Drug Intelligence Brief

MEXICO: COUNTRY BRIEF
July 2002

Mexico is a source for heroin, marijuana, and methamphetamine.

Drug Threat/Status

Mexico faces an array of drug-related problems ranging from production and transshipment of illicit drugs to corruption, violence, and increased internal drug abuse. Powerful and well-organized Mexican organizations control drug production and trafficking in and through Mexico, as well as the laundering of drug proceeds. These organizations also have made a concerted effort to corrupt and intimidate Mexican law enforcement and public officials. In addition, the geographic proximity of Mexico to the United States and the voluminous cross-border traffic between the countries provide ample opportunities for drug smugglers to deliver their illicit products to U.S. markets.

Mexico is a source country for heroin, marijuana, and methamphetamine available in the United States. Mexico also is a source country for pharmaceutical drugs, such as ketamine, OxyContin, Rohypnol, and anabolic steroids bound for the United States. Mexico continues to be the principal transit route for cocaine available in the United States; an estimated 70 percent of the cocaine entering the United States is smuggled across the U.S. Southwest border. Currently, the Eastern Pacific Ocean corridor (EPAC) is the primary route used to smuggle cocaine to Mexico for further transshipment to the United States.

Despite these problems, the Government of Mexico made tangible victories against drug trafficking organizations in 2001 and early 2002. In launching a national crusade against narcotics trafficking and organized crime, President Vicente Fox-Quesada pledged to give criminals no quarter, and urged the Mexican public to expunge these negative elements from Mexican society. Mexico considers trafficking in narcotics a national security issue. Over the past year, Mexican authorities arrested key members of the major cartels, including the Tijuana-based Arellano-Felix organization (AFO), former members of the Amado Carrillo-Fuentes organization (ACFO), and the Gulf Cartel. Information sharing between the U.S. and Mexican Governments has dramatically increased over the past year, facilitating the apprehension of several drug trafficking figures.

In its struggle against drugs, Mexico still faces daunting challenges. The drug trafficking organizations that control the production and shipment of drugs and related money laundering and criminal activities remain powerful. These groups are well organized and are adept at corrupting or intimidating public officials. Such corruption remains a serious institutional problem. These criminal organizations likewise pose a serious threat to the United States, controlling drug distribution networks throughout much of the country.

Drug Trafficking Trends

Cocaine

There is no known cultivation of coca leaf in Mexico. Over the past several years, there have been increased reports of cocaine base being smuggled into Mexico for final processing into cocaine hydrochloride (HCl). The most recent documented seizure of a cocaine HCl laboratory occurred in February 2000, at a ranch near Hermosillo, Sonora, where 7 kilograms of cocaine were confiscated.

Available reporting indicates that drug trafficking organizations generally have not made a concerted effort to establish cocaine processing facilities in Mexico, nor have they undertaken a major effort to begin large-scale processing of cocaine HCl in Mexico. The vast majority of cocaine smuggled into and seized in Mexico continues to be cocaine HCl.

According to U.S. counterdrug assessments, Mexico is the transit point for approximately 70 percent of the cocaine HCl entering the United States. Mexico has been a transit country for cocaine destined for the United States since the 1970s, and the U.S. Southwest border has been the primary entry point for cocaine entering the United States since the late 1980s. Oftentimes, cocaine shipments are warehoused in border areas prior to being distributed in the United States. The predominance of Mexico as a transit route country is reflected in the consistently high volume of cocaine seized in Mexico and along the U.S. Southwest border. Mexican Government authorities have reported the seizure of 29.3 metric tons of cocaine during 2001. This amount represents a 60% increase of cocaine seizures in Mexico from 2000. In 2000, approximately 18.3 metric tons of cocaine were seized in Mexico, compared to 33.5 metric tons in 1999, and 22.6 metric tons in 1998.

COCAINE SEIZURES IN MEXICO
1997-2001

SOURCE: International Narcotics Control Strategy Report (INSCR), March 2002

Traffickers use various routes and conveyances to smuggle cocaine from South America to Mexico. Currently, trafficker organizations favor the use of fishing vessels, go-fast boats, and commercial ships to smuggle large quantities of cocaine via the EPAC. The Pacific coast of Mexico continues to be the favored route for maritime drug trafficking. During 2001, enhanced counterdrug enforcement cooperation between Mexican and U.S. Government law enforcement entities and better intelligence resulted in record-setting quantities of cocaine seized aboard large fishing vessels in the EPAC.

F/V SVESDA MARU
	F/V FOREVER MY FRIEND
	F/V MACEL

In 2001, the following seizures were made aboard fishing vessels (F/V) in the EPAC.

• February 2001—Approximately 8 metric tons of cocaine were seized from the Belize-flagged F/V FOREVER MY FRIEND, which was approximately 200 miles from the coast of Manzanillo, Colima.
  
  
• March 2001—A destructive search of the Mexican F/V TOLTECA I in the Port of Manzanillo resulted in the seizure of approximately 4 metric tons of cocaine.
  
  
• May 2001—Approximately 12 tons of cocaine were seized from the Belize- flagged F/V SVESDA MARU approximately 200 miles south of Mazatlan, Sinaloa.
  
  
• December 2001—Approximately 9 metric tons of cocaine were seized from the Mexico-flagged F/V MACEL approximately 200 miles south of Manzanillo, Colima, Mexico.

Maritime cocaine shipments seized in the EPAC during 2000, while very large, were generally lower than maritime cocaine shipments seized in the EPAC during 2001. For example, the following seizures occurred in the EPAC in 2000.

• January 2000—3 metric tons of cocaine were seized from the Mexican-flagged F/V VALERIA off the coast of Manzanillo, Colima, Mexico.
  
  
• February 2000—4.7 metric tons of cocaine were confiscated from the F/V REBELDE just south of Lazaro Cardenas, Michoacan, Mexico.
  
  
• March 2000—Approximately 2.4 metric tons of cocaine were seized from a go-fast boat near Acapulco, Guerrero.
  
  
• April 2000—approximately 2 metric tons of cocaine were seized from an abandoned go-fast boat off the coast of Baja California, Mexico.
  
  
• July 2000—Approximately 4.3 metric tons of cocaine were seized from the F/V TOP FLIGHT off the coast of Sinaloa.

DEA reporting and seizure activity indicates that the EPAC has been the preferred smuggling route since late 1998. Trafficking organizations are believed to prefer the EPAC because of the vastness of the area, which has no natural chokepoints, as does the Caribbean. Prior to the shift to the EPAC route in late 1998, drug traffickers used the Yucatan Peninsula corridor as the primary route to smuggle cocaine from South America into Mexico. Cocaine shipments, ranging from 1 to 3 metric tons, continue to be smuggled to the Yucatan Peninsula primarily via go-fast boats. These smaller shipments head for remote offload locations in the Yucatan and often successfully evade detection by law enforcement officials patrolling the water in large vessels, by navigating through mangroves, coral reefs and shallow water.

Traffickers use tractor-trailers, passenger vehicles, and railcars to transport cocaine via overland routes through Mexico. In addition, the Pan-American Highway serves as a smuggling route for trucks and passenger vehicles transporting cocaine from Central America to Mexico. Aggressive interdiction efforts resulted in record seizures during 1998 and 1999. Due to these interdiction efforts, traffickers began moving smaller loads along the Pan-American Highway to minimize losses. Larger quantities are still transported overland, as evidenced by the May 2001, 1.1-metric-ton load of cocaine that was seized at the Peñas Blancas, Nicaragua, border crossing. This shipment was hidden inside the false walls of a northbound commercial tractor-trailer transporting 19,000 pounds of nylon string. Vehicles are either outfitted with hidden compartments to conceal cocaine, or other illicit drugs are intermingled with legitimate cargo transported by trucks and railcars. Drug interdiction checkpoints are positioned at border crossings and along major highways to intercept vehicles smuggling drugs, and regularly result in seizures ranging from multihundred-kilogram to metric-ton quantities of cocaine.

Cocaine is frequently transported by vehicle through Mexico to northern border locations for further transshipment into the United States. During traffic stops and at checkpoints within close proximity to the border, multihundred-kilogram quantities of cocaine are periodically seized from commercial trucks modified with hidden compartments and/or concealed within legitimate cover loads. Smaller amounts of cocaine concealed in compartments of privately owned vehicles have also been seized. The daily high volume of truck and passenger car traffic crossing the Mexican–U.S. Southwest border facilitates the smuggling of cocaine by vehicles to U.S. border cities. Daily pedestrian traffic crossing the border also accounts for small quantities of cocaine entering the United States.

There have been occasional reports of cocaine smuggling via railway from Mexico to the United States, but the extent to which railways are used to transport drugs is unknown. There were two cocaine seizures from railcars in April and May 2000 in Empalme, Sonora. In both seizure incidents, the train was en route to Mexicali, Baja California. Recent intelligence reporting indicates that relatively small amounts of cocaine are infrequently transported via railway. By comparison, a few multiton seizures of marijuana have been seized aboard trains transiting Mexico during 2001.

Small aircraft were the primary conveyances used to transport cocaine from Colombia to and within Mexico in the 1980s and early 1990s, and continue to be a viable mode of moving drugs to clandestine landing strips in Mexico. DEA continues to receive periodic reports concerning cocaine shipments smuggled by air. However, the majority of documented cocaine shipments transported via aircraft appears to occur within Mexico. These flights, destined for clandestine landing strips near the U.S.–Mexican border, originate in Southern Mexico. In December 2001, a small aircraft transporting cocaine landed at a clandestine airstrip in Mexicali. Upon landing, the cocaine was offloaded to a pickup truck, which was later stopped by Mexican authorities, resulting in the seizure of 553 kilograms of cocaine. In addition, there continue to be infrequent reports of small aircraft arriving from Central and South America. For example, in October 2001 a small aircraft with false tail numbers was discovered in the State of Campeche, where it had crash-landed on a partially developed road. Evidence found at the crash site indicated that the aircraft departed from Colombia. Sporadic airdrops off the coast of the Yucatan Peninsula also are reported. In addition, passengers aboard commercial airline flights body carry cocaine or smuggle small amounts of the drug concealed in luggage. In addition, cocaine is sometimes smuggled aboard commercial aircraft and transported as cargo.

The price of a kilogram of cocaine in Mexico varies according to quality, geographic location, distributor, and trafficker. DEA reporting indicates that 1 kilogram of cocaine sells for between US$6,000 and US$20,000 in Mexico.

During 2001, approximately 20 metric tons of cocaine were seized at or near the U.S.–Mexican Southwest border area. This is slightly less than the amount of cocaine seized in 2000. This 20-metric-ton seizure represents over 50 percent of the total cocaine seized within the U.S. arrival zone. Personal vehicles crossing at the Southwest border ports of entry (POEs) remained the primary method of conveyance used to transport cocaine shipments en route to the United States.

SOUTHWEST BORDER COCAINE SEIZURES
1997-2001

SOURCE: EPIC ADNET Southwest border seizure statistics
Note: Numbers are converted to metric tons from kilograms and rounded up to the nearest tenth of a metric ton.

In addition, seizure data indicate that, during 2001, traffickers increasingly smuggled cocaine between Southwest border POEs, and in commercial vehicles through POEs, compared to activity in 2000.

Tecate tunnel	Nogales drainage system

Multisource reporting indicates that Mexican drug traffickers continue to devise clandestine, underground routes to smuggle drugs across the Southwest border. An increase in drug seizures in the Nogales, Sonora, area during March 2001, led Mexican counterdrug officials to discover that a complex drainage system running underground between the cities of Nogales, Sonora, and Nogales, Arizona, was used to smuggle drugs and illegal aliens into the United States. In February 2002, a 1,200-foot tunnel was discovered by U.S. federal agents on a ranch in the community of Tierra Del Sol, approximately 70 miles east of San Diego, California. The tunnel opening in Mexico was located on a ranch at the outskirts of Tecate, about 200 feet from the border fence. This tunnel is believed to be among one of the longest and most sophisticated tunnels ever encountered by law enforcement authorities on the U.S.–Mexican Southwest border. The tunnel had been framed with wooden planks, and rail tracks had been installed to transport large quantities of drugs in carts. The tunnel was also equipped with electric lighting and a ventilation system.

Heroin

In 2001, the potential production of pure heroin was estimated at 7.1 metric tons. This figure initially appeared to be a drastic increase in heroin production in Mexico, especially when compared to the record low 2000 estimate of 2.7 metric tons of potential pure heroin production. However, an estimate of 7.1 metric tons of heroin is still in line with traditional levels for Mexican heroin production. Since 1997, Mexico has averaged 6.2 metric tons of heroin per year. A sharp decline in heroin production in 2000 was due to the severity of the drought in Mexico during 1999 and 2000. During 2001, rainfall in key growing areas returned to near normal levels, which allowed opium poppy cultivation to rebound to pre-drought levels. In addition, the figure for opium yield per hectare was revised as a result of a scientific Mexico–U.S. binational survey; this resulted in an updated preliminary opium yield figure, which raised previously published production data between 33 and 50 percent.

Mexico’s eradication program is one of the largest in the world. According to the Government of Mexico, the Mexican Attorney General’s Office (PGR) and the military, have maintained aggressive manual and aerial eradication programs. The United States Government estimates that the Government of Mexico destroys roughly 75 percent of the opium poppy crop annually through its eradication efforts. Government of Mexico statistics also indicate that eradication efforts remained strong in 2001.

OPIUM POPPY ERADICATION AND OPIATE PRODUCTION
IN MEXICO
1997-2001

SOURCE: U.S. Government Cultivation & Production Estimate, 2001

According to the Government of Mexico, most drug crop cultivation occurs in small fields located in remote areas to avoid detection. Despite the small size of these fields, Government of Mexico eradication forces in significant cultivation areas, such as in the States of Guerrero and Michoacan, continue to find more bulbs per plant, allowing for greater yield. Since lands used for illicit cultivation are subject to seizure, opium poppy is often cultivated on public or communal lands. Drug trafficking organizations often recruit small-scale farmers to grow illicit crops. The proceeds from the sale of illicit crops enable impoverished farmers to feed their families and invest in agricultural inputs to grow legitimate crops.

Heroin processing is concentrated in the Mexican States of Michoacan, Guerrero, Sinaloa, Durango, and Nayarit. Essential chemicals used in heroin production are readily available in Mexico, or can be imported from the United States. The average heroin laboratory can process from 3 to 5 kilograms of black tar or brown heroin per day, with black tar predominating. Finished heroin is smuggled into the United States usually within 72 hours after processing. There are a few indications that some Mexican traffickers are increasing heroin purity to make it more competitive with Colombian heroin.

Some traffickers operating in Mexico reportedly are seeking out the expertise of Colombian chemists to convert Mexican opium gum into white heroin for export to the United States. Evidence obtained from two heroin laboratories seized in Durango, in the fall of 1997 and 1998, indicated that Mexican opium gum was being processed into a white powder heroin product, using a Colombian heroin processing method. Moreover, DEA reporting continues to indicate that Mexico-made white heroin is being produced for U.S. consumption, although the scale of current efforts to manufacture white heroin in Mexico is not known.

The U.S. Government estimates that 6 percent of the world’s heroin supply is produced in Mexico. Although this is not a significant quantity of heroin compared to other regions of the world, nearly all Mexican heroin is destined for users in the United States. According to the March 2002 INCSR, a total of 480 kilograms of opium gum was seized in Mexico in 2001, up from 270 kilograms of opium gum seized in 2000. However, according to the same source, heroin seizures in Mexico were down slightly, with only 240 kilograms of heroin seized in 2001, compared to 268 kilograms of heroin seized during 2000.

HEROIN SEIZURES IN MEXICO
1997-2001

SOURCE: INSCR, March 2002

The price of a kilogram of heroin in Mexico varies according to quality, geographic location, distributor, and trafficker. DEA reporting indicates that 1 kilogram of heroin sells for between US$8,000 and US$20,000 in Mexico.

Mexican heroin, primarily black tar, continues to dominate the western half of the United States, only occasionally appearing in the Northeast and South. Mexican heroin typically is smuggled into the United States via overland routes. Individual couriers usually transport between 2 and 5 kilograms of heroin through POEs along the Southwest border in private or commercial vehicles, or carry between 1 and 2 kilograms on their person. Recent reporting indicates that unusually large heroin seizures have occurred along the Southwest border. EPIC reports that the amount of heroin seized at the Southwest border increased to 378 kilograms in 2001, up from 208 kilograms of heroin seized in 2000.

SOUTHWEST BORER HEROIN SEIZURES IN MEXICO
1997-2001

SOURCE: EPIC ADNET Southwest border seizure statistics

Couriers also smuggle South American heroin to the United States via Mexico and periodically are arrested in Mexico City or at the U.S.–Mexican border. The primary POEs for Colombian white heroin in Mexico are through the airports. For example, on February 5, 2001 the Policia Federal Preventiva (PFP) seized 3.8 kilograms of white heroin and arrested two Mexican nationals at the Tijuana Airport. The Tijuana and Mexico City airports appear to be the primary transit airports for Colombian white heroin destined for the United States. On occasion, Mexico also is used as a transit country for Southeast and Southwest Asian heroin destined to the United States.

Marijuana

Mexico is the primary foreign supplier of marijuana to the United States. Cannabis is cultivated in small fields in remote areas of every state in Mexico, with over 70 percent of the total cannabis crop concentrated in northwestern Mexico. The average yield of a cannabis plant depends on weather conditions and other factors such as irrigation.

The Mexican military and the PGR conduct aerial and manual cannabis eradication. The Government of Mexico eradication program is one of the largest and most aggressive in the world; this keeps fields small and dispersed. In 2001, the Government of Mexico eradicated about 14,300 hectares of cannabis, representing a slight increase from the estimated 13,000 hectares of cannabis eradicated in 2000. Since 1999, net production of marijuana has remained relatively stable, as eradication efforts have kept pace with a slight increase in cultivation levels from 2000 to 2001. An estimated 7,400 metric tons of marijuana were produced in 2001, compared to 7,000 metric tons in 2000, and 6,700 metric tons in 1999. (SOURCE: U.S. Government Cultivation & Production Estimate, 2001.)

CANNABIS CULTIVATION & ERADICATION
IN MEXICO
1997-2001

SOURCE: U.S. Government Cultivation & Production Estimate, 2001

Traffickers smuggle marijuana primarily via land route, and to a lesser extent by air and maritime conveyances, to staging areas along the Mexican border for eventual smuggling into the United States. More multiton seizures are made from tractor-trailers with false compartments, or with contraband commingled with legitimate products, than from any other overland conveyances. Very large seizures of marijuana concealed in cover loads of legitimate perishable agricultural products occur periodically in Mexico. The Mexican military seized more than 24 metric tons of marijuana at a checkpoint outside of Los Mochis, Sinaloa, in March 2002. It was discovered inside a tractor-trailer, behind a wall of boxes containing fresh shrimp. Government of Mexico seizure statistics reflect a steady increase in the amount of marijuana seized over the past several years. During 2001, 2,007 metric tons were seized by the Government of Mexico, compared to 1,619 metric tons in 2000, 1,459 metric tons in 1999 and 1,062 metric tons in 1998. (Source: INCSR March 2002).

MARIJUANA SEIZURES IN MEXICO
1997-2001

SOURCE: U.S. INSCR, March 2002

The price of a kilogram of marijuana in Mexico varies according to quality, geographic location, distributor, and trafficker. DEA reporting indicates 1 kilogram of marijuana sells for between US$100 and US$500 in Mexico.

The amount of marijuana seized along the U.S. Southwest border has remained relatively stable over the past 3 years.

SOUTHWEST BORDER MARIJUANA SEIZURES
1997-2001

SOURCE: EPIC ADNET Southwest border seizure statistics
Note: Numbers are converted to metric ton from kilograms and rounded up to the nearest whole number.

In April 2000, an investigation revealed Mexican marijuana organizations were working in conjunction with Jamaican traffickers in the United States. A large-scale Jamaican marijuana trafficking/smuggling group, which had numerous distribution cells throughout the United States, had as its primary marijuana source of supply Mexico-based traffickers with ties to the AFO. Mexican traffickers managed the smuggling of marijuana into the United States, at which time it was turned over to Jamaican traffickers for distribution within the United States.

Methamphetamine

Mexican drug trafficking organizations (MDTOs) operating out of Mexico and California began to dominate the production and distribution of methamphetamine in the United States around 1994, following years of control by independent, regional outlaw motorcycle gangs, and supplemented by numerous independent, smaller-scale producers. Mexican organizations gained a foothold in the U.S. market by initially offering inexpensive, yet high-purity, methamphetamine. These organizations now produce the majority of the methamphetamine available in the United States, using large-scale laboratories based in Mexico and the southwestern United States. It is believed that MDTOs control the majority of the supply of methamphetamine in the United States. Outlaw motorcycle gangs and small independent producers still are active in domestic methamphetamine production, but not on the same scale of the Mexican traffickers.

The MDTOs’ ready access to precursor chemicals on the international market, has greatly facilitated their ability to produce large amounts of methamphetamine. Over the last 10 years, MDTOs have developed international connections with chemical suppliers in Europe, Asia, and the Far East. With these connections, Mexico-based organizations are able to obtain ton quantities of the necessary precursor chemicals—specifically ephedrine and pseudoephedrine—in order to manufacture tremendous amounts of methamphetamine in clandestine laboratories in both Mexico and California.

Compared to the United States, clandestine laboratory seizures are fairly uncommon in Mexico. In 2001, Mexican authorities dismantled 18 clandestine laboratories, down one from 2000. Thirteen clandestine laboratories were seized in Mexico in 1999 and only 5 in 1998. The main methamphetamine production states in Mexico are Baja California Norte, Guerrero, Jalisco and Michoacan.

The price of a kilogram of methamphetamine in Mexico varies according to quality, geographic location, distributor, and trafficker. DEA reporting indicates that 1 kilogram of methamphetamine sells for between US$8,000 and US$11,000 in Mexico.

The amount of methamphetamine seized in Mexico increased significantly between 1997 and 2000. In 2000, 555 kilograms of methamphetamine were confiscated by Mexican authorities, compared to 358 kilograms in 1999, 96 kilograms in 1998, and 39 kilograms in 1997. During 2001, however, methamphetamine seizures in Mexico declined significantly to 396 kilograms. According to the El Paso Intelligence Center (EPIC), methamphetamine seizures along the Southwest border have increased dramatically over the last 5 years as the chart shown below illustrates.

METHAMPHETMINE SEIZURES IN MEXICO
1997-2001

SOURCE: INSCR, March 2002

SOUTHWEST BORDER METHAMPHETMINE SEIZURES
1997-2001

SOURCE: EPIC ADNET Southwest border seizure statistics

For the last several years, Mexico has primarily been used as a transit country for 3,4 methylenedioxymethamphetamine, (MDMA) originating mainly in Europe, and destined for the United States. Traffickers are using Cancun, Quintana Roo, Mexico City, D.F., Monterrey, Nuevo Leon, and Guadalajara, Jalisco, as transshipment locations for Ecstasy en route to the United States from Europe. Trafficking organizations typically transport MDMA to Mexico concealed in luggage on commercial airliners; by express mail services; and regular mail services.

Mexico also serves as destination point for local MDMA consumption, particularly by U.S. nationals residing in Mexico. The cities of Cancun and Cozumel in the State of Quintana Roo serve as major centers of MDMA consumption and trafficking due to their popularity with college students and nightclub scene. The resort areas of Acapulco, Puerto Vallarta, Cabo San Lucas, and Mazatlan have also experienced increased MDMA trafficking and usage.

Presently, there is no indication of large-scale MDMA production in Mexico. Recent DEA reporting, however, indicates a greater interest on the part of Mexican drug trafficking organizations to become involved in the production of MDMA in their own country. This increased interest became apparent with the June 11, 2002 seizure of an operational MDMA processing laboratory in Monterrey, Nuevo Leon, Mexico. The seizure of this lab represents the first seizure of an operational MDMA laboratory in Mexico run by Mexican traffickers. Only one other MDMA lab, run by a German national, has been seized in Mexico (February 1995).

Other Drugs

Mexico is a source country for illicit steroids; veterinary products, like ketamine; and pharmaceuticals destined for the United States such as Rohypnol and Valium. Recently, OxyContin has been seized along the Southwest border and reportedly is available in Nogales, Tijuana, and other border cities. On December 9, 2001, approximately 1 million dosage units of OxyContin were stolen from a pharmaceutical distributor in Mexico City. The stolen tablets were believed to be destined for the United States.

Substance Abuse

Mexico faces an increased internal drug abuse threat related to drug trafficking. According to a Government of Mexico report highlighted during the fourth annual U.S.–Mexican Binational Demand Reduction Conference, the consumption of cocaine in Mexico increased over 500 percent between 1991 and 2000; increasing from 1 percent of the population in 1991 to about 5 percent in 2000. Additionally, the use of heroin, crack, and methamphetamine has also risen significantly. Crack use tripled during the period 1996 to 2000, while the consumption of marijuana nearly doubled from about 3 to roughly 6 percent of the population. The Mexican Government study noted that cocaine has replaced marijuana as the drug of choice among young consumers. The study also noted that heroin use in Mexico City is increasing. The incidence of drug abuse in northern border cities, such as Tijuana and Ciudad Juarez, approaches three times the national average.

Chemicals

Many of the chemicals necessary for the clandestine manufacture of illicit drugs are available in Mexico. Precursor and essential chemicals are imported from the United States, Europe, and Asia for use in the pharmaceutical and chemical industries, and are diverted to clandestine laboratories. Precursor chemicals used in the manufacture of methamphetamine and amphetamine in Mexico are readily available on the international market and large Mexican drug traffickers have established routes to procure and smuggle these precursors into Mexico. For example, during the last 10 years, reporting indicates the majority of ephedrine shipments destined for Mexico were supplied by sources in China, India, the Czech Republic, the United Arab Emirates, Thailand, and Switzerland. In addition, large quantities of the essential chemical, Potassium Permanganate, are being diverted in Mexico to supply cocaine processing laboratories in Colombia. Since 1999, there have been at least seven seizures of Potassium Permanganate in Colombia, in which evidence indicated that the Potassium Permanganate was shipped from Mexico to Colombia. Another essential chemical, Acetic Anhydride, is manufactured in Mexico for multiple uses in legitimate industry. However, supplies of Acetic Anhydride are diverted from legitimate sources and made readily available to supply heroin processing laboratories in Mexico.

The Republic of Mexico is party to the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. As such, the GOM has adopted and implemented laws and regulations to adhere to the strictest levels of control to precursor and essential chemicals listed in the Convention. The Mexican legislature passed the Comprehensive Chemical Control Law in 1997, and the law became effective in March 1998. The law provides regulations for the control of 24 chemicals: thirteen precursor chemicals used in the manufacture of synthetic drugs and eleven essential chemicals used in refining opium gum into heroin and coca leaf into cocaine. In addition, harmonized codes were published that define reporting and notification requirements for both imports and exports for the 24 regulated chemicals.

Despite signing numerous international chemical-control treaties, the consistent implementation of elements of these treaties remains problematic. In addition, inter-institutional jurisdictional conflicts significantly impede chemical investigations; and in fact, no significant chemical cases or prosecutions have occurred in Mexico since the law was enacted in 1997. Until the Mexican Government undertakes sustained and coordinated initiatives to control the flow of precursor and essential chemicals, production of illicit drugs in Mexico will continue to flourish. Moreover, essential chemicals will continue to be diverted from legitimate industry in Mexico to supply cocaine and heroin processing operations in Colombia.

Major Trafficking Organizations

Benjamin Arellano-Felix Ramon Arellano-Felix

The most prominent MDTOs impacting the United States include the Arellano-Felix organization (AFO), the Vicente Carrillo-Fuentes organization (VCFO), the Armando Valencia organization (AVO), the Miguel Caro-Quintero organization (MCQO) and the Osiel Cardenas-Guillen organization (OCG). These organizations are responsible for the majority of the cocaine, heroin, methamphetamine, marijuana, and precursor chemicals entering the United States.

In February and March 2002, the AFO, undisputedly one of the most powerful drug trafficking organizations in the Republic of Mexico, was dealt two huge blows: the death of its notorious and brutal enforcer Ramon Arellano-Felix on February 10, 2002, and the arrest of its overall chief of operations, Benjamin Arellano-Felix on March 9, 2002. For more than a decade, the AFO had been one of the strongest and most violent MDTOs. The AFO operated primarily in Tijuana, and between San Diego and Los Angeles in the United States. It is likely that these two events will dramatically affect the ability of the AFO to retain control over the Tijuana drug trafficking corridor.

Since the death of Amado Carrillo-Fuentes in July 1997, the structure of the ACFO drug trafficking organization remained mostly intact with key lieutenants retaining control of specific geographic areas. These key lieutenants worked collectively to move cocaine further north to major United States cities. These lieutenants include Amado’s brother, Vicente Carrillo-Fuentes, Juan Jose Esparragosa-Moreno, and Ismael Zambada-Garcia.

Armando Valencia-Cornelio

Mexican national, Armando Valencia-Cornelio, is another significant drug trafficker operating in Mexico, and is a key figure in the interrelationship between major Mexican and Colombian drug trafficking organizations. During Operation MILLENIUM, the AVO, whose primary bases of operation are in Guadalajara, Jalisco and the state of Michoacan, was receiving approximately 20 tons of cocaine a month. These shipments were transported primarily to the west coast of Mexico from the north coast of Colombia via maritime vessel and ultimately moved north for smuggling into the United States.

The Caro-Quintero organization, based in Sonora, focuses on trafficking in cocaine and marijuana. Originally headed by Rafael Caro-Quintero, Miguel Angel Caro-Quintero became the head of the MCQO after the 1985 imprisonment of his brother, Rafael, on drug violations and his involvement in the murder of DEA Special Agent Enrique Camarena. Although Miguel was arrested in 1992, that effort was nullified when a Mexican federal judge in Hermosillo dropped all criminal charges and ordered his release from custody. Until his re-arrest on December 20, 2001, Miguel Caro-Quintero operated freely throughout northwestern Mexico; running his drug smuggling activities from Caborca, Sonora. Miguel Caro-Quintero is also known to have strong ties in Hermosillo.

Osiel Cardenas-Guillen

Osiel Cardenas-Guillen, a marijuana and cocaine trafficker responsible for the November 9, 1999 attempted assault and abduction of a DEA agent and a FBI agent in Matamoros, Tamaulipas, is considered a leader of the remnants of the Gulf Cartel, formerly headed by the now-incarcerated Juan Garcia-Abrego. On May 18, 2000, a Mexican judge issued arrest warrants for Osiel Cardenas-Guillen and 12 co-conspirators following their indictment in Mexico on charges of attempted murder, drug trafficking, and illegal possession of firearms based on the November 9, 1999, assault.

On December 14, 2000, a federal indictment was unsealed against Cardenas-Guillen charging him with two counts of possession with intent to distribute more than 100 kilograms of marijuana, and three counts of assault on a federal officer (18 USC 111). Three criminal associates of Cardenas-Guillen were also indicted.

Money Laundering

Current Situation

Mexico continues to be one of the primary money laundering centers in Latin America. Sophisticated and well organized, the polydrug trafficking organizations based in Mexico are able to take full advantage of the extensive U.S.–Mexican border. The massive volume of legitimate trade and traffic between the two countries enables Mexico to be a major transshipment point for bulk currency, as well as narcotics.

Recent Legislative Matters

• In 2000, Mexico and the United States signed a bilateral agreement to facilitate the tracking of large sums of money from the United States to Mexico.
  
  
• In 2000, Mexico became a member of the Financial Action Task Force (FATF).
  
  
• On January 26, 2001, the Mexican press reported that the Second Appellate Court for Penal Matters in Mexico City ruled that Mexican prosecutors no longer have to prove an underlying predicate offense (e.g., an actual narcotics sale) to bring a case against money launderers in Mexico. This precedent-setting decision was binding on all lower courts in the Mexico City jurisdiction. Since the Second Appellate Court for Penal Matters handles nearly all money laundering cases in Mexico, this will likely have a significant effect on money laundering prosecutions.

The following Government of Mexico investigations highlight recent enforcement efforts.

• On May 3, 2001, Adan Amezcua-Contreras was arrested for the third time on money laundering charges. After his second arrest, a judge, (since removed on corruption charges), had ordered him released.
  
  
• On May 24, 2001, Mario Villanueva Madrid, the former governor of the Mexican State of Quintana Roo, was arrested. He faces 28 charges related to organized crime, drug trafficking, and money laundering crimes that were committed during his 1993-1999 term as governor. On June 27, 2002, the US Attorney’s Office for the Southern District of New York unsealed two federal indictments charging Villanueva Madrid and his associates with narcotics conspiracy and money laundering.
  
  
• In June 2001, Mexican federal police raided currency exchange centers (centros cambiarios) in Monterrey and Mexico City. The exchange centers were believed to be used by drug cartels to launder drug proceeds. These raids, under the aegis of Operation MARQUIS, resulted in 14 arrests.
  
  
• On July 18, 2001, the primary money launderer for the AFO, Ivonne Soto Vega, was arrested by Mexican military and law enforcement officers. Soon thereafter, she was transferred to a jail outside Mexico City, where she faces charges of organized crime and money laundering.

Money Laundering Methods

Bulk shipment continues to be the most prevalent method used by Mexican drug traffickers to move trafficking proceeds. U.S. currency is concealed and transported by courier or cargo, either overland or by air. The money often travels in the same vehicle or plane that originally transported illicit drugs into the United States. Concealment methods used by drug traffickers are often difficult to detect and are constantly changing. However, DEA reporting indicates that the concealment of narco-dollars in luggage and their subsequent movement into Mexico via commercial airlines and personal vehicles, is the most common method of moving drug proceeds. Recent DEA reporting also has indicated that transportation companies are recruiting drivers to transport drug proceeds from the United States to Mexico.

U.S. law enforcement officials also believe that a significant volume of drug proceeds are being sent to Mexico through U.S.-based money service businesses. In the past, money transmitters have operated with little or no controls. As a result, drug trafficking organizations have used money transmitters to deposit drug proceeds, and then wire the funds to accounts in Mexico and/or Colombia. On August 18, 1999, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published regulations requiring money service businesses to comply with currency transaction reporting as required by the Bank Secrecy Act, effective immediately.

The use of money service businesses to move drug proceeds is also prevalent in Mexico. Even the President of the Mexican Association of Money Changers (AMCA), Fredy Farca, has stated that, due to a lack of regulation by fiscal authorities, Mexico’s currency exchange firms are likely to be used frequently in the laundering of drug money.

Outlook

The members of the government that have recently been appointed by the Fox Administration are less familiar with money laundering investigations. It may take some time for them to learn enough about the successful investigation and prosecution of money laundering to be truly effective on this front. The implementation of mechanisms to enable the free flow of financial information between U.S. and Mexican law enforcement agencies is also necessary to improve the effectiveness of the law enforcement efforts to attack money laundering.

Narco-Violence in Mexico

The precise number of drug-related murders in Mexico is difficult to estimate, but drug-related violence accounts for hundreds of murders each year. Typically, drug-related violence in Mexico is centered on retaliatory killings of individual traffickers. However, murders of Mexican law enforcement officials, journalists, lawyers, politicians and innocent citizens are prevalent. Violence perpetuated by MDTOs persists with relative impunity because of law enforcement corruption, a scarcity of resources to properly investigate these crimes, and a lack of resolve due to the threat of retaliation.

Many narco-assassinations in Mexico take place using high-powered assault weapons such as AK-47s and AR-15s. These weapons are often used during high-profile drive-by-shootings and during other executions. Other victims are sometimes kidnapped and then murdered; their remains are dumped along the sides of roads or in isolated desert areas. In addition, heinous acts of torture often precede drug-related murders; the victims may have been severely beaten, burned, or have had their body parts severed.

The State of Sinaloa continues to be the epicenter for drug-related violence in Mexico, due to an ongoing struggle between groups allied with the AFO and their rivals in the ZGO for control of that strategic region. The most significant death in Sinaloa occurred on February 10, 2002, when Ramon Arellano-Felix was executed in Mazatlan. According to Mexican press reports, there were approximately 200 drug-related/mob-style executions in the State of Sinaloa during the first 3 months of 2002. The majority of the murders seem to be the result of drug trafficking organizations settling scores or vying for regional control.

Law Enforcement Counterparts

The PGR, which is headed by Attorney General Rafael Macedo de la Concha, is responsible for the investigation and prosecution of all federal crimes. Narcotics violations are covered under the Federal Health Code, Chapter 8, and specifically enforced by federal authorities, not the state or local police. The PGR is made up of several entities that are involved in counterdrug activities. Currently, DEA’s counterparts in the PGR include the Organized Crime Unit (OCU); the Sensitive Investigations Units (SIUs, formerly known as the Bilateral Task Forces or BTFs); the Federal Investigations Agency (AFI), formerly the Federal Judicial Police or PJF; the Prosecutors Office for Crimes Against Health (FEADS); and the Center for Drug Control Planning (CENDRO). Another important entity within the PGR (although not one of DEA’s primary counterparts) is the Ministerio Publico or Federal Prosecutor’s Office.

The AFI, which is considered the Mexican Government agency equivalent to the FBI, has jurisdiction to conduct investigations regarding all federal violations of Mexican law, to include anti-narcotics efforts. The AFI is the resultant agency that subsumed the old PJF. Mexican Government officials created the AFI in an attempt to address many of the problems associated with the old PJF that included corruption, inadequate training, and low morale.

In addition to working with the AFI, the DEA has worked closely with the OCU, the SIUs, and the FEADS in most drug trafficking investigations. As a result of the OCU’s statutory mandate to investigate organized crime cases, the OCU frequently handles anti-narcotics investigations. However, the continuing PGR reorganization may cause such investigations to be turned over to a different entity. For example, DEA’s prior work with the FEADS has been scaled back due to that entity’s newly developed mission of prosecuting drug trafficking cases. The FEADS original charter mandated that it prosecute and investigate such cases.

The SIUs are the primary vetted units with which the DEA investigates major trafficking networks. Prior to their appointment to the SIUs, agents must have passed background investigations, polygraphs, and urinalysis testing. The SIUs report to CENDRO, where PGR intelligence gathering is centered. CENDRO also assists in planning and executing interdiction activities within the Mexican Government and with the U.S. Government.

A major law enforcement proposal of the Fox presidential campaign was the establishment of a federal agency that focused on criminal investigations. This proposal led to the creation of a new agency, the Secretariat of Public Security (SSP). Despite the original vision for the SSP, an amassing of power on the part of the PGR suggests that the PGR, not the SSP, will maintain primary jurisdiction over investigating federal crimes. Thus, it is unclear what role the SSP will play after the completion of the PGR’s reorganization. One major development for the SSP was its gaining control of the Federal Preventive Police (PFP). The PFP, which was established in December 1998, had been housed under the Secretariat of Government until shortly after the Fox Administration took office. The PFP plays a major role in interdiction efforts at Mexico’s seaports, airports, and highways. However, the future of the PFP (like that of the SSP) remains unclear, as the SSP’s mission has been considerably scaled back since Fox’s presidential campaign.

The Mexican military also plays a major role in that country’s counterdrug efforts. In recent years, the military has been tasked with this increasing role because many policy makers view the military to be less susceptible to corruption. Since its establishment as a counterdrug entity, the Mexican military has been involved with eradicating illicit crops, manning interdiction checkpoints along highways, seizing maritime vessels suspected of carrying drugs, and even investigating and arresting drug traffickers.

Cooperation

President Vicente Fox

The public’s reaction to the systemic corruption in Mexico played a key factor in Vicente Fox-Quesada’s election as President on July 2, 2000. President Fox has used this public support to foster a much-improved working relationship between Mexican counterdrug entities and the DEA. Information sharing has dramatically increased, which has aided the DEA and the Government of Mexico in apprehending several drug trafficking figures. The Mexican Government is requesting more training from the U.S. Government, including training for vetted unit agents; clandestine laboratory operations; and analysis of seized drugs. Furthermore, new steps are being taken to ensure the integrity of the Mexican Government’s law enforcement ranks.

Mexican Top Government Officials President Vicente Fox-Quesada Secretary of Government Santiago Creel Miranda Secretary of Defense Gerardo Vega Garcia Attorney General Rafael Macedo de la Concha

In addition, extraditions of Mexican nationals to the United States have increased. At least three Mexican nationals wanted on drug charges were extradited from Mexico to the United States in 2001. Among those extradited was Everardo Paez-Martinez (a.k.a Kitti Paez), who had served as a lieutenant in the AFO. On June 12, 2001, Mexican national Francisco Rafael Camarena-Macias, surrendered to U.S. agents in Guadalajara and was escorted to Tucson, Arizona, to face multiple drug charges connected with a cross-border drug tunnel between Sonora, Mexico, and Douglas, Arizona. On June 25, 2001, Mexican national, Miguel Angel Martinez-Martinez, was extradited to the United States to face federal charges in San Diego. Martinez-Martinez was an alleged leader in the Joaquin Guzman-Loera organization, which reportedly smuggled multiton amounts of cocaine to the United States.

Since President Fox assumed office, several major drug traffickers have been arrested. DEA and Mexican Government fugitive, former Quintana Roo Governor, Mario Villanueva-Madrid, was arrested on May 24, 2001, by the PJF. Major ACFO lieutenant, Alcides Ramon-Magaña (a.k.a. El Metro) was arrested by the Mexican military on June 12, 2001. Ramon-Magaña and Villanueva-Madrid allegedly facilitated the importation and transportation of multiton cocaine shipments through the Yucatan Peninsula. In December 2001, DEA fugitive Miguel Caro-Quintero was arrested by Mexican authorities after a joint DEA/Mexican Government investigation. Caro-Quintero allegedly had been in charge of an organization that imported ton quantities of cocaine to Arizona. Albino Quintero Meraz was arrested by Mexican authorities during May 2002 in Veracruz City, Veracruz, Mexico, and is being held on drug trafficking and money laundering charges. The Fox Administration’s most notable drug trafficking arrest occurred on March 9, 2002, when Benjamin Arellano-Felix was apprehended in Puebla, Mexico.

The Mexican Government’s cooperation with the DEA has also included joint analysis of information gathered subsequent to the December 21, 2001, seizure of the fishing vessel MACEL. Along with Mexican authorities, representatives of the U.S. Government were invited to witness the destruction of the approximately 9.3 metric tons of cocaine seized from this boat.

Extradition

In 2001, the Mexican Government extradited 17 fugitives to the United States, as compared with 12 in 2000. Notwithstanding an increased number of extraditions in 2001, extradition requests have faced hyper-scrutiny and numerous technical obstacles before the Foreign Ministry and Mexican Courts. These bureaucratic hindrances have greatly delayed timely action on extradition requests. Another setback to the extradition process occurred in October 2001, when the Mexican Supreme Court ruled that life imprisonment is unconstitutional and therefore can be an exclusionary bar to extradition for any fugitive who could face a potential life sentence outside of Mexico.

Significant Mexican figures extradited to the United States included Arturo (Kiti) Paez-Martinez, a high-ranking kingpin of the AFO; Isaias Hernandez Garza and Juan Hernandez Ibarra, heroin traffickers and targets of Operation TAR PIT; Francisco Camarena Macias, a drug trafficker, who transported cocaine through tunnels in Douglas, Arizona; Christopher David King, a cocaine trafficker and manufacturer; and Miguel Angel Martinez-Martinez, a cocaine trafficker and money launderer.

Mexico has bilateral narcotics accords with 21 countries and is a party to the 1988 U.N. Convention. Mexico also is a party to the 1961 U.N. Single Convention on Narcotic Drugs and its 1972 Protocol, and the 1971 U.N. Convention on Psychotropic Substances. Mexico also signed the Organization of American States Declaration and Program of Action of Ixtapa, which commits signatories to enact comprehensive antidrug programs, including money laundering and chemical controls.

The U.S.-Mexican extradition treaty dates from 1978. The Mexican Government’s policy is not to extradite its nationals, and extradition proceedings generally are slow. Thus, extradition has long been a sore point in U.S.-Mexican relations. However, since President Fox’s inauguration, there have been some positive developments in this area. Shortly after his December 2000 inauguration, the Mexican Supreme Court validated the extradition of Mexican nationals. On Dec. 27, 2000, the Mexican Senate approved its Extradition Treaty with the United States. The treaty permits Mexican nationals, who have been convicted and are serving time in Mexico, to be temporarily transferred to the United States to stand trial on charges pending in the United States. An extradition-related setback occurred in 2001, when Mexican officials refused to extradite individuals who faced a life or a death sentence in the United States.

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