The Red Line
Episode 92. Narco-Economics: Inside the Mexican Drug Trade
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In this episode, we delve into the complex and lucrative world of the Mexican cartel drug trade and explore the economic factors that drive it. From the production and transportation of drugs to the money laundering schemes used to hide profits, we examine the various stages of the drug trade and the key players involved. We also discuss the impact of the drug trade on the Mexican economy and society, as well as the efforts being made to combat this illicit industry. Is there a way to blunt the rise of drugs like Fentanyl, or are we continuing down a path that simply empowers the cartels? We ask our panel of experts.
Part 1: Passenger or Pilot? (3:52)
Jorge Castañeda begins our discussion by noting the almost complete absence of current Mexican President Andrés Manuel López Obrador from multilateral international forums and his lack of overseas diplomatic travel, except to the United States, as indicative of the current dynamic in Mexican geopolitics.
Castañeda discusses the make up of the Mexican economy, with low level incomes and domestically focused, rather than globally, industries. We discuss the relative paucity of geopolitical influence and manoeuvring in Central America and the Caribbean, including leveraging its oil reserves to strengthen relations. We also discuss the impact on NAFTA on the Mexican economy.
We talk about the state-owned oil company Pemex' role in the Mexican economy, including providing a significant percentage of state revenue, and its lack of efficiency and investment in recent years, with its maximum output nearly two decades in the past.
We discuss why Mexico has not followed Canada and the US in joining NATO and the evolution, or lack thereof, of Mexico's foreign policy in the decades since joining NAFTA.
We turn to the War on Drugs era, starting in 2006, and the complete failure on a policy and outcome level, with violence significantly worse during this era and increasing imports of narcotics into the US during this time.
The arrest of former Secretary of Defence, Salvador Cienfuegos Zepeda, in 2019 has had significant negative effects on the bilateral relation, including the effective ceasing of cooperation and information exchange with the US Drug Enforcement Agency (DEA).
Part 2: Selling Suffering (37:47)
Vanda Felbab-Brown takes us through the evolution of the Mexican drug trade, with a movement towards micro-scale production and a splintering of large established cartels driven by decapitation of leadership, which has led to increasing violence both in Mexico and across Central and South America.
The vast majority of drugs enter international markets via ports. We talk about why the drug trade continues to use alternative methods of trafficking and how those methods have evolved, including in response to events like the war in Ukraine.
We also talk about the rise of synthetic drugs, including fentanyl, and the pressure the US has placed on Mexico and other players such as China in targeting suppliers. We discuss the brute force-style approach the US is attempting to use on Mexico and its efficacy.
Part 3: Disregarding Demand (59:09)
Scott Mistler-Ferguson unpacks the definition of cartel and if it still applies in the rapidly evolving drug trade, given the increasing specialisation in the market today.
We discuss the militarisation of the counter-narco tactics by states like Mexico and Brazil, and explain why these tactics, including targeting the leadership of cartels, have not worked. A prime example was the capture of the leader of the Sinaloa Cartel, Joaquín "El Chapo" Guzmán, and the subsequent splintering of the Cartel into rival factions leading to an explosion of violence in Mexico.
We talk about the role of fentanyl in the drug trade and the differing perceptions of its production between the US and Mexico. We then break down why synthetic drugs are becoming more prevalent in the market.
We conclude Part 3 with an assessment on the overall success of the War on Drugs era and the worsening outcomes for the citizens of Mexico
Part 4: Singing the Wrong Song (1:19:41)
Steven Dudley identifies the large distance between those who sell drugs in the US and the so-called cartels suppling those drugs, noting the similarity to global business across legitimate industries.
We discuss how Mexico has become a middle manager, if not wholesaler, of fentanyl and other synesthetic drugs following into the US.
We compare the lack of incentives to going after large money flow industries like the drug trade, alongside the complexity of an ever-evolving market. We then consider a consolidation approach and its potential for reducing negative outcomes in Mexico.
We conclude with a hypothetical about how the US would be best placed to deal with all the issues that are generated by the drug trade, including citizen security, and how to resource your efforts for maximum effect.
Global Distinguished Professor Of Politics & Latin American & Caribbean Studies at New York University
Former Foreign Minister of Mexico (2000-2003)
Author of several books on Mexico and Mexican-US relations
Senior Fellow - Foreign Policy, Strobe Talbott Center for Security, Strategy, and Technology at Brookings Institute
She also serves as Director - Initiative on Nonstate Armed Actors at Brookings
Felbab-Brown is an expert on international and internal conflicts and nontraditional security threats, including insurgency, organized crime, urban violence, and illicit economies.
She has published a number of works on black market economies and the drug trade.
Notable investigative researcher with a focus on organised crime, particularly in Central and South America
He has published several works on the drug trade in Mexico and the wider international drug trafficking industry, mainly for Insight Crime.
Co-founder and Co-director of Insight Crime, a research and analysis organisation focused on organised crime and corruption in Latin America and the Caribbean
He is also a Senior Research Fellow at the American University’s Center for Latin American and Latino Studies in Washington, DC
Formerly, Dudley was the Bureau Chief of the Miami Herald in the Andean Region, and has reported from Haiti, Brazil, Nicaragua, Cuba, and many other locations
He is the author of MS13: The Making of America's Most Notorious Gang
The Red Line's Bulgarian Reading List:
We’ve compiled a list of further reading to better understand the geopolitics of Bulgaria and its geopolitical position within the Balkans.
The Dope: The Real History of the Mexican Drug Trade
Benjamin T. Smith
Kleptopia: How Dirty Money Is Conquering the World
Fentanyl, Inc: How Rogue Chemists Are Creating the Deadliest Wave of the Opioid Epidemic
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This episode is dedicated to our Patreon member Mary E Doolen, James Lawrence, Matthew Zaleski, Pat, and Bettina Baur.