Southern Pulse Intel Brief - wk of 29 June

The week of 29 June 2009 saw two very interesting developments in Mexico, with the continuation of a third very important economic indicator.

First, remittances from the United States to Mexico continue to drop. In the first six months of 2009, we have seen remittances drop by 19.9%, compared to the first half of 2008. This decline represents some US$1.9 billion dollars.

A new vigilante group has emerged. The “Mata Zetas” is one of the latest of the so-called splinter groups we’ve seen surface. At the end of June, when police discovered three bodies in Cancun, they also discovered a note that read: “We are the new group, Mata Zetas, and we are against kidnapping and extortion and we are going to fight against them in all of the state for a cleaner Mexico."

Just a few days later, police arrested eleven members of a separate splinter group known as “La Contra”. Mexican authorities suspect this group has formed to fill gaps opened by arrested members of the Los Zetas and La Familia.

Analysis:

After petroleum exports, remittances make up the largest source of foreign currency in Mexico. And from January to April, total remittances added up to US$7.3 million. This number continues to drop as a direct function of the economy. Indirect effects, however, may be seen in Mexico, where individuals who relied on these remittances have little option but to turn to organized crime to pay the bills.

Consider three converging realities. Last year, 17,772 minors were deported from the United States to Mexico. It is likely that many of them landed in a crime-controlled municipality. Between 60 and 65% percent of all Mexican municipalities suffer from organized crime infiltration. This adds up to about 1,500 cities.

Finally, there are a reported 980 zones of impunity across the country. Also called “criminal enclaves” the political leadership is either directly involved in organized crime, or is somehow compromised.

We’re not surprised by the presence of La Contra and Mata Zetas. We expect more such groups to surface before the end of the year.

Cross-posted with Southern Pulse blog, Networked Intelligence