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Cablegate: Drugs and Downturn On the Border

VZCZCXRO0890
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #3260/01 3212312
ZNR UUUUU ZZH
R 172312Z NOV 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 9068
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC

UNCLAS SECTION 01 OF 03 MEXICO 003260

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV PHUM SNAR ECON KCRM MX
SUBJECT: DRUGS AND DOWNTURN ON THE BORDER

REF: A. MEXICO CITY 3018
B. CIUDAD JUAREZ FORTHCOMING
C. TIJUANA 685
D. TIJUANA 1102
E. CIUDAD JUAREZ 577
F. MEXICO CITY 3042

1. (SBU) SUMMARY: The Ambassador met with the governors of Baja
California and Chihuahua, the mayors of Matamoros, Tijuana, and
Ciudad Juarez, military and civil security force commanders, maquila
managers, non-governmental organizations, community activists, drug
clinic doctors, renewable energy pioneers, and wastewater plant
engineers during visits to Matamoros September 24-25, Tijuana
October 6-7, and Juarez October 7-10. He found an unsteady security
situation, crowded border crossings, a hobbled economy, and civil
society fighting intimidation by cartels. In the borderlands, most
issues of the broader bilateral relationship are present in
microcosm. While questions cloud the security situation, the
regional economy will rebound as U.S. growth returns. END SUMMARY.


SECURITY: CORNER NOT TURNED
---------------------------

2. (SBU) The borderlands are the flint face of a three thousand-mile
trade route. Drug trafficking organizations (DTOs) land Colombian
product in Lazaro Cardenas, strategize in Sinaloa, and earn revenue
in Atlanta -- but spark conflict at the U.S.-Mexico border, gateway
to the U.S. market and primary battleground. The 2009 death toll in
Juarez surpassed the total for 2008 in September (twelve murders
occurred in the first twenty-four hours of the Ambassador's visit).
Joint Operation Chihuahua has not stopped cartel-on-cartel violence.
In Matamoros, the reactive stance of security forces suggests the
sharing of best practice between areas of operation along the border
is weaker than it should be (ref A). Reduced violence in Tijuana is
a bright spot, but more needs to be done to assess and understand
the causal relationships.

3. (SBU) State and local government and police leaders defer to the
military. Civilians generally are glad for the troop presence but,
fearing crossfire, avoid their patrols. Joint civil-military
patrols in Juarez have reduced DTO targeting of local police. There
is recognition the military is filling a police role for which it is
untrained and must transition to a support role over time. The army
generates inadequate local intelligence and shares what it does find
too slowly. The result too often is a force both blind to events
and unfamiliar with the local landscape. In Chihuahua, the top
human rights complaint is of raids conducted without search
warrants. (The president of the Chihuahua Human Rights Commission
noted, with some sympathy for the military, that the judges who
grant warrants work atypically short schedules; until very recently
no judge was on call to decide time-sensitive off-hours warrant
requests.)

4. (SBU) The conventional view of local and state police forces is
that they are corrupt, DTO-infiltrated, and vulnerable to coercion.
Vetting programs are improving and seeing wider implementation.
These usually include a mix of financial history, interviews with
neighbors, toxicology, and polygraphs. After firing,
early-retiring, or otherwise driving out 400 police in Tijuana (20%
of the force) and 700 in Juarez (44%), political and security
leaders are betting on expanded and vetted forces to improve local
policing. They are cleaning house, but the question is whether they
can hold the line afterward. In Tijuana, the retrained municipal
police were deployed over 20 months, and there are signs of
progress. In Juarez, the municipal force is on the street after
just three months training, with no real mentoring from seasoned
professionals. Under such circumstances, and despite attempts to
recruit countrywide, we can predict that they will be just as
tempted by narco-corruption as their predecessors. Meanwhile, the
more-trusted federal police (SSP) have insufficient forces to
sustain deployments everywhere at once, nor should they be made into
a street patrol force. When DTO la Familia targeted police in
Michoacan in July, a large SSP contingent had to withdraw from
Juarez to reinforce garrisons to the south.

5. (SBU) On the legal side, military commanders and state attorneys
general admit that, given SEDENA's lead role in fighting the DTOs
and the lack of state and local jurisdiction for drug trafficking
crimes, many arrests and seizures never lead to prosecutions. At
its worst, the military contaminates crime scenes, conducts
inadmissible interrogations, and illegally detains suspects, actions
which either prevent cases from reaching trial or get cases thrown
out by judges. In Chihuahua, jurisdictional discord between state
and federal courts also sets suspects free. Federal judges grant
injunctions staying multiple homicide charges referred by state
prosecutors when evidence linking the homicides to organized crime

MEXICO 00003260 002 OF 003


is insufficient. This raises questions about the adequacy of
Mexican law for prosecuting organized crime. Mexico does not have
the equivalent of the RICO statutes or conspiracy laws (ref B). The
governor of Baja California admits his state does not have
jurisdiction over drug trafficking, but in Tijuana state and local
government actively search for ways to leverage their competencies.
Here, public prosecutors enter military bases to conduct
interrogations, at least making the evidence admissible in the
judicial system.

ECONOMY: VIBRANT NORTHERN STATES TAKE THEIR KNOCKS
--------------------------------------------- -----

6. (SBU) Border manufacturing, concentrated in export industries,
hits economic peaks and troughs harder than the overall economy.
This results in volatile production and has a direct negative impact
on employment. The governor of Chihuahua commented that he had
spent four years adding 100,000 jobs in the state, and then lost
80,000 jobs in the last twelve months. Though employment numbers in
Chihuahua showed tentative recovery in the third quarter, the
cumulative decline provides ready recruits for DTOs.

7. (U) The recession has hammered foreign direct investment (FDI) in
the six Mexican border states. Economy Secretariat data show
inflows of USD 1.6 billion in the first two quarters of 2009, about
50% of the 2008 and 46% of the 2007 figures. While the drop in
employment and FDI is marked, it is cushioned somewhat by the cheap
peso, which is attractive to companies considering investments (Ref
C). FDI and local investment lost due to insecurity is more
difficult to quantify. Anecdotally, multinationals may simply be
factoring in security as one more cost of doing business. Both
international managers and local business people in Juarez are
overnighting in El Paso in increasing numbers, while in Matamoros
the mayor reports relocations to San Antonio are up.

8. (U) Border denizens unanimously say southbound tourism at the
frontier has slowed to a trickle. The governor of Baja California
calculated Tijuana's annualized loss of U.S. tourist dollars at more
than USD 1 billion. Retail sales on the Mexican side of the border
have received a compensatory injection from Mexican consumers
shopping at home, as the peso's loss of value has made
dollar-denominated goods more expensive. The Federal Reserve Bank
of Dallas has recorded a corresponding fall off in sales in Texas
border towns. Surprisingly, federal Tourism Secretariat (SECTUR)
data indicate more U.S. tourists are crossing into Mexico at the
border -- 2009 numbers through July are 19% higher than those for
first-half 2008 and 31% higher than in first-half 2007. SECTUR
contacts maintain border tourism is sustaining the otherwise
battered tourism sector.

9. (U) The long term economic picture hinges on competitiveness.
The 2001 recession vividly demonstrated that Mexico had lost the low
labor cost contest with Asia in cities like Juarez, where maquila
sector employment has never surpassed its turn-of-the-millennium
peak. Since 2001, the maquilas have recovered by exiting sectors
like textiles and moving upmarket. If the maquila industry was
historically valued as a jobs program, new maquila job numbers over
the last decade have lagged relative to output and productivity
gains. Tijuana and Juarez business and political leaders claim
their future is in areas like the biomedical and renewable energy
industries. The border states continue to benefit from their
location, long-standing trade relationships with the U.S., large,
work-aged demographic, and resource richness (wind power, ref D). A
recent study by the USAID-funded Mexican Institute for
Competitiveness ranked all six states in Mexico's top ten on
competition.


SOCIETIES UNDER STRESS
----------------------

10. (SBU) The future is murky for children growing up in the drug
maelstrom on the border; easy money and bad role models erode the
already stressed family structure in border towns, where single
working mothers have traditionally formed a large segment of the
maquila workforce. The State of Baja California is building a
network of Boys and Girls Clubs and Juarez NGOs also concentrate
their efforts on children at risk. They are in competition with
DTOs that target the same teenagers to refill ranks reduced by the
turf wars. The DTOs even recruit in Juarez's NGO drug treatment
centers. Drug use is on the rise in Mexico, up 30% since 2002.
Treatment centers in Juarez and Tijuana are seeing more addicts.
The recidivism rate at one of Juarez's better facilities is 75%.
The full network of rehabilitation centers does not have sufficient
capacity to treat the majority of the city's estimated 5,000 heroin
addicts (ref E).


MEXICO 00003260 003 OF 003


11. (SBU) The border states are among the richest in Mexico, and
their populations in the main do not qualify for baseline poverty
programs such as Oportunidades, depriving them of a potential safety
net. The states also have a young demographic profile -- population
growth at the border has outpaced the Mexican average by 0.5% per
year since 1990. In the face of this population pressure, the
Border Environment Cooperation Commission has enabled a notable
expansion of drinking water, wastewater, solid waste, and sewerage
services along the border that contributes materially to well-being
and deserves continued funding. Efforts such as these can help
check the region's elevated rates of hepatitis and respiratory
ailments.

12. (SBU) The Juarez political class, including the mayor, retreats
across the border every night to El Paso, a fact not lost on the
public. Politicians are not the only ones deciding to relocate to
the north. Though the outflow is difficult to quantify, El Paso's
robust real estate market is one sign people are leaving Juarez. An
El Paso city councilman told the Wall Street Journal that the
current flight is "the largest migration of wealthy Mexican
nationals [to El Paso] since the Mexican Revolution." Border city
and state governments are underequipped to combat the ills that have
beset their communities. Political decentralization has come faster
than administrative and financial decentralization in Mexico. State
and local governments have limited capacity to fill their own
coffers. In a rare revenue-raising example, the mayor of Tijuana
appealed to residents to accept a tax hike, and combined the tax
take with capital from the North American Development Bank to fund
the paving of city streets. The initiative has fueled his
popularity -- and held the municipal government accountable to its
residents in a manner central government cash grants to the city do
not.

13. (SBU) COMMENT: The GOM has agreed to dispatch a joint USG-GOM
evaluation team to Tijuana and Juarez to measure counternarcotics
successes and failures, and assess requirements for complementary
socioeconomic measures, within the four pillar framework of our
beyond Merida strategy. The joint evaluation will support transfer
of effective strategies across areas of operation. Based on
discussions at the Alliance of Youth Movements summit in mid-October
(ref F), Mission Mexico is assessing piloting the use of cell phone
text messages to supplement anonymous tip lines in the same cities.
The effectiveness of an SMS-based hotline is contingent, as with
current phone hotlines, on citizen trust in the institutions that
field the communication. While we cannot generate trust for the
police in Matamoros, Tijuana, or Juarez, we should ensure more of
our institutional capacity building efforts reach the state and
local level.

14. (SBU) On economics, the recession has hurt the border economy,
but commerce will recover. The region's future competitiveness
requires that ports of entry, cross-border energy grids, and
environmental infrastructure keep pace with growth. So, too a
skilled labor force: if border industry is to continue the move into
higher value added sectors, Mexico needs a better return on the 6.5%
of GDP (high by OECD standards) it invests in education. Finally,
the cross-border ties between the 13 million residents of border
counties and municipalities are broader than any two-government
dialogue. Our border consulates already leverage these
long-standing community ties and can play a pivotal role in
expanding partnerships with and between universities and civil
society north and south. END COMMENT.

PASCUAL

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