Cross-border intel and assassins, and challenges in Guatemala

An interesting piece from the San Diego Tribune reports that a Mexican intelligence officer will soon begin working with US agents based at the Immigration and Customs Enforcement (ICE) bureau in San Diego. Of course, such an arrangement raises questions of corruption and the dangers of leaks when sharing intelligence.

“You’ve got to go down that road cautiously, but at the same time we’ve got to go full speed ahead,” the San Diego ICE bureau chief told the Tribune.

I would expect that if this pilot program prospers, there will be more Mexican intelligence officials working across the border with ICE investigation units in Phoenix, El Paso, Dallas, Houston, Laredo, and Brownsville.

In Dallas a young man names Rosalio Reta killed for the first time at 13. Four years later, he’s killed some 30 people, all for the enforcement arm of Mexico’s Gulf Cartel known as Los Zetas. Operating as a state-side assassin for Los Zetas, Reta is just one of many young men US authorities believe to be closely associated with Mexican organized crime.

Reta turned himself into the DEA. Calling an agent from prison in Mexico, Reta confessed to two homicides in Texas, hoping to be extradited. Such was his fear of Zeta reprisal for having made a mistake that allowed his target to live and land him in a Mexican jail.

Meanwhile, as Guatemalan president-elect Alvaro Colom prepares to take power in January, the outgoing Public Minister, who oversees public security, held a press conference to announce that 14,000 unserved arrest warrants have accumulated over the past three years. But the Guatemalan National Police only has 35 men assigned to the task of serving these warrants. It was a small bomb for Guatemalan public security, one that underscores, beyond any speculation about organized crime or street gangs, how far the new president has to go before he can make up for his predecessor’s lack of attention on basic public security matters.

Meanwhile, in neighboring Belize, authorities are beginning to report the presence of Mara Salvatrucha, the same street gang whose presence and activities in Guatemala, Honduras, and El Salvador is considered a threat to national security.

This gang’s presence in El Salvador, for example, contributes to recently reported statistics that place the murder rate between January and September 2007 at ten people a day. The total number is 2,677. And this is good news, as this number is 281 less than the number of those murdered during the same time period last year.

Tons of money, Org. Crime victory, and a blow to Chavez

At the end of last week, Mexican authorities seized the largest cocaine shipment in the country’s history – 21.3 metric tons (23.5 tons) according to the Attorney General’s office. The cocaine has an estimated street value of USD 2.7 billion, based on calculations that use the US government’s average price of USD 118.70 for a gram of cocaine sold inside the United States. I’ve seen more conservative figures, closer to USD 1.4 billion, but with a little quick math it’s easy to see how much Mexican drug trafficking organizations stand to earn a year.

(picture from Mexico's office of the Attorney General)

If 21.3 metric tons of cocaine is worth USD 2.7 billion inside the United States, then the 290 metric tons the US Government Accountability Office (GAO) estimates as the annual flow of cocaine from Mexico to the United States would be worth near USD 35 billion.

Now compare those earnings to the USD 1.4 billion that the US government wants to spend to help Mexico combat drug trafficking organizations that at the end of October were brazen enough to try and import 21 metric tons of cocaine into Mexico. Something doesn’t add up.

While Mexican authorities were counting sacks of cocaine, Guatemalan authorities were counting votes. Left of center candidate Alvaro Colom won the presidential run-off election, defeating his opponent and former military intelligence office Otto Perez. Two facts emerged from these results: a relatively low number of Guatemalans voted in the run-off elections and by choosing Colom, those that voted indicated they do not support the mano dura or “iron fist” policies promoted by Perez.

In Honduras and El Salvador, these policies have lead to increased levels of violence. Cops arrest individuals with tattoos because they assume they’re pandilleros, or street gang members. The police crackdown creates a response from the pandilleros, who in turn convince cops that death squads are the best way to exterminate the street gangs. The net result is extrajudicial killings and bold, gang-style murders. Neither are pretty.

So Guatemalans chose to avoid that trap and go with a man who is more focused on economics and reform, but who many believe has made deals with organized crime. That’s bad news, especially in Guatemala. According to the GAO, some 70 percent of the cocaine that enters Mexico passes through Guatemala. But it gets worse. Reports say Colom has "vowed" to use the Guatemalan army to combat drug trafficking organizations. We'll see if he comes through on that promise.

Part of the USD 1.4 billion counter-narcotics package will go to Central America. But if US authorities think they’ll get real help from the Colom administration, they may run into some serious challenges. Time will tell.

Meanwhile, former Venezuelan Defense Minister and General Raul Baudel broke camp with long-time friend and Venezuelan president Hugo Chavez this week when he told the nation to vote against Chavez’s proposed constitutional reforms, passed by the National Assembly on 2 November.

Baudel is now on a nation-wide campaign to give Venezuelan’s an insider’s argument for why the nation should not hand over authoritarian control to Hugo Chavez, who, by the way, is quite upset. Apart from Baudel’s significant defection, Chavez must deal with thousands of students who for over a year now have continued to build an increasingly vocal segment of the opposition.

The students remain a thorn in Chavez’s side, but Buadel’s participation in the opposition could turn into something altogether more interesting and significant as we march closer to the 2 December nation-wide referendum to approve or reject Chavez’s reforms package. Approval would be tantamount to the last nail in the coffin for Venezuelan democracy. Rejection would be a major blow to Chavez’s political position. Again, time will tell…

Spies, sovereignty, and drug trafficking

Media coverage of the Merida Initiative (Plan Mexico) continues as strong as ever. The IHT completed an interesting piece on the money laundering component, suggesting that Mexican organized crime launders up to USD 10 billion in US banks every year. The Washington Post did a piece on gun smuggling, which was not well received in some circles. I also did a piece on the same topic, here.

Most cannot deny that as many as 2,000 guns were smuggled from the US to Mexico a day during the six-year administration of former Mexican president Vicente Fox, but many will disagree over how the US plays a role in this very important aspect of the US-Mexico drug trade. Adam Isacson has completed an interesting comparison of the proposed Mexico aid package with Plan Colombia. The Mexican package, by many accounts, is a great start but could use more money and less focus on the military solution.

One thing is for sure. The front-line of what Washington calls the “War on Drugs” has moved from Colombia to the US-Mexico border. The enforcement arm of the Gulf Cartel, Los Zetas, paid a man in Laredo, Texas some USD 15,000 to kill an American citizen in 2006, for example. Members of Los Zetas are rumored to have taken control of the I-35 interstate corridor, maintaining a presence of many three-man cells that carry out orders from car theft to distribution and, at times, assassination.

Their presence in Texas and other US states was, in part, what prompted the Bush administration to meet with Mexican president Felipe Calderon in Merida, Mexico last year to discuss a bilateral policy to combat drug trafficking – hence the “Merida Initiative”.

Meanwhile, both the United States and Colombia have for some time now operated spies on Mexican soil both with and without the permission of the Mexican Justice department.

One FBI agent, Samuel Martinez, managed to infiltrate Mexican organized criminal rings and remain there for years. He worked this beat for 26 years in total. The DEA has also placed undercover agents, and as one anonymous DEA official told a Mexican daily, sometimes they can’t tell the Mexican government everything because the agent must react to the situation at hand, which sometimes means entering Mexico unannounced. His priority is to maintain his cover, not respect Mexican sovereignty – an understandable position I think.

When Colombian Attorney General, Marioo Iguarán, told CNN en Español that Colombian spies have entered Mexico as undercover agents without alerting Mexican officials, it prompted a strong denial from the Mexican Attorney General and Minister of Foreign Affairs. To be clear, in most cases, Mexican officials are alerted. But sometimes they cannot be.

Iguaran pointed out a very relevant fact: drug trafficking organizations are now more international than ever. Years ago, there were clear lines between the Colombians, Mexicans, and those in between in the Caribbean or Central America. But as the drug trade has been democratized to a level where many smaller organizations work with a number of specialists from smugglers and money launderers to distributors, producers and chemical importers, the international nature of the drug trade has placed a very real strain on sovereignty. Moving forward with any transnational plan to combat drug trafficking organizations must take into account that at times sovereignty must be ignored, otherwise the traffickers have already won.

A Drop in the Bucket

I have decided to increase the publication of this newsletter into a weekly affair. I hope you do not mind. I will share with you some clips from the Internet, including my own publications, but I’d also like to share with you more of the information I receive from interviews with government officials, businessmen, analysts, and others from around the region.

In this edition:

We continue work on our third report on Mexican organized crime. Some of the information we have learned, however, I’d like to share with you here given the current media flack surrounding the Merida Initiative, also known as Plan Mexico.

Lambasted by media on both sides of the border, at a glance it would seem this plan to spend some USD 1.4 billion over three years to combat drug trafficking through Mexico is a step in the right direction. It is certainly more than the current USD 40 million that the US spends on anti-narcotic support in Mexico.

Mexican observers, however, have pointed out that USD 1.4 billion is about the same amount the US military spends on fuel over one month in Iraq. By comparison, Mexico figures relatively unimportant.

Mexican press has also pointed out that when compared to the assumed earning of Mexican drug trafficking organizations (DTOs), the money for the Merida Initiative falls short. Mexican DTOs earn some USD 30 billion a year, compared to the some USD 500 million this plan intends to spend on equipment, support, and training. One Mexican daily figures Mexican DTOs have 21 times the spending power of “Plan Mexico”.

Training is another issue. Some observers suggested that private military contractor, Dyncorp, had been selected to carry out much of the training of Mexican anti-narcotic police. But a recent conversation I had with a Mexican security official suggests that BlackWater might actually get the job. It will likely come down to lobbying in Washington. Either way, it seems clear the US is interested in using private contractors in Mexico.

On the Mexican side of the border, such an announcement comes across as an insult. Already sour about the Vietnam-era helicopters the US handed over for anti-narcotic recon missions that are now useless due to a lack of maintenance support from the US, Mexican officials are worried about receiving old equipment from the Colombian front of the so-called “war on drugs”. Now they are faced with the probability of US officials telling them that if they want the help, they will take it from private contractors.

Given the current media coverage of the BlackWater incident in Iraq that left many civilians dead, such a proposition is a bitter pill.

Another issue is trust. While Mexican officials from public security, defense, national police, and other areas clamor over who will get to play with what toys, US officials look across the landscape of Mexican leaders and see very few they trust. Apart from Mexican president Felipe Calderon, who seems to have a good rapport with US officials, the other is the attorney general, Eduardo Medina Mora, who in the past has served as the Secretary of Public Security.

Finally, and in the best interests of keeping this piece short, I would add my own worry about the US government’s commitment. Spending USD 500 million a year for three years is a drop in the bucket. Mexico will need much more support over a longer period of time to pull itself from the vice grip of organized time. I understand the limitations of Bush’s ability to move anything forward in Washington and applaud his efforts to move forward this plan, but it seems to me too little too late. I hope the next US president is wise enough to realize that Mexico and the border lands deserve much more attention than what USD 500 million dollars a year will buy.

Next week, I’d like to share with you the spy games going on behind the scenes between Venezuela, Colombia, and Mexico.

Correa is not Chavez, Hostage Talks, and a new report

I’d like to announce that we’re working on part three of our ongoing series on organized crime in Mexico. Parts I and II are available on my website here. This time around we’ll focus on the pressure cracks that have begun to form between the organized criminal factions in Mexico that so far can be divided into four large groups. Two groups, specifically the Gulf Cartel and Sinaloa Federation, have begun to show some signs of stress.

Fractures due to ongoing pressure from the Calderon administration may manifest themselves into smaller drug trafficking organizations. These considerations as well as organizational charts and maps, and a discussion of the reasons why organized crime may team up with insurgents in Mexico will all be included in our upcoming report. I expect to publish it via my website by the end of November.

In other news, Ecuador has moved forward with a constituent assembly that with representatives from around the country will meet and debate the governing law of the country, to be enshrined in a new constitution. The president, Rafael Correa, holds a majority position in the assembly and is likely to push through progressive changes that, like in Bolivia, many Ecuadorians hope will grant more rights and status to the country’s poor and disenfranchised parts of society.

This policy, however, has proven unpopular with the right wing parties in Ecuador as well as international press that tends to lump Correa together with Bolivian president Evo Morales and Venezuelan president Hugo Chavez. While all three are happy to hug and smile for the cameras, they are quite different. Correa is clearly not Chavez.

Meanwhile, Chavez continues to outpace change in Venezuela. His constant push to force Venezuela through the reformations necessary to mold Venezuela into his own vision of the ideal country has created a serious strain on institutional capacity there. Government offices are simply not well equipped to maintain the president’s rhetorical pace. As they fall behind, corruption and incompetence fill the gap. It seems that even with billions you can’t buy a revolution. Even Castro is telling Chavez to slow down and administer the administration.

Yet Chavez continues to push his agenda on the international stage. His current foray into Colombian affairs, trying to negotiate a humanitarian exchange between the Revolutionary Armed Forces of Colombia and the Uribe administration may create some positive outcome for FARC hostages, but it’s unlikely Uribe will budge on any peace agreement. Meanwhile, Chavez continues to lose precious time at home, where many Venezuelans have begun to openly question the direction of this “revolution”.

Hitting the highlights after a long absence

This is number 6/2007. My apologies for the long absence. We are back. I will endeavor to produce this newsletter once a month at the very least. Since March, I have been working with a European company, Riskline, covering political risk and security in the region. We also have a developing blog. It has been time consuming but rewarding work! My own website, where you may find commentary and analysis on politics, security, and energy in the region, has been updated (mostly) as of this posting.

In this edition:

So many items are worth mention. I will try to cover the highlights here and get into more detail in future posts.

The Brazilian president's response to the worst aircraft accident in Brazilian history was dismal at best. The country suffers from a significant lack of infrastructure development, and the bureaucracy that supervises commercial aviation in Brazil is complicated and stuffed with political appointees. Many have little to no experience with matters of aviation security.

In Argentina, a couple recent scandals, one involving US$ 800,000 illegally brought to Argentina by a Venezuelan businessman on a private jet chartered by the Argentine national energy company, have tainted president Nestor Kirchner's popularity a little. But they seem to have not affected his wife's campaign for president. Elections are set for October. All expect Kirchner's wife to win, which means little by way of a chance in governance or economic policy - not a good sign for the country's long term growth and stability.

In Ecuador and Bolivia, presidents Rafael Correa and Evo Morales continue to push forward with a Constituent Assembly to rewrite the country's constitution, re-founding it to reflect the needs of the poor. In Bolivia, the process has been met with widespread protests, some for others against the government. Lately, Evo's left flank has become rankled over their perception of his soft stance on reform, a trend that might force Morales into the middle of protests from the both ends of the Bolivian political spectrum. In Ecuador, Correa remains popular but he has only just begun the process.

Venezuela's Hugo Chavez continues to push forward with Socialist reforms at home while purchasing support abroad. He has encountered significant resistance in trying to reform Venezuela's political system under one party, and a string of corruption scandals pointing at Venezuelan energy company PDVSA have begun to attract negative attention at the domestic level. The latest scandal involving the Venezuelan businessman in Argentina has also chilled relations between the two countries. To save face, Kirchner is demanding that Chavez investigate the corruption on his end, but that would force Chavez to face the ugly truth about corruption in his country. It's a stand off, but Kirchner will grow quiet soon. After all, it was Chavez who was just in Argentina to buy yet another US$ 500 million in Argentine government bonds.

In Guatemala, presidential and congressional elections set for September have grown ugly. Over 50 people have been killed in a string of events that points to the close involvement of organized crime in the Guatemalan political field. Financial support of municipal and departmental candidates will ensure a leap forward for organized crime in terms of controlling Guatemalan politicians. The future for this Central American country does not look good. I suspect it will become a much more violent place in the very near future.

Meanwhile, presidents George W. Bush and Felipe Calderon of Mexico are expected to announce the latest developments of a closely guarded plan for the two countries to cooperate in the latest front for Washington's War on Drugs. It has become hard to ignore the violence along the US-Mexico border. And since Calderon has come into office (December 2006), he has proven his determination to take the fight to his country's criminals, a posture that has earned him some respect in Washington. There are many challenges ahead for a US-Mexico plan, but both sides are seriously talking and Mexican security is on President Bush's agenda - something that never happened during the administration of Vicente Fox.

Fighter Planes, Robberies in Rio, and Million Dollar Cars

This is number 5/2007. Our Mexico report, entitled "Calderon's Plan for Mexico", is ready. Research on Russian and Iranian influence in Latin America continues, albeit slowly.

In this edition:

Hugo Chavez continues to force forward his revolution. Apart from the 28 May closure of Venezuela's oldest independent media outlet, he has threatened to nationalize the country's banks and largest steel producer, and has accused both of corruption. The steel producer, Sidor, is controlled by Luxembourg-based Ternium SA. One of Chavez's closest supporters, Luis Tascon, accused PDVSA of corruptive practices on 10 May, citing a US$ 70 million dollar contract that was "given" to a Colombian company that neither bid on the contract nor has the financial or engineering resources to complete the job.

Meanwhile, rumors coming out of the Venezuelan's oil sector state that any attempt to stop or slowdown production activities at either Cerro Negro, recently ceded by ExxonMobil, or Petrosuata and Hamaca, soon to be ceded by ConocoPhillips, will be considered as sabotage by the Venezuelan government. Apparently Chavez's forceful takeover and ownership of oil production in Venezuela could very well lead to reduced oil production there. Few are surprised.

What is also not surprising is that sales of Rolls Royce luxury vehicles in Venezuela have soared. The model that costs US$1 million has sold 200 units and counting in 2007. The company thought it would only sell seven.

In Bolivia, there is talk of purchasing a fleet of 12 to 20 AT-29 SuperTucano jet prop fighter/attack plans from Brazilian company Embraer. This is the same model airplane the US would not allow Embraer to sell Venezuela. If allowed to move forward, the 100 million dollar sale would be financed by Brazilian development bank BNDES. Delivery of the planes could be as soon as the end of this year. Some question this sale as Bolivia has not until recently expressed a desire in these aircraft.

Brazilian oil giant, Petrobras, exported at least 12 million liters of ethanol to the United States in May and is considering purchasing holding tanks closer to the point in entry inside the United States. The wholesale price of Brazilian ethanol has dropped by 13.8 percent in recent weeks, in part pushing Petrobras to increase production.

Finally, intelligence coming from the Brazil-Bolivian border indicates a spike in the transfer of cocaine from Bolivia to Brazil in the coming months. A representative from the US State Department warned Rio de Janeiro state governor Sergio Cabral of this eventuality.

Meeting with the US ambassador to Brazil during dinner, Cabral noted that his team was working hard to secure Rio ahead of the upcoming Pan American games. What the ambassador didn't tell Cabral was that one day before their dinner date dozens of employees, who work at the US Consulate in downtown Rio, watched as two men robbed a third during the lunch rush hour. Before they made good their escape, a fourth attacked the gunmen, killing one with his own firearm. He then assaulted the other and detained him until police arrived some 15 minutes later.

Ethanol Gains Traction

This is number 4/2007. I have been on the road for most of the month of April. Work on our Mexico report and the upcoming Iran & Russia report is moving forward slowly but will pick up pace through May. After spending some time in Washington, DC, it's become clear ethanol has gained traction where other ideas and policies out of Latin America have not.

In this edition:

Brazil has breeched the gap with Washington through Ethanol. According to some people I met with in DC, the head US diplomat for Latin America, Tom Shannon, has been pushing the formation of a policy bridge between Brazil and US vis-a-vis ethanol for some time. But it took more than a series of tours to Latin American and hollow agreements.

When Brazilian president Lula visited Bush at Camp David, it marked a clear division between Lula's administration and the Brazilian foreign policy camp, led by Celso Amorim and based in Itamaraty. The follow through and real policy implementation team is now the Inter-American Ethanol Alliance, led by Jeb Bush. What at first looked like a hoax has begun to look more like a win-win ethanol alliance.

Brazil, however, has not stopped with the United States. A memorandum of understanding was signed in mid-April between Petrobras and PetroEcuador. The two countries will work to produce and distribute biofuels and ethanol in Ecuador. A similar project is underway in Peru. On 18 April, the Peruvian Council of Ministers approved legislation that will make the use of biofuels obligatory in Peru. To that end, the Peruvian Agrimisa consortium will begin in June the cultivation of 23,000 hectares of sugarcane in the department of Piura to produce sugar and ethanol. It will be a US$ 80 million investment.

Brazil has also reached out to Japan. On 22 February, Marubeni Corporation, Japan's fifth largest trading company, has invested US$ 40 million in a biodiesel join venture with Brazilian grain trader Agrenco Group.

Mexico, like Venezuela, has pulled away from an ethanol initiative. Both countries are major oil producers, and both compete with Brazil for regional leadership. Venezuela has resumed ethanol imports from Brazil, however, but Mexico has announced that it will not focus on ethanol in the short term.

Rather, president Calderon has chosen to focus on a development initiative, Plan Puebla-Panama, that will incorporate Central America and Colombia. This sub-regional initiative has strong support from Colombian president Uribe, something it didn't have when Calderon's predecessor, Vicente Fox, first announced this plan years ago.

Iranian Embassies, Coca Tea, and a Failed Tour

This is number 3/2007. We are nearly finished with a report on Mexico's drug wars, updating a piece I published on October on the possibility of a Mexican Mega Cartel. A report on Iranian and Russian influence in South America will be the last for some time. We hope to receive your feedback on the usefulness of these reports over the coming weeks.

In this edition:

Upon publishing version 2/2007, where I mentioned the possibilities of heavy crude refineries in China, I received messages from three independent sources, one of them with Brazilian energy company Petrobras, saying this was indeed the case. We should watch closely Chinese maneuvering to buy more Venezuelan oil.

Meanwhile, Iran has announced it will open embassies in Chile, Colombia, Ecuador, and Uruguay with a representative office in Bolivia. At first glance this line may appear troubling. Iran, however, would like to assure you that Latin America holds opportunity for Iranian businesses. Embassies are the first point of contact for any country to tighten ties with another. I wonder about what Iran intends to do in these Latino states once the embassies are established. Stay tuned.

Two coca leaf factories are currently under construction in Bolivia. With Venezuelan funding, these coca factories will begin producing coca leaf products, such as coca tea, by September or October of this year. There is little market for coca leaf products in Venezuela. The United States is the real market for a product like coca tea. But it is the last country that will import legal coca products. The irony is that by de-vilifying the coca leaf, and importing coca tea the US government could bring Bolivia closer, using Venezuelan-funded factories to revolutionize the relationship between Washington and Evo Morales.

Chavez has gone on the offensive since arresting a father and son team in the National Guard for plotting to kill him. The Venezuelan leader will now hunt for possible threats to his life. Chavez benefits from revealing plans to assassinate him however real or fabricated. They play into his strategy of constantly reminding his followers of the struggle associated with the revolution. Yet real attempts on his life are likely to increase in the coming months. Political risk is alive and well in Venezuela.

Finally, the results are in. US President George W Bush's tour of Latin America was a failure. He signed no major deals, made no promises, and was forced to swallow the harsh words of thousands of protestors. His press secretary, former Fox journalist Tony Snow, made no announcement to the press pool traveling with the president until 17 hours before the end of the tour. Even Guatemala, long a client state of the United States, turned the screws on the immigration issue - not at all fearful of a reprisal for bad behavior. Bush's tour served to solidify one fact: Washington lost Latin America under his watch.

Heavy Crude, Countering Chavez, and Plan Afghanistan

This is number 2/2007. Our Mara Salvatrucha report is complete. We are pleased to say we were able to include never before published information gathered from transcripts of witness testimony. We will now begin work on Mexico's drug wars, updating a piece I published on October on the possibility of a Mexican Mega Cartel. Please note, some of you did not receive the 1/2007 edition due to a technical error. Please use the blog link below to review that material.

In this edition:

Venezuela has signed a US$3.5 billion oil deal with Japan. Japanese companies Mitsui and Marubeni have signed a contract with Venezuelan energy company PDVSA to import crude over the next 15 years. It is the largest energy deal with an Asian company that I have seen.

As many are aware, Venezuela's heavy crude is not a market favorite, but I've recently learned that this crude is precisely what the market may consume in the future. According to sources in India, state-run Indian Oil Corp. has begun placing orders for heavy crude, to be refined at an Indian refinery. If India is convinced heavy crude is the wave of the future, then I must wonder about China. Sources in Petrobras here in Brazil tell me China talks of building heavy crude refineries. The potential effect is two-fold. One, the United States will soon be one of three major markets able to refine heavy crude. And two, the price for heavy crude will stay high. This has obvious implications for the future of Chavez's regime in Venezuela, the world's leading source of heavy crude oil.

Meanwhile, there is no Latin American leader well positioned to counter Chavez. His ideas roam free across Latino lands, and while we must wait until the next round of presidential elections to see how the region has taken to his 21st Century Socialism, it's clear to me and many of us down here that Bolivarianism will continue to take root as Washington's influence in this region continues to fade.

This year will be one of engagement, according to Tom Shannon, the State Department's top diplomat for Latin America. His recent visit to Brazil, however, appears to have been derailed by the revelations of the former Brazilian ambassador to the United States who claims Brazilian foreign policy is still very much influenced by old-school Socialists. Too bad the US has identified Brazil as the country to counter Chavez. We'll see what the future holds. I've been told by contacts in the Whitehouse that President Bush is "obsessed" with Iraq. So we'll see just how much the US will engage in Latin America.

Meanwhile, William Wood, the former US ambassador to Colombia, will soon become the US ambassador to Afghanistan. One country is the world's leading supplier of cocaine, the other heroin. I'm very concerned that failed US policy in Colombia will be repeated in Afghanistan. There is widespread concern that the so-called Drug War will have a negative impact on Afghanistan's future.

By most accounts USAID, the US government's agency that disperses development aid and implements development policy is in need of some serious attention. I have documented USAID's dismal work in Bolivia. It's work in Colombia has had limited success. A contact who has returned from a development post in Afghanistan recently wrote:

"At the end of December I finished up 15 months in Gardez, Paktya, in SE Afghanistan, overseeing USAID-funded reconstruction projects. I don't think I went in with any starry-eyed notions about the US-led effort there, but seeing first-hand the degree to which it is misguided and insincere was astounding nonetheless."

He continues: "I think there's a depth of cynicism in many of these efforts that is hard to fathom-- the Drug War is one of the clearest examples, I guess. The facts are arrayed against it so clearly-- it's ruled by an orthodox faith that allows for very little questioning, but more that that there's a tremendous inertia of interests-- the machinery of the Drug War already in place that needs it to survive, the various entities raking in the profits from the government contracts, etc. I really wonder how many people in leadership positions who espouse the Drug War religion are actual believers."

Gang Busters, Unmanned aircraft, and Ruling by Decree

This is number 1/2007. Our Mara Salvatrucha report is nearly complete. We are waiting on a court reporter in Maryland to send over the transcripts of witness testimony that, so far, have not been released to the public. The results for January's monthly survey are in. Once we publish the Mara Salvatrucha report, we will begin work on Mexico's drug wars. You can still find our December report on the FARC's international network here.

In this edition:

The Mara Salvatrucha, the United States' most violent street gang according to the FBI, has received much attention from the press this year. A trend towards greater organization suggests the gang may soon become much more than thugs. And the government's use of racketeering charges to prove organization has for the first time etched in public records evidence of the gang's increased levels of sophistication.

Meanwhile, a continuing resolution passed by the outgoing Congress late last year has catalyzed a hiring freeze at the Drug Enforcement Administration. The DEA has suffered budget cuts, and its operations on the US/Mexico border appear to be on the road towards friction, not cooperation, with the Bureau of Immigration and Customs Enforcement as well as the FBI. These are trying times for the DEA because Washington has put the drug war on hold while it chases after terrorists and democracy in the Middle East.

Mexico, however, has raced forward with its war on drugs. President Felipe Calderon has taken the fight to Mexican organized crime. He's sent troops to Michoacan, Baja California (Tijuana), and other states. Calderon has also begun using extradition to the United States as a tool. Already he's extradited the leader of the Gulf Cartel and as of the last week of January has some 9,000 troops hunting for El Chapo, the leader of the Sinaloa Federation. I'm waiting to see how the criminals fight back...

...Iran will soon open an embassy in Nicaragua. After a three day tour, guided by Venezuelan president Hugo Chavez, Iranian president Mahmoud Ahmadinejad, extended his Latin American contact network to Nicaragua, Ecuador, and Bolivia through meeting the presidents of all three nations. As Iran's presence in Latin America grows, so does unease in Washington.

Chavez will continue to push Washington with rhetoric all year, but an interesting bit of news - beyond the usual Bush-bashing - surfaced recently. The Venezuelan military has quietly said it will work with Iran to develop unmanned aircraft. This announcement could be misinformation; it could also be a test balloon to gauge US response. Either way, closer military ties between Iran and Venezuela do not bode well for Washington. Nor do Venezuela's plans to purchase anti-aircraft missiles from Russia.

We'll certainly hear more from Chavez, who as of 31 January is in position to rule by decree. The region's response to Chavez's constant tinkering (to put it nicely) with Venezuelan democracy is deplorable and indicative of the fact that it is unlikely anyone in the region or Washington can stop him.

The Iran-Venezuela Balance and Ice in Mexico

This is number 16/2006 and is the last publication for 2006. Voting for December's monthly survey will continue through the holidays until the first week of January. Our report on the FARC's international networks is complete. You may download it here. Please feel free to send in any comments or questions that may arise as you review the report.

In this edition:

Hugo Chavez has won another 6 years in power. It is likely he will remain Venezuela's ruler for much longer. And his cloak of democracy ensures continued protection from any unilateral efforts made by the United States to threaten his regime.

There are at least three triggers that would dramatically increase the threat that Chavez poses to the United States. The first two are well established: oil and nuclear weapons. If Chavez cuts off oil or develops a nuclear program, peaceful or otherwise, he will invoke Washington's ire.

The third trigger is a closer relationship with Iran. For now, this relationship appears to be balanced. But this may change if Iran chooses to pursue closer military ties with Chavez to deter America's efforts to undermine Iran's position in the Middle East.

Meanwhile, activity in Mexico indicates a strong government response to ever increasing drug trafficking operations in Mexico's southwestern states. In the middle of December, Mexican authorities seized some 20 tons of chemicals in Michoacan. Much of the chemicals were on their way to methamphetamine super labs in Michoacan that have risen since US government efforts to shut down meth labs in the United States. These efforts have resulted in a serious problem with meth addiction in Mexico. And in Michoacan organized crime has declared a war on anyone who produces, distributes or sells meth in Michoacan. In 2007, this state may become the center of a dramatic increase in violence.

Finally, as the year draws to a close, many journalists and analysts have tabled ideas for what to watch in 2007. Of the various items under consideration for close observation, I would consider Venezuela's relationship with Iran, the growth of Mara Salvatrucha street gangs, the Colombinazation of Guatemala, and Mexico's "cartel wars" to be the most important to regional security.

Lula's Meddling, Chavez's deals, and a Regional Military proposal on the way...

This is number 15/2006. Votes for October's monthly survey have been tallied. The top two topics voted were the Mara Salvatrucha street gangs, which came in second with 27% and the FARC's international network, which came in fist with 33%. Over the next two weeks, we will prepare a detailed report on the FARC's international networks, including interviews, maps, and other graphics. I will announce its publication on the website and via this newsletter. Next week, I will post the new topics for the November survey, including the Mara Salvatrucha street gang topic, as it came in second this month.

In this edition:

Brazilian president Luis Inacio Lula da Silva visited Venezuela the week of 13 November to sign some energy agreements and inaugurate a bridge between the two countries that has recently completed construction. Interestingly, Lula's implicit backing of Hugo Chavez weeks ahead of Venezuela’s presidential elections raised alarm in Brazil over Lula’s apparent "meddling" in Venezuelan affairs. Up until now, Chavez has been the only state leader denounced for meddling in another country's elections.

Lula's timing was planned. He would prefer to see Chavez remain as Venezuela's president, as he knows Chavez's leadership in Venezuela does not threaten Brazil. It also keeps the United State’s presence in South America off balance, another geopolitical factor that works in Lula's favor.

Meanwhile, US President George Bush has quietly waived a long-standing prohibition on International Military Education and Training Program for countries around the world, including numerous Latin American countries. Venezuelan and Chinese military influence in the region likely has Pentagon leaders worried. It will be interesting to see if the US uses these training programs to increase military-military ties in South America in a move to counter-act Chavez's regional military movements.

Brazil has also made an interesting announcement. On 15 November, Brazil's military advisory group, the Nucleus of Strategic Matters began drafting a proposal for the creation of a South American military force, using NATO as a model. Chavez, Morales, and Kirchner will likely sign on to such a proposal, which looks like a play by Brazil to get back on top of the regional geopolitical game. I expect Lula to focus more on seizing regional leadership now that he's past the elections and has washed his hands clean (well mostly) of past corruption scandals.

Meanwhile, Venezuela has signed a memorandum of understanding with Syria and Iran to build a refinery in Syria. Venezuela has also recently signed a bundle of new agreements with China, bringing the two countries closer together.

Finally, Brazil has announced it will resume construction on its Angra 3 nuclear reactor. We're still waiting to see how the international nuclear watch dog, the IAEA, reacts.

Ortega, Maras in Mexico, and Hezbollah in Venezuela

This is number 14/2006. Sandanista Daniel Ortega is likely to become the next president of Nicaragua. Mara gangs are footloose in Mexico. And some Spanish scholars are talking about Hezbollah in Venezuela.

In this edition:

As of 7 October, most major media outlets have recognized Daniel Ortega as the president of Nicaragua. Ortega, however, has remained silent, and his opponents are calling for every single ballot to be recounted. Democracy watchdog, President Jimmy Carter, said the process was cleaner than elections he's witnessed in the United States.

The possibility that Ortega will begin to orbit Venezuela, along with Bolivia, is very real. Chavez is happy to continue his offer of fertilizer, oil, and fuel, and there's little reason to believe Ortega would refuse. There's also little reason to believe Ortega would manipulate Nicaragua's FTA with the United States. Concern in DC over such a possibility is rooted in outdated beliefs of Ortega the Sandanista more than today's reality. Ortega's presidency will be more about himself and his followers than Nicaraguans or becoming another thorn for Washington. Ortega will certainly have a leftist slant, but it's unlikely his politics will hurt the US beyond the State Department's pride. Chavez called Ortega late on 6 November to congratulate him, and I suspect it is the first communication in what promises to be a close relationship between the two men.

Ortega's presidency adds more evidence to the argument that the US State Department simply has no footing in the Americas and will only lose influence and support in the Americas from today's midterm elections through the end of the current presidential term and beyond.

North of Nicaragua, in the Mexican state of Chiapas, Central America's Maras mix with illegal migration. But their influence does not stop in Chiapas. Maras apparently have built a pipeline for human and drug smuggling north from Chiapas, along Mexico's Pacific coast, to the US-Mexican border. Their presence is Mexico is "flotante" or not rooted down, but their influence is only growing. Testimonies from a racketeering case in Maryland have revealed a certain level of vertical, or what I call north-south, organization between Mara leaders in Central America and their lieutenants that run Mara gangs in US cities.

Meanwhile, two Spanish scholars have taken seriously the recently planted bombs in Caracas. They see the bombs as the first act of Venezuela's Hezbollah cell, acting alone and not part of the greater terrorist organization in the Middle East. They call the 23 October bomb attempt a "frustrated" action of Hezbollah in Venezuela. But they argue this group wants to create a South American Hezbollah movement that will build international recognition through bombings in Venezuela. Ultimately they raise the question. Does Hugo Chavez's leadership in Venezuela send the message to international jihadists that Venezuela will tolerate fund raising, recruitment, propaganda, and training for militant Islamic movements?

Busts, Spies, Polls, and Bombs in Bogota

This is number 13/2006. We are four days from the second-round of the Brazilian presidential elections, and Lula has a 22 point lead over Alckmin. People here in Brazil are already celebrating or crying. Daniel Ortegea, the former Sandanista leader in Nicaragua, will likely be the next president of that country. In Venezuela, polls report Hugo Chavez is 35 points ahead of his opponent Manuel Rosales.

In this edition:

The Brazilian National Intelligence Service (ABIN) has begun the internal selection process to send spies to Venezuela and Bolivia. A classified order made by the president initiated this process, and a daily here made it public. The ABIN office confirmed the news. Until now, Brazil had maintained ABIN agents in Washington, Key West, and Buenos Aires. The presence of Brazilian spies in Venezuela and Bolivia may be the first of a series of geopolitical moves made by Brazil to exert its influence over her neighbors.

As Chavez sprints the campaign trail, two unexploded bombs were found outside the US Embassy in Caracas on 23 October. A moto-taxi driver alerted local police after giving a ride to a guy with a large duffle bag. Inside the bag were Hezbollah pamphlets and a student ID card. Local authorities consider the suspect "demented". And that was that. It's unclear if the story was buried or just a non-starter. Once again flimsy evidence has surfaced that Hezbollah is operating in Venezuela. US Southern Command is convinced of the terrorist organization's presence on Margarita Island, just north of Venezuela, but concrete evidence has not yet surfaced in the public domain. Stay tuned...

Meanwhile, eight tons of cocaine were found off the Galapagos Islands in the Pacific Ocean off the Ecuadorian coast. Three Costa Ricans were arrested. This is the second cocaine bust involving Costa Ricans this month. On 9 October a Costa Rican vessel was intercepted with 3.5 tons of cocaine aboard. The eight-ton bust is the largest single seizure I am aware of in Latin America.

At the United Nations, Venezuela has announced it's willing to pass the baton to Bolivia, and Evo Morales has accepted. I don't think Bolivia has a very good chance of winning a non-permanent seat on the UN Security Council, but if it does, I imagine we will soon have more evidence of the deepening ties between Venezuela and Bolivia.

Finally, another bomb exploded in Bogota on 19 October. President Alvaro Uribe immediately blamed the FARC, but it is not clear if the FARC actually planted the bomb. Calling off hostage-exchange talks with the FARC, Uribe said the only way to free the hostages the FARC has been holding for years is with the Colombian military.

As a high-delegation of US officials hold meetings in Bogota today, 25 October, and tomorrow, Colombia's Foreign Minister is holding talks with Ecuador and Venezuela to share intelligence the Colombian government has that high-level FARC operatives are currently in the eastern jungles of Ecuador and the remote border lands between Venezuela and Colombia.

If Chavez remains in office, and Ecuadorian presidential candidate Rafael Correa - a known Chavez sympathizer - becomes Ecuador's next president, Colombia will have two neighbors that are tacit FARC supporters. The harder Uribe squeezes the FARC in Colombia, the more likely they are to displace their presence into Ecuador and Venezuela, not to mention Panama and Brazil.

Chavez's power on the downslide?

Responding to Andres Oppenheimer's recent article on Chavez's apparent downward spiral, I published the below comments on his blog.

They are recorded here:

Rosales has engineered a strong campaign, but he's still 13 points behind Chavez. I doubt Chavez will give up power easily, no matter what Venezuelans decide.

Outside Venezuela, his influence appears to have planed-out. But it's easy to arrive at this conclusion when you only ready major news papers. Talk to the people, visit the capitals, take a hard look at the realities of life down here, and you'll find there's still plenty of room for Chavez's influence to grow.

If he's an astute politician, and if he manages to get past the December elections without sparking a wave of violence in Caracas, Chavez needs to turn a corner to press what I consider to be an advantage in the region.

He needs to govern, to show some leadership, and to show some follow through. If chooses not to focus on the details of being a effective political leader, he runs the risk of wide spread disillusionment that follows in the wake of the hundreds of thousands of hopeful individuals - Latinos, Gringos, Europeos, quien sea - that are watching him, waiting for him to do more than put his money where his mouth is and make something happen. Venezuela is the first place to begin.

There's no reason to belive that Chavez can't work with Garcia, Uribe, Calderon, or other center-right leaders who have problems with poverty, hunger, sickness, etc.

But there's plenty of reason to belive that if Chavez doesn't do something soon, the disillusionment he creates will cause a fall out much worse than the most awful decisions made by the "Washington Consensus".

I'm not for or against Hugo. He has carved out a measure of regional influence for himself. It remains to be seen if he can do something with it.

"Colombianization" of Guatemala?

This is number 12/2006, and has arrived a little later than expected due to the elections here in Brazil. According to the latest polls published on 12 October, Lula is ahead by 11 points over Geraldo Alckmin. In other news, I heard back from many of you who had trouble purchasing The Reality of a Mexican Mega Cartel. The e-book is now available via my website (not Lulu.com). Also, I have installed a monthly survey on my website. The idea is to publish an e-book that reflects the interests of those who visit the website. Have a look, cast your vote, and check out the results. Finally, I will begin placing these newsletters on my blog. Please leave your comments there, thank you.

In this edition:

The first two weeks of October registered record cocaine busts in Central America. During a regional meeting of Defense Ministers in Managua, Nicaragua, authorities there seized 3.1 tones of cocaine off of Nicaragua's Pacific Coast. Days later Costa Rican authorities seized 3.5 tones of cocaine. Both seizures were record interdictions.

The Central American sub-region remains a transit zone. Larger seizures means larger amounts make it through the zone into target ports. The term "Colombianization" has been used to describe how the drug trade has begun to affect security and economy in Mexico. But some observers have begun to talk about the "Colmbianization" of Guatemala, an interesting concept.

Drug traffickers in Guatemala have planted millions of opium poppies in the country's western highlands. Guatemala is Central America's only source country. Colombia, Peru, and Bolivia are South America's source countries. Colombia has the added challenge of a decades' old civil war. Guatemala, however, has a growing problem with Mara Salvatrucha street gangs, which appear to on the road to increased organization and involvement in the drug trade.

Guatemalan president, Oscar Berger, just last week ordered hundreds of soldiers into the streets of Guatemala City to protect public buses. Strikes led by bus drivers, who were protesting the death of five of their colleagues, prompted this heavy-handed response. Street gangs extort bus divers, forcing them to pay a "war tax". Those who don't pay are shot. We're waiting to see what becomes of soldiers protecting bus drivers from street gangs. It seems to be a recipe for more violence.

Meanwhile, these gangs continue to move into the Mexican drug trade. There's little evidence to suggest they are actively linked with one of Mexico's drug smuggling organizations. I have learned, however, that the presence of Central American street gangs in Mexico has spurred a nation-wide copy cat situation. Mexican youths in cities across the country have begun to call themselves "maras", hoping to capitalize on the fear invoked by the term. Have the Mara Salvatrucha grown beyond a street gang into a brand name that represents extreme violence?

Organized Crime, Smuggling, and Operation Twin Oceans

Today's show covers organized crime in the Americas, smuggling in Colombia, Riots in Brazil, and our favorite leader, Hugo Chavez.

My plans to talk about Bolivia’s self-eradication program were put on hold as I got deeper and deeper into the world of smuggling and organized crime in Colombia and Panama. I am currently working on an eight-part series on smuggling in the Americas. The first piece on Buenaventura, Colombia has been published, and I expect to publish a piece on Panama City early next week.

Today I would like to share with you information about Operation Twin Oceans, a Colombian drug trafficker known as Don Pablo, Riots in Brazilian prisons, the arrest of a Tijuana Cartel boss, and a little tidbit about everyone’s favorite topic, Hugo Chavez.

Let’s get started.

Operation Twin Oceans is the tail end of a long series of operations inaugurated in late 2002. The U.S. Drug Enforcement Administration, also known as the DEA, jumped on board with this string of operations when it deemed the target, Pablo Rayo-Montano as a worthy target in October, 2005. Don Pablo was a Colombian drug trafficker who leveraged his land holdings in Panama and private navy to consolidate shipments of cocaine and move multiple tons of packaged cocaine from Colombia to Mexico and other destinations.

Don Pablo got started in Buenaventura, Colombia, the country’s busiest port city in terms of volume. Over time, Don Pablo won more clients for his consolidation and shipping business as the Colombian drug trade fractionalized from large organizations to dozens of baby cartels.

At the height of his business, Don Pablo moved up to 20 tons of cocaine a month, mostly to contacts with either the Sinaloa or Gulf Cartel in Mexico, that county’s two top drug smuggling organizations. Enter Operation Twin Oceans.

The DEA, working with partners in eleven countries, operated an intelligence gathering network that eventually led to Sao Paulo, Brazil. Don Pablo is believed to have fled to Brazil after a previous intelligence operation, dubbed Buenaventura No. 1 came close to dismantling his operation. Operation Buenaventura No. 1 focused on the smuggling links between Panama City and Buenaventura, Colombia. Invariably some members of Don Pablo’s organization were caught in the drag net.

It’s possible some of them gave up information that eventually led authorities to the Panamanian marina services company, Nautipesca, which was one of the country’s top marina services companies as well as Don Pablo’s principle front for a massive money laundering service that he offered to his clients. Call it an added value service.

With enough information to arrest Don Pablo, the DEA came knocking on the door of the Brazilian Federal Police in mid-May this past year. As many of you probably know, the second week of May was not a pleasant time for the Brazilian Federal Police. There were in the middle of a nearly two-week long siege on over 100 prisons. Riots had broken out on May 14 setting ablaze a series of riots in prisons across the state of Sao Paulo. On the streets, members of the First Capital Command, a Brazilian prison gang, were targeting cops at will, killing them on sight. As the mess dragged on into the week, cops retaliated killing dozens of suspects members of the First Capital Command. For Don Pablo, it would have been the perfect environment to hide out and maintain a low profile until things blew over in Panama.

Again, enter Operation Twin Oceans. With information in hand, the DEA made its case to the Brazilian Federal Police. Soon after Brazilian officers braved the extremely dangerous situation on the streets of Sao Paulo to serve an arrest warrant on Don Pablo, who was probably pretty surprised to find the DEA and Brazilian Federal Police knocking on his door in the middle of the prison riots.

Such mega-operations make me think of the DEA’s operations and efforts to take down Colombia’s first mega-drug trafficking organization. The Medellin Cartel, run by Pablo Escobar, feel apart after Escobar took multiple bullets in the chest, but the truth is his power over Colombian drug trafficking had begun to fade long before Escobar’s death.

A group of men who called themselves People Persecuted by Pablo Escobar, or Los Pepes, were secretly helping the DEA and Colombian authorities pull apart Escobar’s network by fighting fire with fire. Los Pepes broke the law. They set off bombs, murdered people, and – generally speaking – used the same terror tactics on Escobar that he used on his enemies. Two members of Los Pepes went on to form the Cali Cartel, another, known as Adolfo Paz, went on to become a notorious paramilitary chieftain, known as one of the first Colombian drug traffickers fully integrate with the country’s paramilitary forces.

The absence of the Medellin Cartel made way for the grand entrance of the Cali Cartel, an organization run by men who learned from Escobar’s mistakes. In a similar fashion, the recent arrest of Javier Arellano-Felix, a ranking member of Mexico’s Tijuana Cartel, may eventually lead to the dismantling of this Mexican drug smuggling dynasty.

But maybe not. Javier was a younger brother of a brood of Arellano-Felix siblings that have run the Tijuana Cartel since the early 80s. At one point, the Tijuana Cartel was the top dog in Mexico with complete control over smuggling routes into California, a principle market for cocaine in the 1980s.

By March, 2002, the tide had turned. Benjamin Arellano Felix, Javier’s older brother entered prison. Another brother, Ramon, was killed that year. Leadership is belived to have fallen into the hands of younger brother Eduardo and sister, Enedina – the former a doctor, the ladder an accountant. Under their leadership, the Tijuana Cartel has become more of a business, not as ruthless as it’s past antics would lead you to belive. Meanwhile, the Gulf and Sinaloa Cartels have increased their size and power significantly. The arrest of Javier Arellano-Felix puts a dent in the Tijuana Cartel’s enforcement arena, and his arraignment on US soil means he’s just as dead as his brother Ramon. It’s highly likely Javier will serve multiple life sentences once the courts and a jury of his peers have had a chance to sift through all the evidence the US Dept of Justice has on that guy.

Which leads me to my point here. The Tijuana Cartel’s days are numbered. Sooner or later the Gulf or Sinaloa Cartel will take over Tijuana. It is a border crossing that is second only to Nuevo Laredo in terms of volume of daily trade. When that happens, the group that holds both Nuevo Laredo or Tijuana, and it could be either the Sinaloa or Gulf Cartel at this point, will have consolidated smuggling operations into the United States from California to eastern Texas – it’s a business that generates tens of billions a year in tax-free dollars. Quite possibly as much as twice what the Mexican government earns from annual oil revenues.

Speaking of oil, let me finish by making mention of Hugo Chavez. As he would have it, the word Chavez has remained constantly in international headlines for weeks. It seems the media can’t get enough of this guy. Venezuelan presidential elections will be held in December, but already there is much activity in Venezuela.

Most importantly, it appears the once fractionalized opposition has managed to rally around one man, Manuel Rosales. He is the former governor of the state of Zulia, and has resolved to beat Chavez at his own game: appeal to the poor.

Many casual observers of Chavez’s Movement for 21 Century Socilialism fail to realize that the socialist movement is rotting at the core. Chavez’s most ardent supporters in 1998 are not asking why he is spending more money on regional and international programs while bridges fall and people remain jobless at home.

Rosales is playing on this growing sentiment to gain a portion of the chavista vote, while hoping he can attract to voting booths the millions of Venezuelans who have continued to abstain from voting in silent protest. It’s certain that in a year of many presidential elections, the Venezuelan election will be the most passionate. The outcome could range from peaceful and cheerful even to downright bloody and a welcome mat to civil war. I guess if that happens, the region’s drug smugglers will have one more option for places to keep a low profile. Don Pablo has certainly learned that Brazil is not an option.