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The Dimension of Mexican Organized Crime

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Adriana Degetau
Adriana Degetau

The document discusses the rise in power and influence of Mexican drug trafficking organizations (DTOs) over the past ten years due to shifts in the drug market. It notes that over 45,000 murders have resulted from internal cartel disputes and competition for drug routes into the US and local markets. While DTOs have at times controlled some Mexican cities, the government lacks a consistent strategy due to bureaucratic infighting and lack of capacity. The analysis provides an overview of the situation using a market explanation and forecasts what may happen if current policy does not change.

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The Dimension of Mexican Organized CrimeSeptember2011
The riskMexican DTOs have gained extraordinary power in the last ten years, due to shifts in the drug market and the availability to use Mexicos logistical infrastructure at a very low risk.
The lack of a national security and crime policy, has been a fertile ground for corruption in law enforcement agencies, government and society.
Internal disputes among the Cartels, the competition for entry points into the U.S. and increased revenues from local markets (drugs, prostitution, extortion and black market activities), have resulted in over 45,000 murders that include police, military, prosecutors, elected officials and politicians as well as innocent civilians.
At times urban and large cities, in the country have been controlled for up to two days by the DTOs.
The Mexican government does not have a consistent strategy due to a lack of institutional capacity and bureaucratic infighting, the result is an incoherent public policy and failed attempts to deal with the problem.
This analysis will provide an overview of the situation based on a market explanation and the possible scenario if the current policy is not changed.Trafficking is based on a logistic business modelSupply in Colombia
Innventory
Price Efficiency
Distribution
Money Laundering$4,000 USD$8,000 USD$6,500 USD1 kg. Cocaine in Atlanta wholesale price without dilutions$22,000 USD 1Kg. Cocainein Meta Guaviare$900 USD 1 kg. Cocaine in Galapagos$3,500 USD1 kg. Cocaine in Michoac叩n$7,500 USD 1 kg. Cocaine in Laredo$15,500 USD 1 USD = .90 USDIn MexicoCasas de CambioCasinosReal StateConstructionEscrow accounts$18,000 USD1 kg. Cocaine in MIlan wholesale price without dilutions$33,500 USD Mexican DTOs have the biggest profit share of the market, and are able to determine prices worldwide
Why did Mexicans become the no 1 player in the drug market?Shifts in the supply structure of cocaine, the increased demand of meth and the conflict in Afghanistan, gave the Mexican DTOs a unique position in the market

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The Dimension of Mexican Organized Crime

  • 1. The Dimension of Mexican Organized CrimeSeptember2011
  • 2. The riskMexican DTOs have gained extraordinary power in the last ten years, due to shifts in the drug market and the availability to use Mexicos logistical infrastructure at a very low risk.
  • 3. The lack of a national security and crime policy, has been a fertile ground for corruption in law enforcement agencies, government and society.
  • 4. Internal disputes among the Cartels, the competition for entry points into the U.S. and increased revenues from local markets (drugs, prostitution, extortion and black market activities), have resulted in over 45,000 murders that include police, military, prosecutors, elected officials and politicians as well as innocent civilians.
  • 5. At times urban and large cities, in the country have been controlled for up to two days by the DTOs.
  • 6. The Mexican government does not have a consistent strategy due to a lack of institutional capacity and bureaucratic infighting, the result is an incoherent public policy and failed attempts to deal with the problem.
  • 7. This analysis will provide an overview of the situation based on a market explanation and the possible scenario if the current policy is not changed.Trafficking is based on a logistic business modelSupply in Colombia
  • 11. Money Laundering$4,000 USD$8,000 USD$6,500 USD1 kg. Cocaine in Atlanta wholesale price without dilutions$22,000 USD 1Kg. Cocainein Meta Guaviare$900 USD 1 kg. Cocaine in Galapagos$3,500 USD1 kg. Cocaine in Michoac叩n$7,500 USD 1 kg. Cocaine in Laredo$15,500 USD 1 USD = .90 USDIn MexicoCasas de CambioCasinosReal StateConstructionEscrow accounts$18,000 USD1 kg. Cocaine in MIlan wholesale price without dilutions$33,500 USD Mexican DTOs have the biggest profit share of the market, and are able to determine prices worldwide
  • 12. Why did Mexicans become the no 1 player in the drug market?Shifts in the supply structure of cocaine, the increased demand of meth and the conflict in Afghanistan, gave the Mexican DTOs a unique position in the market
  • 13. The rise of global influence
  • 14. social unrest, by traffickersDemonstrations against military presence in Monterrey, a very organized civil society.20% of the population has a neighbor that is involved in drug trafficking, poll conducted by Gabinete de Comunicaci坦nEstrat辿gica (Nov. 08)
  • 15. Border fragility is a serious threat
  • 16. Drug war? ReallyGovernment needs to be very assertive and efficient in order to confront the cartels.Largest cash seizure 200 million USDBut, not from a money laundering operation216 airplanes impounded,But, no pilots or traffic operators are in jailEstimated revenue for Mexican Organized Crime$161 billion USDMore weapons
  • 19. Flexible organizationMexican budget to fight crime $3 billion USDMerida Initiative$400 million USD
  • 20. A violent environmentViolence erupted from a boardroom dispute, between shareholders, and shifts in market trends. The new composition of groups is a result of disagreements over routes, production and local markets.
  • 21. Implications for THE Mexican PRIVATE SECTOR
  • 22. Implications for the Mexican economy / politics
  • 23. Violence outlook in MexicoDTOs prefer to have a quiet atmosphere, because this is good for business.
  • 24. However violence is tolerated by DTOs if it increases revenue or protects market share and routes.
  • 25. But there are limits:Credible risk to life or imprisonment of top members ExtraditionThere is room for more violencetheir cost is still low and there is no credible risk of a punishment.
  • 26. DTOs are outsourcing violence to local criminals and specialized groups to isolate the business unit from the protection unit.
  • 27. Going after the hitman will not reduce the size or revenue of DTOs.