Mexico’s Drug Cartels Are Not Competitors to the State

Since 2006, the Mexican military has participated in domestic law enforcement duties against Mexico’s drug cartels, large criminal organizations whose primary source of profit is the trafficking of illegal narcotics to the United States. Violence between the cartels over territorial and business disputes, exacerbated by the Mexican government’s more vigorous persecution of cartel leaders, has caused Mexico’s homicide rate to more than triple since 2007, reversing a previous long-term decline. The U.S. military now estimates that the cartels directly control around 30-35% of Mexican territory. Over eighty politicians or candidates for political office were killed in Mexico during the country’s 2021 midterm elections.

As of early 2024, despite the incarceration of leading cartel figures such as Joaquín "El Chapo" Guzmán Loera, the organization he headed, the Sinaloa Cartel, remains the dominant cartel in Mexico and is also an increasingly powerful force in drug networks across the world. Its main competitor is the Jalisco New Generation Cartel (CJNG) and the two often engage in violent competition, alongside smaller cartels like the Gulf Cartel, the Juarez Cartel, the La Familia cartel, and many more local criminal organizations. In 2017, Americans consumed $153 billion worth of banned narcotics. The cartels satisfy a large fraction of this demand. There are no precise estimates of cartel revenues and profits, but it is likely that annual revenues are in the low tens of billions of dollars and profits total several billion after the costs of business, including bribes. The cartels also generate revenue from other criminal activities like human trafficking, extortion, and even illegal logging.

Around the world, such criminal activities have shown to be lucrative enough and resilient enough to state persecution to fund rebellions that could topple governments. For example, the Marxist FARC guerillas in Colombia, as well as multiple generations of Taliban rebels in Afghanistan—first fighting the Soviets, then the U.S.—were funded in this way. Because of the drug war, ongoing violence, and continued influence of cartels in Mexican society, Mexico has sometimes been described as a failed state and some U.S. politicians, such as former President Donald Trump and Republican Senator Tom Cotton, have even called for taking unilateral military action against the cartels, as was done against ISIS, the short-lived Islamist statelet in Iraq and Syria.

But Mexico’s cartels are not ideologically or politically-motivated groups making the jump to crime to fund their activities. They are rather amorphous criminal groups motivated by profit-seeking, usually relying on familial and regional ties. From a business perspective, it is preferable to collaborate with the government when possible, rather than invite anarchy. Since, through bribery, the cartels represent an important source of revenue for Mexico’s elites, this interest is mutual.

As a result, the cartels are far more like junior partners to corrupt government officials rather than an independent and competing force of their own, though their allegiances have ebbed and flowed from the state level to the federal level—Mexico is a federation of united states—and seemingly back over the last sixty years. This makes Mexico’s cartels clients of the Mexican state, not its competitors, and, in turn, Mexico’s status as a client of the U.S. explains why the cartels continue to flourish and why there is unlikely to be any U.S. intervention in the near future.

The Mexican Drug Industry

The drug trade is a notable, but not large, portion of Mexico’s economy. U.S. government estimates from the last fifteen years have settled on figures ranging from $6 billion to $29 billion annually for the amount of money going from the U.S. to Mexico for illegal drugs. According to the Department of Homeland Security, up to three-quarters of cartel cash revenue might never even be laundered into a financial institution by a cartel, but just stored indefinitely in cash form or presumably used to pay off others in cash. In 2023, a statistical estimate of the number of Mexicans working in the entire drug industry—including armed members, farmers, and chemists—reached a figure of 175,000.

This would be just 0.3% of Mexico’s labor force of sixty million people as of 2024, while even if the drug trade brought in revenues of $50 billion annually, this would still be well below 5% of Mexico’s GDP of $1.47 trillion as of 2022. For reference, Mexico’s largest company, the state-owned oil company PEMEX, brought in $74 billion in revenue in 2019. The flagship telecommunications company of Carlos Slim’s business empire, América Móvil, brought in $45 billion in 2023. While the cartels derive revenue from other rackets such as domestic extortion, these are unlikely to be as profitable, on the whole, as drug trafficking to the U.S. The drug trade in its entirety is about as large as Mexico’s largest company, but the two largest cartels together are believed to employ just 45,000 members, on the high end. The drug trade is powerful in Mexico not because of its size, but because of its liquidity, anonymity, and informality, which makes it easy to enrich particular individuals. (...)

The Mexican Cartels Are Networks Not Hierarchies

The major Mexican cartels operating today nearly all descend from the Guadalajara Cartel, the dominant force in the 1980s Mexican drug trade. Like most of the so-called “cartels,” however, the Guadalajara Cartel had no clear leader nor a set hierarchy. It consisted of a shifting set of allegiances formed between a number of drug traffickers from the Mexican state of Sinaloa, their political connections in the PRI—Mexico’s dominant political party for most of the twentieth century—the federal police services, and their personal bodyguards. These traffickers had familial roots in the drug trade going back at least one generation. The leadership of today’s cartels turns over rapidly and allegiances between different organizations come and go, but the major bodies are relatively stable despite periodic inter-cartel wars.

The Sinaloa Cartel is today the leading Mexican drug trafficking organization. It is controlled by two competing factions, one led by the four sons of El Chapo—known as the “Chapitos”—the other by Ismael Zambada García, known as “El Mayo.” Now aged 76, El Mayo is the last remaining free man among the cartel old guard and has never been arrested in a lifetime of drug trafficking. His faction includes Aureliano Guzmán Loera, El Chapo’s brother. The Chapitos were largely responsible for the cartel’s move into the fentanyl market, which has opened up a new and profitable revenue stream.

They have also proved willing to engage in direct gun battles with the Mexican military, which the Sinaloa Cartel had historically avoided whenever possible.

by Samo Burja, Bismarck Brief |  Read more:

Image: Adam Jones