meXico’s drug war reForms

CHAPTER 4:

meXico’s drug war reForms

iN 2010 and 2011, grenades exploded at city hall buildings in Reyno- sa, Matamoros, Nuevo Laredo, and Ciudad Victoria, all located in the Mexican border state of Tamaulipas. Organized crime was blamed for the explosions—in particular, members of the Zetas or the Gulf Cartel. I visited the region in early 2011, at a loss for what could be driving criminal groups to fight against local governments that are, for all intents and purposes, under cartel control. I went to the region against the counsel of various journalists, who said it was too danger- ous. Most of my sources refused to go on the record, and the stories they told in hushed tones were enough to give any reporter the chills. It wasn’t until I met Francisco Chavira Martínez that things began to become clear. The first time we met, he suggested we eat together at the back of a Reynosa restaurant that caters to well-heeled locals. Wait- ers dressed like penguins bowed in and out; the rest of the tables were occupied mostly by older men. Chavira, who runs a private university with campuses throughout Tamaulipas, spoke loudly between bites, not seeming to mind the fact that others could hear him.

After a bit of small talk and a couple of sips of coffee, I asked about the bombs. Local governments “use car thieves to steal the cars of anyone who opposes them; house thieves who will rob your house to frighten you; narcotraffickers, who they use as a way to create fear in the people, so that you don’t participate, so that you don’t raise your voice or go against the government; they even send their own to throw grenades at city halls,” Chavira explained.1 Silence. Maybe Chavira noticed the quizzical look on my face. He quickly explained what it was he meant. “Why?” he asked himself, pausing for a mo- ment. “So that the people are scared and don’t go to City Hall to make demands; they won’t go and demand that public accounts be trans- parent, or [ask] what the money is being spent on.” Some months af- ter our interview, Chavira, a candidate for the left-leaning Democratic

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Revolutionary Party (PRD), was arrested on trumped-up charges and held in jail until after the elections, in what he referred to as a “legal- ized kidnapping” by the state.

Members of the Mexican government have used many means to defend their position in society, from explosions to extortion and threats. The methods Chavira describes above can help us understand the extent of this, and go a little ways toward illustrating the complic- ity between state actors and criminal groups. But the politics of the drug war isn’t just about bombs and bad guys. Alongside the violence, there are legal and policy reforms embedded in Plan Mexico that have everything to do with creating a more hospitable business environment as well as entrenching the US-backed rule of law framework.

The stated focus of the Mérida Initiative is fourfold: dismantle criminal organizations; strengthen air, maritime, and border controls; reform the justice system; and diminish gang activity while decreas- ing demand for drugs.2 The Mérida Initiative, or Plan Mexico, is the overarching policy and legislative framework that establishes drug war capitalism in Mexico. It takes a page directly from Plan Colombia in terms of enshrining support for disrupting narcotics trafficking while transforming Mexico in three key ways: introducing a new legal sys- tem and promoting structural reforms, increasing levels of militariza- tion, and, as a by-product of the latter, encouraging the formation and multiplication of paramilitary groups.

As with Plan Colombia, the Mérida Initiative is not strictly a mili- tary agreement. It has four “pillars”: disrupt organized criminal groups, institutionalize reforms to sustain rule of law and respect for human rights, create a 21st century border, and build strong and resilient com- munities. According to the US Government Accountability Office, “The Mérida Initiative is an assistance package with diverse program compo- nents that is being implemented by a wide range of U.S. agencies under the leadership and management of the State Department.”3

The first component of the Mérida Initiative is officially known as “Assistance to Enhance the Rule of Law and Strengthen Civilian Institutions.”4 Tied to—or simultaneous with—anti-drug funding, laws are adjusted, and reforms are brought in that encourage privat- ization and increased foreign direct investment. According to the US government, this will “Build Strong and Resilient Communities,” and “Strengthen Institutions.”5 An alternative analysis of this component of drug war funding could instead carry a title that represents the spirit of these adjustments: in the case of Mexico these policies could

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be called “NAFTA-plus” as they are a form of deepening institutional changes formalized in the Canada-US-Mexico (North American) Free Trade Agreement, signed in 1994. In addition, this component fulfills an important part of counterinsurgency, as it attempts to convince and capture the hearts and minds of Mexicans.

The second component of the Mérida Initiative is officially called “Law Enforcement and Security Assistance.”6 This consists of state-funded militarization of police and of borders, as well as increased police and military powers, training, and weaponry. This represents agreements made in a legal manner between cooperating governments, though implementation can be on the margin of legality in host states.7 The US government tells us that this is designed to “Disrupt Organized Criminal Groups” and “Build a 21st Century Border,”8 but in actual fact it looks a lot like counterinsurgency. Back in 2010, Hillary Clin- ton, then US secretary of state, compared the situation in Mexico to an insurgency. “It’s looking more and more like Colombia looked 20 years ago,” she told delegates at a Council on Foreign Relations event. Drug cartels “are showing more and more indices of insurgencies,” she went on.9 In 2009, the head of the US Joint Chiefs of Staff stated that he backed the use of counterinsurgency in Mexico.10

Counterinsurgency can be understood not only as a form of war- fare but also as a kind of war with outcomes that may differ from those of traditional combat. “Victory in the context of counterinsur- gent warfare is measured not by the number of enemies vanquished but by the increase in trust and sympathy among native peoples that would wean them away from the insurgents’ influence,” writes Vicen- te L. Rafael, a professor of history at the University of Washington.11 Keep Rafael’s description of victory in mind, and then take a look at how John D. Feeley, principal deputy assistant secretary of the Bureau of Western Hemisphere Affairs at the US State Department describes the US’s National Drug Control Strategy as it is applied in Mexico. He describes the core of the strategy as enhancing citizen security and strengthening the rule of law, “while empowering average citizens to collaborate with police, prosecutors, and judges, as well as teachers, community activists, non-governmental organizations (NGOs), and human rights advocates.”12 Seen from an alternative perspective, the law enforcement segment of the Mérida Initiative can be understood as the application of counterinsurgency war within a formally democratic framework. It also serves as a program to limit human mobility while encouraging the flow of goods and services.

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The two components described above are both formally acknowl- edged by proponents of anti-drug policy. The policy component and the policing component reinforce one another: as public companies are privatized and state revenues fall, more force will be required on the part of the state in order to maintain social order. Take Pemex, the state oil company, for example. Before reforms in December 2013, 99 percent of the state-owned oil company’s profits went to paying taxes, representing the largest revenue source in Mexico’s national budget.13 It remains to be seen how the reforms to Pemex will affect the country’s revenue stream and budget. If the taxation of private oil companies fails to fill state coffers in the future, it could result in the application of the harshest austerity measures yet in Mexico, which may in turn trigger mass social protest.

To this end, the capacity of security forces to make massive ar- rests and jail dissidents is being increased through Mérida Initiative programs. As more people are arrested by larger and more aggressive police forces, the expedited justice system offered by the United States model could prove useful in processing them. The increased prison capacity, also funded by the US through the Mérida Initiative, will doubtless be useful in detaining them. Looked at from this perspective, the Mérida Initiative appears to be a long-term strategy to enforce aus- terity and globalized capitalism while militarizing Mexico.

The third and final component of the Mérida Initiative is a gener- ally unacknowledged yet known effect of the application of the drug war: the emergence of new forms of social control that stem from the reorganization of narcotics flows and crime groups provoked by the militarized disruption of existing trafficking networks. In the domi- nant discourse of the drug war, this phenomenon is described using cartel war discourse. However, from a critical perspective it can be understood as something closer to a form of paramilitarization. This part of the drug war is the most nebulous and difficult to describe. Journalists are encouraged to use a frame around cartels warring with each other to explain this phenomenon, but a closer look shows that paramilitarization is a known effect of militarizing drug trafficking. As we saw in the example of Colombia, paramilitarization can serve the interests of investors and transnational corporations seeking to pre- vent unionization or community mobilization.

The Mérida Initiative served as catalyst for a sharp increase in domestic police and military spending in Mexico. Before the Mérida Initiative, the US was giving Mexico in the neighborhood of $60–70

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million a year.14 The drug war changed that, and fast. US security spending in Mexico in 2010 was over $500 million, compared with $434 for Colombia, before falling off to $160 million or less (com- pared to over $250 million in following years for Colombia).15 World Bank data shows Mexico’s military spending as a proportion of gross domestic product (GDP) has risen 0.4 to 0.6 percent over recent years, between 2012 and 2013 Mexico increased military spending “by 5.1 per cent, despite weaker economic growth.”16 “It should be noted that Mexico has devoted considerable monies of its own to combat drug-related crime in the country, increasing the defense budget from just $2 billion in 2006 to $9.3 billion in 2009. This investment has been used to mobilize thousands of troops and federal police, under- write interdiction of drug shipments, implement institutional reform, and enhance inter- and intra-agency cooperation and intelligence shar- ing,” reads a report by the US army–linked RAND Corporation.17 It is worth pointing out that military spending does not include the full spending on policing. Calderón’s offensive “was backed by the U.S. under the Mérida Initiative and included deployment of 96,000 army troops, together with thousands of marines and the appointment of dozens of military officers as police chiefs in towns and cities.”18

Total US funding appropriations for the Mérida Initiative in Mex- ico between 2008 and the end of 2014 totaled $2.35 billion. Congress requested $115 million for the Mérida Initiative in 2015.19 It was esti- mated in 2012 that for every dollar that the United States spent on the Mérida Initiative, Mexico spent thirteen.20 Central America Regional Security Initiative funds began flowing to Central America in 2008, by the end of 2014 totaled approximately $806.3 million, with an addi- tional $130 million requested by Congress for 2015.21 By mid-2013, the US had disbursed $27,151,000 for the Caribbean Basin Security Initiative, a fraction of the over $157 million allocated.22

The US government did not provide any cash to the Mexican government as part of the Mérida Initiative, instead spending the earmarked dollars on US-made equipment and various private con- tracting firms. Additionally, non-Mérida counter-drug assistance was provided by the US Department of Defense, totaling $208.6 million between 2009–2012.23 Through newspaper reports generally focus on the police and military aspects of the drug war (the violence), recent testimony by the US point man for anti-drugs policy in the Americas, William Brownfield, highlights how the US government’s motives in funding the Mérida Initiative go beyond security: “In every society,

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citizen security underpins economic stability and allows trade, in- vestment, energy development, and education exchanges to flourish. The partnership forged between the United States and the Govern- ment of Mexico over the past six years under the Mérida Initiative exemplifies how strengthening citizen security supports these broader objectives.”24 The objectives outlined by Brownfield could be more im- portant than they first appear. According to economist Dr. Paul Collier, “Conflicts are far more likely to be caused by economic opportunities than by grievance. If economic agendas are driving conflict, then it is likely that some groups are benefiting from conflict and that these groups therefore have some interest in initiating and sustaining it.”25 Collier is referring to civil wars, but the same applies to Mexico. The drug war in Mexico can hardly be called a civil war, due to the extent of international involvement in the conflict (the same can also be said of other so-called civil wars, like those in Guatemala and El Salvador, for example). The scale of the killing has pushed the conflict far be- yond the frame of being a dirty war. In some senses, it is a war with no proper name. Regardless, Collier’s point about economic opportuni- ties holds true for Mexico.

In the case of the drug war in Colombia, Central America, Mexico, and elsewhere, it is clear that dominant factions in the state apparatus stand to benefit. State military power, policing, and the prison sys- tem are strengthened through increased aid and cooperation with the world’s military superpower. Another beneficiary of drug war policies generally is the transnational corporate sector. It experiences improved conditions for investment thanks to reforms as well as an increasingly militarized and repressive social context that allows a freer hand to pursue destructive and/or controversial mega projects.

Criminal groups, the ones moving the drugs, are the third category of beneficiaries. These are the war profiteers the mainstream media and governments focus on. According to a 2010 report by the UN Office on Drugs and Crime, 85 percent of gross proceeds in the $35 billion cocaine market stayed in the United States. Of that amount, 15 percent went to US wholesalers and mid-level dealers, and 70 percent went to street-level dealers who sold to US consumers. Compare this to the $4.6 billion (13 percent) that stayed with traffickers moving the product be- tween the Andean region and the US, or with the mere 1 percent that stayed with Andean producers.26 These statistics help us understand that drug traffickers in Mexico are accessing amounts of money that are, all told, relatively small. A similar division of profits in the narcotics trade

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exists worldwide. According to the Global Commission on Drug Poli- cy, “drug prohibition has fueled a global illegal trade estimated by the UNODC to be in the hundreds of billions. According to 2005 data, pro- duction was valued at $13 billion, the wholesale industry priced at $94 billion and retail estimated to be worth $332 billion.”27

Though it is the military aspect of the Mérida Initiative that gets the lion’s share of funding and media attention, it is worth examining policy aspects that constitute the first component of the Mérida Initiative. Of the $400 million the United States promised to spend on Mexico’s se- curity, $73.5 million was devoted to funding judicial reform, institution building, and rule of law. The rule of law, judicial and institution build- ing or policy component of the Mérida Initiative is of crucial impor- tance. It brings together security and economy in what is perhaps one of the greatest innovations of Plan Colombia: the militarization of aid and the steering of anti-drug money toward fostering the creation of more welcoming investment policies and legal regulations. Though not often talked about in the context of the drug war, these policy changes often have little or nothing to do with illicit substances and everything to do with the transformation of the business environment.

The policy part of the Mérida Initiative is carried out and coordi- nated by USAID, with participation by the Department of Justice, the Department of Homeland Security, the Department of Defense, the State Department, and the Office of National Drug Control Policy.28

USAID’s general focus is on “furthering America’s foreign policy inter- ests in expanding democracy and free markets while also extending a helping hand to people struggling to make a better life, recover from a disaster or striving to live in a free and democratic country.”29 The agency, together with the US State Department, requested nearly $50 billion from the federal government in 2014.30 “U.S. policy toward the Western Hemisphere seeks to seize and expand opportunities for inclusive economic growth, transforming the region’s emerging middle class into dynamic new markets for U.S. exports and creating jobs at home,” according to the US State Department.31 The US government plans to spend about $205.5 million in Mexico in 2014, a significant reduction from the previous year, but still the third highest amount in the hemisphere, after Colombia at $323 million and Haiti at $300 million (together these three countries make up over half of total US government spending in the Western Hemisphere).32

After seven years of destabilization and terror linked to the drug war, Mexico is undergoing a series of reforms and signing on to new

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agreements that deepen the North American Free Trade Agreement, which took effect in 1994. As the Mérida Initiative continued into 2014, the US government proposed to use it increasingly to focus on political and legislative reforms that are under way. “In Mexico, Mérida Initiative assistance will continue to transition to increased capacity-building activities geared towards strengthening Mexican institutional reforms, rule of law, and violence prevention in part- nership with the Peña Nieto administration.”33 There’s no shortage of ways for the US to get involved in policy changes in Mexico, as there has been a slate of reforms since Peña Nieto was elected in July of 2012, including energy reform, financial reform, tax reform, labor reform, political reform, education reform, and telecommunications reform. “If all of this unfolds successfully, Peña Nieto will have moved Mexico forward more than anyone since NAFTA was passed, putting Mexico on the path to economic and democratic modernity,” James R. Jones, co-chair of Manatt Jones Global Strategies, told journalist Eva Hershaw in late 2013.34

In addition to the reforms, Mexico is party to the Trans-Pacific Partnership, a secretive trade agreement between twelve nations: Aus- tralia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. According to the Of- fice of the US Trade Representative, “This agreement will advance U.S. economic interests with some of the fastest-growing economies in the world; expand U.S. exports, which are critical to the creation and re- tention of jobs in the United States; and serve as a potential platform for economic integration across the Asia-Pacific region.”

The US and Mexican economies are deeply linked, and the robust- ness and protection of both countries’ economies is an oft-cited justi- fication for the drug war. According to Strategic Forum, a US military journal, “In recent years, almost 85 percent of Mexico’s exports have gone to the United States, making Mexican economic success depen- dent on the balance between trade and security. U.S. economic success is also dependent on this balance. Continued prosperity depends on reliable homeland defense and security, which can only be achieved through greater coordination and information sharing among military partners as well as the law enforcement and interagency community. President Calderón promised to improve security, thereby enhancing prosperity for the Mexican people.”35 Though at the beginning of his term Peña Nieto made links between violence and economic growth, it is an increasingly rare refrain for high-level politicians in Mexico and

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the United States, who are attempting to shift the discourse toward the purely economic. “Preventing violence and promoting economic and social development are part of a vicious cycle,” President Enrique Peña Nieto told Time magazine after his election. “Without better economic opportunity you can’t have better public security, and vice versa.”36

Not all of the policy reform work is taking place using Mérida Initiative funds. Nonetheless there is coordination between Mérida programs and USAID’s competitiveness programs, which aim to cre- ate a policy environment that is more favorable to transnational cap- ital.37 One of USAID’s program goals is to see that the “Government of Mexico becomes more effective in curbing monopolies and elimi- nating anticompetitive practices.”38 According to a call for proposals issued in January 2012, “USAID is working with Mexican partners to improve economic governance and increase private sector compet- itiveness.”39 The agency’s focus is on advocating for a new regulato- ry regime and additional privatization, efficiency, and foreign direct investment in the transportation, financial, energy, and telecommu- nications sectors.40 “USAID is supporting Mexican-led initiatives to improve the country’s competitiveness by working with Mexican fed- eral, state, and local government entities, nongovernmental organiza- tions, and the private sector to improve Mexico’s business-enabling environment and build sustainable support for continued policy re- forms and systemic changes.”41 USAID funds the Red Mexicana de Competencia y Regulación (Mexican Network on Competition and Regulation, RMCR) and the Centro de Investigación para el Desar- rollo, A.C. (Center for Research for Development, CIDAC), whose policy proposals for Mexico’s economy look like they are drawn di- rectly from a US State Department wish list.42 CIDAC promotes the advantages of increased foreign direct investment and more aggressive privatization programs. In addition, USAID subcontracts work to pri- vate firms, which are tasked with carrying out various programs de- signed to improve the investment climate in Mexico. This is significant because many of the firms subcontracted by USAID are military con- tractors who have participated in reconstruction efforts in post-war zones. These firms are the same ones that were tasked with helping implement reforms once the US and its allies invaded and occupied Iraq. In Mexico, the destruction isn’t wrought by US bomb attacks, but nevertheless the country has been deeply damaged by the drug war. Here, reconstruction and reforms are implemented alongside on- going terror and violence.

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In 2009 USAID awarded Abt Associates $17.8 million to carry out the Mexico Competitiveness Program, which is made up of four parts: building sustainable environmental governance, increasing private sec- tor competitiveness, making precursor markets more competitive, and increasing investment in and use of clean energy.43 Abt subcontracted out the private sector competitiveness section of the program to Casals & Associates. According to Casals & Associates, this segment of the program has the following goals:

• Increasing government transparency and accountability • Promoting competition within government through policy reforms and regulatory changes • Improving government communication • Promoting nongovernmental organization networks and pub- lic-private partnerships to strengthen the role of civil society 44

Casals & Associates and Abt Associates both have direct ties to the US military; Casals & Associates belongs to DynCorp, a defense contrac- tor that, according to its website, has “recruited, trained, and deployed more than 6,000 highly-qualified civilian peacekeepers and police trainers to 11 countries, including Haiti, Bosnia, Afghanistan, and Iraq, for the Department of State,” while Abt got its start “transfer- ring defense-related technology and systems to civilian application.”45

Both of these military-linked corporations are today at work in Mexico promoting policy reforms designed to improve the experi- ence for transnational corporations and investors seeking to do busi- ness in Mexico. Their programs are unfolding at the same time as the country undergoes militarization and paramilitarization because of the drug war.

Another USAID-funded program in Mexico is being carried out by Evensen Dodge International, a global capital markets firm that helps Mexican states raise money by arranging for the issuance of bonds and loans that make resources available to invest in public private part- nerships.46 According to the US State Department, “Evensen Dodge International, a financial company, is working with U.S. Embassy Mexico and the Government of Mexico to carry out reforms to the le- gal framework of pension funds at the federal level. [Fernando J. Gama of Evensen Dodge] said that these reforms are enabling Mexican states to finance renewable energy systems.”47 If there is any doubt about the benevolence of USAID and foreign assistance programs, it was quelled

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in 2001 by US Secretary of State Colin Powell, when, in a rare admis- sion, he spoke to the true role of US development aid: “Just as surely as our diplomats and military, American NGOs are out there serving and sacrificing on the front lines of freedom.… [NGOs] are such a force multiplier for us, such an important part of our combat team.”48

Peña Nieto’s Reforms?

Days before President Enrique Peña Nieto’s inauguration, the New York Times reported that “he has promised to rewrite the tax laws, open the state-owned oil sector to private investment and rein in Mexico’s powerful monopolies.”49 Peña Nieto’s promises align al- most perfectly with USAID-coordinated economic and financial pro- posals for Mexico.

Before assuming office, Peña Nieto’s PRI party joined with Calderón’s PAN to pass a labor reform law that introduced hourly wages (about 70¢ per hour) instead of daily minimums, and lessened the legal requirements on corporate contributions to the social security program. This strike against the already precarious Mexican working class was Calderón’s parting shot and helped usher in a new era of re- forms under the PRI. When he took office on December 1, 2012, Peña Nieto launched the “Pact for Mexico,” a coalition of the country’s three largest political parties that has introduced education, financial, tax, political, and energy reforms.50 By and large, the reforms being implemented in Mexico are based on the model of austerity and struc- tural adjustment. The promotion of structural reforms in Mexico is enshrined in the Mérida Initiative and provides a crucial example of how drug war capitalism works to transform national economies to benefit the corporate sector.

In early 2014, I visited Alejandro Hope at his office in Polanco, one of Mexico City’s swankiest suburbs. He’s an analyst who has worked with a variety of Mexican and US think tanks—including the Mexican Institute for Competitiveness (IMCO) and the Wilson Center—and I asked him what he thought of Peña Nieto’s first year. “There’s a lot of wishful thinking and propaganda. Peña Nieto’s first year was not a good one,” he said. Hope pointed out that the education reform, the telecommunications reform, and the political reform are still only par- tially realized, stalled at the level of implementation and state accep- tance. “If the energy reform hadn’t have been passed in mid-December, Peña Nieto’s first year would have been declared a failure.”

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Regardless, it’s worth a look at some of the reform initiatives that have been pushed through under Peña Nieto’s leadership. On Decem- ber 11, 2012, ten days after he took power, the Mexican government changed two articles of the constitution, resulting in what they said was an education reform. “What was approved isn’t an education reform, rather a labor and administrative reform in disguise,” wrote colum- nist Luis Hernández Navarro in La Jornada.51 Hernández maintains the legislation opens the pathway to the privatization of the educa- tion system. The changes introduce standardized testing and increased labor precarity for Mexican teachers, and require English classes for Mexican students. The reform was heavily contested; two months of marches and blockades by teachers, especially Indigenous teachers from impoverished rural areas in the southern states of Oaxaca and Chiapas, showed street-level resistance against it. Tents were erected, and a protest camp, which lasted for months at the Monument to the Revolution in Mexico City, was built. For months, teachers refused to return to classes until their demands—for multilingual education (Spanish and Indigenous languages, not English) and no standardized testing—were met.

The stakes are high when it comes to Mexico’s education system, and the US corporate sector in particular has a lot riding on innovation and education in Mexico. “With Mexico able to provide US compa- nies with young, skilled and cheap labor, and with the US able to play a potentially crucial role in the transfer of technology and know-how to its southern neighbor, there is clearly plenty of room for the two administrations to push ahead with further economic integration,” ac- cording to a recent article in the Financial Times. General Electric has an important center for research and design in Querétaro, which is fast becoming the country’s most important aerospace cluster. Engi- neers, 115,000 of whom graduate in Mexico each year, are particular- ly sought after, as they can be hired in Mexico for less than $1,000 a month. This is a crucial element in Mexico’s ability to attract foreign direct investment in advanced manufacturing, like the automobile and airplane industries. According to data from Mexico’s Secretary of the Economy, the number of aerospace companies in Mexico rose from 61 to 249 between 2005 and 2011, and 85 percent of aerospace exports are to the United States. Aerospace exports more than doubled to $4.3 billion over the same time period.52 By 2011, the automotive industry represented 6 percent of FDI in Mexico and 23 percent of Mexico’s exports. In a speech given the same day Enrique Peña Nieto assumed

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his role as president of Mexico, the US ambassador to Mexico had this to say: “Increasing competitiveness has enabled Mexico to take a larger share of U.S. imports—about 13 percent this year. This trend is being driven by the rising cost of labor in China and the impact of high-energy prices on transportation. There are compelling reasons to believe that it is not just a short-term phenomenon. While Mexico has been the second-largest destination of U.S. exports for some time, some economists now predict that Mexico will overtake China to be- come the largest source of imports into the U.S. by 2018.”53

There has been pressure from international finance institutions to change the education system in Mexico; in a December 2012 press release announcing the renewal of a $73 billion credit line for Mexi- co, the IMF called for reforms to the education system, among other things.54 Peña Nieto has already earned the admiration of the Interna- tional Monetary Fund, whose leaders said they were “very impressed with President Pena Nieto’s structural reform agenda.”55

The strategy, at least according to economic elites, is working. On May 8, 2013, Mexico’s Finance Ministry (SHCP) presented to Con- gress a 927-page financial reform, consisting of thirteen decrees and amending thirty-four federal laws. Changes to the financial system are necessary not only to encourage foreign direct investment, but also to allow for the beginnings of shifting the tax base away from state-run petroleum company Pemex, which in turn was part of clearing the path to privatization. The same day the reform was published, Fitch Ratings raised Mexico’s credit rating to BBB+, citing “greater than anticipated commitment of the new administration and Congress to pass structural reforms.”56 Finance Minister Luis Videgaray explained that the reform aims to increase competition in the banking sector and create incentives for lending.57 Videgaray twice pointed to Chile, long the Latin American poster child of neoliberalism, as a model for Mex- ico’s financial system. “Regardless of the reforms, the performance of the Mexican economy over the last three decades has not been sat- isfactory,” read a report released prior to the reforms by the Mexi- can Central Bank.58 In a March 2012 presentation, a Bank of Mexico representative correctly said that the pending reform agenda for the country’s central bank would improve the ease with which companies can do business in Mexico, remove “legal obstacles,” prevent labor flexibility, “strengthen the rule of law,” and consolidate macroeco- nomic policies.59 “A poor track record of paying back loans, limited consequences for non-payment and a challenging legal environment

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for collections also dull lending in Mexico,” reported the Wall Street Journal,60 so among the key objectives of the reform bill, is “improving trial procedures seeking faster resolution of controversies and granting enhanced rights to lenders through the courts, which are likely to ex- pedite collections.”61

The financial reform, far from extending credit to poor and ru- ral Mexicans and farmers who own land collectively (who do not have fee simple title), encourages the extension of credit in the form of credit cards. It creates the legal framework for the government to facilitate repossession of property belonging to debtors, something not previously contemplated in Mexico. Citibank and Banco Bilbao Vizcaya Argentaria are the biggest players, and HSBC, Santander, and Banorte round off the banks that essentially control the sector in Mexico. Experts say the financial reforms introduced on May 8, 2013, as part of the Pact for Mexico will primarily benefit these big banks. “The financialisation will take place through an increased pen- etration in small and medium sized communities, including poor and rural areas, that could finally mean an even deeper process of indebt- edness of a good part of the population of Mexico,” said Dr. Luis Ig- nacio Román Morales, a professor and researcher in the department of Economics, Administration, and Finances at the Western Institute of Technology and Higher Education (ITESO) in Guadalajara, Mexi- co. “For the banks and financial institutions in general, it will become much easier to collect from the debtor. That’s very serious on a num- ber of levels.”62

Ejidos are also under threat from the financial reform.63 The sys- tem of ejidos is similar to the calpulli system of the Aztecs’ rule of Mexico, in which part of the lands was farmed by single families and other parts were used collectively. Ejido land was formerly only collec- tively owned by groups of farmers and passed on through the gener- ations. Since pre-NAFTA reforms in 1992, parceled lots of ejido land can be converted to fee simple land. Under the 2013 financial reform, these lands could be collected for debts in the countryside, further dev- astating the rural land base. “In other words, we could go back to hav- ing banks as major land owners,” said Román Morales. For the first time, banks could also seize goods and real estate for non-payment, as well as take over small businesses.

Isabel Cruz Hernández, director of Mexican Association of Cred- it Unions in the Social Sector (AMUCSS) and president of the Latin American and Caribbean Forum on Rural Finances, points out the

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financial reform will not assist the millions of Mexican farmers who have resisted converting their lands to fee simple title. “Those who re- ceive credit are those who have material guarantees, but 80 percent of our farmers have social property, which is to say, they’re part of ejidos and they can’t use their land as collateral for a loan—that is forbid- den by the constitution,” she told me. “This reform will never benefit [farmers with less than five hectares or using ejidal land], never ever, and there is no movement within the financial reform to ensure that rural and agricultural credit can be activated for food production.”

The IMF loan renewal granted for Mexico in late 2012 noted “a broad structural reform agenda would be needed to unleash Mexico’s growth potential.” Mexico’s finance minister has admitted that the fi- nancial reform is necessary to other reforms pushed ahead in Mexico by the Pact for Mexico, which was supported by all of the major polit- ical parties.64 “What some countries are doing, and this is the case of Mexico, we are trying to push a structural reform agenda that differen- tiates our economy from other economies in the world,” said Mexico’s vice finance minister, Fernando Aportela Rodríguez.65

As if to confirm Washington’s glee at Peña Nieto’s reforms, in Feb- ruary 2014 Time magazine featured him on the cover. In the photo, Peña Nieto’s head is slanted slightly upwards; he looks smug, con- fident, and handsome. Across his chest, bold white letters scream “Saving Mexico.” Below them: “How Enrique Peña Nieto’s sweep- ing reforms have changed the narrative in his narco-stained nation.” Critics pointed out that the Time piece read like a paid advertisement. Journalist Daniel Hernández wrote, “Weirdly, though, I don’t know of anyone who is calling this ‘Mexico’s Moment,’ other than people who stand to directly benefit from the construction of an impression of an economic boom in Mexico, a boom which actually has not manifested, and has certainly not ‘trickled down’ to the average Mexican.”66

The Time cover showed the new heights the US media would go to put a positive spin on Mexico. Beginning in 2012 and accelerat- ing with the return of the PRI, there was a public relations push to rebrand the country as an economic Aztec Tiger undergoing a new Mexican Miracle. This kind of reporting focuses on dubious asser- tions that Mexico has an expanding middle class, and ignores ongoing state and paramilitary violence. According to a 2012 position piece by Vianovo, a branding and PR company, to change Mexico’s brand, a good story “should highlight that Mexico’s stable GDP growth and burgeoning middle class represent a true economic miracle in spite of

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these challenges. It should emphasize that the violence is contained within certain geographies, and that most of the country isn’t affected. You wouldn’t postpone a trip to New York City because of violence in St. Louis, right?”67

“In India, people ask you about China, and, in China, people ask you about India: Which country will become the more dominant eco- nomic power in the 21st century? I now have the answer: Mexico,” wrote Thomas Friedman in the New York Times.68 Friedman, a jour- nalist and columnist known for his strong neoliberal position, went on to extol Mexico’s competitiveness and suggest the United States should divert its war spending in Afghanistan to Mexico. “Better integration of Mexico’s manufacturing and innovation prowess into America’s is a win-win. It makes U.S. companies more profitable and competitive, so they can expand at home and abroad, and it gives Mexicans a reason to stay home and reduces violence. We do $1.5 billion a day in trade with Mexico, and have been spending $300 million a day in Afghani- stan. Not smart.”

Extractives

Without a drug war, Mexico would have continued to implement neoliberal reforms, but there is little doubt that the fear, distraction, and terror created by the war, as well as the special funding provid- ed through it, helped speed up the reform process. It also shifted the balance of power, as many Mexicans, disgusted by the perception that the drug war was the PAN’s doing, went back to voting PRI, whose election shifted public relations discourse—the economy became the central issue and talk of security challenges and the drug war were kept off the agenda. “It is a mistake to limit our bilateral relationship to drugs and security concerns,” wrote Enrique Peña Nieto in a Wash- ington Post editorial the month before he assumed office.69 “In NAFTA we have a solid foundation to further integrate our economies through greater investments in finance, infrastructure, manufacturing and en- ergy. Together, we must build a more competitive and productive re- gion.” On Obama’s first visit to Mexico during Peña Nieto’s term, the New York Times reported that the presidents would focus on “compe- tiveness [sic], education and innovation, along with border infrastruc- ture, commerce, migration and citizen security among other subjects of shared interest.”70 In Mexico City, Obama pumped the immigration reform that was about to go before the Senate, where the Immigration

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Reform Bill was transformed into an effort that would see the United States spend another $46 billion on militarizing the US-Mexico bor- der.71 It has since stalled and appears unlikely to be adopted in 2014.

Today, governments prefer the term “competitiveness” when talking about privatization and regulatory reforms designed to benefit the corporate sector. Previously, competitiveness was known as auster- ity, a term that has fallen out of favor among the economic elite due to the growing awareness of the harsh consequences austerity has on the public.72

Pemex, the state-owned oil company, was founded in 1938 when President Lazaro Cárdenas announced that the oil industry in Mexico, until then largely controlled by US companies, would be expropriat- ed. The company is now the crown jewel of the privatization effort.73 Many prominent Mexicans, including Peña Nieto, advocated its pri- vatization,74 and some, like the head of the Mexican Stock Exchange, have proposed using as their model Colombia’s oil sector reform.75 According to the Financial Times, “An opening of Mexico’s highly protected oil sector, which is dominated by state behemoth Pemex, could provide untold opportunities for US oil companies as well as the sort of technology-transfer Mexico desperately needs.”76 Much of 2013 was dedicated to preparing the political ground for the constitu- tional reforms required to open the oil sector to private investment. In a 2013 talk at a Council of the Americas event, Emilio Lozoya, head of Pemex, suggested that foreign companies will be allowed to begin extracting shale oil and shale gas in Mexico once new legislation is adopted. “Pemex is not making as many deals as it could, because like any other company it has a limited capacity for investment. Regardless of this, legislation does not permit other players to develop what Pe- mex leaves on the table because of a lack of investment capacity. Not only are the hydrocarbons not extracted and cheaper energy not gen- erated, neither is the employment generated. Thus, exploring the pos- sibility of more private sector participation would benefit the country, and this is part of the energy reform that President Enrique Peña will launch this year,” said Lozoya.

An initial energy reform passed by Calderón in 2008 didn’t mod- ify the constitution but it allowed for an increase in service contacts between Pemex and private companies. Lozoya, whose father was en- ergy secretary under former Mexican president Salinas, underscored that Peña Nieto is not in favor of outright privatization, but he hinted that opening up Pemex to increased Mexican investment would be

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a positive step forward. Until reforms in December 2013, the Mexi- can Constitution stipulated that hydrocarbons are the patrimony of all Mexicans, which means foreign corporations operated on fixed con- tracts instead of earning based on the amount of oil extracted.

Following the December 2013 constitutional changes, limitations on foreign participation in Mexico were lifted. Prior to the energy re- form, Mexico had one of the world’s most closed oil sectors—more so than even Venezuela’s, which was partially nationalized under Hugo Chávez. “There’s no comparison in Latin America; the only regime that continues to be markedly closed is Kuwait, and possibly North Korea,” said Dr. Miriam Grunstein, who teaches at the Centre for Eco- nomic Research and Teaching (CIDE) in Mexico City. “Chávez’s Ven- ezuela was more open than Pemex was up until two months ago,” she said as we spoke on a warm Mexico City afternoon in late January, 2014. To further open up Mexico’s extensive oil and gas fields to for- eign companies required constitutional changes to Articles 25, 26, and 27, which would allow companies other than Pemex to draw their pro- ceeds directly from the oil or gas removed from the ground. These re- forms, passed in December 2013, were justified on the grounds of job creation (there were promises of up to 2.5 million new jobs in Mexico by 2025 if the reform was passed),77 competitiveness, and the promise of providing cheaper gas and electricity to Mexicans.

Grunstein described the results of the Energy Reform as surpris- ing, and said that oil-industry experts didn’t think that such a radical reform would be possible in Mexico. “This reform, without a doubt, changes Mexico’s energy sector 180 degrees. For the first time, we will have private participation from the oil well to the private vehicle, or as they say in the US, from the well to the wheel. The change is total, and it will change not only the energy sector, but rather the entire econom- ic order of the country.” The fact that the state-owned oil company’s profits go into the federal budget, representing about 40 percent of the state’s total income and 70 percent of the total national budget, is generally skirted in the media. The longer-term consequences of pri- vatizing Pemex, and removing the corresponding revenue stream from the budget, would be akin to implementing a severe austerity program, creating a massive shock for the country’s working poor. In addition to the loss of profits, collecting what would be relatively high taxes for companies to operate in Mexico could pose a problem. “The govern- ment of Mexico has historically not been a good tax collector.… It is highly questionable whether it can, or whether there is a fatal level of

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corruption,” said Grunstein. “If Mexico doesn’t manage to maintain its share of tax revenues, there will be a coup d’état” sometime in the next fifteen years, she predicted. In Venezuela, private participation in the state oil company was permitted in 1993, and in 1998, Hugo Chávez Frias, an openly socialist candidate, won the presidency. Should Mex- ico similarly mismanage oil revenues and move sharply to the left, the militarization and the expansion of the prison system in Mexico, which has taken place in lockstep with the drug war, could eventually be used in controlling dissent.

In addition to the opening up of Pemex, the Federal Electricity Commission (CFE) was gutted as part of the energy reform. The CFE held a monopoly over electricity generation and distribution in Mexico since 1937, and historically operated at a loss while providing many in Mexico with subsidized electricity. There were protests against dams and high tariffs in some areas, but the extreme tensions that exist in private energy markets were largely avoided (for example, the 2012 protests and massacre in Totonicapán, Guatemala, which were partly motivated by higher energy prices). The CFE’s monopoly was swiftly undone with the December 2013 reforms. “The CFE will undergo a very important change, and I actually think it will be weakened more rapidly than Pemex, in the sense that there will be a competitive mar- ket for [electricity] generation, and the possibility of bilateral contracts directly with industrial users,” said Grunstein. For mining and oth- er energy-intensive industries to be able to harness their own energy source will surely be a boon to investment. It could also create lucra- tive side businesses for transnational corporations, which—to encour- age investment—other jurisdictions (like British Columbia, Canada) allow to sell surplus energy generated from state-subsidized dams back to the government buyer at market rates.

The Mexican government has actively promoted mining invest- ment, and today the sector is 70 percent foreign owned.78 Mining projects have been among the most conflictive sites of recent capitalist expansion in Mexico, and the majority of gold and silver production in the country takes place in states with the highest rates of violence (So- nora, Chihuahua, Zacatecas, Guerrero, and Durango). “Mining pro- duction in Mexico has been skyrocketing, up 50% in 2010, and more than double in the ten years ending in 2010 what three centuries of mining by the Spaniards produced. Today, eight out of the top 11 gold producers in the country are Canadian, and gold production was up 118% between 2007 and 2012.”79 In a move contrary to many of the

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policies passed by previous governments, taxes imposed on the mining industry, including a 7.5 percent royalty tax, were introduced as part of the tax reform, to the dissatisfaction of many foreign mining com- panies.80 However, “forgotten in the flood of criticism is that as much as 60% of the royalty amount will be tax deductible.”81 Anti-mining activists estimate there are fifty active mining conflicts in Mexico, and as investment in the sector continues to grow, the pro-mining/anti- mining divide is bound to become more polarized.

As we have seen, over the seven years since the war on drugs started in Mexico, a series of reforms have been passed that go a long way to- ward improving the country’s macroeconomic indicators. In February 2014, Mexico’s credit rating was again increased, this time to AAA, based on the energy and taxation reforms. The large financial institu- tions are pleased with Mexico’s performance, and Mexico’s economy is expected to grow faster because of the reforms.82 But it has long been established that stronger macroeconomic performance does not trans- late to better quality of life, especially for the poor. Over the first six years of the war on drugs, the number of Mexicans living at or below the poverty line increased from 42.9 percent to 52.3 percent, according to the World Bank.83 Austerity measures, decreasing labor standards and increasing precarity, and the increased cost of buying basic goods are forms of deepening structural violence against the poor majority.

Legal Reforms

We must also consider the judicial and rule of law aspects of the Mérida Initiative. In February 2012, the United States government announced a new training program for 8,500 prosecutors and investigators in Mex- ico.84 By 2016, all of Mexico is expected to be using a US-style legal system, a complicated transition funded by the Mérida Initiative.85 At one point, current Attorney General Jesús Murillo Karam claimed that drug trafficking had broadsided Mexico, as if it was a boogeyman that sneaked up on unassuming politicians and police in the dark of night. “We Mexicans had a justice system, an investigative system, and a po- licing system made for a country where the most serious crime was cat- tle rustling, which is to say, cows were stolen. And then all of a sudden, before we realized it, we were seated in a terrain where narcotraffick- ing, organized crime, the organization of crime had already surpassed all of the institutions,” he said.86 His words not only betray the Mexi- can state’s level of involvement in the drug trade historically, but they

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imply that Mexico was a country without massacres, dispossession, and femicides before the drug war started, which is simply false.

Mexican officials used the specter of narcotrafficking to shift blame away from structural impunity and police abuses, the drug war has provided them with a chance to push for reformation of the justice system. “Mexico is doing things that go much beyond fighting drugs. Yes we’re fighting organized crime and organized delinquency, which is one aspect of drug trafficking, but the truth is that the struggle in Mexico is a struggle for the transformation of its security and justice institutions,” stated Alejandro Poiré Romero, who served as secretary of the interior during part of Felipe Calderón’s administration.87

Many human rights groups herald the transition to oral trials and an accusatory justice system as a positive step, and progressive groups have provided trainings promoting the new legal system. But the re- forms also have their detractors: “Just as within globalized commerce [the United States] wants a world where everywhere there is a Mc- Donald’s, an Applebee’s, a Home Depot, a Walmart, a Sam’s [Club]; they also want a world where tribunals are the same everywhere as they are in the United States, so that whatever legal issues they have can be dealt with perfectly well by a legal firm from the United States, which can operate in the US, in Puerto Rico, in Argentina, in Chile, and so on,” said Oscar Castrejón Rivas, the president of the College of Lawyers in Chihuahua City, during an interview in late 2011.88 Chi- huahua was one of the first states to adopt the new legal code, begin- ning in 2007, and Management Systems International (MSI), which was contracted by USAID to promote and carry out legal reforms in Mexico, maintains the state has what is “considered to be the most advanced, progressive criminal justice Code in Latin America.” Using US taxpayer money, MSI sent politicians from Chihuahua to Chile and Argentina to study their justice systems, since decades earlier, in the 1990s—funded by USAID, the World Bank, the United Nations, and the Inter-American Development Bank—both South American coun- tries transitioned toward an accusatorial system.

When I spoke to Castrejón Rivas just over a year later, he told me that “in the opinion of the community of people in Chihuahua and the lawyer’s forum, what has happened has been a counter-reform, some- thing very different than what Washington and USAID promised.” Incarceration rates increased, and “basically, the presumption of inno- cence has been cancelled.” There is no doubt that the Mexican justice system is racked with irregularities, and advocacy groups—some of

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which are US funded—are clamoring for reform. But the statistics are generally lost amid the barrage of publicity claiming the USAID-im- posed model will clean up Mexico’s justice system.

It is also important to note that at the same time as the US-backed reforms to the legal system are being carried out, the penetration of Mexico’s judiciary by criminal groups is on the rise. “In many cases, judges, court officials and legal professionals are unable to act freely or fully independently because they are faced with threats, intimidation, harassment and other forms of undue pressure,” according to a 2011 report by the UN’s special rapporteur on the independence of judg- es and lawyers.89 “The impetus behind rule of law projects has often been the belief that markets require predictable legal structures to pro- tect property rights, facilitate foreign direct investments, and contract enforcement—that is, to establish U.S. law as the ‘lingua franca for business and politics.’”90 In addition to USAID, the Quebec Bar Asso- ciation, the US Federal Judicial Affairs Council, the National Judicial Institute, the National Democratic Institute, and the Federal Judicial Affairs Council have all been involved in promoting such legal reforms in Mexico. The economic bases for the reforms have been established by the Mexico Competitiveness Institute, which “identifies the cre- ation of an objective and reliable justice system as Mexico’s top priori- ty to improve competitiveness and to attract both foreign and domestic investment,” according to a statement by USAID chief Roger Garner.91 “Our Mérida programs in Mexico are designed to support those Mex- ican institutions as they fundamentally change their entire justice sys- tem and train an estimated 1 million people in new, more transparent and accountable ways of administering justice.” Garner didn’t men- tion that the Mexican Competitiveness Institute receives funding from the Mexican Council of Businessmen and USAID, and does consulting work for the US Embassy and the World Bank. His comments reflect the classic US echo chamber, though which US-funded civil society groups reinforce the State Department’s policy prescriptions.

The push to change Mexico’s legal system could impact Mexican legal traditions, which, according to law professor Deborah M. Weiss- man, include “ongoing attention to indigenous rights, constitutionally designed cooperative land use, corporative models of labor relations, and legal pluralism.”92 In turn, these changes could negatively impact popular resistance to mega-projects with foreign beneficiaries. The US rule of law program in Mexico falls in lockstep with counterinsur- gency efforts. “If you look at the allocation of rule of law money, it’s

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for surveillance, it’s for activating, whatever the heck that means, new prisons in Mexico, it’s for training Mexicans with regard to the ad- versarial and oral trial systems, yet they do not introduce the jury sys- tem,” Weissman told me. “You have a rule of law program in what is essentially a plan to militarize the drug war. You see that everywhere.”

Take this telling example of the connections between US police training and US-backed reform from 1960s Venezuela: “In the first place, the Venezuelan legal system had to be changed. Venezuelan law required the arrest of a police officer who killed a suspect, this, accord- ing to the Los Angeles Times reporter, frequently meant three months in jail while awaiting trial. But ‘under American tutelage, a police- man who killed a terrorist would be examined in one day by a civilian board of lawyers, and would be quickly restored to duty.’”93

The use of torture to obtain confessions is a common tactic used by Mexican police and soldiers, and the practice shows no signs of waning. In 2008, Felipe Calderón modified the constitution to in- troduce arraigo, a legal provision allowing the lengthy detention of suspects on the pretext that it allows authorities more time to gather evidence against them. This increases the possibility that torture be used against individuals or groups detained by the state. According to Mexican human rights groups, “This measure is clearly a form of arbitrary detention contrary to the obligations of human rights that Mexico has acquired, and violates, among others, the right to personal liberty, legality, presumption of innocence, due process and the right to an effective remedy.”94

Arraigo can be applied without any formal charges being laid, and the accused are held incommunicado for a period of up to for- ty days (which can be extended to eighty days with a warrant). In a 2011 report, the Inter-American Commission on Human Rights not- ed that it “received complaints having to do with the use of arraigo to hold individuals in private homes, hotels, and military facilities without respect for judicial guarantees, indicating that those being held in this manner have been subjected to torture for the purpose of obtaining confessions.”95

Who Benefits?

Some of the most important companies in the world will gain from financial and legal reforms in Mexico. The country is the world’s largest exporter of flat screen TVs and fridge-freezer units, and the

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manufacturing sector includes investment from firms including Toshi- ba, Hitachi, Mitsubishi, Pioneer, Ericsson, Sony, Sanyo, Panasonic, Xerox, Siemens, Foxconn, and Motorola, among others. Recent an- nouncements indicate that new investment in auto and aerospace man- ufacturing in central Mexico will continue.

“Mexico fell into a deep recession in 2009 when American de- mand for Mexican-made imports collapsed. But the recovery under President Felipe Calderón has been notable, with growth expected to reach almost 4 percent this year, roughly twice that of the Unit- ed States,” according to an article published in the New York Times in 2012.96 In 2008, before the financial crisis spread to Mexico, FDI reached $23.2 billion, and fell the next year to $11.4 billion.97 FDI has since rebounded: to $19.43 billion in 2011, and by 2013, to over $35 billion, primarily in manufacturing (73.8 percent), mining (7.9 per- cent), and commercial services (4.9 percent).98|99

An important and underreported aspect of the Mérida Initiative is the building of new border crossings and expansion of existing ones, both key demands of the US commercial sectors. “Financially, invest- ment in border crossings and infrastructure has not matched the ex- ponential increase in trade crossing the border each year,” reads a December 2012 memo from the Council on Foreign Relations.100 This infrastructure is necessary for the maquila (assembly) industry in Mexi- co, as well as to ensure efficient and regular supply of fruits, vegetables, and other food products to the United States. There are huge subsidies for US and other corporations that operate along the US-Mexico border, and so the US requires Mexico’s cooperation on these crossings. With regards to port and border posts, “the U.S. Government funded the de- velopment of licensing officer training; provided end-use/end-user and risk analysis training and enforcement training; developed an internal compliance program for private industry; and provided targeted dona- tions of radiological and chemical detection and identification equip- ment in collaboration with the U.S. Department of Energy’s Megaports program and the Mérida Initiative.”101

Possibly the highest profile beneficiaries of the drug war are large banks. As mentioned previously, the United Nations Office on Drugs and Crime reported in 2010 that 85 percent of the gross profits from the $35 billion US cocaine market are generated in the United States.102 This is where the big banks in the United States cash in on the drug trade, their complicity, when discovered, going nearly unpunished. HSBC was found guilty in late 2012 of having laundered over $880

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million for the Sinaloa Cartel and Colombian drug traffickers, among others. According to a report in The Guardian, “In order to handle the ‘staggering amounts of cash’, the bank even widened the windows at some branches to allow tellers to accept larger boxes of money.”103 HSBC was let off with a $1.9 billion fine—about five weeks of income for the bank—and none of its executives faced criminal charges for their role in facilitating the drug trade.104 According to Antonio Maria Costa, head of the UN Office on Drugs and Crime, cash from orga- nized crime essentially rescued banks during the market meltdown in 2008. “Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities.… There were signs that some banks were rescued that way.”105

In addition to organized crime, large corporations and public offi- cials also participate in money laundering in Mexico and elsewhere.106 A key aspect to any corruption scandal, where public officials steal money from government accounts, is money laundering or offshore bank accounts,107 which corporations like Walmart have been accused of taking part in.108 Narcotrafficking organizations are suspected of bankrolling candidates via campaign financing (in Mexico, the US, and elsewhere).109 In addition, it has even been documented that large es- tablishment media organizations like Mexico’s Televisa have been in- volved in international organized criminal activity.110

Mexico is an important player in the world economy, and if the analysts’ predictions are correct, it will have an even more important role as manufacturing continues to shift from China. A small transna- tional elite in Mexico, led by Carlos Slim, stands to make good off fi- nancial and other reforms, as do other important sectors, including the oil and mining industries, among others. The stakes are high, and the reforms brought in alongside the drug war are intended to reinforce and empower transnational capitalism in an increasingly stratified and unequal society.