Reconceptualizing the Illegal Narcotics Trade and Its Effect on the Colombian and the Mexican State
Revised January 17, 2003
Reconceptualizing the Illegal Narcotics Trade:
Its Effect on the Colombian and Mexican State
Patricia B. McRae, Ph.D.
Department of Political Science
Muhlenberg College
2400 Chew St.
Allentown, Pa. 1810
This paper was first presented at SECOLAS,
South East Conference on Latin American Studies,
Savannah, Ga. April 9-12, 1998.
Draft: Please do not cite without author's permission
Reconceptualizing the Illegal Narcotics Trade:
Its effect on the Colombian and Mexican State
Introduction
On a Frontline Special, Money, Murder & Mexico: The Rise and
Fall of the Salinas Brothers, Dr. Peter Lupsha, Professor of Latin American Studies
at the University of New Mexico echoed the thoughts of long time Mexico scholars and
watchers when he said, "What's going on in Mexico is beyond fiction".(1) Mexico, long considered to have a "muddling
through" style seemed to be teetering on the edge of chaos as the peso plunged in
December of 1994.
Moreover revelations about corruption during the Salinas regime
exceeded even the standard levels of corruption which usually accompany an ex-president.
Daily newspaper reports linking members in top governmental administration posts raised
questions of Mexico becoming a narco-democracy. How did this happen? Who and what was to
blame? Would this ultimately pose a national security threat to the United States?
While this paper does not purport to have answers to all those
questions, it does suggest that there are profound and permanent ways in which the illegal
narcotics trade (INT) affects the economic and legal institutions of a country, in this
particular instance Mexico. To this extent drug trafficking, its actors and stakeholders
have an impact on state-civil society relationships. In this paper I argue that to more
fully understand the impact of the INT on Mexican economic and legal institutions, the INT
must be situated within Mexican culture and then treated as a transnational corporation
(TNC). That is to say, the evolution of the INT as a TNC must be directly situated within
a larger framework of state-civil society relationships. In an earlier work on the
Colombian cocaine cartels and as part of a larger ongoing research project, I argue that
the evolution of the INT, its explosive growth and effects upon producing and consuming
countries (INT) could be best understood and explained through a model of firm or
organizational evolution using network analysis.(2) I
developed an organizational typology set within a historical chronology of the INT in
Colombia and which traces three phases of INT evolution consistent with the literature on
firm evolution from strategic management literature. It demonstrates that the INT, like
other TNCs, develop competencies and adjusts is organizational structure to deal with
multiple political environments within which it conducts business.
Obstructions to markets imposed by a variety of governmental regimes
are less problematic as organizational structures adjust to deal with these market
obstructions. As such the INT develops multiple points of access, creates alliances, and
develops an articulate constituency which aids its development. How did the INT develop in
Mexico? What role did general corruption play in its development? Having long been
considered an "exception" by Latin American scholars because of its lack of
civil and political violence, were there ways by which Mexico earned its reputation as
"exceptional" that may have contributed to the growth of the INT? In what ways
did external pressure from the U.S., Mexico's partner in many social and economic
pressures, alter governmental policy? What was the ensuing dialectic relationship with, to
use Gramscian parlance, differing power contenders who emerged as the INT became a
transnational organization? The purpose of this paper is to develop an historical
chronology using the methods and models developed in earlier work on Colombia. The hope is
that there are some mid-level generalizations that can be drawn from this regarding
state-civil society relationships and the role of illegal power brokers and challengers to
the state.
Review of the Literature
Since the late 1980s there has been an explosion of literature on drug
trafficking in the Americas. Few systematic studies, however, attempt to trace the
evolution of the INT through its relationship to culture and the institutions of state or
state-civil society relationships. At the beginning of this century the earliest studies
focused on the criminal nature of the activity. By the 1960s the focus was on narcotics
abuse as part of a larger public health issue. Presently much of the literature on
narcotrafficking offers a strong policy focus on the enterprise as a criminal activity or
as part of general corruption. In research tracing the evolution of narcotrafficking in
Mexico, Peter Lupsha observes that it is not only difficult to pinpoint a specific date
for the beginning of corruption in Mexico but also notes that pervasive and persistent
corruption in Mexico has been so widespread that the "...government handbook on
Mexico includes it under , The Rule of Political Competition.(3)
While useful in helping situate organized crime within a larger
culture, it does not identify in specific ways, the evolution of the INT as a TNC nor its
role as an agent of social change for the culture and institutions of State. Few studies
in the early 1990s have attempted to deal with the INT as a multinational corporation
(MNC) or, preferably, a TNC. Part of the reason for this is that early models of MNCs
assumed a coherence and logic not readily apparent in enterprises such as the INT.
Moreover there was not space within these models to deal with an illegal activity. Another
important difficulty in conceptualizing the INT as an MNC is the very amorphousness of the
INT concept which defies the precision required in analysis. To speak of the INT is to
speak of a drug production chain which begins in the producer countries where narcotic
plants are grown and ends in the consumer countries. There are many MNCs along the drug
production chain and in earlier stages of my research, the most clearly defined TNC to
emerge was the Colombian cocaine cartels. Though they are not cartels in an orthodox
economic sense, they do exhibit certain characteristics consistent with cartel behavior in
their attempts to set price and production levels. Peter Lupsha's definition of organized
crime as a process that possesses certain identifiable characteristics was used to define
the cocaine cartels.(4)
Growing evidence suggests that the emerging organizational structure
among TNCs is that of the network organization, characterized as much by a set of
relationships as by a formal structure. Indeed, many of the component parts are outside
the legal TNC structure as suppliers and other firms with mutual interests. In his studies
on American organized crime, Peter Lupsha identified network analysis as crucial to
understanding the growing power of organized crime. Network analysis attempts to identify
patterns of causation through an examination of a wide variety of social relationships and
interactions such as group cohesion, social distance measures, clique patterns, proximity
and proximity flows, network density and centrality, influence patterns, and affective and
instrumental associational ties. He notes that trust is the most critical of variables in
all interactions, whether that trust exists through blood-tie relations or patron-client
relations and which may or may not contain a coercive element. This is not surprising when
examining an illegal enterprise which is conspicuous for its lack of written contracts.
Lupsha's study of corruption helps us incorporate in measurable ways the element of
illegality that had been missing in more traditional models of TNCs.
Increasingly research findings suggest that structural forms adopted by
various TNC are in response to the specific needs of their particular environments and
entry barriers as well as a reflection of their history and specific competencies.
Stopford and Wells [1972], for example, notes that the progressive change in structure of
TNCs, although somewhat similar, was based on the specific growth and development of each
organization. Just as there are limited number of ways in which a government may be
structurally arranged, there are a finite number of ways in which firms may put together
their component parts. Chandler [1962] first developed a framework to describe the
progression from simple, single business structures to complex, multi-divisional
structures in American businesses. This confirmed and expanded by others including
Stopford [1968], Scott [1970], Channon [1971], Thanheiser [1972], Dyas [1971],Pavan
[1972], and Rumelt [1973]. However, as Schollhammer [1971] points out, there are
ultimately more similarities than difference among the population of TNCs.
How, where and when such structural changes occur is the concern of
entrepreneurship scholars. [Dean, Meyer, and DeCastro, 1992] Dean, et al, argue that
market dynamics create disequilibrium providing opportunities for entrepreneurs.
Constraints on new firm development or incumbent firms taking advantage of new market
opportunities is largely dependent upon the existence and height of entry barriers. Dean,
Meyer, and DeCastro's model of demand determinants of business formation permits
incorporating the expansion of drug demand [enlarging markets], modification of demand
[preference shift in type of drugs by consumers], technological development [both product
and process of INT was refined by changes in distribution networks] availability of new
sources [alliance creation between Mexico and Colombia as well as local traffickers] and
political dynamics [pressures of the War on Drugs]. The model also allows for the
incorporation of culture and values located in earlier work by McRae and Ackerman.
Subsequent literature in the management discipline has further examined
this issue and confirms the existence of a general progression of structural types often
related to firm strategy. Concomitant with this structural progression is evidence that a
congruency or coalignment of structure and strategy play a significant role in performance
[e.g., Schollhammer, 1971; Thorelli 1977;Venkatraman 1989, 1990]. Bartlett and Ghoshal
[1989] point out that the success or failure of structural arrangements frequently depends
on administrative heritage, a collection of forces which include the history of the firm's
development and the personalities of its leaders. These along with environmental forces
shape a strategy which is suited for the needs of each specific firm. Such a form may
emphasize centralized, decentralized or shared decision-making. In any event, the form
adopted must ultimately be one which most closely matches the specific needs of the
specific organization. Ultimately, however, they advocate that management mentality and
strategic posture are of greater importance than structure to the TNC.
The search for the ideal structure, however, continues, with
considerable interest currently given to the concept of the network organization. Raymond
Vernon, whose work on multinational/transnational organizations spans over 30 years, now
includes the concept of networks as a part of his definition of such organization [Vernon
1992:7].
Network Organizations
Recent studies suggest that the emerging organizational structure among
TNCs is that of the network organization [Ghoshal and Bartlett 1990]. Bartlett and Ghoshal
[1989] view three characteristics as critical to the understanding of the structural and
strategic needs of the modern corporation operating in international/multinational
environments. The first dimension, configuration of assets and capabilities measure the
degree to which assets are centralized and related among the operating units. In the
traditional conceptualization, these were seen as decentralized and nationally
self-sufficient as a means of insuring responsiveness to local conditions and forces. As
firms sought to globalize their operations and achieve global standardization and
economies of scale, assets became centrally managed with a resultant loss of flexibility
for local operations. The emerging pattern, however, appears to be toward dispersed assets
which are interdependent and specialized.
A second dimension, that of the role of overseas operations has moved
through a steady progression over time. Initially all that was required was adaptation to
competencies of the parent corporation. However, the new role of operations located
outside the home country has become one of contribution to integrated world-wide
operations based upon the specialized knowledge of each operating unit. Thus, rather than
simply carrying out the plans of the parent, the individual operation is expected to share
its specialized competencies with all other components.
The third dimension is one of development and diffusion of knowledge.
Historically, knowledge was developed at the parent corporation and transferred to the
operating units located in various countries. As decentralized patterns emerged, knowledge
was developed at each operating unit and retained there or in the case of firms seeking to
seek global economies of scale, developed centrally and retained at the center. Such a
pattern, however, lacks the ability to integrate the specific and often complementary
competencies of each national unit. Thus, the emerging trend is toward jointly developed
knowledge shared among the units. Taken as a whole, the pattern described by Bartlett and
Ghoshal has come to be described as the heterarchy [e.g., Hedlund and Rolander 1990], a
definition based in the control mechanisms employed or network organization [e.g., Ghoshal
and Bartlett 1990; Sundaram and Black 1992], and located within the structural
relationships of the components. While this is, in some respects, a departure from more
traditional conceptualizations of organizational relationships with TNCs, it is also
consistent with many including those based in resource allocation [Kogut 1983],
administrative heritage [Bartlett 1986], and cognitive orientation [Perlmutter 1969]. Most
importantly, such arrangements facilitate adaptation by operating units to the local
environments in which they are embedded while retaining a common orientation with the
other units of the TNC/network. Thus, rather than utilizing structure as an integrative
mechanism, each operating unit proceeds with various strategies to adopt structures
congruent with their specific environments, a significant factor in achieving superior
returns [Ghoshal and Nohria 1993].
Rather than relying on hierarchical power, network organizations
allocate power, in part, by the degree of point centrality [Ghoshal and Bartlett 1990].
That is to say, power within the network is partially dependent upon the number of
linkages controlled by any one portion of the network. If the parent continues to control
critical linkages, it will retain centrality. Such would be the case when coordination
continues to be exercised primarily by the parent organization, or it is the
decision-point for resource allocation (i.e., it controls investment decisions).
It is important to remember, however, that members of the network need
not be "owned" by the parent, they need only be bound by contracts, mutual
purpose or advantage to the network. This is in contrast to the more traditional
mechanisms such as vertical integration. Early in our exploration of similarities of
between the INT and TNCs, I attempted to conceptualize the Colombian cocaine cartels as
vertically integrated corporations, but found that many of the necessary components of the
production and transportation chain were not, in fact, owned by the cartels. By
considering all parts of the system as parts of a network with a common purpose of
maximizing the return on illegal narcotics, this factor becomes unimportant.
In the case of the INT networks, component parts are allied in a common
mission, the production and distribution of illegal drugs. The network has expanded to
encompass all phases of the operation, from cocoa leaf gathering or marijuana leaf
processing or manufacturing of barbiturates and amphetamines to retail sales. Because of
their involvement in critical phases of the operation, the Colombian cocaine cartels
managed to maintain a high degree of centrality to the overall network and thus provided
strategic direction. Specialized functions within the network, on the other hand, are
performed by allied organizations which occupy comparatively weaker positions within the
network and whose relationship with the coordinating center (the Colombian cocaine
cartels) is often a function of their criticality to the overall operation. It is not yet
clear that this is the case with Mexico.
In the following section I construct an historical typology for Phase
One of the evolution of the INT in Mexico. It is bound in time between the years
1973-1982. I have chosen the early-mid 1970s as the starting point for Phase One in the
evolution of the INT because until then illegal narcotics trafficking had been essentially
a regional phenomenon, notwithstanding the constant cross-border flow of drugs
[principally marijuana]. The early to mid-1970s also represent a point in time that a coyuntura
or conjuncture of events came together changing the market dynamics of narcotic
consumption and narcotic production heralding the transformation of the INT into a
transnational phenomenon. The market for narcotics in general expanded, both regionally
and internationally during this period. The paroquet scare that dried up marijuana for a
time in Mexico enabled Colombian producers to expand their market share. The closing down
of poppy fields in Turkey made Mexican heroin more attractive and enlarged its market
share. Simultaneously there was a shift in preferences as narco-producers as cocaine
increasingly became the consumers's drug of choice. Additionally the INT market changed in
response to technological changes. The increased use of airplanes to distribute the drugs
increased efficiency and improved security of delivery. For the Colombians at this time,
organizational changes included bringing cocaine chemists/cooks into the organization
depending less and less on small mom and pop type organizations for this skill. In Mexico
we will see the development of irrigation technology as a major innovation in developing
marijuana plantations and achieving economies of scale not possible at a smaller level.
These activities represent both vertical and horizontal mergers in structural adaptation.
The alliance formation between Mexican and Colombian traffickers as the political
environment of the south Florida coast and Caribbean became increasingly risky under
various drug enforcement campaigns represents new sources of market product and
distribution. And lastly, despite pressures on the Mexican government by the US to stop
drug trafficking, the political environment remained hospitable to the creation of newalliances and increased opportunities for profit.
Phase One of INT evolution is characterized by the end of turf wars
between smaller traffickers. Loose coalitions are built accompanied by informal and
occasional cooperation among various crime families on specific projects. Lupsha situates
Phase One of narcotrafficking in Mexico at a much earlier stage, before 1960 to
approximately 1965.(5) Lupsha is concerned, however, with
examining patterns and history of drug trafficking related to corruption in Mexico. For
the purposes of this paper I am concerned with the evolution of INT from a regional
phenomenon to a transnational phenomenon. In this transformational process I attempt to
identify which strategies the Mexican narcotraficantes and the Mexican government employ
and their effect on state-civil society relationships. In what ways did the Mexican
narcotraficantes adjust organizational structures to meet either the challenges of
the Mexican government or to improve alliance formation with political elites. How did
this either foster the leap to transnationalization and/or weaken Mexican political and
economic institutions?
Before beginning our study, we must define the concept of the Mexican
state. The Mexican political model cannot be full appreciated until one comes to grips
with what Blum terms "..Mexico's extraordinarily dense institutional context".(6) Roderic Ai Camp identifies Mexico as a semiauthoritarian
political system unique for its blend of liberalism and authoritarianism by which it
permits greater access to the decision-making process and by which decision-makers change
frequently than traditional authoritarian regimes.(7) A
second feature of the Mexican political structure is corporatism, a mechanism by which
groups relate to the state and by which the state relates to group interests and demands,
the essence of which is reciprocity. Central to this feature for our purposes, however, is
how the Mexican state has used this feature to strengthen various groups by absorbing them
into the government-sponsored political party, the Institutional Revolutionary Party (Partido
Revolucionario Institucional or the PRI). Comparative studies have shown that while
this is an effective means of interest aggregation and articulation, it is also an
effective means to coopt opposition movements. State dominance is a third structural
feature of the Mexican political system. The prestige of state institutions over private
institutions has served to attract some of the finest minds to careers in public service
as well as concentrating resources in the Districto Federal or Federal District. The locus
of power within the state vis a vis local and provincial governments has engendered
dependency and resentment over allocation of resources. Moreover, the dominance of the PRI
which has functioned, at least operatively, as the Mexican state does not mean the PRI has
an institutional structure and/or presence in the more rural areas. In even the most dusty
and isolated of small towns, one will find a military garrison. Here the Mexican military
acts as an agent of the state, an important variable as we examine the impact of the INT
on Mexican institutions. Presidentialism or prescidencialismo , or concentration
of authority in the executive branch is a third feature of Mexico's political system. This
locus of power usually comes at the cost of decreased power in the legislature and
judicial branches but radiates outward at the horizontal level through the organization of
the PRI. These structural features of the Mexican political model are complimented by the
dual political heritage of modernity and traditionalism and two populations, rural and
urban. The contradictory blend of political values such as supporting increased political
participation while simultaneously supporting suppression of political dissent has
produced contradictory policy goals.
Phase One: Who's on First? 1973-1982
Marijuana had been the drug of choice for the counter-culture movement
dominating the middle-1960s to early 1970s in the United States.(8)
During 1970 heroin use and addiction in the United States was considered to have reached
epidemic proportions. Poppies, from which heroin is refined, were grown in Mexico but the
quality of heroin produced in Southeast Asia was preferred to the "tar-like"
Mexican Brown heroin. By 1972-1973 preferences in taste among drug users changed
simultaneously as the Turkey Opium ban went into effect and the French Connection was
broken. Gomeros [gum makers as poppy growers were called] had made a modest
living for border addicts in the 1950s and 1960s dissolved into well established opium
families in Mexico.(9) At this point aerial spraying was
not available to the central Mexican government, so most eradication had to be done by
hand using the military and the state police.
Prior to the early/mid 1970s illegal narcotics trafficking in Mexico
was dominated by local chieftains or as Lupsha notes "the rhythm of the La
Plaza"(10) or the time when a village was controlled
by whomever dominated the trade. Unlike Colombia during this period when drugs were just
another inventory item in a large underground smuggling enterprise that cris-crossed
regions in Colombia and posed no threat to the Colombian state, the owners of the Mexican
plaza, or those in charge of the day to day operations of the village, obtained their
franchise from the local jefes meaning the police commandante, mayor
military or local oligarch.(11) Those operating la
plaza in Mexico do not appear to have been as thoroughly networked among their
kinship groups as Colombia was during Phase One. Institutional settings for corruption may
limit itself to a pervasive but poorly organized bribery.(12)
Nadelman notes that the change from one type of corruption such as pervasive poorly
organized to pervasive organized corruption can be understood in the shifting
organizational structures.
Influencing the ability of the narcotraficante to maintain his
franchise was the structure of the PRI, Mexico's single political party. The downward
vertical reach of the PRI extended from the Districto Federale (DF) through state
governors to local municipal governments. This suggests narcotrafficking was not
the relatively ad hoc isolated regional event it was during a similar period in Colombia.
The rapid expansion and demise of less well organized and connected traffickers during
this time occurred in both states accompanied by increased intervention of the State in
response to external international pressure. The shift from a plaza type organization to
one dominated by fewer actors resulted in vertical and horizontal mergers, a movement from
market competition to market protection, co-optation of some by raising the entry barriers
for the smaller narco-entrepreneur rather than eliminating them.(13)
In the following section I identify and examine three different organizational types which
survived phase one of the INT evolution in Mexico.
Blood, Kin and Familial Entrepreneurs: The Herrera Nevares
Family
Foremost among the opium families which emerged during this period was
the Herrera Nevares family.(14) Located in the Sierra
Madre Mountains the Herrera family had developed several laboratories and an extensive
transportation system that stood them in good stead to become heroin suppliers to East
Coast addicts when the French Connection ended. Thus they had an existing production
infrastructure in place when the market expanded. The Herreras had a comparative
organizational advantage over other traffickers: numbers and political power. Through
intermarriage the Herrera clan grew to approximately 2,000 blood relations with an
additional 3000 associative relations. Family members occupied positions up and down the
entire drug production chain in a "farm to arm" organization stretching from
their home base of Durango to Chicago. By 1978 conservative DEA estimates were that the
Herreras were grossing $60 million per year.(15)
The Herreras were very involved community members, binding their
community to them not only through marriage but by reinvesting their profits into
legitimate businesses in the community. Hospitals and municipalities benefitted from the
clan's philanthropy as differing members of the clan were rewarded with positions or at
least badges of the Durango State Judicial Police. DEA reports that among all the Herreras
almost every position in law enforcement have been occupied by a Herrera at one time or
another.(16) Compared to shootouts elsewhere the Herreras
were an ocean of calm.
The Herrera clan represents a fully integrated organizational system
with a competitive advantage over other trafficking organizations. Bound by familial ties
with a shared purpose strengthened by familial loyalty, the trust quotient among member of
the family corporation was very high requiring less of a paper trail for authorities. It
also required lower levels of sanctions and coercions with high levels of concentration of
power in a single leader. The organization's primary goal was to take control of the
market disequilibrium that occurred in the mid-1970s meeting the demand, change in
preferences, technological innovation, and adaptation to a changing political and
regulatory environment.
Plaza Overstretch: Pedro Aviles Pérez and Pablo Acosta
Pedro Aviles Pérez emerged from Sinaloa in the late 1960s as a major
transporter of more "recreational drugs" like marijuana which he moved in
ten-ton loads. Second generation Sinaloan traffickers such as Rafael Caro Quintero and
Ernesto Fonseca-Carillo would claim they learned all they knew about narcotrafficking
while serving in the Aviles organization. Killed in a shootout with the MFJP, it is
believed Aviles was set up by Fonseca, the gang's treasurer. After Aviles Peréz' death
the gang splintered. Rafael Caro Quintero, Aviles' foreman in Chihuahua began acquiring
marijuana and poppy plantations. An introduction to powerful politicians and law
enforcement officers in the state of Jalisco and its capital, Guadalajara was brokered by
Miguel Angel Félix Gallardo, an emerging capo who had spent time in Sinaloa wearing the
badge of a Sinaloan State Police trooper and serving as body guard to Leopold Sanchez
Celis, governor of Sinaloa.
The dusty town of Ojinaga in northwestern Mexico had been a
coordinating center for smuggling all kinds of contraband with heroin trafficking
providing a fresh infusion of cash in the post-World War II period. Control of la plaza
was punctuated by disagreements over girlfriends, what inventories to carry and customer
loyalty. Like most border towns, Ojinaga housed an army garrison. La Plaza, in civil terms
referred to police authority and jurisdiction. In criminal terms, it referred to whomever
had the concession to run narcotics.(17) Pablo Acosta's
return from the United States to his birthplace in 1976 occurred when la plaza was in a
state of uncertainty due to feuding factions among the local narcotraficantes. Manuel
Carrasco, owner of la plaza had abandoned it leaving local traffickers without guidance or
knowledge of whom was to be paid tribute. The situation became increasingly tense as,
despite a growing market demand, most traffickers moved only enough narcotics to keep some
customers and pay their bills. Interestingly while most of the traffickers knew some
"arrangement with the authorities" was necessary, no one was clear which
authority and what that arrangement should be. During the succession of failed jefes
in la plaza, Pablo Acosta carefully built his own drug organization, cultivating
people he gradually identified as being important to him including the local authorities.
Acosta's chain of payments is instructive both for the involvement of
Mexican officials but also for the changes occurring within Acosta's organization.
Initially payments to the federal police were made through intermediaries who made sure
the monies got to Mexico City. Later the DF created a federal police headquarters in
Ojinaga and the commandante collected the tribute personally and passed the money
up the chain. Payments to the Mexican military were through a former Ojinaga chief of
police who served as the military's liaison between the military and the narcotraficante,
Acosta. In return Acosta was able to purchase credentials from an array of government
agencies as well as being provided advance notice of impending raids. Although recent
revelations suggest an increasing involvement of the Mexican military, evidence available
for this time period suggests a limited institutional corruption at the regional level.
By the end of Phase One Pablo Acosta's drug organization was growing at
an incredible rate even as the continuing shoot-outs between warring factions continued
drawing more attention from the local authorities and driving the cost of protection
higher. Chief among the traffickers brokering deals with the Colombians was the Pablo
Acosta operation in Ojinaga whose treasurer was Ernesto Fonseca-Carillo, uncle to the up
and coming young trafficker, Amado Carillo-Fuentes, later to become a major narco-mafioso
with the appellation, Lord of the Skies, for introducing the use of jumbo jets to
distribute narcotics. Fonseca-Carillo is generally believed to have been the broker
between the Colombians and Acosta, as well as the Felix-Gallardo organization on occasion.
Fonseca, treasurer to the Acosta organization, also provided enforcement services to other
lesser drug trafficking gangs. Fonseca sent his nephew, Amado, to the Ojinaga plaza to
work with Acosta. It was here Carillo-Fuentes experienced in great detail the
organizational problems of a group that grows too fast and takes too many risks. His
arrest in 1985 proved pivotal to his decision to "invest with politicians" not
merely bribe them.(18)
By 1983 Acosta and his organization was considered a major player in
the INT.
Rise of an Outsider: Alberto Sicilia Falcon
Alberto Sicilia Falcon was the third major trafficker to emerge during
this period and is notable for being the object of a central tactical unit formed by DEA
agents especially to find and imprison him Falcon. Although Falcon was arrested and
imprisoned in 1975, his reign is notable for both his willingness to form associations
with established Mexican traffickers like the Herrera family as well as the Aviles
organization. He was also among the first of the Mexican traffickers to make contacts in
South America for shipping cocaine in large quantities. This organizational shift in his
organization was carried on by members of his organization such as Cochi Loco who became
the drug lord of Mazatlán and made a name for himself in the Guadalajara cartel. An up
and coming chemist by the name of Juan Matta Ballesteros who had helped establish sources
in South America became a leader, until his capture, in the international cocaine trade.
After Sicilia Falcon was arrested, Ballesteros became partners with Miguel Angel Felix
Gallardo, a Culiacán heroin trafficker who aspired to become a cocaine dealer. The Felix
Gallardo family became major players in INT during the 1980s and 1990s as the heads of the
cartels restructured and shared skilled employees, devised mechanisms to settle
differences and, on occasion, sharing risks. The shake-out among traffickers during this
period left those most fit and whose political connections ran deep, to continue and
consolidate. Traffickers hardened during the boom years of the 1970s such as Ernesto
Fonseca, Felix Gallardo, Caro Quintero and the second generation of the Herrera family had
organized themselves and penetrated the institutions of their local area. Survival for
those traffickers in the old time bandido holder of the plaza mode, such as Pedro
Aviles and Pablo Acosta, survival became more difficult as the dialectic changes between
the INT and the Mexican state continued.
Convergence
By 1982 Guadalajara had become the international home for the Mexican
traffickers as they shuttled between their regional strongholds and the convenience of
international communications and international banking offered by the capital city of the
state of Jalisco. Turf battles became fewer and limited to newer entrants to the business
as the traffickers realized it was to their greater interest to stop fighting each other,
share resources, and develop a mutual means of conflict resolution within the group. Later
described as the Mexican Federation, these initial attempts represent what Pier Luigi
Sacco in his discussion of the organized crime families of Italy the initial phases of the
establishment of an ethical code as a management tool.(19)
Sacco notes that as one attempts to address an illegal activity as a business, a central
problem becomes one of contract compliance and enforcement, or contractual incompleteness.
Contractual incompleteness occurs for several reasons. First is the absence of legal
redress to enforce compliance as members of an illegal enterprise move beyond familial
ties. Second unifying through organizational restructuring is a chief strategy for
narrowing individual opportunism within ranks of the illegal organizations. Devising
organizational structures to settle bargaining problems lessens the level of and potential
for continued conflict secondary to the contractual incompleteness and incomplete
information.
Another impetus for the traffickers' structural adjustment toward
federation on the part of the traffickers was the establishment of the South Florida Task
Force to disrupt the cocaine supply link from Colombia to Florida. Although imprisoned at
this time, Sicilia Falcon's initial collaboration with the Colombian cocaine cartels laid
the organizational framework for a greater level of collaboration between the Mexican and
Colombian traffickers. This proved fortuitous as the organizational efficiencies developed
in both country's trafficking organizations and enabled the Colombians to tranship cocaine
using the well established smuggling routes of the Mexicans.
Another advantage to forming a federative organization was to raise the
entry barriers to others wanting to compete in the market place. As the naroctraficantes'
business grew not only did it become difficult for them to meet the demands of a changing
market, but their convergence raised the entry barriers to aspiring narcoentrepreneurs.
The increase in volume and activity made the traffickers more vulnerable to security
concerns and increased the amounts of payoffs necessary to conduct their business. The
federative structure enabled them to not only share risks but to share the introduction of
new technology such as the airplane for distribution and streamlining labs for production,
and innovative irrigation methods to transform the Mexican desert into a thriving
agribusiness for growing marijuana.(20) The exponential
growth of trafficking and production required another layer of expertise, particularly in
the financial area. Money launderers increased in number as did accountants to manage the
narco-profits. While the addition of yet another layer of players could increase the
traffickers' exposure, shared enforcement through coercion and incentives also reduced the
organization's exposure. It was much easier to identify a leak if there were limited
places from which the leak could have occurred.
The Mexican State
Although the Federal Security Directorate (Direccíon Federal De
Seguridad-DFS) was formed in the late 1940s, Mexico's version of an internal CIA
functioned primarily as an anti-guerrilla force during the 1960s. With the exception of
one person all of the eight directors graduated from the prestigious Colegio Militar,
forming bonds that would become more evident as the DFS became more intimately connected
with the drug elite. The strengthening of regional strongholds by narcotraficantes
presented a challenge to the state's authority and capacity to enforce the law.
Additionally as Mexico became the chief supplier of marijuana and heroin, external
pressure from the United States intensified. Mexico sought and received bilateral support
from the United States in the form of helicopters, aerial photography to plot fields,
specialized aircraft for herbicide spraying and training for Mexican pilots. The three
pronged approach of the Government of Mexico (GOM) included the following: 1) eradication,
2) interdiction of transiting drugs, 3) disruption of traffickers networks and
organizations.(21) The results were impressive. Between
1975-1978, the Mexican military is credited with destroying some 6,000 hectares of
marijuana and an annual average of 11,000 hectares of opium. The Mexican government
regained jurisdiction over its territory until 1983 when it was revealed Mexico was again
experiencing high levels of drug production and trafficking. How could this have happened
from such a promising eradication policy? Most of the literature on the Mexican military
note the exceptional degree to which it has, unlike almost every other Latin American
nation, remained subordinate to civilian control. Contributing factors to explain Mexican
military subordination to civilian dominance include the following: 1) Mexico's
authoritarian government, 2) lack of interference by Mexican civilian leaders in strictly
military matters, 3) the military's role in civic action programs, 4) monitoring elections
and 5) preserving internal order.(22) Three of these
factors shed light on the military's role in drug trafficking. The first concerns the
authoritarian Mexican state built around the dominance of the Institutional Revolutionary
Party (PRI). Inasmuch as the PRI is operatively the Mexican state, Mexican military
officers have not had to choose which political party to support. While Fryer and others
argue that this has enabled the military to remain detached from politics, I will argue in
the conclusion of this paper that such a statement ignores the political, economic and
social linkages acquired by attachment to a single dominant political party in a patronage
state. The second factor important for our analysis is the military's role in civic action
programs. Perhaps more than any other state agency the Mexican military's role in civic
action programs, especially in areas where the PRI is not functional, allows it to act as
an agent of the PRI. Civic action programs such as rural electrical housing projects,
flood prevention, veterinary programs, medical and health programs while strengthening
support for the government and ensuring political stability also enables it to penetrate
Mexican society in a way the government and the PRI have not yet accomplished. Preserving
internal order, the third factor, includes administering and working with the Mexican
police forces in anti-narcotics programs. Fryer notes that the Mexican police force
resembles a pyramidal organization with those at the bottom receiving low wages
supplemented by la mordida to those at the top of the pyramid who live luxurious
lives.(23) It is difficult to envisage two agencies
engaged in anti-narcotics programs together and one, the military, not being affected by
the corrupt behavior of the police. The work of Shannon, Lupsha, Poppa and others suggest
this was not the case at all during this period. The Mexican military guarded the
marijuana plantations in Chihuahua while the MFJP guarded the marijuana plantations in
Hermosillo, Sonora for Rafael Caro Quintero and others.(24)
An informant for the DEA who had worked for traffickers confirms Lupsha's thesis that
there were high levels of official corruption during this period as violence permeated
Sinaloa. DFS commandantes went to Fonseca, Miguel Angel Felix Gallardo, the Caros and the
Quinteros and advised them to limit the violence and shift their base of operations to the
U.S. and move their operations to Guadalajara where DFS agents built a sort of
narco-industrial complex.
- DFS officers introduced the traffickers to people of influence in Guadalajara, found them houses, and assigned them DFS bodyguards.
- The traffickers provided
muscle,
- DFS leaders contributed brains, coordination, insulation from other government agencies
- and firepower, in the form of thousands of smuggled automatic weapons, computers, protection and organized them.(25)
This suggests that the DFS in conjunction with the military operated as
agents of the state to reduce chaos in the INT marketplace and forestall instability in
rural areas. The Mexican military's presence in these small rural areas was to pacify the
countryside in a nation where the state had penetrated in a limited way and in which there
was no institutional presence of the single political party, the PRI. Drawing upon
strategic management literature, we can say that states will not tolerate chaos in the
marketplace operating with dysfunctional and wasteful behavior as the smugglers exhibited
as they warred and competed with each other. The work of Dyas and Thanheiser examining the
interventions of the French and German governments provide an interesting analog, despite
the illegality of the INT.(26) Dyas notes that when the
French state considered the market to be out of balance it would step in forcing less able
firms to merge or drop out of the market decreasing chaos and restoring balance in the
marketplace. In Germany Thanheiser found this regulatory role was played by the large
banks in Germany, operating in a form of corporate capitalism through the use of
cross-cutting cleavages inasmuch as at least one seat on the company's board of directors
was reserved for a member of the bank. I suggest that for the Mexican military, and to a
lesser extent the DFS, functioned as a regulator of the smuggling business in Mexico
during Phase One and sent the message to the feuding pistoleros that regulating
their behavior was preferable to arresting them. At this stage it is clear in the Mexican
and Colombian cases that neither thought the smuggling enterprise which had drugs as just
one more inventory item would come to dominate smuggling generating profits none dreamed
of.
Operation Condor/Trizo was hailed as a great success and eradication
figures seemed to support its success. Behind this joint effort between the US and Mexico,
however, were numerous atrocities and human rights abuses at the hands of Carlos Aguilar
Garza of the Mexican Attorney General's office and Comandante Jaime Alcalá of
the Mexican Federal Judicial Police.(27) The silence of
DEA agents about these and other brutalities derived from the Mansfield Amendment of 1975
which made it illegal for US agents to be in a foreign country at the scene of an arrest
and DEA agents had been given the "freedom of the skies" from Mexico in exchange
for tangible support during Operation Condor. Lupsha suggests that the success of
Operation Condor obscures the "embeddedness" of associational connections
between the narcotraficantes and political institutions.
Miguel Nazar Haro was, in 1977, the director of the DFS and resigned
under pressure in 1982 after being indicted for running an international stolen car ring
in Los Angeles. The DFS/narcotraficante connections continued under his
successor, Antonio Zorrilla who signed DFS and Gobernacíon Agent Identification
cards for members of the Guadalajara cartel. Other forms of associational embeddedness is
reflected in the appointment of Arturo Duarzo Moreno as the police chief of the Mexico
City police force despite having been accused by a Florida grand jury of conspiring to
ship heroin into the US. Moreover the Mexican Federal Judicial Police (MFJP) was revealed
to be as corrupt as other Mexican Law Enforcement agencies. In 1976 presidential
front-runner Mario Moya Palencia's name was pulled from consideration after it was
discovered Moya had frequented Sicilia Falcon's Lear Jet several times as well was
presented Falcon with the official Gobernacíon Special Agent identification he
carried.(28) Despite urges from his supporters to run
independently, Moya Palencia exercised a discretion and loyalty to the PRI and was
rewarded with an appointment to Mexico's Tourist Development Fund and later Mexico's
ambassador to the United Nations. Manuel Ibarra Herrera was now made head of the Mexican
Federal Judicial Police. Subsequent campaigns against traffickers rarely netted "big
fish" and in the case of the trial of trafficker Gilberto Ontiveros, his associate
Carlos de Herrera identified Ibarra Herrera as the recipient of payoffs from the Chihuahua
marijuana plantations. Jose Lopez Portillo announced in 1977 that the presence of the
American government would be sharply reduced in Mexico. Lopez Portillo's decision was
publicly assumed to be in response to a resurgent nationalism secondary to disputes with
the US over natural-gas prices. DEA agents suspicions that the decision had more to do
with corruption than gas prices may well be founded. More interesting is how the INT
changed and presented more pressures for the incoming president, Lopez Portillo.
The success of the eradication campaign had an economic effect as well
in a country suffering behind the boom and bust years of the 1970s. Mexico's oil
production had plummeted from 191.5 million barrels in 1973 to 177.3 million barrels,
equivalent to the output of 1921.(29) As oil production
fell, domestic demand dramatically increased with Mexico's cost for oil imports rising
from $124 million in 1972 to $382 in 1974. Borrowing to pay for imports caused the foreign
debt to go from $9.5 billion in 1974 to $20 billion in 1976. Right before
outgoingPresident Luis Echeverria left office, he devalued the peso. Although needed it
was met with anger and hostility(30) as it increased
Mexico's already high debt service of 30% of export earnings.(31)
As Mexico's economy continued its downward spiral between 1981-82, President Lopez
Portillo nationalized Mexico's banks in an attempt to stem the flow of capital flight.
Four point four billion dollars in capital had left Mexico in 1979 and by 1982 capital
flight was averaging $13.2 billion.(32) "Subsequent
investigations estimated the loss to the end of 1984 between $33 billion and $60 billion
or roughly 50% of Mexico's total funds from export receipts and foreign loans during that
period."(33) Lopez Portillo castigated the local
bankers, who protested they functioned as mere clerks converting pesos to dollars at the
request of their clients, without whom such an outflow would not have been possible. Once
more the peso was devalued, this time at 30% with still little or not stemming of capital
flight in anticipations of further devaluations. Mexican finance minister, Jesus Silva
Herzog, went to Washington to see what could be salvaged. Meanwhile the permanent
anti-narcotics campaign suffered from "neglect, lack of guidance, a dearth of
leadership."(34)
Conclusion
In this paper I have sketched out the first phase of a historical
chronology of the INT in Mexico using network analysis to identify major conjunctural
shifts in time and organization of the INT. The INT is treated as a transnational
corporation, so I am particularly interested in tracking its organizational evolution. My
findings suggests that during Phase one of the INT in Mexico, it emerged as part of an
already existent organizational structure which really promoted differing levels of
entrepreneurship combined with a shifting level of corruption consonant with the shifting
organizational changes of the INT. As shown, in the beginning corruption of a passive,
pervasive, and unorganized type suggests that corruption may be rampant but one cannot
assume that everyone is corrupt. Simultaneously there appears to have even developing a
systematic type of corruption characterized by a hierarchical payoff system with multiple
of "payoff cones" that, in the case of the Acosta organization overlapped with
payoffs being paid for a time to the local head of the military and local head of police.(35) Nadelman argues the case for corruption in Mexico being
unique and I disagree and suggest that correlating the behavior of agents of the state
[whether the agent be local PRI bosses or the Mexican military, the DFS, or the MFJP] with
its actions as a regulator of the marketplace stimulating strategies among the players
resulted in organizational changes that almost required an adjustment in the corruptive
process. The INT grew from local druglords to a more complex and sophisticated
corporations in response to market changes. It is also clear that as the business grew
those druglords who could not keep pace with either the enormous influx of monies or the
technological innovation had been winnowed from the scene by 1982 leaving only those who
had survived this turbulent period in control and in the process of reorganizing.
This study is part of a larger project comparing the effects of the INT
on economic and legal institutions of the Colombian and Mexican states. Two other phases
have been identified and I am in the process of identifying a possible fourth phase. Phase
two focuses on what I call the Golden Years of the INT as the differing members of the
emerging cartels or federations enter the global economy. It is during this phase that the
INT begins behaving in the way of TNCs engaging in what Stopford and Strange consider to
be behaving like nations engaging in diplomacy, brokered agreements, bargaining and
brokering. While it is clear from the Colombian example that this is the case, the Mexican
case awaits further analysis.
1. PBS Frontline: Murder, Money & Mexico: The Rise and Fall of
the Salinas Brothers.
Http://www.pbs.org.wbh/pages/frontline/shows/mexico
2. Patricia B. McRae and David J. Ackerman, "The Illegal
Narcotics Trade (INT) as TNC: Implications for the TNC/Government Interface" Paper
presented at the American Political Science Association, Washington, DC 1993.
3. Peter A. Lupsha, "Drug lords and Narco-corruption: The
Players Change but the Game Continues." Crime, Law and Social Change Vol.
16, Kluwer Academic Publishers: Netherlands, 1991, 41-58.
4. Peter Lupsha, "Organized Crime in the United States", Organized
Crime: Cross-Cultural Studies, ed. Robert Kelly, New Jersey: Rowman and Littlefield,
1986. Although Lupsha's primary focus is on the US, its application to the study was found
appropriate.
5. Lupsha, "Drug Lords..."np.
6. Roberto E. Blum, "The Weight of the Past" Journal of
Democracy 8.4 (1997) 28-42.
7. Roderic Ai Camp, Politics in Mexico, New York: Oxford
Press, 1996. 10-18.
8. William O. Walker III, Drug Control in the Americas,
Revised Edition, Albuquerque: University of New Mexico Press, 1989, 189.
9. Elaine Shannon, Desperados: Latin Drug Lords, US Lawmen and
the War America Can't Win, New York: Viking Press, 1988. See Chapter 3 for a thorough
treatment of this time period.
10. Ibid
11. For an excellent treatment of this phenomenon, see Terrence E.
Poppa, Drug Lord: The Life and Death of a Mexican Kingpin, New York: Books, 1990.
12. Ethan A. Nadelmann, Cops Across Borders: The
Internationalization of US Criminal Law Enforcement, Pennsylvania: The Pennsylvania
University Press, 1993.
13. For a broader discussion of competitive strategies and entry
barriers, see M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries
and Competitors, New York: The Free Press, 1980. M.E. Porter, "The Contributions
of Industrial Organization to Strategic Management" Academy of Management Review,
1981 Vol. 6, No. 4, 609-620. M.E. Porter, Competitive Advantage: Creating and
Sustaining Superior Performance, New York: The Free Press, 1985.
14. For an in-depth examination of the Herrera organization see
Peter A. Lupsha and Kip Schlegle, "The Political Economy of Drug Trafficking: The
Herrera Organization" (Mexico and the US)". Working Paper #2, The Latin American
Institute, University of New Mexico, 1980.
15. Shannon, 58-59.
16. Ibid.
17. Poppa, 41-50.
18. "Mexico On The Edge: The Drug Cartel Threat" Albuquerque
Journal News 1997.
Http://www.abqjournal.com/news/drugs/
19. Pier Luigi Sacco's discussion of Michele Polo "Internal
Cohesion and Competition" in The Economics of Organised Crime, eds. Gianluca
Fiorentini and Sam Peltzman, England: Cambridge University Press, 1997, 109-115.
20. Shannon, 14. One of DEA agent Camarena's informants showed him
the beginning of marijuana plantation structures with 220 acres of marijuana 200 miles
south of Guadalajara as early as May 1982.
21. Lamond Tullis, Unintended Consequences: Illegal Drug
Policies in Nine Countries, Boulder: Lynne Reinner Publishers, 1995.
22. Wesley A. Fryer, "Mexican Security" WEB article 1993
http://www.wtvi.com/wesley/mexicansecurity.html
23. Ibid.
24. Shannon, 121.
25. Ibid., 196-197.
26. Gareth P. Dyas, The Strategy and Structure of French
Industrial Enterprise, Ph.D. Dissertation, Harvard University Graduate School of
Business Administration, 1972. Heinz T. Thanheiser, The Strategy and Structure of
German Industrial Enterprise, Ph.D. dissertation, Harvard University Graduate School
of Business Administration, 1972.
27. Shannon, 64-70.
28. Lupsha, Ibid.
29. Donald J. Mabry and Robert J. Shafer, Neighbors, Mexico and
the United States: Wetbacks and Oil, Mississippi State, Ms: Historical Text Archive,
1997.
30. Ibid.
31. Jonathan Aronson, Money and Power: Banks and the World
Monetary System, Beverly Hills: Sage, 1979, 174.
32. R.T. Naylor, Hot Money and the Politics of Debt,
Montreal: Black Rose Books, 1994, 31.
33. Ibid., 62.
34. Richard B. Craig, "The Illicit Drug Traffic and US-Latin
American Relations" Washington Quarterly, 1985, 122.
35. Nadelman, 169-178.
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