|Drug war related deaths by state, 2007-2009.
Image Source: Sean Connely et. al. “Mexico Under Siege.” Los Angles Times interactive feature.
This week The Washington Post published an investigative report on the role U.S. intelligence agencies have played in Mexico’s ongoing campaign against the drug cartels. This is their introduction to the topic:
For the past seven years, Mexico and the United States have put aside their tension-filled history on security matters to forge an unparalleled alliance against Mexico’s drug cartels, one based on sharing sensitive intelligence, U.S. training and joint operational planning.
But now, much of that hard-earned cooperation may be in jeopardy.
The December inauguration of President Enrique Peña Nieto brought the nationalistic Institutional Revolutionary Party (PRI) back to power after 13 years, and with it a whiff of resentment over the deep U.S. involvement in Mexico’s fight against narco-traffickers.
The new administration has shifted priorities away from the U.S.-backed strategy of arresting kingpins, which sparked an unprecedented level of violence among the cartels, and toward an emphasis on prevention and keeping Mexico’s streets safe and calm, Mexican authorities said.
Some U.S. officials fear the coming of an unofficial truce with cartel leaders. The Mexicans see it otherwise. “The objective of fighting organized crime is not in conflict with achieving peace,” said Eduardo Medina Mora, Mexico’s ambassador to the United States.
Interviews with more than four dozen current and former U.S. and Mexican diplomats, law enforcement agents, military officers and intelligence officials — most of whom agreed to speak about sensitive matters only on condition of anonymity — paint the most detailed public portrait to date of how the two countries grew so close after so many years of distance and distrust, and what is at stake should the alliance be scaled back. 
I recommend that you read the whole thing. The lack of attention paid to events in Mexico by most media outlets is deplorable. 60,000 men and women have died and 25,000 more have gone missing over the last six years. American drug consumption has driven this violence; American officials orchestrated the campaigns designed to stop it. Like it or not, America is inextricably tied to Mexico’s home grown terror. This report is as good of an introduction to the role played by the U.S. government in the fight against the cartels as you will find anywhere else.
I would like to focus on one sentence hidden in the body of the report. Shortly after the implementation of the Merida Initiative in 2008, the Mexican intelligence agency CISEN discovered that various cartels were employing American trained, ex-special forces. Understandably alarmed, American intelligence agencies floated a proposal to cut the power of the cartels:
“Anxious to counterattack, the CIA proposed electronically emptying the bank accounts of drug kingpins, but was turned down by the Treasury Department and the White House, which feared unleashing chaos in the banking system.”
This one sentence betrays Washington’s distorted foreign policy priorities. The CIA proposal had several clear benefits: drug lords forced to pull their investments would have less incentive to stay in the game, cartels would be robbed of operating funds, and most importantly of all, the proposal could be implemented with minimal American involvement.  There would be no need for more boots on the ground. The drawbacks were also clear: folks on Wall Street would lose money. The White House took Wall Street’s side in the debate, and favored a policy designed to kill or capture those same “high value targets” whose bank accounts were not to be touched. (Readers curious about the cost of these operations — in terms of man-power as well as money — will find plenty of details in the last few pages of the Washington Post report.)
|The source of flawed reasoning.
Image Source: Lynn Stuart Parrimore. “Wall Street Power Player.” Salon. 3 April 2013.
The reasons the Bush administration gave for rejecting the CIA proposal are reminiscent of Obama administration’s justifications for not prosecuting mega-bank HSBC. In 2012 a Senate Permanent Subcommittee on Investigations report revealed that the bank – one of the world’s largest – had lent money to Middle Eastern financial institutions that were closely linked with terrorist groups and, you guessed it, laundered money into the hands of Mexican drug cartels. The total exchange between the bank and the cartels was an estimated $881,000,000.  The Obama administration’s Assistant Attorney General explained why the Justice Department chose not to prosecute anyone for these offenses:
“If you prosecute one of the largest banks in the world, do you risk that people will lose jobs, other financial institutions and other parties will leave the bank, and there will be some kind of event in the world economy?” 
For several decades business strategy has been beholden to the dangerous idea of maximizing share holder value.  Those setting America’s grand strategy have fallen under the same spell.
 Dana Priest. “U.S. Role at a Crossroads in Mexico’s Intelligence War on the Cartels.” Washington Post. 27 April 2013.
 The Mexicans seemed to have reach a similar conclusion:
“The Mexican government has increasingly been conceptualizing the DTOs as for-profit corporations. Consequently, its strategy, and U.S. efforts to support it, has begun to focus more attention on disrupting the criminal proceeds used to finance DTOs’ operations.67 In August 2010, the Mexican government imposed limits on the amount of U.S. dollars that individuals can exchange or deposit each month. In October 2012, the Mexican Congress approved an anti- money laundering law establishing a financial crimes unit within the Attorney General’s office (PGR), subjecting industries vulnerable to money laundering to new reporting requirements, and creating new criminal offenses for money laundering.
Source: Clare Ribando Seelke and Kristin M. Finklea. “U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond.” Congressional Research Service. 14 January 2013.
The Mexicans did this unilaterally; one questions how effective these policies will be without similar efforts to crack down on drug lord deposits abroad.
 Matt Taibbi offers a colorful account of these events in “Gangster Bankers: Too Big to Fail.” Rolling Stone. 14 February 2013. A more reasoned and mature critique of the DoJ is found in Sarah Coxin. “What’s in a Fine?” The American Interest. 5 February 2013. The executive summary of the Senate report can be found here.
 Nils Patley. “HSBC: Banking to a Different Set of Rules Reaps Dividends and Stability.” The Guardian.4 March 2013.
 Fore more of the history and impact of this idea, see Steve Denning.” The Dumbest Idea in the World: Maximizing Shareholder Value.” Forbes. 28 November 2012; Karen Ho. Liquidated: An Ethnography of Wall Street. (Durham: Duke University Press). 2009. ch 3 & 4, pp. 122-212.