin and Hamburg), but in others people see their manifestations as a mere nuisance. The responses to the brown shirts of Germany in the 1930s were incredibly similar.
And Latin America?
Likewise in Latin America, the political middle has largely eroded. As the Greeks learned, the problem here is that their political survival is so dependent on the international market that it’s hard to carry out any program without the approval of international forces. For those countries that made up the famed Pink Tide, social advances have been made, but remain largely blunted by the wall of international pressure. This has resulted not only in a disillusionment of the Left, but a disillusionment of politics at large, leaving little to say of democracy.
In Mexico, hardly anyone has faith in the political apparatus. Voter turnout continues to be dismal, as 63 percent of the population voted in the presidential elections while only 47 percent voted in the mid-term elections of this year. This marks a downward spiral of faith in the political institutions. However, what makes Mexico particular from all of the above situations is that despite electoral politics, Mexico suffers from civil war-like conditions. The recent case of Ayotzinapa was telling not only in the impunity that faces criminals that commit crimes against humanity, but it showed that political dissidence is met with murder by extra-legal forces. Hence, before Mexico can develop politically, it must first solve the narco problem. Unfortunately, this would require the legalization of drugs in Mexico and the United States, as well as the illegalization of weapon sales in the United States, as most of the weapons procured in Mexico’s war on drugs come from the United States. Once again, Varoufakis’ observation of the limits of national politics continues to ring true.
The essential problem here is that Latin America is in such a dependent position on the Global North, that any political solution here seems unlikely until there is a political solution in the North. And in the North, things appear to be turning sour.
What is to be Done?
What all of this makes clear is that the world is currently undergoing an incredible geopolitical shift. The two most believable courses are both found within the right-wing of the spectrum of possibilities: either we have massive, integrated markets that will continue to produce massive inequality (as in our analysis of the TPP and TTIP), or nationalism will prevail. Historically, with the latter comes war. As Slavoj Zizek reminds us: “In China, so they say, if you really hate someone, the curse to fling at them is: 'May you live in interesting times!’ Historically, the 'interesting times’ have been periods of unrest, war and struggles for power in which millions of innocents suffered the consequences.
Let us hope then that this analysis is incorrect. But as far as the eye can see, interesting times are coming.
Nearly a decade ago, 63 miners died in the northern Mexican state of Coahuila after a methane explosion in a coal mine left them trapped underground. Police authorities, firefighters and the mine’s owners and administrators not only failed, notoriously, in the rescue and recovery effort, but in providing a feasible explanation as to why the event took place. Both the governor of Coahuila, and the Pasta de Concha’s mine owners, Grupo Mexcio - the largest mining corporation in Mexico to date -, issued varying statements on the matter. Yet, nobody successfully addressed reports from actual miners, their families and the families of those who, to this date, remain trapped underground. It became apparent, then, that the safety conditions of the mine were poor; in fact, an unaddressed gas leak had been bothering dozens of workers shortly before the accident took place.
Indeed, the workers of Pasta de Conchos, at that point, had gone on strike against Grupo Mexico over a dozen times precisely because the company had failed to address concerning security and health issues for the workers associated with the coal mine. The National Union of Mine and Metal Workers of the Mexican Republic, led by Napoleón Gómez Urrutia, according to Grupo Mexico, however, signed an agreement, interestingly enough, two weeks prior to the accident, assuring their recognition that the mine’s working conditions were safe. Both the Miners’ Union and González Urrutia, naturally, have failed to address Grupo Mexico’s claim.
Mining, historically, as it is well known, has always been and continues to be a dangerous endeavor. Yet, Napoleón González Urrutia, in fact, issued a series of public statements - including two articles for Mexican newspaper La Jornada - in which he speaks out against Grupo Mexico and Mexico’s then-president Vicente Fox and the Partido de Accion Nacional, PAN for “staging the scenography of a rescue effort for five days” and for committing “industrial homicide” in what he claims is a “historical embarrassment” for Mexico. He speaks and writes against “impunity, corrupt politicians, journalists” and “sold-out workers” and demands a public explanation and clarification for the families of the deceased miners and even draws a provocative contrast between the Pasta de Conchos incident to the successful rescue effort of the 33 miners in Chile that were brought back onto the surface alive, capturing prominent international attention.
Ironically enough - and to González Urrutia’s dismay -, however, it is precisely during the Pasta de Conchos explosion incident that a series of individual investigations against him culminated. Dozens of accusations were brought to public and national attention: it was exactly in 2006, indeed, that Interpol in fact issued a red flag against the Mexican union leader, which lasted for six years, until 2012, when his lawyer solicited an appeal for removal in Lyon, France. Up until that date, at least three arrest warrants remained active against González Urrutia.
The principal - and perhaps the most serious - case against González Urrutia involves the disappearance of at least 55 million dollars that in 2005 were deposited into his personal bank account, 0146591035, Bancomer, S.A. The funds were later transferred to several domestic and international accounts held by González Urrutia and his wife Oralia Casso Valdés, his sons Alejandro and Ernesto Gómez Castro and his brother-in-law Humberto Felipe de Jesús Torres. Miners’ Union secretary and treasurer, Héctor Felix Estrella and Juan Linares Montúfar, amongst others, were likewise investigated for potential involvement with the monetary scam.
It goes like this: in 1988, the Miners’ Union sold a hefty amount of the workers’ retirement fund of which 5% of generated capital - according to the deal between the union and the workers - belonged to 10 thousand miners scattered across eleven Mexican states. That sum, of course, amounted to the 55 million dollars that were deposited into González Urrutia’s account and then split up across several other personal and familial accounts in 2006. Though the union leader has publicly claimed “that money was never meant to go to the workers, and they know it”, over 200 lawsuits were filed against him across the Mexican Republic. Interestingly enough, however, the investigations, to a large degree conducted by the PGR, Mexico’s principal agency in charge of criminal prosecutions, did not just include the workers’ retirement fund.
The union leader also faced charges of fraud, using funds from illicit sources, embezzlement, money laundering, influence trafficking, trust breach and the falsification of official documents, amongst others. Much like the dubious career of PEMEX union leader Carlos Romero Deschamps, González Urrutia was caught in the middle of a national embezzlement scandal where the most heavily affected party are Mexican miners - the group of people he was supposed to represent and whose interests he claimed and continues to claim he looks after.
There is an interesting connection between the infamous Pemexgate case in which Romero Deschamps was accused of embezzling 90 million dollars - from PEMEX workers’ retirement funds - in order to illegally fund Francisco Labastidas’ presidential campaign during the 2000 presidential elections. Needless to say, Labastida didn’t win: charges against Romero Deschamps were dismissed for “lacking sufficient evidence” against him and because “too much time had elapsed” by the time he was proven guilty, six years later, in 2006, precisely when the case against González Urrutia - almost linearly - became a serious national matter. Again, legal and political impunity for a Mexican union leader, rather than an isolated incident, is a constant, historical trend. Deschamps’ case was shelved while Gómez Urrutia’s surfaced.
As we’ve previously reported, though Mexican law guarantees every union member the right to access the financial activities, decisions, and political engagement of the union, the political autonomy granted to such labor organs has been predominantly used to favor union’s bureaucratic elite, which amounts to a small amount of leaders and other administrative members; notwithstanding, of course, an ever recycling discourse that revolves around workers’ rights and protection and that is proven time after time to be only minimally congruent.
It should come as a surprise, then, not only that Napoleón González Urrutia actually inherited his position as union leader from his father Napoleón Gómez Sada - who ran the Miners’ Union for 30 years - but that Romero Deschamps’ lawyer, Marco Antonio Del Toro Carazo, who has defended him for decades against a myriad of intricate legal cases and scandals, has also been in charge of legally representing González Urrutia himself.
In 2007, after the accusations against him were brought to light and in order to evade federal Mexican authorities, the union leader left Mexico for Canada where he continued to remotely run the Miners’ Union. He presumably remains installed there to this day, after strategically convincing not only Canadian authorities but also other pro-union international organizations that he is innocent and that the charges against him are proof of the Mexican government’s notorious political and economic corruption.
There is no denying that latter part: the Mexican political and labor climate is and has been marked by corruption and impunity for decades. The irony of González Urrutia’s defense, however, is that he denies his own involvement in such activities, his own participation in an intricate system of corruption. The union leader has masterfully prayed on the Canadian government’s ignorance in regards to such domestic Mexican issues and his very position, indeed, as an undeniable privileged political actor precisely because of his post as the director of the Miner’s Union.
The corporatist structure of workers’ unions in Mexico has worked hand-in-hand with Mexico’s banking structure and volatile political climate in order to facilitate money laundering and other illicit activities. It doesn’t begin or end with Romero Deschamps, Gabino Fraga Peña, or Napoleón González Urrutia, the latter is merely a current example worth approximation precisely because of its historical and familial connections in the matters of corruption and impunity. The case of González Urrutia, in fact, is interesting because he appears to be disenfranchised from a particular political party: he is neither explicitly partnered with the PAN nor the PRI.
Exile, then, seems to be the perfect state of affairs for the union leader.
Yet, González Urrutia continues to announce a triumphant return to Mexico: it is not certain whether or not it has actually materialized. Since April of 2015, however, his lawyers requested judges to dismiss federal investigations against him. They want a suspension in regards to the lawsuits regarding the money taken from mine workers but other ongoing money laundering investigations stemming from millionaire accounts found in tax havens overseas. What González Urrutia is worried about, clearly, is pending arrests warrants him.
Though he continues to publicly denounce corruption, the government’s incompetence and particular political actors such as Javier Lozano from the PAN, González Urrutia continues to ignore accusations against him or shamelessly deny his illicit activities and dubious political behavior. Whether or not he is allowed a smooth return to the Mexican territory will inevitably depend on his positioning in regards to the PRI’s political stronghold.
Recently, the US government has opened a string of subpoenas: the Department of Justice asked Citigroup Inc. to provide information regarding businesses tied to notorious kingpin, Carlos Hank Rhon. Indeed, Hank Rhon and his family amount to being the 10th richest in the country of Mexico. However, despite the fact that the DOJ does not wish to comment any further regarding their ongoing investigation - claiming that it is merely a matter of investigating ‘anti-money laundering practices’ at Banamex (Citigroup Mexico’s unit) -, two of Hank Rhon’s most significant assets have been brought to light: Grupo Financiero Interacciones SA and Grupo Hermes SA.
This is not the first time that Carlos Hank Rhon - or anyone else in the Hank Gonzalez/Hank Rohn family, in fact - have come under scrutiny. Throughout the 1990s and the 2000s, Carlos Hank Gonzalez (Carlos Hank Rhon’s father, a man that held a series of powerful political positions throughout the 1970s, 80s, and 90s), Carlos Hank Rhon, and Jorge Hank Rhon (the younger brother of Carlos) were subject to intense speculation, investigation, and criticism. In spite of this, however, the Hank-Gonzalez-Rhon family has amassed ever-greater fortunes, climbing the ranks of billionaires internationally, while holding onto political power at home, in Mexico.
The current DOJ investigation is only the latest of a long series that casts serious doubt on the Mexican political system as corruption and links to money laundering increasingly appear embedded into the fabric not only of Mexican political culture but of everyday life.
What lies behind the power of families such as the Hank-Gonzalez-Rhons, however, is actually far more disturbing when one considers both the long duration of such practices as well as the shadow networking that goes on behind the closed doors of the Mexican political system.
Whether or not he Hank-Gonzalez-Rhon family is connected to money laundering is yet to be seen. What is certain, though, is that the power network they belong to is part of systemic failures (or successes) rooted in historical processes that leave the country incredibly exposed to corruption.
Furthermore, their family is a crucial component of a political clique that has not only endured for decades, but has entrenched itself, generating incredible riches over specific stages. This club, known as Grupo Atlacomulco (named after a municipality in the state of Estado Mexico, just north of Mexico City), provides an exemplary case study in understanding the way power works in Mexico as well as the difficulties posed to international systems (especially banks) by operating in such contexts.
Forming a Nation
In order to properly understand the complexities of power-relations in Mexico, one must grasp the issue through a historical lens. Not only because current events do not occur in a vacuum (and are part of a historical continuity), but because in the particular case of the PRI (which was able to hold power for the better part of a century), political and economic structures endured despite what appeared to be serious transformations (such as the election of the center-right party - PAN).
Following the end of the Mexican revolution in the 1920s, the military victors seized the moment to establish a government that would perpetuate their own political and economic power by establishing a national structure that favored top-down relationships with little or no civilian oversight. As John Gledhill points out in his text “Official Masks and Shadow Powers: Towards An Anthropology of the Dark Side of the State” (1999), published in Urban Anthropology and Studies of Cultural Systems and World Economic Development, the 1940’s marked a particular moment wherein “backstage power networks overcame regional differences and created a remarkably solidary ruling elite” (p 211).
One of the immediate agendas of the “revolutionary” party was to modernize the country through a state-led industrialization plan (which was common through capitalist nations in Latin America). In Mexico, particular hubs were designated to become industrial sectors, and these revolved around Monterrey (in the north), Mexico City and Estado de Mexico (in the center), and Guadalajara (in the West).
However, to accomplish this, the newly minted State had to negotiate with localisms and regionalisms. A brief look at the revolution itself displays the fragmented landscape of Mexico wherein particular generals ruled over precise and particular regions. A central characteristic of the PRI was its ability to negotiate between inter-local, regional, and national disputes. Mexico had always been a fragmented landscape and remains so today: what is true in Tijuana is not necessarily true in Cheran, Michoacan, or San Cristobal, Chiapas; much less in Mexico City. Each one of these geographical spaces has a very particular history that separates it from national narratives. The extreme localism and the constant existence of caciques (local bosses) made the post-revolutionary period one that was primarily on the integration of localities into a national body that functioned for the distinct ends of the PRI.
But what were the ends of the PRI? At a primary level, the PRI was a particular party that came to be the same thing as the government yet largely served the specific ends of elites that themselves were subdivided into different interest groups. Though these interests were never fundamentally opposed to one another, different subgroups of elites came to power at different movements, each one moving their own agenda. These elites were drawn from particular sectors of society - namely the purely political sector, the business sector, and the labor sector. The period following the revolution, like elsewhere around the globe, was marked by a compromise between the interests of capital on one end, and the interests of labor on another. The state’s primary role was to operate as arbiter between these two interests.
However, just as the accumulation of capital is a historical product (meaning that capital accumulates and concentrates over people and generations) so too is the accumulation of political power. As Gledhill (1999) points out, the expansion of the state sector of the economy in the 1970s allowed for a certain ‘political accumulation’ as purely political elites increasingly expanded their domain into the economic sector (p. 212). As neoliberalization came around (along with the dominant notion that what is good for the individual is indeed good for all of society) those political elites, already involved in various economic sectors, were best poised to expand their personal domains.
Grupo Atlacomulco Phase One
Grupo Atlacomulco, as it came to be known by outsiders, was born in the 1940s when Mexico initiated its industrialization process. Estado de Mexico (the state just north of Mexico City) was marked to be, alongside the Federal District, an industrial hub that would operate alongside agricultural production. However, this meant disciplining labor under the parameters set by the federal government.
Local representative and president of the Grand Commission of the Chamber of Local Representatives, Fernando Ortiz Rubio, nephew of ex-president Pascual Ortiz Rubio, carried out the murder of Alfredo Zarate Albarran in 1941. The assassination let loose a tide of killings because it upset local power relations.
Isidro Fabela Alfaro, a diplomat at the time that hailed from the municipality of Atlacomulco, was designated as the replacement governor, from 1942-1945. Fabela Alfaro not only had the distinct opportunity to direct union formation under CTM (Confederation of Mexican Workers - Mexico’s most powerful to date) but was allowed to develop local bases of power by the COCEM (Confederation of Workers. Farmers, and Employees of Mexico). Acting as intermediary between the Executive Office and local bases, Fabela Alfaro was able to establish his own power network.
It must be noted however the vast majority of unions themselves are part of the PRI. They function as the industrial arm of the party and are mostly vertical and authoritarian. Fabela Alfaro, by being the one to have established the nexus between the local and the national, thus served as a regional boss. He established the unions as blocks of economic and political power. Given the political weight, Fabela Alfaro managed to directly install Alfredo del Mazo Velez (1945-1951) and Salvador Sanchez Colin (1951-1957) as governors, both actually coming from Group Atlacomulco.
Following three successions, the Executive office of the federal government temporarily restored direct power in Estado de Mexico, until the election of Carlos Hank Gonzalez in 1969. Though in ‘57, Manuel Avila Camacho was able to create an opening, the amount of political pull that the Fabela generation of the Grupo Atlacomulco was able to accomplish was enough to establish key relationships and create spheres of influence within local structures.
The Transformation of Feudal Relations
Caciquismo (the creation of networks of local bosses), though often relegated some “pre-modern” social formation, something that no longer fits into the general schema of capitalism, survived through the post-revolutionary period and became an important link within the local, regional, and national chains of power, especially as the federal government needed to establish its supremacy.
Given the historical nature of caciquismo (which was created under the Spanish system of colonialism, and remained to be politically and socially embedded), the newly formed Mexican State seized such pre-existing structures to instill its own programs. As Maldonado Aranda points out, between 1942 and 1991, this system is integral in explaining not only power groups that gained access to national power, but how the use of caciquismo is a ‘historical product’ that was itself the product of “localist ‘ideology’” based on the protection of Estado de Mexico “against continuous ‘interventions’ of the political center” (p. 84). We must keep in mind that in the immediate post-revolutionary period, up until its solidification in the 1950s the Mexican government was marked by a deep purging, wherein those that played the game were allowed to stay in power, and those that did not were effectively cleansed from the system (Maldonado Aranda 2003).
The creation of such networks thus created a multitude of spheres of influence within Mexico. Though the cacique is historically seen as a figure that is tied to agrarian production modes, in the modernizing Mexico, union bosses became just as important and functioned in a similar fashion, as well as any leader of civil society. Those that moved up the ranks of the PRI (and thus the government) were those that were able to get things done due to the connections that they forged in their political career. As Gledhill points out: “clientelistic relationships and social ‘connectedness’ have remained essential” to political life in Mexico (p. 209).
Hence, the entire PRI political justice rested on the assumption that it is the political elites that know what is best in Mexico. Power operated backstage and depended on the political ability of individuals to make things move, this resting on the social networks they had created.
Enter the Drug War
However, by the 1980s, drug production and distribution in Mexico began to explode. Drug production (especially marihuana) had always been a feature in Mexican society, but by the 1960s, it was receiving increased scrutiny until the 1970s when US President Nixon declared a “war on drugs” and Ronald Reagan militarized the war.
The prevalence of drug production, distribution, and consumption in Mexico must be historicized and contextualized. There is both economic and political reasoning as to why the phenomena is not merely extinguished, but is rather further embedded.
If one were to merely create a chart that factors the amounts of death, the amount of drugs, the amount of seizures, and the amount of revenues due to drug protection and overlay this chart atop a chart that counted the years and levels of privatizations Mexico had accomplished, the message would be incredibly simple: as Mexico neoliberalizes more, drugs are more profitable and more people die.
Why is this?
Quite like neoliberalism, drug production could not be what it is today had not certain revolutions in terms of social organization, communication, and transformation occurred first. Prior to globalization, economies were national and there were national interests in caring for the population (before it was considered to encourage ‘dependency’ or ‘anti-business’ and hence anti-job-making). However, given the economic crisis of the 1970s, the only alternative, if one was to coin Margaret Thatcher, was to promote competition and offshore labor. In previous economic modes, one simply could not do this because the infrastructure wasn’t there. But due to revolutions in the way things were transported (by land, sea, and air), in the speed things could be communicated (by telephone and then the Internet), and the way people lived (increasingly in cities), this was suddenly possible.
Mexico changed overnight: from the 1980s onward, Mexico underwent rapid transformations. As Free Trade agreements (like NAFTA) were signed into law, agricultural workers were suddenly out of work because American products were cheaper. Roads were built up and down Mexico as maquiladoras sprang everywhere and semi-trucks transported export-only goods to the north. And people moved where the money was, so they went to cities that simply couldn’t handle them. This is why cities like Tijuana, Ciudad Juarez, and Mexico have grown at exponential rates, along the similar exponential curves of capital accumulation.
Everything that helped transnational business grow also helped transnational drug flows grow. Beginning with the disenfranchisement of rural workers, a new workforce was created that could increase production - so long as wages were competitive. Meanwhile, the roads that were created for the exportation of legitimate products, obviously, were used for the exportation of illegal products. Meanwhile, production could be streamlined and coordinated remotely and centrally due to advance in communication. Those that could not find work in the cities (or wanted to supplement meager wages) were then hired by cartels.
The question of corruption is always one of scale. As Leonardo Curzio (2000) states in his work “Organized Crime and Political Campaign Finance in Mexico”, in the book Organized Crime and Democratic Governability, criminal organizations need some basic resources in order to operate:
“First, they need police protection. They also need financial mobility and protection to launder their earnings and bring them into the legal economic system. Political protection is harder to see, but it is also important in creating a powerful buffer against law enforcement and judicial authorities if they decide to move against a criminal organization. These minimal necessities are what prompt criminal organizations to infiltrate government and corrupt public officials to win the complicity or tolerance needed to continue or expand criminal activities” (p.84).
When a criminal organization first operates, it cannot bribe police authorities because it simply has not generated enough revenue to do so. To bribe police, a criminal organization has to be able to pay more money than the police officer is already making, otherwise, it is not enticing. In Mexico, that enticement level is quite low due to the low-wages police earns. From here on up the institutional latter, the levels of bribes that function require more money. However, there comes a moment when a politician is more worthwhile than a cop. The politician can order the police chief to act according to the necessities of the criminal organization and thus the cost is effectively driven down.
But why would a politician be interested in accepting bribes? Aside from financial gains, there must be political gains as well.
First, due to the massive reconfiguration of the Mexican economy that followed neoliberalization (or, globalization) traditional political and industrial bodies became less relevant. However, in any poor neighborhood in Mexico, everyone knows that the local drug boss rules, especially in areas where the state has divested interests.
As the amount of revenues generated from drug sales increase, so must the workforce, if the criminal organization wants to move and sell its product. Sophisticated networks are created with an obvious ruler (the one who brings in the drugs and thus the employment). Due to the way drugs are sold (through scattered and small markets as centralizing consumption centers would be too obvious), this means that the reach of the drug lord is wider as well. Hence, at a primary level, drug cartels, given their level of sophistication, are more than capable of delivering votes to the booth.
Second, given the massive amount of revenue from drugs, drug barons are capable of donating money that is increasingly required to win elections. Again, as Curzio (2000) posits, “It seems reasonable to suppose that if $300-500 billion, according to varying estimates, is laundered worldwide each year, some part of that is going to disappear into the political systems of organized crime” and hence depositing that money and laundering it through a political campaign is a perfectly reasonable (if not sophisticated) manner of doing so (p. 84).
There have been attempts however, since the 1980s, to make transparent campaign financing. But here we must remember a critical lesson previously mentioned: the PRI and the government were essentially one and the same thing for decades. In 1987, for the first time in Mexican history, rules were established for direct party financing (Peschard 2006). Then in 1993, under pressure from the public, President Salinas de Gotari passed an “electoral reform that political parties must submit income and expense reports to the electoral authority at the end of each year and after every year”, even though the Federal Electoral Institute (IFE) did not have any auditing capacities, and hence could not know if whatever was turned in was in fact actual (Peschard 2006). In 1996, constitutional reform was approved wherein “the constitutional reform introduced important changes that became the strongest pillars of the electoral system: autonomous electoral authorities; equality in the distribution of party resources and prerogatives as the basis for competitiveness; and a specialized judicial body responsible for resolving electoral controversies” (Peschard, 2006, p. 88). However, there was a major limitation:
“IFE can audit political parties; however, it cannot investigate private individuals or companies that become party contractors and who may eventually handle party accounts, or who may help to convey illegal resources to secretly finance certain party activities. That is, parties may have parallel bank accounts, under private names, that a regular auditing exercise cannot detect. Banking regulations protect people from government interference, except in the case of judicial or prosecutorial investigations, in which such information must be disclosed if the investigations” (Peschard 2006, p. 95).
Furthermore, IFE has no reach any time before or after the campaign. So even though there was some moderate level of transformation, loopholes still existed for criminal infiltration.
The last reason that a politician might look for backing should already be plainly evident: given the clientelism and corporatism of the political body of Mexico, backing from a local crime enterprise may be the good start to a political career.
Grupo Altacomulco and the Hank Family
Though lacking familial relations to Isidro Fabela Alfaro, Carlos Hank Gonzalez had Fabela Alfaro’s backing when he assumed the throne of the governorship of Estado de México in 1969. Hank Gonzalez had assisted in the gubernatorial campaigns of Isidro Fabela and Alfredo del mazo Velez in the 1940s. Carlos Hank Gonzalez had been a professor at a university in Estado de Mexico, where Isidro Fabela Alfaro ended up (this is why he was given the nickname ‘the professor’). Throughout the late 1950s and early 1960s, Hank Gonzalez worked his way through the political circuit before returning to run as the PRI candidate for governor of Estado de Mexico in 1969.
What makes Hank Gonzalez’s governorship over the entity so important is due to the massive urbanization and industrial projects that the state underwent during his administration. In the late 1960s and throughout the 1970s, as elsewhere in the nation, Estado de Mexico underwent a series of urbanization and industrial projects. Though not as expansive as Mexico City, the number of factories that opened during this time period surpassed Jalisco and even Nuevo Leon. Industrial parks grew at rapid rates during Hank Gonzalez’s time as governor. Manufacturing made up 40 percent of the state’s product by 1975, when Hank Gonzalez left office (Rozga Luter 1994).
Similar to Fabela Alfaro, Hank Gonzalez had a great deal of influence during the following two gubernatorial administrations. As previously noted, as Hank Gonzalez brokered both political and economic deals, he had established himself as an effective business and political leader, as he himself amassed more wealth and as he amassed power for the PRI. Hank Gonzalez had established himself as head of the Grupo Atlacomulco.
His ability to do both one him the favor of then-President Lopez Portillo and he became regent of Mexico City in 1977, where he again had the unique opportunity to be in charge of massive urbanization and infrastructural projects.
Following his regency in Mexico City, Hank Gonzalez fell out favor during the presidency of Miguel de la Madrid, but had made very strategic investments. Aside from having amassed both financial and construction enterprises, his youngest son Jorge Hank Rohn, had purchased a lucrative and famous casino, Agua Caliente Racetrack (Hipodromo de Agua Caliente SA de CV), while his oldest son, Carlos Hank Rhon, established himself as a financial magnate.
During the late 1980s, under the presidency of Salinas de Gortari, Carlos Hank Gonzalez was put in charge of the Secretary of Agriculture which saw the privatization of many communal land-holdings, again putting him in a historical position to broker special deals.
Carlos Hank Gonzalez private ventures were wide ranging. He had come to own the distributor of Mercedes Benz in Mexico, as well as transportation companies, electrical companies, real estate companies, and financial and communication companies, all of which acquired alongside an extensive and influential political career.
The political and economic legacy his children inherited was vast and far equally influential as their own enterprises (themselves built upon the legacy of their father), creating a political continuity. Furthermore, Carlos Hank Rohn (the smarter of the two brothers) positioned himself as a financial magnate while Jorge Hank Rohn (certainly the more flamboyant and the least sharp of the two) positioned himself as a gambling king. It goes without saying that both children have fallen under scrutiny, while both their empires have only expanded.
Carlos Hank Rohn established Grupo Hermes in the 1980s, following the devaluation wave that hit Mexico in 1982. This was a lucrative time period for Hank Rohn as he established his eye for speculation as he made fortunes in an economically transitional moment for Mexico. As the country underwent neoliberalization, Grupo Hermes set itself as a foundation for a new style financialization.
However Carlos Hank Rohn came under scrutinty when it was discovered he was Raul Salinas’s reference at Citibank. Following such, it was leaked that Carlos Hank Rohn had come under intense scrutiny by the US federal government in the 1980s and 1990s. However, as Thomas Constantine, former head of the DEA, admitted, it was impossible to move further on collected intelligence, due to the incredibly “weakened and compromised” state of Mexican law enforcement institutions and public institutions. More recently however, Carlos Hank Rohn was one of the many individuals whose name appeared in an investigation carried out by the International Consortium of Investigative Journalists who got a hold of leaked documents from HSBC’s holdings in a Swiss Bank Account.
Jorge Hank Rohn was included in the allegation. He began his lucrative career in the earliy 1980s when he purchased the Tijuana horseracing track, Hipodromo Agua Caliente. According to Mario Maldonado of El financiero, since then the growth of his empire has made Tijuana the second city with the most casinos, and his portfolio has expanded intensively: Grupo Caliente (his company) owns hotels (Pueblo Amigo), travel agencies (Viajes Petra), an internatoinal zoo, a school (Colegio Aleman Cuahtemoc Hank), and of course, Tijuana’s own soccer team, los Xolos. This is aside from his company, Operadora de Apuestas Caliente, which reported revenues of 45,490,000 pesos and more than 9 million clients in 2014.More interestingly is Maldonado reports that Jorge Hank Rohn was able to double his revenue between 2007 and 2014. These are precisely the years of an economic crisis and a drug war that has hurt tourism greatly in Mexico and caused waves of unemployment.
Carlos Hank Gonzalez (not to be confused with his grandfather, Carlos Hank Gonzalez) is born into the greatest social network. The son of banker Carlos Hank Rohn, and grandson of Roberto Gonzalez Barrera, founder Gruma and Grupo Financiero Banorte, Carlos Hank Gonzalez grew up around an established fabric of power.
According to a biography written by Excelsor, at an early age he worked along side Roberto Gonzalez Barrera in Grupo Financiero Banorte, and upon completeing his bachelor studies in Business Administration, worked in the Mexican stock exchange, before being named director general of Grupo Financiero Interacciones. By 2008, the young Hank Gonzalez became director general of Grupo Hermes and by 2012 became vicepresident of Gruma, the biggest producer of tortillas, where he worked alongside his uncle Juan Gonzalez Moreno.
Del Mazo Family
As stated earlier, Alfredo del Mazo Velez took the governorship of Estado de Mexico from 1945-1961, as a political partner of Isidro Fabela Alfaro. According to journalist Elizabeth Gutierrez Zaragoza, del Mazo Velez was Treasurer of the State as well as Secretary General of Government. After winning the governorship, he became close friends with Miguel Aleman Valdes, and was hoping to be nominated for the presidency, but the title went instead to Adolfo Ruiz Cortines.
Alfredo Hilario Isidro del Mazo González, son of Alfredo del Mazo, would later become not only governor of Estado de Mexico (1981-1986), but Secretary of Energy under Miguel de la Madrid from 1986-1988. His candidacy for the governorship was personally sponsored by then president Jose Lopez Portillo. He was almost nominated to candidate for the presidency in 1987, but the candidacy was given instead to Salinas de Gortari.
Alfredo del Mazo Gonzalez however had strong roots in Mexico’s banking world. As journalist Mayela Sanchez points out, in the Banco Comercial Mexicano he was sub director of the international division and sub director of the Banca Internacional from 1966-1973; director general of Banco Minero y Mercantil (1973-1976); vicepresident of the Comision Nacional Bancaria y de seguros (1976); director of Public Debt (1977) and director of Instituciones Nacionales de Credito en la Secretaria de Hacienda y Credito Publico (1978) as well as director general of Banco Obrero (1979-1981).
The grandson of Alfredo del Mazo Velez (and son of Alfredo del Mazo González), Alfredo del Mazo Maza, was mayor of Huixquilucan, Estado de México, and when Enrique Pena Nieto took office, was made director of the National Bank of Public Works and Services (Banobras) in 2012. In January of 2015, he resigned from the position to make a run for a seat as a federal representative. He won the position in June.
The Nieto Family
The Nieto family legacy begins with Salvador Sanchez Colin, mentioned earlier as the second governor of Estado de Mexico following Isidro Fabela Alfaro from 1951-1957. His sister, Ofelia Sanchez Colin, married Constantino Enrique Nieto and gave birth to Maria del Perpetuo Socorro Ofelia Nieto Sanchez. Socorro (more commonly known as) Nieto Sanchez was married to Gilberto Enrique Pena del Mazo. This should sound familiar. Gilberto Enrique Pena del Mazo is the cousin of Alfredo del Mazo Gonzalez.
Enrique Pena Nieto first accomplished a political foothold under the governorship (1999-2005) of Arturo Montiel Rojas. Arturo Montiel has been accused of rampant corruption and was investigated by the Mexican government (which ogf course found nothing wrong). Roberto Madrazo, another PRI career politician, claimed that Montiel Rojas had embezzled millions of dollars and had them in investments in France and Spain. This seems likely as even Maude Versini, Montiel Rojas’ ex-wife notified the French authorities that she has knowledge of these events.
What makes matters interesting is that Martiza Diaz Hernandez, a former girlfriend of Enrique Pena Nieto, claimed that Pena Nieto worked within the closest circles of Arturo Montiel Rojas. And this makes sense as Pena Nieto served as Arturo Montiel’s Secretary of Finances, as well as serving other positions under the governorship within the departments of Economic Development and Governance.
The trajectories of these families should thus show that power in Mexico is not only historical, but that it is so concentrated that it is impossible that no one in power is simply obvious to their holdings and their interactions with illicit funds. Not a single one of the families here have fallen lost political influence over time (though that is not to say they have been able to always avoid scandal). Rather their power and influences merely accumulates over time and is inherited from family member to family member.
What stands strong, surely, is a feudal set of social productions, wherein power remains in families that use the political party (the PRI) and the political organism (the country) to better themselves. And while these families have grown more powerful, the rest of the country has only worsened. Giving the lack of social forms of organization that have remained since neoliberalization, it is more than likely then that drug cartels are used for political and economic gain.
Just when it seemed that things could not possibly get worst for Mexico’s infamous, current president, Enrique Peña Nieto, international newspapers have revealed another dubious connection between his cabinet and illicit activities: Gabino Antonio Fraga Peña, who worked as a campaign manager for Peña Nieto’s presidential race in 2012, is being investigated for a money laundering scheme involving Spanish bank Banco Madrid. Though the Mexican lawyer - whose father was a minister of the Supreme Court in the 1940s and part of then-president Gustavo Díaz Ordaz’s government - denies all allegations, the Spanish government has raised a red flag regarding his banking activities of at least half a million dollars dating, precisely, back to 2012.
As we know, money laundering and banking in Mexico has been an ongoing problem not just for official authorities but also for domestic as well as foreign banking groups and companies. Peña Nieto’s term is no exception: not only has it been wrapped up in the case of government involvement in the disappearance and murder of 43 rural students last year, the purchase of a multi-million dollar mansion by his TV-star wife and first lady, Angélica Rivera, his daughter’s racist social media publications and over-indulgent expenses and travels but it has been riddled with corruption, theft and money laundering accusations. Worst of all is the impunity regarding these often clear-cut cases against his government and regional as well as central authorities.
Spain’s Executive Service of Money Laundering Prevention, SEPBLAC, is investigating Gabino Antonio Fraga Peña, along with several notorious Venezuelan businessmen, Russian mobster Andrei Petrov and Spanish ex-Police Chief, Juan Cotino, for suspicious banking transactions and deposits. The money that Fraga Peña moved through Banco Madrid, according to the investigative agency, “could correspond to illegal financing for political parties”, namely, Mexico’s PRI. Interestingly enough, the current investigation coincides with the public accusations against Enrique Peña Nieto’s campaign shortly after his presidential victory in 2012 by rival candidate Andres Manuel López Obrador, a then-representative of Mexico’s Partido Revolucionario Democrático, PRD and founder of MORENA, or the National Regeneration Movement, as well as Carmen Aristegui, one of Mexico’s most important journalists, if not the most notorious one for speaking up against government corruption and impunity.
As a kind of witty reference to a money laundering and embezzlement case involving PEMEX and the leader of the Petroleum Workers Union of Mexico, Carlos Romero Deschamps, that in the 2000’s came to be known as Pemexgate, the scandal involving Peña Nieto’s illegal campaign funding was quickly nicknamed Monexgate by national media. The details are almost comical: electronic money was distributed via prepaid MONEX debit cards in order to sway voters to vote for Peña Nieto. In shorter terms: the PRI party bought votes but instead of paying with printed cash it paid with cash gift cards.
An investigation was initiated and conducted by Mexico’s PGR, the principal agency in charge of criminal prosecutions.
They found that the MONEX cash card case was not the only suspicious activity of the Mexican foreign exchange company that, as a matter of fact, specializes in international transactions and payment services for commercial clients. Accounts were frozen by the PGR, large amounts of cash money were seized from dozens of companies and individuals: close to a million dollars were indeed unaccounted for. The PGR believed, of course, that at least some of this money came from drug trafficking activities, quite possibly from drug dealers interested in funding the Peña Nieto campaign.
PRD’s Andres Manuel López Obrador - who after his defeat in 2012 was allegedly cheated out of a presidential victory for the second time, the first in 2006 - indeed made a public call to revise Peña Nieto’s victory: his campaign had exceeded the legal amount of permitted campaign expenses. López Obrador demanded authorities to void Peña Nieto’s election, a claim that was naturally unaddressed by the government and the TEPJF, Mexico’s electoral tribunal. Nonetheless, he submitted hard evidence to the TEPJF in which he outlined dozens of companies and corporations that participated in illicit activities and deposits involving Monex.
López Obrador effectively unveiled an intricate chain of fraudulent moves by small and large companies that were linked to government officials, campaign participants and PRI representatives.
In other words, Peña Nieto’s presidential rival outlined a money laundering net that consisted in the transferring of money that came from shell companies under names of random individuals without any considerable assets. That cash was then re-routed to financial enterprises with connections to notorious businessmen such as Gabino Antonio Fraga Peña through the purchase of the cash cards that were in turn distributed by the PRI in order to sway voters.
“Validating this election would imply that the country’s competent authorities approve illegal practices”, said the report submitted by López Obrador. “The article IV of the General Constitution of the Republic of Mexico would be dismissed” and the act would “affirm that it is licit to launder money through the political-electoral campaigns.”
One of Mexico’s most widely distributed newspapers, La Jornada, in fact, published an article where the company Importadora y Comercializadora EFRA SA de CV as well as Grupo Comercial Inizzio were identified as purchasers of Monex cards. Those companies, whose activities supposedly revolve around commerce and distribution of goods and services, amongst other things, are actually linked to Gabino Antonio Fraga Peña’s law firm. They coincidentally share the very same address: Calderón de la Barca 78, colonia Polanco, Mexico, D.F.
Other companies involved include: Grupo Comerical Inizzio, Grupo Koleos y Grupo Empresarial Tiguan, Comercializadora Atama, Grupo Koleos, Grupo Empresarial Tiguan.
Though the legal and public attempt by López Obrador delayed the declaration of Peña Nieto as elected president, the country’s electoral judges unanimously refused to validate the challenge against him because of “insufficient evidence of wrongdoing”. Notwithstanding the legal challenge, massive protests and pressure from national newspapers, Enrique Peña Nieto was declared presidential victor shortly after, paving the way for the last several years of corruption, money laundering and other scandals. And, of course: a series of crucial reforms that have characterized Peña Nieto’s presidential term.
The lack of recognition and persecution by the government involving Monexgate, also, should come as no surprise. As we mentioned above, the Pemexgate scandal took place with similar impunity back in the year 2000.
Funds from the PEMEX’s workers’ union - headed by Carlos Romero Deschamps - were illegally used to finance the presidential campaign of PRI’s Francisco Labastida in the 2000 elections. Close to a million dollars were embezzled by the union and distributed to the PRI. The only difference, however, is that Labastida did not manage to win the elections nearly a decade ago. Nonetheless, money was stolen from the retirement funds of PEMEX workers and used to illegally fund a political campaign. Bringing that case to light is extremely important because it shows that the Monex case is not unprecedented. The impunity surrounding corruption, money laundering and Peña Nieto’s government is a trend and not an isolated occurrence.
Carlos Romero Deschamps himself, the head of the PEMEX worker’s union, in fact, was involved in a money embezzlement lawsuit by Texas’ Arriba Ltd., who accused PEMEX and Deschamps for breaching a contract agreement for a total of at least $426 million in damages. Deschamps, claims the U.S. oil refinery, eluded its legal responsibility and instead resorted to “cons, frauds, misrepresentations” and behaved with “an absolute sense of impunity”, a course of action that could be surprising for a U.S. corporation but that is not rare for a Mexican firm.
The DIPEASA and Oceanografía money laundering scandal recently unveiled publically is yet another case-in-point. Still, one may ask: what do all these cases have to do with the recent investigations by the Spanish government against Gabino Antonio Fraga Peña? The short answer: everything.
Gabino Fraga Mouret, Fraga Peña’s father, coincidentally, was part of Miguel de la Madrid’s government, Ernesto Zedillo’s and also sub-secretary of the PRI’s president during the 1972-1975 term. He’s been a hardcore member of the PRI for nearly four decades. In fact, he was working for Francisco Labastida’s campaign during the Pemexgate scandal mentioned above. It would not be completely incongruent, then, to say that his son Gabino Fraga Peña participated and possibly designed the purchase of votes through the Monex cash cards during Enrique Peña Nieto’s presidential campaign. The Fraga family, in fact, who has set up a law firm in Mexico City, has been – and continues to be – actively involved in matters concerning the PRI.
That is, precisely, why Banco Madrid should have been more careful in establishing a business relationship with Gabino Fraga Peña in the first place. Especially since the 2012 campaign scandal actually – to some degree –managed to raise the public’s concern and beckoned government involvement. Because the case was dismissed, however, Fraga Peña continued to conduct business freely, especially under the government of Peña Nieto. In that regard, the Fraga family and the PRI’s positioning in the political sphere are inextricably linked.
But the bank’s money laundering detection mechanisms did not come into play effectively. Spain’s SEPBLAC, in fact, announced that Gabino Fraga Peña should have been “specially investigated” by Banco Madrid. The investigative agency explained that his particular case necessitated an exemplary investigation not because money laundering is presumed to have taken place, but because the information surrounding the case merited such efforts. Nonetheless, the bank’s incapacity to do so will not be taken lightly: it failed to abide by Spanish law and quite possibly, it allowed its financial structures and banking services to collaborate in illicit business.
Banco de Madrid, in fact, is Banca Privada d’Andorra’s Spanish subsidiary. Earlier this year, U.S. authorities formally accused BPA of money laundering. A particular case, for instance, involved a high-level manager of BPA helping a suspect money launderer who was actually later proven to have been working with Russian organized crime. Banco Madrid as a banking institution itself was already intimately related to another group accused of money laundering, then. It becomes evident not only that due diligence was never effectively practiced by either institution but that much like the Gabino Fraga Peña family and the PRI, the institutions shared a complementary financial relationship that is at least somewhat oriented towards illegal business.
With that said, it is undoubtedly significant to reflect upon the new investigation for money laundering posed against Gabino Fraga Peña. Bringing his relationship to the current president of Mexico, Enrique Peña Nieto, through the Monex scandal, brought back into the attention of major international journalists and is clearly symptomatic of a series of unfortunate political moves that demonstrate the Mexican government’s involvement with money laundering and organized crime. It is a subtle yet punctual reminder that Peña Nieto’s presidency, even from its beginnings as a campaign, was already riled up in public scandals that outline the political impunity associated to the ruling PRI party. The case serves as a reminder, so to speak, of the volatile relationships that exist between strategic political actors, organized crime and in this case, domestic as well as international banking structures.
The notorious hacking breach that exposed the private enterprise known as the Hacking Team, based out of Milan, Italy, is quite revealing in terms of State practices in Mexico. Despite whatever implications it may have on democracy or civil society in Mexico, the leaks reveal an unprecedented attempt at social intrusion by the Mexican government. Furthermore, and perhaps more interestingly, the leaks reveal a concerted effort by the Mexican state to update obsolete state-craft and expand a decaying sphere of influence.
Since the birth of the “Information Age” and the explosion of the Internet as a primary mean of communication, the Mexican State has struggled to maintain hegemony. This is primarily evidenced through a failure to “combat” narcos and through repeated failures to contain social agitation since the Ayotzinapa massacre. In terms of public relations, the Enrique Pena Nieto administration has failed to posture itself as a new, human face for the PRI, the Partido Revolucionario Institucional. Instead, it has blundered at nearly every turn, and has only proven that the emperor wears new clothes in Mexico.
Furthermore, the fact that so many governmental institutions in Mexico have purchased services and malware from the Hacking Team should be cause for concern: especially given the kind of embedded corruption that exists within Mexico.
Historical State Craft of Mexico
The foundation of current Mexican State is rooted in fascist structures that originally rose in Italy and Germany in the 1920s and 1930s. Following the end of the Mexican revolution in the 1920s, the new elite needed “new” structures that “reflected” the ideals upon which the Mexican revolution was fought for. These mainly revolved around the desires of an exploited peasantry and a nascent industrial working-class. The victors of the revolution had no desire for any radical Leftist experiment, but still had to consolidate – at least a superficial level – some of these aspirations. The result was what is often called a “soft” dictatorship run by the PRI (Partido Revolucionario Institucional).
Over the course of the remaining century, the PRI ruled uncontested. Although other political parties were allowed to exist, few were able to wield any sort of effective or autonomous power. This is due primarily to the political structures created in the post-revolution by the PRI. Whether it was unions, business associations, or civil organizations, the PRI had created structures that were stemmed in the corporatist practices of the PRI. Hence, the PRI wielded power – whether directly or indirectly – in nearly every important social apparatus.
However, by 2000, the PRI’s structure had undergone a series of shocks. Neoliberalization in the 1980’s tested the strength of these foundations as unions (an important base of the PRI’s strength) had to be drastically reformed under the conditions of the new global economic order that was nascent in that decade. By the 1990s, neoliberalism appeared uncontested as the viable economic platform. But these reforms came at a cost: namely the creation of new political and social blocks that contested the profit-orientated reforms. Political parties like the PRD (Partido Revolucionario Democratico) and waves of new social movements came into existence.
Out of them, it was the Zapatista movement that became the greatest thorn in the government’s side. The Zapatista movement represented an articulate and networked condemnation of PRI hegemony. Per usual, the government responded with brutal force at the onset of the guerrilla war that began in 1994. But in the new age of the Internet, the PRI suddenly faced incredible international outrage, especially as the Zapatistas called for a ceasefire (within the Zapatista organization, the more violent, militant leadership was voted out and replaced by a charismatic and articulate leadership that was savvy to the times). A number of prominent individuals – from public intellectuals, to writers, to artists, to politicians – as well as a number of NGOs called on the PRI to cooperate with the demands of the Zapatistas.
This was a blow to the PRI in that in all previous cases of guerrilla movements, the PRI had total control on the interpretation of events. From the 1968 student massacre to the number of urban and rural guerrilla movements that sprung up through the 1970s, the PRI was able to manipulate the media and control popular opinion. All previous insurrections and rebellions had been handled with incredible force and efficiency. But thanks to increasing global communicative interconnectivity, the international pressure that was applied onto the PRI was to such a degree that it was forced to recognize autonomous lands in Chiapas. Suddenly, the structures of the PRI were looking weaker and increasingly obsolete.
Since the year 2000, politics in Mexico have undergone rapid transformations. That year, the PRI ceded power to the PAN (Partido Accion Nacional), a historically moderate-right-wing party, whose roots lay in Catholic conservatism. What seemed most incredible was that everyone thought that the democratic seizure of power by the PAN would bring a new age to Mexico, one in which the practices of the PRI would be booted to the historical record of a dark age. What many did not understand is that in the 70 years of rule that the PRI had presided over, deep and structural practices were put into place. A new political and economic class of bureaucrats had been created that stood between executive politicians and the popular classes. Deep and embedded practices of corruption that dated back centuries survived through the transformation of the Mexican revolution and thrived in a political realm that lacked any transparency and accountability.
Hence, even though the PRI was ousted for twelve years, authoritarian and corrupt practices survived despite the transfer of power. Change only occurred at the executive level, but the incredible corporate body of the PRI was still left largely intact.
The Crisis of the Mexican State
The incredible field of social contradictions and tensions created by the PRI and inherited by the PAN came to a head in 2007-2008, when newly elected PAN president Felipe Calderon announced a war on the drug cartels. The war against the cartels brought to light the severity of many of these contradictions. Primarily, it showed how much power the PRI had lost in rural communities since the 1980s, as these made fertile bases of social support for the cartels. Effectively abandoned by austerity and the brutal competition produced by NAFTA, many of these communities saw drug production as the only way to stay home and make a living, especially as hundreds of thousands of displaced people made their way to urban centers in the north in search of work. Furthermore, some of these old school cartels even paid for social projects, like the construction of roads and parks, in a time when the Mexican government was no longer buying into such things due to neoliberal economic doctrine. Hence, as the government withdrew from public investment, the cartels stepped in.
But, unlike other social antagonists, the cartels barely felt any pressure from the State, at least until the 1990s. Other social productions, like social movements, student movements, Leftist guerrilla organizations – all of these were met with fierce opposition and repression from the State. The crucial difference is that social movements, student movements, and Leftists challenged the status quo, whereas narco cartels only reproduced it.
But this relationship of social reproduction vs social antagonism is truly a question a scale. When a narco organization operates at a purely local scale and is not yet embedded into the social fabric, then it hardly challenges the status quo. But after decades of operation, cartels became increasingly embedded, and this is best represented by the amount of revenue they generate. Once they are making millions, hundreds of millions, or billions, then their presence becomes increasingly problematic. This is especially true as entire markets become dependent on their existence. If the sum total of drug revenues in Mexico are into the tens of billions, then we know that their existence cannot simply end overnight. If, for example, drug revenues were to somehow be frozen overnight, this would generate such a great an immeasurable market crisis.
Hence, the war against the cartel should be seen as a systemic crisis, rather than a purely phenomenal one. Years of uninterrupted growth, the lack of any kind of regulation, and the level of social embeddedness (in form of corruption as much as market dependency) has produced such a monstrosity that the Mexican State is having a difficult time responding. What has become increasingly obvious is that this war is not against all cartels but specific cartels. Rather than try to terminate the cartels (at this point. an impossible task unless the State were to upend the current economic formation), authorities have responded by incorporating specific cartels (like the Sinaloa cartel and its associates) while attacking the others head-on.
New monstrosities were created: the Zeta cartel and more recently the Cartel de Jalisco Nueva Generación, which care little for the rules of the Old School (public investment, incognito operation, etc.) and understand that with a particular level of raw force, not only the drug market, but many other sectors of the black market (human trafficking, arms smuggling, prostitution rings, etc) can be dominated. Hence, the government responds to these independent and rogue cartels with brute force. But, the State is always a complex entity. Even if the executive body may want these cartels terminated, local government branches are likely involved with rogue cartel operations. Hence the chessboard of operations is incredibly complex and multidimensional.
Tens of thousands, if not hundreds of thousands, of people have their lost their lives in the war that began in 2007. However, the lack of government response (aside from sending soldiers and creating strategic plan after strategic plan) has only worsened by revolutions in social media. To a degree, new communicative advances have broken the monopoly on information previously held by the Mexican State: it has had an increasingly difficult time stifling dissent as it attempts to keep social control. Since the onset of the war on cartels, Mexican civil society, in fact, has seen an explosion of social movements that express their discontent.
Ayotzinapa: the 43 students
Since the Enrique Pena Nieto administration took office, a number of scandals have broken loose. But the most damaging of these have taken place over the course of last year. Among them the single most important one has been that of the Ayotzinapa massacre, in which 43 students were disappeared in a rural town in Guerrero. What makes this case so particular is that it displayed the strong connection between local cartels and local government: a relationship of mutual benefit was revealed. In this case, it was uncovered that the mayor’s office resorted to cartels to liquidate and disappear students that were protesting against recent educational reforms. Remains of some of the students were found through the efforts of a federal investigation, while the remains of hundreds of other people were also uncovered in the surrounding areas.
The implications of the case are two-fold. First, it demonstrates the potentially dangerous relationship between local government and local cartels. If a progressive, grassroots civic movement begins to threaten the status quo, narcos can be used to extra-legally “dispatch” the problem. The implications are not only humanitarian in nature, but further reveal the anti-democratic character of government in Mexico. Furthermore, the massacre was a case-study in failed public relations by the Mexican government.
At every turn, the Mexican federal government seemed either uninterested or annoyed at the national outrage that ensued. Whether it was the Attorney General, Julio Murillo Karam, saying in a national press conference that he was tired of the conference in an off-the-cuff sigh, or a former PRI representative saying on twitter that those protesting the case should be killed, or the revelation in the midst of the outrage of the existence of “the [Mexican] white house”, the Enrique Pena Nieto administration struggled to maintain control.
Since September of 2014, when the massacre happened, there has been no lack of scandal and outrage in the country. The most recent wave of protests have come following the murder of Ruben Espinosa, a photojournalist who is one of many journalists that have died in Mexico since the war on cartels began. The government has done little to provide protection to journalists, as more than 100 hundred journalists have been murdered in Mexico since 2000, making Mexico one of the most dangerous countries to be a reporter. What makes the case of Ruben Espinosa even more disturbing is that Ruben Espinosa is one of 14 journalists to have been killed from Veracruz since governor Javier Duarte took office.
Where does the Hacking Team come in? The recent purchases by Mexican government offices demonstrate a concerted effort to attempt to regain technological supremacy in the face of systemic failure. The Hacking Team’s most prized product is a Remote Control System called “DaVinci,” which gives the customer the capability to “monitor encrypted files and emails…Skype and other Voice over IP or chat communication” while providing “identification of the target’s location and relationships that can remotely activate microphone and cameras” on Windows, mac, Linux, iOS, Android, Symbian and Blackberry systems. The Mexican government has paid a total of $6.3 million, making it Hacking Team’s best paying client by nearly $2 million dollars. The different Mexican agencies that have purchased services from the Hacking Team are as follows:
- Mexico Police
- Durango State Government
- Queretaro State Government
- Puebla State Government
- Mexican Navy
- Mexican Army
- Federal Police
- Federal Attorney General’s Office
- Campeche State Government
- Center of Investigation and National Security (CISEN)
- Tamaulipas State Government
- Yucatan State Government
Products and services were purchased through a private firm SYM Servicios Integral S.A. de C.V. out of Mexico City. Since the leaks, the Hacking Team has garnered a less than favorable reputation. Among the various organizations the group has sold or attempted to sell its services to, are a number of shady if not malevolent groups.
However, if the Mexican State has had these capabilities for some time, the question becomes, to what end have they been applied? It certainly hasn’t been to capture any of the murderers that killed either the students or the journalists. Which brings up either one of two possibilities: either the State is using it for other purposes, or the State does not know how to use the programs it has purchased from the Milan based organization (either of which is likely, given that the amount of data storage necessary for such a stream of information would be great). This explains why those government agencies purely dedicated to intelligence collection have renewed their product services, like CISEN and the Federal Attorney General’s Office.
Regardless, what is most likely is that this technology is hardly being used to capture enemies of the State. It is most likely that given such ability, the Mexican State is not interested in using such incredible powers to bring criminals to justice. Rather, the State is interested in updating its abilities for a new era, one in which communication makes and breaks either social movements or governments.
The recent strike-wave that hit Baja California took the world of business by surprise, especially because production in Baja California has grown incredibly in the last several decades. The northernmost Mexican state is idyllic because of its proximity to the United States but more importantly, the prime southern Californian market with its competitive business climate. However, in order to foster such a climate, wages in border Mexico have to be kept low; production output, additionally, has to be tightly controlled due to the inflexibility of “just-in-time” production models. This, in turn, has meant that labor unions have been sedated and immobilized in order to ensure products reach their destination markets in timely and scheduled manners. Recent massive strikes in San Quintin – a town south of the U.S.-Mexico border – revealed that time is an incredibly important factor for Baja California’s industry. The rotting strawberries and other fruit left on the dusty fields sent a clear-cut message.
However, what made this strike even more incredible was that official unions did not participate. In fact, mobilization caught them off guard because they had no idea the strike was coming. It is no surprise that over recent years, throughout Mexico, we have witnessed an increase in worker participation in self-created organs outside of unions. There are many reasons for this, but a primary factor has been the prominence of corruption within unions. Indeed, union corruption has negatively affected many workers in Baja California. Rather than represent workers, unions have largely operated for the interest of well-paid bureaucrats, and this is due largely to the way unions have been structured in Baja California. As elsewhere in Mexico, unions have largely been influenced by PRI statecraft, which is defined by its ability to hold power through co-option. Without addressing this entangled relationship, corruption is unlikely to end.
The Mexican Union: a dominant structure
In Mexico, it is not only the Labor Law that secures the right of every worker to organize in a union, but the very country’s constitution. In fact, the country was one of the first that recognized unions as a central element of civil society.
Mexican labor law gives every union member the right to have full insight on the financial activities of the union as well as its political engagement. Additionally, the law defines the function of a union as a collective organ of workers/employees with the task of protecting the workers and their rights in general. It does not, however, give any regulations regarding the union’s structures, ideologies, or tactics.
Theoretically a group of at least 20 workers of the same profession can found a union and be registered with the Department of Labor as soon as these workers elect leadership and agree on a constitution and by-laws. The structure can be developed by founding members and is not regulated by law, although a secretary general has to be elected as a public representative of the organization.
Each union can be autonomous but as indicated by historical development, the majority of local unions are organized in federations. The reason was in the beginning rather a practical one: After the Confederación de Trabajadores de México (CTM) was founded in 1936, it quickly became the most powerful workers organization of the country. The PRI, which was developing its system of incorporation at that time, worked closely with the newly founded labor confederations and supported the development of union supra-structures. The interaction between the PRI and the CTM led to a fast bureaucratization of the CTM (some researchers argue that the bureaucratization of the CTM led to the involvement of the PRI). In contrast to other attempts of union network building, the CTM formalized its structures far beyond annual meetings and information interchange and became a full organization.
To some degree, it seems that this additional bureaucratic layer is particularly open to corruption. Furthermore, by taking advantage of the concept of autonomy, union leaders extend their power in the organization. By denying any external observation, any given union leader can become a very powerful actor – if not the principal one – in the entity.
What is visible today is that a long history of pro-union politics and explicit legal protection do not lead to a strong workers representation: the country’s labor organizations failed over the years in protecting its workers and many organizations that call themselves “unions” only serve its own leadership through a net of corruption and blackmailing.
Since the abuse of union structures is not limited to a specific organization or region, the problem must be seen as a structural one. As shown, the labor law itself offers relatively good protection but the amount of abuses inflicted on workers proves that this protection mainly exists on paper. Some of the problems are based on the described legal frame, such as the potentially uncontrolled power of union leaders in the legally autonomous organizations.
Other issues are rooted in the support of nationwide bureaucratic networks that make-up union confederations. These networks create a variety of new positions – on federal, state, and local levels – whose tasks are poorly defined. Their main functions are to create relations between the unions they represent and the political elite. This puts the CTM leadership itself in a very powerful position. They’re almost like gatekeepers for union demands: they exercise influence over each union, favoring the interests of few, but they are also spokespersons for large quantities of workers, which gives them a kind of power over political elites.
Beyond that, some unions are abusing the part of the labor law that limits the right to strike to situations in which negotiations failed and after the employer received the information about an upcoming strike. Especially workers in the maquiladora industry: they are frequently represented by these so called “yellow” or” white” unions – which are not fighting for the employees but rather the employer – that keep the workers from negotiating for their rights.
The blackmailing of employers, for example (the offer to suppress strikes if the employer pays money to the union leadership) as well as the widespread corruption is not addressed at all by these legal gaps.
Unions in Baja California, Historically
In order to understand union corruption in Baja California in particular, it is necessary to provide some breadth regarding its historical development of unionism. Early union formations in Baja California were premised on the necessity of self-organization for the direct purpose of protection from exploitation. In Baja California, many of the original business owners were American. It goes without saying that explicit racism was a dominant notion held by many.
It could be said that Tijuana functioned similarly to Las Vegas – it was a commercial hub that attracted tourists and gamblers alike, allowing, for the sake of capital accumulation, the fulfillment of desires premised on vice. Hence, Tijuana functioned in its early day as a legal and commercial haven for business owners. But still, given the popularly held conceptions of race at the time, American business owners did not want to employ Mexican workers – despite the supposedly sovereign land in which they found themselves.
Hence, business owners principally employed American managers and hired Chinese workers to conduct work that necessitated subordinate interactions with customers – all the while Mexicans were only allowed to work in warehouses or in backrooms where they were invisible to clientele. Given these practices were established during and after the Mexican revolution, unions thus formed as a basic response to incredibly poor working conditions.
In the 1920s, radical nationalist and anarcho-communist unions thus formed in Tijuana and Mexicali. Tijuana became home to an increasingly militant base of workers around tourism and services, while in Mexicali, agrarian workers mobilized against landowners. But with the end of revolution, came the political monopoly of the Partido Revolucionario Institucional (PRI). The PRI came into being when fascism was sweeping across Western Europe.
Since the revolutionary fervor that swept Mexico was based on specific demands placed by a largely agrarian and heterogeneous society, what ever government came after would have to address such radical desires for which the revolution was fought for. The PRI, which was the political party that came to monopolize the government after the initial formation of the PRN, established a radical, revolutionary discourse while maintaining a corporatist structure that mimicked elements of Italian and German fascism, hence conserving bourgeois relationships to private property, while conceding basic demands to labor. Though unions were allowed to be established, under the post-revolutionary relationship, the Mexican government was meant to act as arbiter between labor and capital.
The previous unions that existed in Tijuana were thus consolidated under the new structures that permitted state control. Unions and civil organizations were attached to the PRI as semi-autonomous organs of the party, primarily under umbrella federations such as the CROC, CROM, CTM, CNOP, and so on. Meanwhile, on the side of business, as unions grew so too did the role of chambers of commerce and business associations. Hence, by making organizations that channeled energies and disputes to the State, the PRI could effectively wield control from the top-down. Union members that supported the State agenda obviously received PRI support, while those that ran counter-current were marginalized by the State. This is not to say that the relationship between State and union was one that was fixed; these observations note tendencies, not law. Militancy and conflict with the State and the status quo did occur, but PRI co-option was constant.
By the 1980s, under the necessity of reform due to the changing global economic order, unions were forced to undergo a series of transformations. Some fought this, but many took the side of the State, which having to undergo structural adjustment, took aim at the social welfare state and those vehicles that protected it. Unions with high levels of bureaucracy (such as the CTM, which is also one of the unions with the greatest number of members) quickly conformed to the new regime of social organization. What became increasingly common was the establishment of contratos de proteccion (protection contracts), wherein union representatives make contracts directly with employers in order to protect the firm from any worker actions as well as staving off militant unionism. Under such cases, it is even common that union representatives not even inform the employees at the site they are represented by unions. Though such cases are prominent, it must once again be noted that this tendency rather than rule, as Chris Tilly points out. It depends on local tradition and history whether the unions offer a genuine form of worker representation and protection.
However, in the last couple of decades, Tijuana and most of Baja California has increasingly rid itself of union militancy. This has lead to a notable trend: workers prefer to organize outside of union channels, fearing co-option and corruption within the unions. This is precisely the reason that farm workers in San Quintin recently organized independently from unions, catching them off-guard when the strike was called earlier this year. Due to large scale co-option throughout Baja California, workers looking to organize, few as they are, hardly look towards union confederation.
Union Organizations Currently Operating in Baja California
Due to the conflicts in San Quintin, where day laborers organized a revolt against their employers without the involvement of official unions, the Confederación Nacional Campesina (CNC) got international media attention. Their absence in the areas of conflict – their unwillingness to get involved – was explained by saying the conflict is “too political”. They made it very clear, then, that the organization had no interest in fulfilling its duty to protect the workers from exploitation. Among other things, it was the international critique that led to severe internal conflicts in the CNC of Baja California.
The Confederación Revolucionaria de Obreros y Campesinos (CROC) is relatively passive in the field of labor law in Baja California, on the other hand. The Confederation is, however, strongly involved in local politics. Jorge Alfredo Guadalupe Escobar Sánchez, head of the confederation, is a city council member of Tijuana – the state’s biggest city – and member of the Infonavit counseling group in Mexicali. The CROC representative for Tijuana – Jesús Javier Merino Duarte – is also a member of the city council, as well as being head of several smaller unions in the city. Raymundo Estrada Ortega, another representative of CROC, is the head of a construction worker union and seems to have close relations to the Hank government.
What becomes clear, however, is that single individuals are holding a variety of power positions that are usually meant to exercise a certain control over each other. The unions, on the one hand, via public protest; the government, on the other, via corrective legislation.
Similar to CTM and CROC, Confederación Regional Obrera Mèxicana (CROM) is criticized for their lack of support in the case of the labor conflicts in agriculture (San Quintín, Oaxaca, etc.). Together with the CTM, the CROM was accused by the workers to actively undermine the strikes and protests in San Quintin. The reason for this total lack of support can be seen again in the strong relations between the confederation and the PRI. On a federal level, the Secretary General is also a congressman; on a local and state level, the connections are less obvious but the CROM representatives in Tijuana and Mexicali are involved in the consulting committee of Infonavit in both cities. Furthermore, the CROM openly supported the PRI during the elections in 2012, something which should not be too surprising as nearly all the major unions throughout Mexico claim a direct relationship with the PRI.
Union Corruption in Baja California Socially and Culturally
In the first half of 2015, Tijuana became a prime example for the role that corruption plays not only in the unions but also in Mexico’s society in a whole. A case that made headlines beyond the city’s borders was a report on an internal investigation that claimed more than 150 officers were and/or are involved in organized crime, excessive violence, blackmailing. The problem about this situation was not only a completely dysfunctional police force but that fact that these crimes were known to the city government for years. It is this silence, the acceptance that creates the basis for widespread corruption in the unions.
The cases touch all parts of everyday life. One example is the taxi/public transportation driver union. A taxi in Mexico has to be registered as such. Aside from taxation purposes, this strategy is intended to prevent an oversupply of taxis in a specific region or city; hence, it does protect drivers’ income.
A problem the drivers (as well as the state) are confronted with, however, is the illegal reproduction of taxi licenses. The city of Tijuana attempts to battle this fraud through concentrated police actions. These actions come with a remarkable lack of success. In may 2015, the CTM accused the local union of informing the drivers about time and date of police checkpoints so that they can be avoided by drivers with false licenses. Even though this is a problem, the CTM is criticizing the wrong end of the chain: Yes, it is very likely that the local union informs its drivers, but it is the police that informs the union and it is the government that decides to have single dates of “taxi checkpoints”.
At least four parties are involved in this circle – and none of them loses profit (although the biggest and at the same time poorest group of people is paying the major part). And it has to be said: “at least” the taxi union in Tijuana is a member of the CTM – even though CTM released a statement against corruption, it is more than likely that at least some of its members are actively involved in the case. Especially because the secretary general of the CTM in Tijuana is at the same time a member of the city council.
A look at the statewide leader of the organization, Eligio Valencia Roque, speaks further against the CTM as a force that works against corruption. When he was accused of Fiscal Evasion and fraudulent real estate deals, he miraculously avoided jail by taking an oath of office for the seat of representative, which includes immunity – despite the presence of federal agents. This episode alone makes clear how low the CTMs interest in legal control over administrative activities is. The fact that his son – as well as his son-in-law – are in power positions within the CTM and/or the PRI further strengthens the assumption of the organization’s involvement in the corrupt structures that lead to mentioned protection of fraudulent taxi registrations in Tijuana.
Another field that is heavily affected by the consequences of corruption is education. Since 2013, the teachers union Sindicato Nacional de Trabajadores de la Educación (SNTE) became infamous when their long-time leader, Elba Esther Gordillo, was arrested for embezzlement of union money. During the month following her arrest, a variety of union leaders in different states were arrested for quite similar offenses. During these arrests – and in combinations with a wave of big strikes in Mexico City – it was confirmed that the union consisted of a very rich leadership that was representing very poor workers. Whereas most of the legal consequences already happened, the social effect of a union that did not work for its workers but rather stole from them was striking in last April Baja California. The scandals around the SNTE strengthened alternative organizations, such as the Coordinadora Nacional de Trabajadores de la Educación (CNTE) which is currently calling for strikes to finally fight for a better income for rural teachers and a change in union leadership resulting from the broad indignation towards Elba Esther Gordillo, thus spurring a mobilizing effect on the members of the SNTE.
But it is society at large that loses most – since the taxi union covers all kinds public transportation, the money paid to police and government is put on the drivers and they have to give the financial burden to their customers – the vast majority are within low-income social groups. The damage done by the corrupt leadership of the SNTE goes even deeper. The educational system in Mexico is very weak, resulting in the fact that the country is not able to compete on an international level and in some areas, such as Oaxaca, Guerrero, and Chiapas, around 20% of the population is illiterate – a rate more than twice that of the Latin American average. The unstable payment given to those who work in the educational system is a main factor for this weakness. Therefore, the current fight for higher wages might have the potential to actually better not only the teachers’ lives but also the students’ future. The current downside is that schools remain closed and students receive poor-quality education largely due to systemic corruption and exploitation, executed by an organization that is supposed to safeguard their rights.
What is interesting about this deeply embedded corruption is the public’s reaction to it. Corruption is not only widespread but also popularly recognized as an issue. Transparency campaigns as well as open accusations are found on a regular basis: The CTM claimed to battle corruption in May 2015, the federal government just released a new anti-corruption law in June, and the Mexican Employers’ Association (Coparmex) implemented anti-corruption rules in February. These are only the most recent allegations of the last four months. Yet, none of this is new: anti corruption laws and campaigns have been implemented for quite some time. Such measures, simply, have not rendered considerable positive results.
There is currently no reason to believe, that the new regulations will be any different. The possibility to concentrate power in individuals that hold positions in unions as well as the government will not end with the new regulations. It is this relationship that makes corruption so common. The problem in Mexico is that this entanglement of the state and its civil organizations is a central element of the PRI’s statecraft. The strategy to implement forces before they might become a threat to the PRI’s power enabled the party to keep power over most part of the 20th century. Therefore it is safe to say that as long as the PRI holds any power in Mexico, there is little to no ground to effectively battle corruption.
“El Chapo” Guzmán has indeed escaped prison again: the events have made national and international news in the past couple of weeks. Though many, in recent times, believe he is one of the most infamous and wanted drug dealers of all time, others rightly believe this is an exaggeration. What is true, however, is that Joaquín Guzmán Loera, “El Chapo”, built one of Mexico’s largest illicit drug businesses, being, for example, one of the principal suppliers of cocaine to the United States. His break out this past July 11 from Altiplano, Mexico’s only maximum security prison – and the most heavily guarded – marks his second successful escape from official authorities: back in 2001 he managed to get away from Jalisco’s largest and securest facility, supposedly, in a laundry cart.
Some estimate that in order to get away last month, however, El Chapo had to pay at least 50 million dollars in bribes and, notoriously, construction costs.
In Altiplano prison, located in the Estado de Mexico and built to hold high profile criminals, El Chapo lived in a small individual cell with an integrated shower: the only spot, because of human rights issues, where security cameras were blind and the place where one of Sinaloa’s principal drug kingpins, according to Mexican authorities, was last seen by the facility’s surveillance.
There, a small opening was found that led to a 5,000ft long tunnel equipped with electricity lines for lighting, a makeshift ventilation system made with PVC pipes and interestingly enough, a parallel railway track where a transportation wagon – built with a motorcycle frame and engine – successfully transported El Chapo to Santa Juanita, one of the prison’s nearest neighborhoods.
Though the small house under construction on the other side may have not raised any red flags, it was strategically placed as to enjoy a full panoramic view from both the prison and oddly enough, a military base which is less than two miles away from the residency. Still, allegedly, no one saw, heard or at least reported any suspicious activity.
The possibility that El Chapo bribed the military is not entirely out of the question, however.
Nonetheless, it is important to note that unlike the first time he was arrested, when El Chapo spent nearly 9 years behind bars, this time around, only a year and five months elapsed before one of Altiplano’s most important prisoners escaped. Servando Gómez Martínez, “La Tuta”, Miguel Ángel Treviño Morales, “El Z-40”, Omar Treviño Morales, “El Z-42”, and Osiel Cárdenas Guillén, amongst other big names in Mexico’s illegal drug business, including one of El Chapo’s principal henchmen, José Sánchez Villalobos, continue to serve life-long sentences in Mexico’s primary maximum security prison.
It is also worth mentioning that a week prior to his 2014 arrest in Sinaloa, El Chapo managed to escape from authorities thanks to an undoubtedly complex tunnel system that connected six houses in the vicinity. Sánchez Villalobos, precisely, was not only his main financial administrator along the U.S.-Mexico border region connecting California and Baja California, but an expert tunnel planner and constructor that years prior had completed that tunnel project.
He was actually arrested in 2012 in an upscale neighborhood in Zapopan, in the Mexican state of Guadalajara and taken to Altiplano. Though he kept a low profile, he led an opulent lifestyle that led authorities to his arrest. He was later positively identified as the chief director of El Chapo’s narcotic trade operations via tunnels in the Otay Mesa and Tijuana region and sent to Altiplano prison.
It is not a surprise, however, that El Chapo did not attempt to breakout Sánchez Villalobos from prison in the three years that he has been locked up. After all, Sánchez Villalobos himself is thought to initially have worked with Felipe de Jesus Corona-Verbera, an architect from Guadalajara that inaugurated the Sinaloa cartel’s tunnel-building trajectory in the 1980s.
When Corona-Verbera was arrested in 1990, El Chapo simply remarked: “Let him get screwed.”
This suggests that getting Sánchez Villalobos out of prison may have not been a crucial goal of the cartel: though he indeed was one of El Chapo’s principal business partners, he was not absolutely necessary for the cartel’s operations. His tunnel-building expertise, like Corona-Verbera’s, however, has undoubtedly been passed down to other cartel members.
It is very possible that El Chapo and company had taken careful note of previous drug traffickers that resorted to tunnels.
In fact, initially, Alberto Sicilia Falcón, the Cuban drug dealer that became the first top-ranking criminal to escape prison – the Lecumberri facility in this case –, crafted tunnel building through a tunnel dug underground in 1976.
Likewise, it is possible that the tunnel that El Chapo used to escape may have been initially – or partially – constructed to get Sánchez Villalobos out of Altiplano. If it was indeed intended to get him out of prison, things could have changed once El Chapo was caught and taken to the same facility where Sánchez Villalobos is being held.
Some believe that Sánchez Villalobos, in fact, somehow participated in the Altiplano tunnel construction, perhaps by laying out the blueprint or providing instructions from inside the facility itself. After all, final surveillance footage shows that El Chapo had an electronic device – a kind of touch-screen tablet – within his cell on the day of escape. Though it is difficult to demonstrate decisively, it is not completely out of the question that Sánchez Villalobos helped via telephone.
What is certain, however, is that if one is to believe – though some fiercely deny – that El Chapo indeed exited Altiplano through an underground tunnel, carefully planned and constructed, he necessarily required the assistance of somebody with an intricate and experienced tunnel engineering ability such as Sánchez Villalobos.
The tunnel, just tall and wide enough for El Chapo to stand in and the cart to move through in order to transport not just the prisoner but also the construction materials and the earth and debris being torn in the operation, was well elaborated.
In addition to the millions of dollars used to bribe individuals on the Altiplano staff – as of now over thirty have been detained, 7 arrested and fifty continue to be investigated – experts estimate that it would take over 350 days of 10-hour work shifts between four construction workers in order to get 7 cubic meters of material per day. Working quietly at that pace, engineers believe, it is not impossible for the tunnel to have been constructed without causing a considerable ruckus.
The workers that participated in the construction, on the other hand, are in all probability, dead. Some of Corona-Verbera’s tunnels discovered in Arizona also led authorities to mass graves where the bodies of diggers and tunnel construction workers were found. From México D.F. to Ciudad Juárez: if a narco-tunnel is found, often, the bodies of participants are also retrieved nearby.
Coincidently enough, a week after El Chapo escaped Altiplano prison, in the state of Durango, 11 miners were murdered. They were unarmed. According to their family members, they were not in anyway related to illegal activities, yet, it is very possible that these workers participated in the tunnel constructed to get El Chapo out of Altiplano prison.
For the cartel, after all, it is easier and safer to simply eliminate any possibilities that information may leak to authorities or major newspapers.
Assuming the tunnel was not somehow already there or that El Chapo simply paid his way out through the front door, again, it is not out of the question that the tunnel escape route construction began at some point in 2014, especially if we consider that tunnel elaboration and smuggling is notoriously El Chapo’s most prominent trademark.
If uncaught, one vehicle alone can illegally cross up to 300K of methamphetamine, for instance, across the Tijuana / San Diego border, which is an area heavily guarded and inspected. The amount of illicit narcotics that can be transported via tunnel, however, can potentially explain, to a considerable degree, the reason why El Chapo is one of the principal illegal drug suppliers to the United States.
Tunnels don’t just allow for bulkier merchandise – such as marihuana – to go through. Workers, people and money can all indeed go through with ease.
It could be said, in fact, that El Chapo’s business has been largely built through tunnels. Moreover, engineers affirm that the ones found in Otay Mesa, effectively built by Sánchez Villalobos, as a recent investigation reveals, are structurally similar to El Chapo’s escape tunnel in Altiplano.
Yet, it is important to entertain the following question: why did El Chapo have to dig a tunnel to escape Altiplano when he basically built a hotel last time he was in prison?
Indeed, when federal officers investigating his activities personally interviewed him in Jalisco’s prison in the early 2000’s, it became clear to them that El Chapo was in charge. “It dawned on me that he was the boss, that he has actually running the prison…I was scared of making him think I was his enemy”, declared one of them extra-officially.
Anabel Hernández, a reputable journalist and investigator whose expertise is drug trafficking in Mexico believes, persuasively, that El Chapo, back in 1993, deliberately let himself be arrested in order to evade rival cartel leaders – to ensure his survival.
It is at least true that while he was behind bars in Jalisco, many of his adversaries where actually killed, imprisoned or left the drug trafficking business. To some degree, this coincidence did contribute to El Chapo’s return to a successful illegal trade operation so prominent that in 2014 it culminated on his arrest and consequent escape last month.
13 years El Chapo had been on the run from both U.S. and Mexican authorities.
Perhaps this last time he was arrested, he acted quickly because he was able to directly communicate with Sánchez Villalobos inside Altiplano. Possibly, he never meant to be caught last year. Being unable to shamelessly bribe his way out through the front door – or in a conspicuous laundry basket – he had to partially bribe and partially dig.
It is indeed crucial to note the reaction of police and government authorities as a result of El Chapo’s escape because it suggests an interesting relationship between the Mexican government and the former, in this case, a major representative of the drug trafficking business.
First of all, it is obvious that Mexican police authorities have been rendered completely unqualified and decisively inept in handling the escape situation. Following El Chapo’s escape, to no avail, under the leadership of Miguel Ángel Osorio Chong, authorities deployed a federal and military police force in a serious manhunt across nine states: from Morelos through Tlaxcala to Estado de Mexico.
The Toluca airport was also partially shut down.
Yet, if state authorities were unable to size El Chapo for thirteen years, how did they expect to catch him in one night?
In fact, Mexican officials were so overwhelmed that they resorted to the consultation of three retired Colombian generals: Rosso José Serrano, Ismael Trujillo Polanco and Luis Enrique Montenegro, all three whom participated in taking down the so-called King of Cocaine, Pablo Escobar, and in the dismantling of the Medellín cartel in Colombia.
President Enrique Peña Nieto, in the meantime, continued to attend international relations in France. From the distant European nation, he declared that El Chapo’s tunnel escape was not just “a very unfortunate event that outrages Mexican society” but also a definite “insult to the Mexican state” that has left him “deeply concerned.”
Still, El Chapo is nowhere to be found. He continues to be at large, possibly hidden in the Sinaloa Mountains. Or maybe, authorities do not intend to actually catch him.
“I trust that the institutions of the Mexican state, especially the ones involved with public safety, have the determination and the strength to re-apprehend that criminal,” continued Peña Nieto. Interestingly enough, some believe that El Chapo actually has sensitive information about corrupt government officials, from Vicente Fox, Felipe Calderon through Peña Nieto’s cabinet.
Anabel Hernández claims that when El Chapo was first arrested in 1993, he talked to Coronel Guillermo Álvarez Nahara dozens of names of businessmen, governors, and government representatives that were involved in the drug trafficking business. Basically, he revealed a long list of individuals working for both the Mexican state and the Sinaloa Cartel.
What is certain, though, is that there is a number of businesses that undeniable belong to Joaquín “El Chapo” Guzmán that have been commercial associates of Peña Nieto’s government through contracts and concessions.
From 2007 to 2014, according to an investigation led by the U.S. government, El Chapo managed to create a commercial net of 95 businesses. From that conglomerate, 14 have dealings with the Mexican government.
Estancia Infantil Niño Feliz, Nueva Industria de Ganaderos de Cualiacán, Bioesport, Fletes y Transportes Gaxgar, Aero Express Intercontinental, Urbanizadora Nueva Italia y Cooperativa Avestruz Cuemir amongst others, including several gas stations that have active contracts with PEMEX.
With that said, it is difficult to deny that El Chapo Guzmán is in one way or another involved, or is to some degree related to the Mexican state, whether it is through individuals that work for the state, politicians, representatives or facilities as a whole as the Altiplano prison, for example.
Moreover, it is also imperative to recognize that even with expert tunnel builder José Sánchez Villalobos behind bars, tunnels will continue to be built and illegal merchandise as well as people will likewise flow through them, whether it is to exit from a guarded facility or to enter a foreign country such as the U.S.
Tunnel building and drug trafficking is, for the moment, here to stay. With El Chapo free to roam again it is a given that illegal activities of the sort will continue to flourish and to generate immense amounts of profit as well as investigations by both the U.S. and the Mexican government. Even without El Chapo, however, an example has been set.
The precedent of tunnel building, violence, and the outright challenge of the state’s authority, with or without El Chapo, seems to be a fixed aspect of the future for the U.S. and Mexico at hand.
Dipeasa began working diligently for Banamex in 1994, when Alfredo Harp Helú, the banks’ chief administrative counselor was kidnapped. For nearly 20 years thereafter, the company provided specialized - and expensive - private security services for one of the largest Mexican banks in recent history. In 2014, however, investigations led to the discovery of fraud scheme involving fake and inflated service receipts issued by the security company, totaling in at least $15 million dollars of stolen capital.
Though money theft is a serious offense, for Citi, who purchased Banamex in 2001, it was more alarming to discover a breach in business trust: Dipeasa’s illegal monitoring, recording and use of telephonic conversations as well as the fact that it provided services independently, to clients that were never approved by the Mexican bank. In taking decisions independently, without proper approval, the Dipeasa case became a clear indicator of a general issue of business corruption in Mexico.
Indeed, the most concerning issue for Citi, in that particular case, were dishonest business practices: an absolute loss of transparency.
And though it is still unclear whether Dipeasa, Banamex – or both – are to blame, these events should come as no surprise: as we’ve previously reported, money laundering and banking fraud in Mexico, in the past few decades, has been an ongoing problem not just for official authorities but for domestic as well as foreign banking groups and companies that have ventured to invest in the territory.
The worldwide known case of HSBC, a banking institution with a renown and impeccable global reputation that in 2012 was severely penalized should speak for itself. After it was discovered that from 2006-2010, HSBC Mexico failed to monitor over 600 billion dollars in transactions that enabled money laundering, including illegal activities from Mexican and Colombian drug traffickers, the institution had to pay over 2 billion dollars in fines.
Interestingly enough, shortly after that banking scandal, president Enrique Peña Nieto was elected into office. The incident was a definite foreshadowing of some of the issues that have persisted throughout his regime: corruption, theft and money laundering, amongst others.
The recent case of Banamex and Oceanografía, one of the largest petrol services company working in Mexico in recent years, for instance, is a crucial case in point. Just last year, after Banamex was petitioned to restate its 2013 earnings and account receivables, another million-figure fraud was brought to light. Though by the end of 2013 the Mexican bank had lent $585 million dollars in short-term credit to Oceanografía, the majority of the accounts were found to be fraudulent.
Since a mere $185 million dollars were estimated to be properly backed, $400 million, in short terms, went missing somewhere between Banamex and Oceanografía.
That loss, of course, has to be affronted by Citi, in addition to penalty fines issued both by the Mexican and the U.S. government.
As Julián Alfonso Olivas, from the SFP, the Mexican Public Function Office, explained in regards to the case, “when a contract is breached, damage and loss have to be accounted for, in this case we must refer to penal clauses in order to determine the penalty amount.”
In that light, the energy reform advanced by Peña Nieto personally as well as his cabinet and political allies becomes particularly relevant because one of its principal points is to stimulate global business interest in Mexico. Opening up PEMEX, in fact, was one of the main goals of the reform.
Evidently, the problem is that foreign investment, precisely, is built on security and trust. Without effective and properly executed due diligence, however, how can safe business practices be assured? With several cases, just in Peña Nieto’s presidency, of money laundering and fraud involving international investors, what kind of future is ahead?
The Dipeasa and Oceanografia cases are both exemplary of several persistent issues, but in the latter case, the problem can be explained on various points.
First of all, it must be noted that the problem began in the fact that the loans were merely secured by accounts receivable. The principal trusting point was the fact that Oceanografia had been PEMEX’s principal contractor since the late ‘70s, when the firm began working with both PEMEX and PEP in oil exploration and production.
From 1999 to 2013, in fact, the company provided more than 2 billion dollars worth of services: from Vicente Fox to Felipe Calderón and finally to Peña Nieto.
Yet, the forging of invoices was blatant: according to several new sources, the documents were evidently false, whether they were heavily stamped or carelessly elaborated on Word documents. That sheds light not only on the fact that the problem can be explained through a poor security standard in dire necessity of innovation – perhaps it is necessary to digitalize invoices – but it reveals that it was not a secret that several representatives of PEMEX, Oceanografia – or both – were well-aware and likely profiting from the situation at Citi’s expense. Indeed, 11 high-ranking officials from the Mexican bank were immediately fired after through investigations.
As the Business Times reported, Michael Corbat, Citi’s CEO voiced his concern: “although our inquiry into this fraud is continuing, we have been responding forcefully over the past week by assessing the overall exposure to Citi, coordinating law enforcement, pursuing recovery of the misappropriated funds and seeking accountability for everyone involved.”
It is doubtful, however, what kind of accountability will Corbat or Citi manage to achieve.
The history of PEMEX and fraud, for instance, is a known issue. Though never officially convicted, Carlos Romero Deschamps, the leader of PEMEX’s workers’ union – and of the principal advocates for the energy reform – has frequently been on the national and international gaze due to his extravagant lifestyle and dubious fortune. In 2013, for example, Deschamps presented his son with a $2 million dollar birthday gift: a Ferrari Enzo.
Yet, during the 34 years the magnate has been active in congress, there have simply been no laws designated – or at least effectively enforced – that will target an individual like him.
On the other hand, after the discovery of the Banamex embezzlement, Amado Yañez Osuna, head of Oceanografia, was placed under house arrest and assigned a million-figure bail. He had no problem taking care of it, considering his fortune is similar to that of Deschamps. He is the owner of one of the largest petrol ships in the world, the OSA Goliath, of a construction company and a soccer team, to name a few. He was behind Oceanografia for decades.
And yet: it is impossible to figure that he was not aware of the fraud involving PEMEX and Banamex.
Indeed, Banamex and Citi were not Oceanografias’ only victims. The petrol firm has a recent history of fraud: Navistar; Hoop Lobith; Deutsche Forfait AG; Misr Bank Europe; Woodlands Export and Landesbank Hesse, amongst others, are facing considerable losses.
In regards to the business and political climate as whole, however, as the L.A. times proposed, Peña Nietos’ “ability to clean up these alleged misdoings would go a long way in assuring international investors wary of endemic corruption in much of Mexican business and industry”.
Yet: how can Peña Nieto sweep this serious condition under the rug when his very political allies are involved? Yañez Osuna’s whereabouts after the incident, though he was officially sentenced with prison time, are unknown.
Furthermore, it is evident that the issue cannot be pinpointed to a single responsible individual, firm or agency. Dipeasa and Oceanografia, independently, were operating corruptly and embezzling money, not just from Banamex but also from other companies. PEMEX, likewise, was facing and continues to face its own fraud issues. Each firm blames each other and top officials in all three, though each claim being unaware of the situation, have been found to be involved.
Alarmingly, Oceanografia is not the only contractor known to have breached the trust of PEMEX and acquired money illegally: experts often report that similar scams are common and operate regularly.
The problem, thus, is general: an entire bureaucracy riddled by corruption that now, after the energy reform, is looking to clean up its act in order to tender oil and gas exploration and production, to innovate and to collaborate with international firms looking for healthy business relationships. The question remains: will it be able to?
The sale of Oceanografia may provide us a possible hint of the future: Grupo Alemán, from ex-President Miguel Aleman’s family – which also owns Interjet – was the principal purchaser of the petrol service company. The Aleman family and Yañez Osuna underwent serious negotiation; a price and agreement in fact had already been publicly announced when investigations revealed the $400 million scandal.
Though the deal – according to official news sources – did not go through, it speaks loudly about the questionable business relationships currently taking place in Mexico. Miguel Aleman Velasco, the son of ex-president Miguel Aleman, is an active politician aligned with the PRI: he has been a member since 1953. There is no doubt that his relationship with Peña Nieto is active and healthy.
Likewise, it is very probable that he knew exactly what he was getting into when Grupo Aleman agreed to purchase Oceanografia before public pressure did not allow the sale to consummate. The question, thus, remains: who are the players, who is behind big business in Mexico and what mechanisms are in place to prevent fraud, theft and the loss of capital at the expense of corruption and dubious leaders?
As we have previously reported, in the last couple of decades, the drug cartel business in Mexico has proved to be both a highly lucrative business and an endemic problem for the safety of nationals and foreigners alike. The 2014-2015, period, however, has been a decisive time for narco trafficking because leaders of the Sinaloa Cartel, the Gulf Cartel and the Knight’s Templar cartel – some of the largest criminal groups in Mexico – were captured, which has inevitably led to a significant restructuring of power that is ongoing to this date.
This recent power shift will very likely have specific - and violent - repercussions on the Mexican territory that merit our attention.
The emergence of the New Generation of Jalisco Cartel (CJNG) is a case in point. It is a new drug trafficking group that, since 2011, has been making itself known in the Mexico through territorial and market expansion as well as violent confrontation with state and federal authorities. It has a left a mark on the drug market and society in general not only by leaving messages and warnings on cloth banners for pedestrians and city dwellers to see, but by hanging lifeless bodies from bridges, kidnapping, torturing and executing public officials as well as businessmen.
In 2011, notoriously, the CJNG left 35 dead bodies lying on the streets of the Veracruz’s tourist zone, as a kind of public demonstration of power and its relentless use of violence. In 2013, moreover, over 100 bodies were found buried in clandestine graves in the state of Jalisco: they were immediately associated to the illegal activities of the group, serving as evidence for a much larger body count estimated in relation to its illegal activities.
A long list of violent crimes follows the path of the CJNG, including the kidnapping and murder of soldiers of the Mexican army as well as frequent shootouts with Jalisco’s state police, which, by April of this year, had left fifteen officers dead and several civilians accidentally shot.
It has been recognized that the group’s leader is Nemesio Oseguera Cervantes, also known as El Mencho, who has been active in drug trafficking activities since the 1990s – and who actually served prison time in the U.S. for heroine trafficking – is now one of Mexico’s most wanted.
In fact, on the 8th of April of 2015, U.S. Department of the Treasury’s Office of Foreign Assets Control, OFAC, announced it has been following Oseguera Cervantes’ and the CJNG’s activities, which they now finally recognize “plays a significant role in international narcotics trafficking” and “ranks among the most powerful drug trafficking organizations in Mexico.”
But the CJNG’s activities are no longer limited to the Mexican territory. As the U.S. Department of Treasury’s announcement also indicates, the “CJNG has expanded beyond Jalisco to other Mexican states, including Michoacán and Colima” and that has in fact created “ties to other criminal organizations around the world, including in the United States, Latin America, Africa, Europe and Asia.”
The problem is that the new group has recently also taken over many of the trafficking routes and market niches left open by deteriorating drug cartels, precisely as a result of internal restructurings after dead or captured leaders or other decisive changes to activities. The Sinaloa Cartel, the Gulf Cartel, the Beltrán Leyva group and the Zetas all have abandoned connections that the CJNG have been quick to take over.
Indeed, the CJNG is now active in Guatemala, Colombia, Panama, Perú and Ecuador, to name a few. Ricardo Restrepo, Colombia’s chief anti-drug director has worryingly declared that though the Sinaloa Cartel continues to have an important presence in Central and South America, the CJNG must be recognized as the “emerging power” in the area.
Óscar Davila Mejicanos, Guatemala’s chief anti-drug director has likewise confirmed that El Mencho, by reconfiguring the drug market on northwest of the country, which was previously controlled by Doña Tana (arrested in Mexico in 2014), is now effectively smuggling cocaine from Colombia to Mexico through the Central American nation.
In Mexico City, on the other hand, the CJNG has moved in through extortion. The group is known to have killed several bar owners in both the Zona Rosa (the red zone) and upper-middle class neighborhoods such as la Roma and la Condesa after they refused to pay a weekly operating fee ranging from 15 to 40% of proceeds. Many restaurants, bars and other businesses are paying but others have closed down because they cannot afford the new expense.
But the CJNG has also allocated itself in the northernmost city of Mexico.
Alarmingly, on the fifth of April of this year, messages by the new group were placed in various parts of Tijuana. They warn about an upcoming violent wave as a result of confrontation between them, the currently existing narco factions in the city – nine as of 2014, to be exact – and the Sinaloa Cartel. Both the CJNG and the CTNG (the New Generation of Tijuana Cartel) signed the banners.
Such a joint signature should be read as a clear indication of both the CJNG’s appearance in Tijuana – a crucial point for drug trafficking in northern Mexico – as well as the springing up of a new generation of narco criminals in the city, which involves both members of Jalisco’s CJNG and resurgent members of the infamous Arellano-Félix Cartel, the CAF.
The narco banners – one of them left hanging on one of the most heavily transited streets – are basically a declaration of war. And they are also telling of the CJNG’s intention to modify the dominant drug trafficking structure that has, to a degree, been ongoing since the 1980s.
It is no surprise, then, that few days after the banners were posted, Luis Manuel Toscano Rodriguez, El Mono, was killed while eating at a public food stand. Toscano Rodriguez was one of the leaders of an active CAF faction in Tijuana and had been arrested and released several times in the last couple of years. Interestingly enough, Toscano had an appointment to make a statement to authorities about several ongoing investigations against him.
His death could very well be an indicator for an upcoming turf-war between battling drug-cartel organizations that will surely impact the city.
Remaining CAF members, then, along with the incoming CJNG, are potentially the new components of the New Generation of Tijuana Cartel, or what the banners indicate is the CTNG.
If we take into consideration that the CJNG is already active in numerous parts of Mexico, it makes sense that the cartel is looking to secure new territory in one of the most crucial cities for drug trafficking in Mexico and that its strategy is to allocate itself in an already active dispute in Tijuana.
The remaining members of the Sinaloa Cartel in the city, however, are not likely to take things lightly. Much like in the 2007-2010 period, when public shootouts between the CAF and Sinaloa Cartel were commonplace – even in broad daylight – the upcoming times will possibly show an increase in violence, public shootouts, kidnappings and other criminal activities that place citizens, travelers and businessmen in potential danger.
Unfortunately, the CAF in Tijuana is notorious for its ties with municipal and ministerial police officers and officials, which make it a prominent partner for the CJNG and a group that is difficult to eradicate. The CAF and CJNG alliance that culminates in the CTNG is likely to become a powerful criminal organization.
As we mentioned above, the CJNG’s current expansion in the area has been built precisely on the weakening – after the capturing of main leaders – of other prominent groups such as the Knight’s Templar or Zetas. Yet, contrary to the latter, the CJNG has not been affected by the capturing of important bosses, including Eliot Alberto Radillo Peza, Martin Arzola and Abundio Mendoza Gaytan, José Guadalupe Serna, Erick Valencia Salazar, also known as el 85, and Oseguera Cervantes’ own son, Ruben Oseguera González, who was arrested in early 2015. In May of 2015, Victor Manuel García Orozco was captured in Michoacán.
Much like other drug cartels, the CJNG is definitely an armed, paramilitary criminal organization. Their massacres have been ongoing since 2011: Veracruz, Sinaloa, Jalisco, Michoacán, Nuevo Laredo and others. Their activities on social media and their YouTube videos of bloody assassinations not only make the group notoriously violent but also are indicative of their clear strategy to promote fear and build a specifically ruthless reputation.
Surely, the appearance and consolidation of the CJNG indicates a new kind of drug cartel that is working in both established and innovative ways. Unfortunately, its current trajectory speaks loudly of the continuing drug trafficking problem that concerns the authorities of both Mexico and the U.S. and that continues to disrupt social order, in fact making several cities and areas, especially of the northwest regions of both countries unsafe for nationals and foreigners alike.
From the myriad of broken promises that tally up in Enrique Peña Nietos’ current presidency, restoring order and peace to a violence-ridden Mexico is possibly the most notorious.
Though somewhat unreported, the turmoil involving the legislative nation-wide elections that took place last week is not only indicative of the PRI’s struggle to dominate the country’s political climate: it also reveals the deep-rooted corruption and violence that persists and continues to plague Mexican society and its public affairs.
Even more so than in 2013, the midterm elections of this year involved violence against candidates, campaign workers and politicians as well as hundreds of reported cases of electoral fraud and violent protests in several parts of the country. An independent candidate was also elected in Nuevo León, yet, his disaffiliation from the PRI is highly questionable.
The case of Yucatan’s Enrique Hernández Salcedo, from the National Regeneration Movement, the MORENA party, is notorious: he actually received 37% of votes, officially winning the largest a mount of votes for the mayor seat.
The only problem, ironically, is that he had been murdered after a political rally that took place several weeks prior: by the time citizens cast their votes he was already dead. Many suspect the involvement of political adversaries in his assassination since he was an outspoken critic of the state government.
But his murder is not an isolated incident.
Hector López Cruz was killed in a drive-by shooting, Silvia Romero Suárez, from Guerrero, was kidnapped, Ulises Fabian Quiróz, from the Green Party, murdered. Aidé Nava González: beheaded. Israel Hernández Fabela, killed in the garage of his home. Miguel Angel Luna, a former mayor from a municipality in the State of Mexico was shot dead in his campaign office; his bodyguard was seriously wounded. And the list goes on.
Since the beginning of 2015, at least 21 people involved in the political arena have actually died. Dozens of others have been threatened, injured or kidnapped.
The violence against these political figures can be explained as an effort to dissuade registered voters from participating in the elections or to persuade others to vote for a particular party or official. In that sense, it also signals the continuous power of organized criminal groups in the political affairs of Mexico.
Security analyst Alejandro Hope in fact commented that actions against political figures in states such as Guerrero and Michoacan, which have been riddled with violence in recent times, might have considerably influenced voter participation. Luis Carlos Ugalde, a legal consultant, also explained that many of the murders could in fact be related to organized criminal groups and the drug trafficking business.
Electoral Fraud, Protests and Civil Unrest
Yet the killings were not the only issue that interrupted the electoral process: massive protests took place in several parts of the country. Roads and highways were blocked, ballots burned and election headquarters vandalized.
In the state of Guerrero, fellow students, teachers and family members of the 43 disappeared students of last year protested for several days and actually managed to halt voting activities by taking over and burning ballots. Confrontation with other political groups and authorities ensued.
In Michoacán, protests led to the burning of several vehicles.
Protests in Oaxaca, on the other hand, were also noteworthy. Ballots never actually made it to several districts and dozens of members of the CNTE, the National Coordination for Teachers Union, who continue to protest against the educational reform initiated by Enrique Peña Nieto in the beginning of his presidential term, in fact attacked a van transporting ballots and burnt them in the city’s center: over 30 were destroyed.
Furthermore, more than a hundred people were arrested nation-wide. Lorenzo Cordova, head of the National Electoral Institute, made an urgent, public call on authorities to help maintain an orderly electoral process.
But in Mexico D.F., protests by MORENA continued. The young party demanded a voting recall, claiming electoral fraud. The National Action Party (PAN) also demanded a voting recount. Laura Elena Fonseca, highest authority and president of the Electoral State Council, however, denied the petitions and declared that electoral fraud was simply “not a possibility.”
Notwithstanding, hundreds of fraud cases were reported nation-wide, from Chiapas to Baja California. They involved ballot relocation, voting without proper ID, and casting vote without being on the registered voter list for a particular municipality. Dozens of reports involving purchased votes were also registered.
Yet, somehow, the ruling party received the majority of votes, according to official reports and counts.
Jaime Rodríguez Calderón or “El Bronco”, translated as “the brazen one”, as he is popularly known, actually won the governor’s office in one of Mexico’s richest states: Nuevo León. Rodríguez Calderón is the first independent candidate to be elected governor of the state in the last 88 years.
Tough-spoken and claiming the lifestyle of a norteño, a rancher from northern Mexico, “El Bronco” won over 49% of votes. He claims that his principal method to reaching out to people is Facebook. His speeches include claims to being “part of the people”, fighting corruption and not being interested in “playing politics” or “dressing up unrealistically” as most politicians do.
In fact, he has an international tour scheduled to talk about how he managed to win an independent governor office without major financial support. The Dominican Republic is his first stop.
There is no doubt that his victory is indicative of a generalized dissatisfaction with both the PRI and the PAN, the principal traditional political parties in Mexico. Yet, it is questionable whether “El Bronco” is actually a genuinely independent governor.
Though he has not recently mentioned it, he was in fact affiliated with the PRI for over thirty years, serving as senator in 1992, 1997 and actually holding a municipal presidency from 2009-2012. It wasn’t until September of 2014 that he announced his disaffiliation from the ruling party in order to prepare this year’s campaign.
“You’ll never see in me the discourtesy and defamation of a dirty war, quite the contrary, there will be in my something more respectful, transparent and positive”, he declared last year in an open letter to Eduardo Bailey Elizondo, Nuevo Leon’s PRI leader.
President Enrique Peña Nieto, in fact, personally called the new governor over the phone to congratulate him.
It is evident that his success is a fresh strategy from the ruling party to maintain power in important territories during difficult times. With Enrique Peña Nieto’s final three years just around the corner and a majority of seats in D.F., having a PRI governor that apparently isn’t is another crucial advantage.
Needless to say, the elections in Mexico were, have been and continue to be a fraud: 2015 was definitely not the exception. Peña Nieto’s term has indeed been characterized by violence, instability and considerable social unrest in several areas of the country.
The violence and volatility surrounding this month’s midterm elections are surely related to the issues that the Mexican government has been unable to address in recent times. Peña Nieto’s energy, educational and labor reforms have caused civil unrest and mass dissatisfaction as well as an increased popular distrust of traditional political candidates.
The power and involvement of organized criminal groups in social and political affairs, the incapacity of authorities to address the 43 missing students as well as the inconformity of the CNTE in regards to the educational reform all have come to the fore and disrupted the electoral process.
Once again, but perhaps even more decisively, the Mexican government and its democratic claims have been exposed as ambivalent. In many regards, the government under the PRI leadership has even lost legitimacy in the view of considerable sectors of the population at large.
After a fourteen-year interruption, it is – and has been – evident that the PRI’s perfect dictatorship, as Peruvian Nobel-prize winning writer named it, is making a definite comeback.
It is widely known that the drug business in northern Mexico - especially in the city of Tijuana, in the state of Baja California - has been an ongoing issue for several years - even decades - now. Drug trafficking is principally orchestrated by drug cartels, which are often competing with each other via all but peaceful means. Murders, kidnappings, bank robberies, money laundering, public shootouts, bloody settling of scores and more: all of it commonplace when it comes to the illegal drug market.
Kidnapping thus has become an endemic issue for Tijuana: it has followed the trajectory of drug trafficking. For criminal gangs equipped with high caliber weapons, armored vehicles, and explosive weaponry, kidnapping is not an issue, it is in fact a relatively easy and quick way of acquiring large amounts of money when the pressure from the Mexican military - which has also increased in the last couple of years - has contributed to making other lucrative activity more difficult.
Just this past February, a kidnapping group composed of seven ex-members of the Arellano-Félix Cartel (CAF) were captured by law enforcement after a freed victim led authorities to the safe house where he was kept hostage. Over sixty police officers were involved in the operation: they found five vehicles, guns, assault rifles and dozens of ammunition cartridges. The gang is involved in at least five known kidnapping cases and six homicides. Their latest victim was a 63-year-old woman that worked at a local tortilla-shop.
The case sheds light on the fact that different types of kidnappings have indeed developed over time. Drug traffickers often kidnap not only high-ranking businessmen and their family members, visiting foreign businessmen and unaware traveling tourists, but shop owners, small-business owners and even bank employees.
Last month, a bus driver was found dead. He had been kidnapped but promised to be freed after family members paid over 15 thousand dollars for his release.
By the end of the month, over 211 dead bodies were picked up from the streets of Tijuana: victims of unreported kidnappings and other drug cartel related activities.
Currently, several narco factions operate in Tijuana. They’re active and spread across different parts of the city, with overlapping territories. Therefore, not only do territorial disputes and public shootouts frequently erupt, but kidnappings often take place, disturbing not only the public space but private establishments as well.
This leads us to the fact that the 2014-2015 period has been decisive for narco-trafficking in Mexico in general - and Tijuana in particular - because leaders of the Sinaloa Cartel, the Gulf Cartel and the Knight’s Templar cartel were captured, which has inevitably led to a significant restructuring of power that will have specific - and violent - repercussions in the city.
Alarmingly, in the beginning of this month - on the fifth of April -, messages by the CJNG were placed in various parts of the city of Tijuana. They warn about an upcoming violent wave as a result of confrontation between them and the currently existing narco factions in the city - nine as of 2014, to be exact - and the Sinaloa Cartel.
The messages should be read as a clear indication of the CJNG’s appearance in Tijuana as well as the springing up of a new generation of narco criminals in the city, which involves both members of Jalisco’s CJNG and resurgent members of the infamous Arellano-Félix Cartel, CAF. The messages - one of them left hanging on one of the most heavily transited streets - are basically a declaration of war.
In fact, 13 severed heads have already been found in the streets of Tijuana along with distinct messages from the Sinaloa Cartel.
Yet simulated or virtual kidnappings are also worth mentioning. They are false kidnappings that follow a relatively simple method of intimidation or extortion yet often proves to effective and lucrative. In the 2013-2014 period, the extortion trend sky-rocketed precisely because the actual kidnapping threat in Tijuana is so apparent that victims are easily convinced that a close family member or somebody they know has been kidnapped.
It is not surprising, then, that the northern part of Mexico ranks amongst the highest in the kidnapping rates. In 2014, just in the city of Tijuana, kidnapping officially increased by 300% when compared with the 2013 trend. From January to April of 2015, there were 12 reported kidnappings statewide, in Baja California. That number ranks it in fourth place nation-wide, with Tamaulipas reporting 119, Estado de Mexico 63 and Guerrero 52. Yet we must keep in mind that a large amount of cases remain unreported because victims are often disillusioned with law enforcement’s inefficiency in solving the kidnapping problem.
As we previously reported, Alejandro Martí, the president of Mexico SOS, a civil organization concerned with kidnapping in Mexico that has been active since 2008, reported that neither federal nor local authorities have responded accurately to the alarming kidnapping problem partly because they claim a false, less frequent rate of occurrence. Isabel Miranda, president of Stop Kidnapping, an organization with the aim of finding and identifying kidnapping victims and perpetrators, brought o light the considerable contrast between official state reports in 2014: while 132 kidnappings took place according to authorities, they registered 588 cases.
As long as police and government authorities do not admit full-responsibility for their failure to successfully curtail the kidnapping issue that is currently threatening the security of the population of Tijuana at large - from the housewife to the corporate businessman - as well as the traveling high-ranking official and businessmen, it is very unlikely that the problem will begin to recede. Much like in the 2007-2010 period, when public shootouts between the CAF and Sinaloa Cartel were commonplace - even in broad daylight - the upcoming times will possibly show an increase in violence, public shootouts, kidnappings and other criminal activities that place citizens, travelers and businessmen in potential danger.
We are making it a priority, at Interpoint Global, to advise our clients about these current dangers as well as the necessity to take extra precautions to avoid being a victim of kidnapping.
In Tamaulipas, 174 people were killed in the first two months of this year. In the past three years, there’s been an increase of over 300% in kidnappings.
It is more than evident that the federal government’s efforts to curtail the endemic violence and crime have not been successful. Even with continued military presence and the advent of the Tamaulipas Coordination Group (GTC) - a specialized group made of both state and federal security and armed forces - authorities have been unable to stabilize, much less eradicate the numerous issues plaguing the safety of both nationals and foreigners alike. It would not be farfetched, in fact, to consider that Tamaulipas currently resembles a war zone.
In the month of April, for example, the arrest of a high-ranking criminal and important leader of the Gulf Cartel, Jose Hugo Rodriguez Sanchez, “El Gafe”, resulted in not just the torching of several vehicles, including a public transport bus, but in continuous gunfights between heavily armed cartel members as well as federal and state police forces. The shootouts lasted for hours and in fact blocked off several parts of the city, rendering them inoperable. The results were the deaths of various criminals, police officers and most notably: civilians.
Notwithstanding president Peña Nieto’s assurance that Tamaulipas is “much more” than violence and crime because foreign investment has considerably increased in 2015, Francisco Garcia Cabeza de Vaca, a former mayor of Reynosa, said it simply and powerfully: “the city is completely out of control.”
Notably, Tamaulipas is the state with more underage criminal activity. Authorities seize more children in Tamaulipas than in any other state for carrying guns, assault rifles and grenades. It also has the highest rate of homicide of individuals ranging from 15 to 17 years old. In 2014, over 200 children were sanctioned for carrying a weapon or for possession and sale of illicit narcotics.
Carlos Rafael Ulívarri López, the president of the Río Bravo’s Chamber of Business, declared that businessmen in Tamaulipas are not safe. After authorities were unable to locate his disappeared 23-year-old, he searched on his own until he found the dead body of his son in an open field in the vicinity. A young man associated with drug cartels beat him up and shot him.
It is evident that social activities in general in the state of Tamaulipas have been profoundly affected. Eight Diconsa stores - a smaller grocery shop - in fact were forced to because they were subject to assaults by criminal organizations. The company declared losses of almost 500 thousand dollars. A 52-year old man and his two sons were killed this past Wednesday, for no other reason than being a black pick-up track with plates from the state of Nuevo León.
Additionally, kidnappings are also stable and rising.
Criminal groups from Tamaulipas kidnapped 25 people from the adjacent state of Monterrey on the 25th of May. Three - business owners - were released after paying a large ransom but the others remain captive are being negotiated for without the involvement of police authorities.
Several days prior, on the 21st, police authorities received an anonymous call that led them to a safe house - behind a city hotel - where 47 people being held as hostages were found: 18 foreigners and 29 Mexican nationals. Yet, this incident is in tune with the Tamaulipas’ kidnapping record: 40 reported kidnappings in January and February alone. It also brings to relevance that Francisco Rivas, the spokesman for the National Citizen Observatory, declared that the rate of kidnapping in the state is in fact 694% higher than in the rest of Mexico.
“One cannot travel the roads of Tamaulipas unless they are in company of the Federal Police, otherwise it is very likely that the entire vehicle will be seized”, Rivas commented. He also explained that the numbers - though high - could be even worst because authorities count kidnapping incidents but not the number of victims. Kidnapping incidents now rarely involve just one person being taken.
Yet civilians and business owners are not the only kidnapping targets: perhaps traveling with police authorities is not enough. Earlier this month, both the GTC and police units of Monterrey rescued eight police officers kidnapped by criminal forces. The latter persecuted a suspicious vehicle across state lines and two additional criminal vehicles as well as the GTC showed later. The persecution became an armed confrontation and it resulted in one dead police officer, one injured and the release of the eight officers from Nuevo León. Yet criminals also kidnapped an additional female police officer.
The issue has not changed for several years: drug cartels and criminal organizations are heavily armed. Their weapons are similar and sometimes superior to those of police forces. They’re often not afraid to - or in fact, openly looking to - engage in a confrontation with authorities. Early this May, an SUV with bulletproof capabilities opened fire against an army vehicle and a firefight ensued.
A week later, state authorities as well as members of the military discovered a safe house where they found 37 assault rifles, 20 thousand bullet cartridges, a rocket-launcher and 2,000 lbs. of marihuana. A day later, scattered across the state, Tamaulipas seized an additional 4,000 lbs. of the illicit substance.
The fact of the matter is that organized crime continues to be a dominant presence in the state of Tamaulipas. It is no longer just an issue of drug trafficking and activities related to that illegal business. In the beginning of the month, for example, a vehicle with 12 thousand liters of an unknown, highly flammable chemical substance was seized. Later, authorities also seized ten vehicles with over 5 thousand liters of stolen gasoline. Additionally, three civilians were arrested for driving in a vehicle with nearly 3 million dollars in cash. High-caliber weapons are being sold on social media pages.
The presence and power of drug cartels is such that they actually had a considerable surveillance system in various part of the city of Reynosa. 52 surveillance hubs were found by authorities: they were used by cartels to monitor the activities of the military and marine as well as state and municipal armed forces. Each hub contained several cameras - accessed online by criminals. Police also brought down 55 antennas that were likewise operated by cartels and made up a complex digital and analog communication system spread across various parts of Tamaulipas.
As if it wasn’t clear enough, just this Thursday two explosive devices were detonated in both the offices of the National Electoral Institute as well as the Federal Police headquarters in Matamoros. It is notable that these explosions were registered days after several narco-messages were left by the Gulf Cartel, warning about a possible violent retaliation against authorities for “messing” with the family. They assured that they would turn the city into a “war zone”, as if it wasn’t one already.
With two weeks left for official elections on June 7th, it is very doubtful that Tamaulipas will get any safer or any quieter, as President Peña Nieto seems to suggest. The explosions at the both the headquarters of the police and the Electoral Institutes are perhaps a clear message by drug cartels to underline the obvious: they are directly involved and have a serious influence over both the safety and the politics of the city.
We expect more of the same violence to continue and increase in the next couple of weeks. Streets will definitely not be safe for locals, foreigners, travelers, ex-pats and high-level managers.
Vice President Teodoro Obiang Mangue’s extravagant - and expensive - lifestyle has been well documented. A 30 million dollar mansion in Malibu equipped with a private golf course, a personal jet, a half-a-million-dollar Ferrari, another mansion (Paris), three million dollars worth of Michael Jackson memorabilia, and more: the list of his belongings has been traced from the U.S. to Spain and from South Africa to France. Yet, as the UN has reported: Obiang’s country as a whole is largely in ruins. Less than half its population of Equatorial Guinea has access to drinking water; one in every five children dies before turning five-years-old. 77% of the population lives below the poverty line. How, then, can we make sense of Obiang’s opulence and wealth?
In 2011, Obiang was appointed by his father, Equatorial Guinea’s president - or dictator – who has ruled over the country for over three decades. His promotion speaks loudly about the fact that there has been little, if any, room for political opposition, even though officially the country is a multiparty democracy.
To say that things are problematic is not sufficient: the U.N., Human Rights Watch, Global Witness and Transparency International, amongst others, have publicly urged President Obiang to address issues of corruption and provide transparency, both in economic and political, as well as human right issues. Though the government has responded and pledged to make improvements, thus far, it is clear that official claims differ enormously from what actually takes place on the ground.
Money laundering and corruption are at the heart of the issue.
To begin with, it should be considered that the country’s government is relatively recent. Following independence from Spain in 1968, Equatorial Guinea entered an openly violent period. Under the military leadership - or the reign of terror - of Francisco Macias Nguema, about a third of the population fled the country. Thousands of political opponents were killed and an entire population - the Bubi ethnic minority - was literally eradicated. A decade later, a coup d’état led by Obiang deposed the regime and, along with family members and personally selected associates, ensured his subsequent dominion over the government in the years to come.
By 2006, Forbes estimated President Obiang’s net worth at $600 million, making him a notoriously wealthy head of state, worldwide.
It took nearly twenty-five after independence from for capital to really begin accumulating in Equatorial Guinea, however. It is largely due to the fact that it was not until the mid-1990s that significant oil reserves were discovered. Foreign investment, naturally, has not ceased since: currently, Equatorial Guinea is Sub-Saharan Africa’s third largest oil-producer. Ironically, it is also on Transparency Internationals’ Top 12 most corrupt states in the world. Government revenues, budgets and audits are not adequately published: there is virtually no transparency. Public officials earnings and subsequent assets are completely unknown. Profits generated from the oil industry have mostly benefited foreign companies and corrupt state officials.
Alarmingly, since oil was discovered, the populations’ mortality rate, in fact, has actually increased. The government’s promises to address such issue - and plenty others – are very far from being fulfilled, notwithstanding international pressure. Evidently, oil-money profits are yet to create a significant impact on Equatorial Guinea’s population. Social inequality and widespread poverty is rampant. It is unquestionable that Obiang and his government have been using public funds for personal enjoyment and benefit, as the lack of social services and better opportunities for the population demonstrate.
Teodoro Obiang’s recent exposure - all in all it is estimated that he spent over $300 million between 2004-2011 - consequently, is not unprecedented.
We must remember that in the early 2000’s, his father, President Obiang, along with Chile’s ex-dictator Augusto Pinochet, was involved in a money laundering scandal for accounts held at Riggs, one of the U.S.’s most famous banks until then. After the oil reserves were discovered, Obiang’s government became one of Riggs’ principal depositors, holding accounts worth as much as $700 million. Equatorial Guinea’s officials claim that President Obiang did not personally own the money and that instead it was part of the government’s revenues, is startling.
During that time, the L.A. times exposed the peculiar relationship – perhaps one could even say friendship - between President Obiang and one of Rigg’s top officials, who was known to be personally involved with his most important clients, including General Pinochet. The bank welcomed enormous deposits and transfers with virtually no questions asked, something that fit perfectly with President Obiang’s and Equatorial Guinea’s reluctance to be transparent.
Oil interests intersected, of course. Exxon Mobil, Amerads Ness and Marathon Oil had a complex business relationship with President Obiang and / or the government of Equatorial Guinea. They too, claimed to have no suspicion of corruption. There is evidence that the companies paid large amounts of money to the country’s government officials and their family members. Yet, when approached about the situation, the bank officials expressed no intention of ceasing business with Obiang, his associates and his relatives.
The incident did not go entirely unnoticed, however. In due time, the bank was considerably penalized. In 2004, the bank was fined $41million total in civil and criminal penalties. It also agreed to pay $9 million to Pinochet victims for facilitating the movement of money out of Britain for the ex-dictator. The principal issue was undeniable: the bank failed to adequately monitor his clients. Bank regulation was obsolete and it was not successfully applied. It is an issue concerning both the bank’s general security protocol and, of course, the bank’s employees at various levels. From the local teller and the branch manager all the way up to the bank’s upper management. Riggs managed at least $35 million of Obiang’s illicit money, of cash he literally took from the Equatorial Guinea’s revenues.
It should be mentioned, however, that corruption in Africa is not limited to Equatorial Guinea. Transparency International has red flagged mining and extraction in Africa as one of the most risky places for foreign investment. Even though many countries have agreed to impose anti-corruption mechanisms, issues persist. Business deals often involve third parties and partners, which is a hotbed for bribery, theft and corruption because it is difficult for investors to know the history of all of the parties involved.
Recently, in 2013, a Geneva-based oil services firm with operations in Texas paid $153 million dollars on sanctions of commercial bribery. In 2013 also, a drilling company based in Texas paid almost $16 million for sanctions having to do with payments made to Nigerian officials. In the UK, an ex-CEO of an oil and gas exploration company was jailed for bribing a director working for the European Bank for Reconstruction and Development.
Money laundering in Africa, as we have previously reported, is an intricate issue that has and continues to affect the continent as a whole. Thabo Mbeki, South Africa’s former president stated that Africa loses $15 billion a year through the “illicit export of capital.” Fiscal evasion, he said, is generating considerable losses for the continent. The Organization for Economic Co-Operation and Development, OECD, reported accordingly: “Africa loses twice as much in illicit financial flows as it receives international aid.”
It must also be mentioned that Equatorial Guinea has been known for drug trafficking activity. As the Observatoire Géopolitique des Drogues (OGD) reported, various sectors of the government profit directly from the revenues generated by trafficking illicit narcotic substances. As a report conducted for the Canadian Parliament also reported: drug traffickers in “Latin America and are bringing cocaine trafficking to all parts of sub-Saharan Africa”, and in the case of Equatorial Guinea, "diplomats belonging to the president’s family or clan used the diplomatic pouch and their immunity to engage in cocaine and heroin traffic around the world. Tens of them have been arrested over the past two decades, particularly in Spain.” Not only that, but the country’s Secretary General, Lucas Nguema Esono, has a history of drug trafficking activities.
Yet efforts to combat such issues as well as money laundering in Africa have rendered nearly insignificant results. Not only has international money laundering regulation not been adequately implemented, but also, it is no longer enough to curtail the growing issue. As we previously reported, in his book, Offshore, Alain Deneault rightly claims that indeed “legitimate states facilitate the conflation of private funds from different sources” by allowing companies to avoid presenting “balance sheets that clearly delineate its “various components.” In fact, “legitimate states seem to strive to make these machinations ever more efficient”, he adds.
Western nations have contributed enormously to the creation and the maintenance of tax havens and offshore companies, the idyllic means to store away exuberant amounts of cash.
Similarly, as Global Witness has reported, the U.S. Department of Justice found that President Obiang’s son used shell companies that only exist on paper in order to “disguise his criminal conduct, conceal the source of his income, and to claim falsely to overseas financial institutions and foreign governments that his income was derived from legitimate commercial activities in [Equatorial Guinea].”
Yet, it should be mentioned that minor steps have been taken to address the issue. Earlier this year, the 42 year-old vice president, with a vehicle collection that includes seven Ferrari vehicles, five Bentleys and four Rolls Royce, has been forced to return 30 million dollars worth of assets. The investigation conducted by the U.S. department of Justice began in 2011: they found that at least $80 million of his belongings proceeded from corruption and money laundering. He has agreed to sell his mansion in Malibu, a Ferrari vehicle, and return part but not all of his Michael Jackson memorabilia collection. The money collected from the sale will be donated to a charity concerned with poverty in Equatorial Guinea.
Back in 2012, in France, other that placing a warrant for his arrest, police also seized properties and vehicles that were purchased by Obiang. They have been conducting an investigation since, which, some believe may lead to trial. Though Obiang and the government of Equatorial Guinea have requested that the investigation be dropped, the French government has ignored such requests.
The question, however, remains: are such measures enough to curtail money laundering and state corruption in Africa, in places such as Equatorial Guinea? The latter is but one example in a vast array of cases.
Though in recent years, foreign investment in Africa has considerably increased, business profits have mostly benefited foreign enterprises and corrupt state officials. Money laundering practices take place very easily in the context of state corruption and the lack of adequate banking regulation by part of western banks and financial institutions. The issue will very likely remain unless state corruption is adequately confronted and a new method for banking regulation and investigation is implemented.
Mexico’s biggest union, the teachers’ union, is currently under fire. The Sindicato Nacional de Trabajadores de la Educación (SNTE) is the biggest and, therefore, one of the richest unions in Mexico – so far, its even the biggest union in Latin America. The trouble started in February 2013 when Elba Esther Gordillo, the president of the union, was arrested under allegations of embezzlement of union money. “La maestra,” as she is called, was the head of the organization since 1989, and could have kept this position for the rest of her life if this investigation would not have happened. But that was just a first step in the Mexican state’s current attempt to change the union’s structure.
While in April 2013, Jesús Salomé Rodríguez Manjarrez, leading member of SNTE Sinaloa was arrested for stealing 14 million pesos from the union (about 962,250 dollars); in August 2014, the head of SNTE Hidalgo was arrested for stealing 123,928,265 pesos from the union (about 8,517,850 dollars). Yet the most recent case happened in November 2014 when the leader of SNTE-Nayarit was reported for financial irregularities. He is suspected of employing his four sons with an impressive salary for very little work, and this list goes on. Most of the money was stolen over longer time periods of time.
Such cases are typical in the SNTE. Gordillo, especially, was known for her almost obscene lifestyle: not only plastic surgery but tremendous shopping bills as well as a one million dollar house in Coronado, San Diego, another one in La Jolla, California — all of it paid with union money. What this shows is that it is not the irregularities that are new, but the attempts to investigate and punish them.
Under the new union leader, Juan Díaz de la Torre, it became visible how deep corruption and mismanagement are entangled with the union structure. One of his first activities was the implementation of a new law that, amongst other things, prohibited the inheritance of union positions and replaced this system with a regular application process. The law, created in November 2013 by the Peña Nieto Administration, was presented as a strong attempt to reform the corrupt system of the teachers union and to help (re-) build an organization that actually serves the workers as well as the education system. And on the organizational level, it is an important step in direction to a more democratic organization to no longer allow the inheritance of positions in the union or positions like “life-time presidency” which was held by “la maestra.”
Additionally, the law identifies a clear relation between the education that people receive and the conditions the teachers work in. Therefore the law does not just reform the teachers union but attempts to reform the educational system as a whole. Furthermore, a central element of the reform is a strict observation system over the teachers work, an element that is criticized by various teachers, but in this context, it makes clear that the union and the educational system are in the focus of the government and clearly thought of as directly related.
But is this an attempt from the government to actually better the working condition of the teachers and by this the education system? Is this the “New PRI” that was sold to the public during the elections campaigns in 2011/12?
To answer these questions, it is necessary to understand how an apparatus could develop that is basically stealing money from the workers and placing it in the hands of its very rich leaders yet remaining under the guise of a “union.” The explanation can be clearly found in the history of SNTE and the very beginning of the PRI’s domination in post-revolutionary Mexico.
It must be said, first of all, that the teachers in Mexico were traditionally involved in political activism such as protests against Porfirio Díaz, the dictator who was leading Mexico before the revolution. During the 10 years of revolution, between 1910 and 1920, the teachers remained a significant political force that was capable of influencing national politics.
In the 1930s and 40s the Party of the Institutionalized Revolution (PRI) began to stabilize its position as leading party by including political and social institutions on various levels into the party’s apparatus. In doing so, the PRI basically nullified any separation between the government and the state in the meaning of a ‘collection of institutions’. Unions and other activists who were not willing to participate in this system were simply replaced by organizations that were founded by the government itself. The SNTE is a result of exactly this strategy: In 1943, the organization was founded with a presidential decree after a longterm conflict between existing teachers unions and the state. The state created a replacement for the politically active and critical unions and therefore became employer and voice of the employees all at once. In fact, the founding of the SNTE in itself makes clear that it was never meant to represent the teachers – for a good reason, it is usually illegal for the employer to found the union that represents the employees (the key expression is “conflict of interest”).
With this history, it is not surprising that the SNTE was, over decades, an integral part of the PRI state and, due to its size, one of the government’s most important power tools. Instead of representing the workers, the organization functioned to control the workers but, at the same time, managed to orchestrate the impression of worker participation. Actually, most of the money the state pumps into its education system goes through this union. (This might actually explain, why Mexico has one the highest rate of spending on education from all OECD countries while having the worst outcome).
Even though the PRI lost the federal elections in 2000 and needed 12 years to get back in power, the structure of the state did never really change. Too comfortable was the possibility of an almost total control over society, and especially control of the workers was needed to implement NAFTA regulations. A short view at regions that did develop a limited amount of self-organization, such as Chiapas, makes very clear that NAFTA, in the form the governments agreed on, would have been confronted with major problems in the case of a functional workers representation. Wherever the structures allowed it, the protests against the agreement began even before 1994 and the newly elected party of 2000, PAN, with its neoliberal orientation had no interest in a workforce with a democratic corpus of representation. A union that was basically part of the government was just too perfect to be reformed.
It is this background that has to be taken into account for an understanding of the current conflicts between the state and the SNTE. Knowing how important the SNTE had been for the PRI over seven decades, the question if the Peña Nieto Government is really working on a reform has to be asked again, and for various reasons it has to be answered with “no”.
First of all, the history of the organization shows that it was never meant to represent workers or to be their tool in labor-conflicts. The SNTE has no legitimation to speak for the workers. Even worse, it is exactly this organization that was created to wipe out the unions that fought successfully for their members. A reform of such an organization can solve minor problems but it is unlikely, if not impossible, to transform it into a real worker’s organization.
Linked to this argument is the fact, that it was the PRI that created this organization and also set its goals over decades. It is questionable whether this party is really willing to give up its own tools for some kind of greater good. In contrary, the current reports on the President and his family as well as the other members of his administration and party show that the country’s elites keep on profiting from corruption, money laundering, and embezzlement. What are the odds that this elite will, all of a sudden, change the system that gives them wealth and power?
And there are more signs that clearly signal against the government’s desire to really change the union’s structure. The beginning of the current unrest is directly related to the questions debated here. The 43 students who were kidnapped in Ayotzinapa were studying to become teachers. They were protesting against parts of the described law, such as the centralized organization of the planed observation of their work, and the low income that is planned to be paid to them. These students did not only mobilize by themselves, they were able to refer to a network, built by the Coordinadora Nacional de Trabajadores de la Educación, CNTE – a leftist teachers union in which the majority of the members are from Guerrero, Oaxaca, Chiapas — all states that are poor and largely rural, on the one hand, but that do have a tradition of resistance and self-organization on the other. CNTE was founded in opposition to the Sindicato Nacional de Trabajadores de la EducaciónSNTE and therefore never included in the PRI system of the 20th century. The union has a broader political program and is for example active in movements against the privatization of PEMEX, and demanded an investigation regarding the violent actions against demonstrators in Oaxaca. It is this union that was prominently involved in the organization of the protests in Ayotzinapa, before the 43 students were kidnapped.
An honest attempt to develop a union for the teachers that is worth the name of a union would be based on strengthening an existing organization that already reached credibility amongst the workers of the education system. But to almost suppress an investigation of a kidnapping, presumably attempted by the police, a local mayor, and a drug cartel is clearly an attempt to weaken such an organization.
The question remains, what is happening with the Government and one of its favorite power tools?
If the reform does not aim to really better the educational system, what might be the reason to begin such a conflict with this big organization? One important factor is that already short after the elections, Peña Nieto’s popularity was not exactly skyrocketing. As there is a broad agreement in society that the education system needs to be reformed and that the SNTE has to be part of such a reform, it might have looked like an easy step to better the reception of the newly re-elected PRI — especially because “la maestra” already had been a symbol for corruption in general. Going after her was clearly helpful for Peña Nieto to get the public opinion at least for the moment on his side.
Additionally, it seems like arresting Elba Esther Gordillo and passing the law on the educational system gave the Peña Nieto administration a new strategy to keep the workers under control. The discourse he developed around the arrest and the following reform of the SNTE was not that this union is extremely problematic due to its specific history but that unions – in general – are not the right way to represent workers. This discourse included the CNTE. The protests against the reform are coming from various sides. The CNTE is very active against bad salaries and a centralized observation that does not include the specific local conditions. The SNTE is very active for the protection of their system of inheritance. Clearly these are two very different demands and clearly the first one aims to better education, while the second one aims to protect elitist interests. But by investigating the SNTE, the PRI’s own child, so to speak, Peña Nieto is trying to create a general anti-union atmosphere that might help him to get rid of oppositional voices as well.
A final reason for the current attack against the SNTE might be that the system the PRI developed after the revolution (in which every bigger organization was at the same time a party organization) does not work out that easily any longer. Already the presidential election campaign in 2012 showed that despite the difficult conditions, a variety of social and political organizations developed and they were very willing to speak out against the PRI. At least the last part can also be said for “la maestra.” Despite from profiting largely from the PRI system she left the party in 2006 and became an active member and leader of the New Alliance Party (PANAL). With a lifetime president of the SNTE not being a party member, the whole organization lost its main function in the perspective of the PRI.
It must be said, then, that the Peña Nieto Administration is hardly interested in genuine education reform. It has recently adopted the strategy to reform its former institutions in hopes of reinstalling its almost absolute control over society in the 21st century.
The situation in Mexico regarding the disappearance of 43 rural college students in Ayotzinapa, Guerrero continues to show little or no sign of improvement. As the Mexican government attempts to restore peace and legitimate power throughout the country, great masses have taken to the streets under hashtags that read, “I’m tired [of this/everything]”. The Mexican government has handled the entire ordeal quite poorly and, at every move, attempts to calm the population, fails, and further provokes more protest. In order to understand the current situation, we must place them in a historical continuum. From there, it is evident that an event that happened in a relatively peripheral town has been able to mobilize very large portions of the population. This, in turn, requires an understanding of the embedded nature of organized crime in Mexico. Finally, we can make sense of the current tendencies and why they are felt so harshly in the south-central regions of Mexico.
The fact that the Mexican government was involved in the disappearance of 43 students should not cause too much surprise: violent state repression is not an uncommon event in Mexican history of the 20th century. Mexico’s Institutionalized Revolutionary Party (PRI), which now governs the country at the executive level, ruled everywhere, unquestioned, for nearly 70 years until it was democratically voted out of power in 2000 and replaced by the PAN. In 2012, the PRI returned and many shook their heads at the return of such history. Many indeed repeated those famed words, “First as tragedy, then as farce.”
In fact, the PRI in the 20th century is often remembered as a soft dictatorship. It had a strict hold over all elections, always manipulating the results through implied or direct violence. Ironically, in some instances, it also manipulated a Leftist discourse in order to present itself as a progressive force following the revolution that exploded in 1910 and ended in most regions of the country by the mid-1920s, after leaving a tenth of the population dead and many others displaced.
By using such a discourse, the PRI established itself, for some time, as a “revolutionary” force that fought for the interests of the peoples it ruled. However, by the 1960s, the facade began to disintegrate. During its turn to industrialization that began during the Second World War, it was clear that the economic benefits of its new program were hardly equal. Urban centers quickly became populated by mass migration and, simultaneously, unemployment became critically visible. By 1968, a student movement emerged, questioning the motives of the PRI. The student movement mobilized around the then-coming Olympics. In response, the Mexican government massacred hundreds of students in early October of 1968 and disappeared the bodies to leave no trace for the coming tourists.
This left a deep mark on the country. The PRI then became synonymous with repression and state violence. Prior to ‘68, guerrilla campaigns had begun in the countryside by peasant socialists in the state of Guerrero. After ‘68, urban guerrilla movements sprouted in different urban orbs. Expectedly, all of these were met by brutal state violence. The state created paramilitary forces known as the White Brigades (also associated with the brother of Carlos Slim, a notorious criminal and kingpin, who was in charge of internal security for much of this time) in order to face the armed groups. During this time period, known as the Dirty War of Mexico, tens of thousands of people were disappeared by federal and local forces, all under direct control of the PRI. This became a great portion of the legacy of the PRI.
Hence, when the 43 students disappeared in Ayotzinapa, it immediately reminded people of the brutal history of the PRI’s violent repression against students. Since 2000, the PRI had worked hard to distance itself from its dictatorial past, but now, the memory has resurfaced all across the country.
The state in which this occurred, Guerrero, has always been known for rebellion. Historically, many peasant movements surged from this region, including the one mentioned above. Since the “War on Drugs” took the center stage in 2006, democratic councils have surged to fight back against representative corruption at the local level. These councils have been exemplary to other struggles such as those in Michoacán. Hence, Guerrero must be pitted as a site of constant antagonism against the government.
It is also noteworthy that the students that were massacred by the government were protesting neoliberal reforms in rural education. Not to mention that the students had a clear political program against privatization reforms in the countryside. Consequently, their death soon became a marker for the embedded nature of criminal organizations in the government. It has been clearly established that the mayor of the city that ordered the police to unleash violence against them was closely involved with local cartel leaders. His wife, it was revealed, also had extensive relationships with the local criminal organizations. When this became known it became symbolic of the government’s involvement with drug cartels throughout the country.
Federal response was extremely problematic. Following the revelation, the president of Mexico took a trip to China following Barack Obama’s visit to talk about trade and railways. This, to many people, was an insult. The common message that this conveyed was that the federal government could not care less about 43 missing individuals. Furthermore, the State Attorney General attempted to make up for lost ground, but then said, during a press conference, “Ya me cansé” (“I’m already tired”) of the event. This further incited the population of Mexico and became the single most memorable response by the federal government.
The response of the federal government has been entirely lackluster and incapable. The remains of the 43 students are yet to be revealed. One body was found and the skin of its face was missing. The body was later identified as belonging to one of the missing students when his wife recognized it through body marks. To make matters worst, multiple mass graves have been found in Guerrero, yet none of them have contained the remains of the students. All of this has considerably incited further indignation and protest by the Mexican population.
Protests have surged with a particular strength in the capital of the country, Mexico City. Students, working-class, and middle-class people all have taken to the streets. Yet, one case in particular further enraged the capital: on November 15th, students assembled in UNAM (the National Autonomous University of Mexico) to protest the disappearances of the 43; yet, the event quickly culminated in further violence: the police fired at the students, shooting one in the leg. Thus, more connections have been made between the current events and Mexico’s history of state repression against students, considering also that UNAM was the site where the student movement of ’68 originated. Since public universities in Mexico are autonomous through federal protection, like Native American reservations, police or federal forces are not allowed to violate this autonomy. Hence, the fact that police were acting against the law and actually struck a student with lethal force created an instantaneous connection to the PRI’s violent history.
The protests have made clear that the federal government is having a very difficult time to keep things in order and to maintain its image of stability. Protests throughout the Mexican territory have been and continue to be ongoing. Scenes from Mexico City, in fact, are increasingly looking like Greece a couple of years ago, or, even more recently: Brussels. Actually, several days ago, protestors burned the Mexican National Palace: a definite symbol of the severity of the events currently taking place.
As of the 27th of November, the president issued a public speech to announce the new plan of the Mexican federal government. The main feature of this new plan is to grant the federal government the ability to dissolve local police forces and put in their place federal ones. The targeted sites of such measure will, naturally, be Guerrero and Michoacán, but Jalisco and Tamaulipas as well. It is quite doubtful that this measure will actually appease protestors or that it could actually become an effective method of combating corruption locally. More issues, rather, should be expected: further confrontation between police forces and the Mexican population. In fact, a similar measure was executed several years ago in the city of Rosarito, in the state of Baja California. The results, expectedly: corruption was not curtailed; it is far from being eradicated.
Regardless, the protestors (and many people throughout Mexico) increasingly see the cartels and the government as the same thing — regardless of whether the authority is local or federal. The interesting question, however, is whether this continuing unrest will lead to decisive changes to the structure of the Mexican government. Will it be possible to talk about a Mexican spring, in the months to come?
1. Recent History: differing trends
For nearly a decade, kidnapping has been an endemic issue in the Mexican territory. Though kidnapping, as a criminal activity in the region has existed for a long time, in recent times, it has undertaken specific developments influenced by the trajectory of the drug-trafficking business. Reflecting upon the country’s previous presidency - that of Felipe Calderón - and its transition to the current (Peña Nieto) one, for instance, easily reveals a decisive shift in kidnapping activity in Mexico.
In the 2006-2012 period, killings and kidnapping principally took place as a by-product of the outright civil war between competing drug cartels and the Mexican army. Alongside public shootouts, executions, and mutilated bodies literally thrown on the streets, kidnappings took place at alarming rates between enemy cartels and their corresponding allies, whether they were politicians, professionals, business owners, or family members.
Though the infamous War on drugs or the Anti-narco war emphasized by the U.S. and the Mexican government initially intensified the bloody turmoil, the Mexican military succeeded, to a certain extent, at appeasing rival cartels and calming the situation. It did not, however, eradicate the drug-related violence. In fact, it contributed to the intensification of a previously existing trend: profit-specific kidnapping. The notable difference is that kidnap perpetrators were now better equipped not only with high-caliber weapons but also with armored vehicles and explosive weaponry.
So, even though large drug cartels, after pressure from the Mexican military, broke up into smaller factions and certain territorial boundaries were, to an extent, re-drawn, opposing groups remained at odds with each other. What took place, then, was only inevitable: an oscillating, re-shifting drug market lead to new market ventures for newly formed players. Drug traffickers, unable to securely rely on the drug business for profit, began to innovate their criminal practices, looking for different, faster methods of acquiring large amounts of cash in the least amount of time, via the most effective - and violent means. After the trend of bank and ATM robberies wore down, kidnapping proved to be the crime of choice for fragmented as well as emerging drug-trafficking factions.
Different types of kidnappings developed over time. Drug traffickers began to kidnap not only high-ranking businessmen and their family members, visiting foreign businessmen and unaware traveling tourists, but shop owners, small-business owners, bank employees, etc. They also began the practice of express kidnapping, which was aimed at acquiring low-amount ransoms and minimizing the risk of being caught by law enforcement.
Simulated or virtual kidnappings are also worth mentioning. They are false kidnappings that follow a relatively simple method of intimidation or extortion yet often prove to effective and lucrative. As of 2013, the extortion trend has sky-rocketed precisely because the actual kidnapping threat is so apparent that victims are easily convinced that a close family member or somebody they know has been kidnapped. Currently, virtual kidnapping is no longer exclusively practiced by drug traffickers but has moved into other kinds of criminals, who are often only dedicated to kidnapping and who have no previous drug-trafficking history.
Kidnapping in its various forms, then, has become a widely practiced crime not only by different kinds of criminals but in different areas of the country. Though the northern part of the territory ranks highest in the kidnapping rates, central and western Mexico also significantly suffer from kidnapping.
2. Infidelity of official reports and unsuccessful attempts to combat kidnapping
The incapacity of Mexican authorities to provide accurate kidnapping statistics sheds light on the seriousness of the issue. Alejandro Martí, the president of Mexico SOS, a civil organization concerned with kidnapping in Mexico that has been active since 2008, reported that neither federal nor local authorities have responded accurately to the alarming kidnapping problem partly because they claim a false, less frequent rate of occurrence.
Other organizations such as the National Citizen Observatory (ONC) and the Alto Secuestro (Stop Kidnapping) organization, interested in similar objectives: the curtailing and eradication of kidnapping as well as finding and identifying victims and perpetrators, have also expressed almost identical concerns about the relation of the government’s reported numbers and its unsuccessful attempts to reduce kidnapping.
In fact, Francisco Rivas, ONC’s director as well as Isabel Miranda, president of Stop Kidnapping, publicly urged the federal and local Mexican government, as well as the National System of Public Safety, to successfully inform the public, in accurate number and extensive detail, about currently reported kidnapping cases and ongoing investigations.
Though not everything officially reported is completely inaccurate, there are a lot of kidnapping cases that are coincidentally left out. For instance, according to official state reports, from January to Feburary of 2014, 132 kidnappings took place nation-wide. Stop Kidnapping, however, announced that it registered 588 cases: the contrast is noteworthy.
Isabel Miranda suggests that the statistical discrepancy is due to authorities’ evident failure to attend the kidnapping issue, to combat against perpetrators and to locate and rescue victims. Likewise, ONC’s analysts stated: “kidnapping continues to rise” and “to extend to more and more cities and counties” because "federal, state, and local authorities have not provided with necessary results” in its curtailing. They carefully added that “the alarming growth rate previously mentioned” could “be larger than the one reported by authorities.”
The fact is that Mexican law enforcement is yet to find an effective mechanism to successfully confront, contain and if not eliminate, at least reduce the issue of kidnapping. So much so that the kidnapping rates of 2013 and 2014 thus far are alarming.
3. Kidnapping, now
From January of 2013 to March of 2014, there were 3,600 reported kidnapping cases in Mexico. Alto Secuestro estimates that 4,051 is a more accurate number. This is a 592% increase from the figures of 2011-2012.
Among the list of victims are professionals, business owners, students, workers, businessmen, rural workers, housewives and even unemployed individuals. 61% of the cases took place in Estado de México, Guerrero, Tamaulipas, and Mexico D.F. 30% of kidnap victims were killed or mutilated. During 2013, 349 counties were prone to at least 1 kidnapping case.
From December 2011 to June of 2012, 878 kidnappings took place. Yet, from January to February of 2014 over 600 kidnappings were reported in Mexico. For two-months’ time, this is an alarming rate. During Enrique Peña Nieto’s presidency, kidnapping cases have tripled in comparison with the two previous presidential terms.
In August of 2014, the ONC reported that Mexico ranks first place globally in terms of kidnapping. Reynosa, Cuernavaca, Ciudad Victoria, Morelia and Villahermosa were amongst the cities with the highest kidnapping cases. The state of Tamaulipas, alarmingly, had a rate of kidnapping 465% higher than the rest of the country.
Alejandro Martí, president of Mexico SOS, said that “neither federal nor local authorities have responded accurately to kidnapping” and that it was “unfortunate that there is no single acceptable anti-kidnapping unit” in the entire country. A lot of kidnapping cases, in fact, never make it on record, even when reported. If authorities don’t succeed in locating the victim or following-up on the case, they simply dismiss it. In turn, the Mexican population has ceased to trust authorities: from public officials to law enforcement. The overwhelming feeling is that they cannot attend the issue at hand and, much less, address their own failures.
In the city of Tijuana, for instance, kidnappings have increased by 300% in 2014 when compared to 2013. From January to July of 2014, over 100 kidnappings have taken place, according to official reports, which do not amount for the unreported cases or those ignored by authorities. The increase is in correlation to considerable increase in homicides, also in 2014. From January to August: 300 in Tijuana.
The problem is that as many as 9 narco factions currently operate in Tijuana. They’re active and spread across different parts of the city, with overlapping territories. In July of 2014, several key members of Los Erres, for instance, were released from prison and already became involved in a murder incident that took place this last August. Los Erres are linked to drug traffickers active during Tijuana’s 2007-2010 period, when the city went through a never-before-seen wave of drug cartel related violence: public shootouts in broad day light and mutilated bodies thrown on the street on a daily basis.
As long as Mexican authorities do not admit full-responsibility for their failure to successfully curtail the kidnapping issue that is unfortunately currently threatening the security of the Mexican population at large - from the housewife to the corporate businessman - it is very unlikely that the problem will begin to recede. Addressing their shortcomings first and then revising the issue of their inaccurate statistics is perhaps the first step in working towards a nation-wide solution, which, inevitably, also entails addressing the incompetence of law enforcement and the Mexican anti-kidnapping units.
In recent years, cartel organizations have systematically stolen crude petroleum from the Mexican state company, PEMEX, syphoning billions of dollars from it, straight out of taxpayers’ wallets and straight into cartel accounts. However, in order to be able to understand how the cartels of Mexico are accomplishing such a feat, we must outline several key points about their origins and operating mechanics.
Criminality surges from all economic classes, but drug cartels surge from marginalized, disenfranchised, impoverished and/or socially excluded sectors of the population, both politically and socially excluded sectors. Such criminality usually expresses itself even further in nations that are structurally unequal. This explains why in the past year Iceland police killed someone for the first time and rocked the nation to its core. In such homogenous and largely equal political territories, criminality is hardly commonplace. Hence, criminality is largely produced in oppressed sectors of society. Although white-collar crime does exist and functions in direct relation to other forms of criminality, but is the result of different social contradictions.
Drug cartels are economically based. They are the result of social structures that do not allow legitimate social mobility. Furthermore, they generate funds through a market economy. Hence, criminal organizations have to survive through illicit business activity that is subject to the same market perils as legitimate businesses. However, their economic domain is based upon the domination of the sale and distribution of illegal products. In this black market, they compete against other criminal organizations for total domination of the market. In the same way that fewer and fewer corporations hold more and more capital in the open market, criminal organizations strive to accumulate assets and dominate a larger portion of the market. However, these criminal organizations ultimately operate within the legal market as well, and are even buttressed by legal institutions. Without such buttressing, the black market would not exist.
Criminal organizations, then, operate under the same market pressures as legitimate businesses: the fact that they have to diversify their products and operations should not come as a surprise. It must be said, however, that competition between criminal organizations is ruthless; participants stop at nothing to out-perform each other. Even if it means violence or other criminal moves.
Vice recently published a documentary that uncovered startling facts regarding petrol syphoning in Mexico. Since the year 2000, Mexico has reported an increase in petroleum theft of over 1500 percent. Military units in Tamaulipas have to patrol alongside PEMEX employees in order to ensure their safety. Each time illegal taps are found, PEMEX has to re-weld the taps. In 2013 alone, the government found more than 2,000 illegal syphons. More than 50 PEMEX employees have been kidnapped over the last ten years. The illegal syphoning of fuel began in Mexico’s southern states, and then headed north. The places where Mexico is principally affected are of course in areas where government dominance is strongly contended. Sometimes, drug cartels even steal directly from tanker collection points. In 2013, legitimate crude oil extraction was the lowest in 20 years. The problem runs deeper.
As this article points out, 2013 marked no sign of advancement in the government’s attempt to secure the pipelines. In fact, 2013 marked the worst year in petroleum syphoning with nearly 2,200 discoveries of illegal syphons. In 2012, there were 1,749 syphons discovered, while 2011 left 1,419 syphons discovered. As of September 25th of this year, there have been 2,481 syphons discovered, while PEMEX estimates that it has roughly lost $1.15 billion in revenues, resulting in the loss of 7.5 million barrels. This was just within a period of 21 months. The amount of oil stolen from the federal government has only increased over the years. A report by Forbes, found that $720 million dollars of crude was stolen in 2008, slightly more than in 2007. For nearly a decade that government has been aware of the problem of illegal petroleum syphoning, but as the numbers show, it has been unable to successfully address the problem, to decrease the oil syphoning occurrences.
According to an article in the Economist, most of the stolen oil is being sold in the United States. It’s quite likely, considering how difficult it would be for unprepared or amateur thieves to simply take the oil and sell it on small quantities. If unprepared or unfunded criminals were to continuously engage in this activity, it would be easier to catch them: the problem would not be as massive. In fact, as the Vice documentary points out, many local engineers or officials can and are likely easily bribed or threatened into cooperation with the oil thieves. Hence, to continuously syphon oil, one needs a good deal of capital and/or the appropriate weaponry.
We must remember, as the Vice documentary shows, that there is a network of informants and surveillance personnel constantly monitoring the oil pipelines: it is an extensive, professionalized, and efficient watch-system. In fact, as military patrols move to locate illegal siphons, their movements are watched and transmitted live via radio. Yet, oil continues to disappear. Meaning: corruption is definitely at play. Not to mention that because the pipelines are fixed, robbing oil from them is not that difficult. It is not likely that the government will simply re-route the entire petrol network, considering that such an endeavor would surely cost the federal government a fortune.
Perhaps even more startling is that this petroleum theft shows further deterioration of Mexican political institutions. In the states where oil syphoning is a considerable issue, it appears that the monopoly of violence has been contested and the State has lost legitimacy. In those territories, cartels exert coercive violence on individuals, forcing them to obey the law of the cartels above the law of the government. It thus becomes harder, in those places, to implement a workable solution to criminality, criminalization, illegality, social insecurity, and wide-scale public and private theft.
Whatever happens regarding the sale of PEMEX and/or its privatization, it is clear that whoever buys the oil will have to deal with catastrophic externalities and costs. In the meantime, the people of México will continue to experience the difficulties of the oil crisis, such as the case of the San Martín Texmelucán disaster that occurred after a group of people tried to illegally syphon gas, causing an explosion that formed a river of fire streaming from the pipelines: an accident that left 30 people dead. It goes without mentioning that there is a rising environmental damage caused by such oil syphoning, a deterioration whose costs will likely be transferred to the public as well.
The oil syphoning crisis in Mexico is a blunt reminder that, in the war against organized crime, the Mexican government continues to lose ground.
Just last week, one of San Diego’s largest community colleges was completely evacuated after a student told her class instructor she and her family members had been recently quarantined for possible exposure to Ebola, the deadly virus currently plaguing several countries in West Africa. In the past few weeks, there have been over nine thousand people infected with Ebola and more than four thousand have died as a direct result from the disease.
In fact, two U.S. healthcare workers in Texas have acquired Ebola on U.S. soil just this month. They are nurses that were assigned to the care of Thomas Eric Duncan, who arrived at Texas Health Presbyterian Hospital late September. He had traveled to Nigeria, where he unknowingly became infected with Ebola. It was only after he went back for a second visit that the hospital staff realized that Duncan did indeed carry the virus. After his initial visit, he was sent home to recover from a serious fever and other side effects that were associated with a stomach infection.
The hospital’s mistake cost Duncan his life, and now, the lives of two nurses are at considerable risk. It thus no surprise that Southwestern College staff took the student’s claim so seriously.
Along with the student who claimed exposure to Ebola- who later admitted she lied in an attempt to excuse her unjustified absences - 50 other students as well as two faculty members were quarantined in a school building while the college administration attempted to clarify the situation. Campus Police cordoned off the area, local police was notified, and the County Department of Health called in for assistance. Several hours elapsed. A school nurse, without proper protective equipment, was summoned to evaluate the student. No symptoms were detected and the student was found to be disease-free. Some students, faculty and staff were sent an automated phone call or text message instructing them to be cautious, but most of these alerts were received several hours after the event had passed.
“We did what we thought would assure the safety of our students, our faculty and our staff,” said a police officer working with Southwestern Colleges’ law enforcement team.
Yet, it is evident that the college’s administration, staff, and even law enforcement, did not know how to properly address the situation. There is simply no precedent: they are not trained on how to deal with Ebola. In the case that the student was indeed infected, then, all 50 other students who were quarantined along with her would have been at immediate risk of acquiring the disease, as well as the college instructor who notified authorities about the student’s claim; and, of course, the police officers that cordoned off the area. The nurse that corroborated that the student did not show any symptoms: definitely at risk.
But the staff and administration at Southwestern College are not the only ones to blame. The fact of the matter is that even though U.S. authorities have publicly assured that any and all public hospitals are willing and able to successfully treat Ebola patients, it is simply not true, as it became clear in the case of Texas Health Presbyterian Hospital, a top tier medical institution. Both the nurses who became infected were in fact not wearing proper protective equipment when they treated Thomas Duncan.
Brianna Aguirre, part of the same nursing team, admitted in an interview with NBC: “we were never talked about Ebola and we probably should have.” She also explained that the hospital “should have known” the situation was “getting out of hand.“
Duncan was placed in a room along with seven other patients. The nurses wore protective equipment with a large gap on their neck that was covered with tape by those who felt exposed. Hazardous waste was not disposed of properly and responsibly. The hospital’s infectious disease department, in fact, admitted they did not have a clear protocol that informed them and staff about how to deal with Ebola.
To make matters worst: one of the two infected nurses actually got in a commercial flight with 132 passengers a day before she tested positive for Ebola. Now, all of those people must be traced, contacted, tested and watched in order to assure that they did not become infected. The occurrence sheds light on the incredibly ease with which a disease of such magnitude can travel. There is no doubt that national, political and territorial borders do not pose a considerable obstacle for Ebola.
In fact, yet another nurse that was part of the staff that treated Duncan at Texas Health Presbyterian Hospital was on a cruise along the coast of Mexico when she became aware that her co-workers had become infected. She chose to self-quarantine in her room along with her husband, but she obviously had been interacting closely with a large number of the ship’s passengers and staff. Mexican authorities did not allow the ship to dock in Cozumel - as it had been planned to do - when they learned about the situation and the possible risk of allowing an Ebola-positive individual to enter the country. They are evidently not ready to handle such a situation.
The cruise ship event places the Southwestern College case into serious perspective. Currently, a considerable part of the college’s students live or work in the city of Tijuana, just south of San Diego. They cross the international border daily. It wouldn’t be too difficult for somebody that has acquired the disease to carry it back into Tijuana. After all, the incubation period for Ebola lasts 21 days. A potential carrier could be completely unaware of actually having it.
It is important to mention, also, that if an Ebola case were to surge in the city of Tijuana, the U.S.-Mexico border will shut down. Historically, from JFK’s assassination to the events that took place on 9/11, the border has been closed, preventing anyone to enter Mexico from the U.S. or to enter the U.S. from Mexico. Shutting down the border, clearly, would be of great negative impact to the San Diego-Tijuana region.
Unfortunately, it is evident that authorities, public and private institutions, as well as medical institutions in the city of Tijuana are not ready to safely and successfully handle and treat a patient with Ebola. Taking into consideration that the U.S. itself only has 4 hospitals seriously qualified to handle and treat highly infective and high-risk diseases such as Ebola, with a total of nine beds per the entire country, it is not difficult to reflect about Tijuana’s incapacity to deal with the disease.
Fernando Peñúñuri Yépiz, Tijuana’s Hospital General’s director, announced that Mexico’s airports are ready to detect possible cases, but he did not explain how such a procedure would take place. On the other hand, the director of Baja California’s Health Administration, Sergio Tolento Hernández, claimed that several hospitals in Tijuana are likewise ready to treat and handle a patient with Ebola. Again, he did not clarify how this would actually take place. He did not specify the protocol that such hospitals in Tijuana have prepared in order to handle a case of the virus.
In fact, there actually is no facility in the city of Tijuana with the capability of analyzing blood samples in order to determine whether or not a patient is carrying the Ebola virus. Roberto Lizárraga, the director of the Baja California’s Secretary of Health, indicated that in order to test whether a patient has Ebola, the samples would have to be sent to Mexico City, where the country’s only facility capable of testing for the virus is located. So, if Tijuana is not even ready to test for Ebola, how is it supposed to handle, contain, or treat it?
The only procedure that officials hinted at is isolation. Yet, the hospitals are not well equipped with properly sealed rooms and much less, with proper protective equipment, such as full-body suits for healthcare workers. Not to mention that nurses and doctors are simply not trained for handling high-infectious diseases such as Ebola. Furthermore, like we previously mentioned: there is simply no clear protocol for confronting the disease.
It is important to realize, however, that Ebola in the city of Tijuana is of particular concern because of its maquiladora industry. With over a million of men and women currently employed by the industry, the risk of an Ebola outbreak is pressing. If the situation were to take place, it would require outstanding effort by part of the working plants to handle and minimize the damage of the incident.
In fact, it is doubtful that there are currently any preventative mechanisms outlined by the maquiladora industry. It is an effort that involves communication, training, and the implementation of a clear, effective system that could allow the companies to be prepared and ready to act when a case presents itself. It is clearly a logistical challenge that requires concise and effective leadership. Managers and other company actors should be warned and prompted to elaborate an adequate plan to deal with a possible Ebola occurrence in their plant.
Yet, much like the healthcare institutions in the city of Tijuana, maquiladoras simply don’t have a clear, concise handling a case of Ebola in their workplace. Without a clear program, they are automatically dependent on civil authorities to handle cases, which, unfortunately, are not any better equipped to handle a case of the deadly virus. Thus far, there has been no statement from companies addressing these pressing issues.
Upcoming next month.
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