Mexico’s Righteous War

It is unfortunately commonplace today to blame the woes of Latin America on the United States. Burdened by corrupt government and the cruel specter of a wealthier and more secure neighbor to the north, Mexicans, perhaps understandably, have been hardly different.

As the popular Mexican expression goes: “Poor Mexico, so far from God, so close to the United States!”

Now we have Mexican President Felipe Calderon’s unprecedented war on the drug cartels, a stunning and courageous break from Mexico’s corrupt past. But sadly, as the depths of the cartel problem have finally become evident, instead of hailing Mexico’s initiative Latin America analysts have begun drinking the Kool-Aid of a political culture long adverse to its own accountability and turned to a familiar bogeyman – the U.S. drug market.

Mary Anastasia O’Grady recently echoed this tired refrain in the Wall Street Journal. What is most striking about O’Grady’s piece is not her statement that “the source of the problem is not Mexican supply [but instead] American demand coupled with prohibition,” as it is as old as the drug trade itself (though one must wonder how the “supply” cannot by definition also be “the source” of the problem). Rather, it is the attempt to dress this analysis in high-handed economic theory, ipse dixit, and pass its implications off as profoundly obvious truths when they are anything but.

As any Econ 101 student knows and O’Grady correctly points out, markets are driven by supply as well as demand. A decrease in either will give us what we are looking for: a reduction in the quantity of drugs produced by the Mexican cartels. There is no reason, based on economic theory alone, to prefer a demand-side approach to a supply-side one – they result in exactly the same thing.

Obviously, economic theory alone will not solve this debate.

Even if we wanted to assume that demand were the “source” as some claim, how do we then account for the lack of Mexican-style drug syndicates in the countries where demand is highest? Canada, Spain, France, Germany and, yes, the United States itself would be perfect homes for cartels. The reason they are not is because of one common trait which, not coincidentally, is something Latin American states have historically lacked – a robust rule of law applied equally and fairly throughout its territory.

So is it demand or supply that is the “source” of the problem? Perhaps history, rather than theory, will be the better judge.

Latin America devotés are certainly on to something when they point to the lack of results from the U.S. interdiction efforts in Latin America. Drug production has, in fact, risen since these efforts began in the 1970s.

But this is only a surface level analysis of the issue. Interdiction efforts in the 1970s, for one, were successful in eliminating the over-seas route from Columbia. But the drug lords were crafty – business moved to Mexico, then ruled by the notoriously corrupt Institutional Revolutionary Party (PRI).

The groundwork had already been laid: Mexico had been a production and transshipment point for narcotics heading to the U.S. since the late 19th century, back when cocaine put the “Coca” in Coca-Cola.

The PRI were grateful hosts. As Mexico expert Dr. Francisco Gonzales, assistant professor at the Johns Hopkins School of Advanced International Studies, put it: “The kingpins bought access to the Mexico-US border, and this access allowed them to expand their production and smuggling activities [as] the authorities in turn stuffed their pockets with cash.”

The collusion was never much of a secret. According to corruption expert Stephen Morris, reports of military and police involvement in drug trafficking in Mexico go back to the late 1970s. The torture and murder of U.S. Drug Enforcement Administration agent Enrique Camarena in 1985 by drug traffickers, and the murder of journalist Manuel Buendia in 1986 by the director of the Mexican Federal Security Police, convinced many even then that the cartels had bought protection from the political elite. “Indeed,” Morris wrote back in 1991, “it is at times difficult to distinguish police from criminal in Mexico.”

Indeed it was. One particularly egregious example can be found in the story of Flavio Romero de Velasco. Velasco was governor of the state of Jalisco from 1977 to 1983 and a one-time potential presidential candidate for the PRI. Velasco was governor of Jalisco at the time of “Operacion Condor,” a U.S.-initiated anti-drug effort, in concert with the Mexican government, to eradicate the cartels that had become entrenched in the state of Sinaloa. Instead of eradicating the cartels, however, the cartels simply relocated to Jalisco – with Velasco’s assistance. Velasco was not arrested for his actions until 1998.

There is more. In 1994, sitting President Jose Francisco Ruiz Massiu was assassinated with the help of ex-President Carlos Salinas de Gortari’s brother. The Swiss later discovered Mr. Gortari’s brother had a bank account there filled with over $100 million in laundered drug money.

Finally, in what was probably the most embarrassing indictment of the PRI at the time, in 1997 the party’s “drug-czar,” General J.J. Gutierres Rebollo, was arrested for connections to the Juarez cartel for allegedly using his position to protect the cartel and eliminate their competition.

Given such situations, the failure of supply-side interdiction to halt rising drug production should come as no surprise to supply-side warriors. We know interdiction in theory is sound because, as an Econ 101 student would illustrate, attacking the supply reduces both profits and production by increasing the costs to suppliers – the cartels lose those materials captured by the government and pay the “tax” of additional security.

But when a corrupt government diverts such efforts for the benefit of some cartels at the expense of others, and they are not applied equally to all of the market’s suppliers, the effect on the favored cartels is the opposite: it increases their market concentration and, consequently, their power. This is what in fact happened under the PRI and why their interdiction efforts, were they even sincere to begin with, were so counterproductive in the 1980s and 1990s, and why Mexico finds itself being bled today by a handful of concentrated, high-powered, and absolutely ruthless drug lords.

This open secret is now Mexico’s gaping wound. Calderon’s war has been a success if for no other reason than its exposure of Mexican officials’ ties to the cartels at all levels: local, state and federal, from the top on down. Lest we forget, it was Calderon’s efforts that rooted out the head of Mexico’s Interpol office as a stooge of the drug lords and, once again, the federal government’s drug czar, this time Noe Ramirez.

It is said that when Yankees great Yogi Berra would have trouble hitting the ball, he would never blame himself – he would just change bats. “After all,” he mused, “if I know it isn’t my fault that I’m not hitting, how can I get mad at myself?”

The U.S. is not Mexico’s faulty bat – the cartel problem stems from Mexico’s long history of corruption and lack of accountability for those who abuse power for their own ends. Calderon’s war has been messy not because of the United States, but because the PRI left it for him that way.

Calderon is guilty only of choosing to clean it up.

Andre Joaquin Castillo is an M.A. candidate at the Johns Hopkins University School of Advanced International Studies concentrating in International Economics and Middle East Studies with a specialization in Emerging Markets, focusing on Latin America. He writes frequently on issues of U.S. foreign policy and has previously written about Mexico’s drug war for the Center for a Just Society in a two-part piece which can be found here and here.

The CJS Forum seeks to promote an open exchange of ideas about the relationship between faith, culture, law and public policy. While all the articles are original and written especially for the CJS Forum, they do not necessarily reflect the views of the Center for a Just Society.