Monday, June 19, 2017

Criminal Corporations, Energy, and Militarization in the Age of Trump

By Guadalupe Correa-Cabrera

The rapid growth of organized crime in Mexico and the government’s response to it have driven an unprecedented rise in violence and impelled major structural economic changes, including the recent passage of energy reform. Guadalupe Correa-Cabrera’s new book, Los Zetas Inc.
Criminal Corporations, Energy, and Civil War in Mexico, asserts that these phenomena are a direct and intended result of the emergence 
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of the brutal Zetas criminal organization and the corporate business model they have advanced in Mexico. Since the Zetas share some characteristics with legal transnational businesses that operate in the energy and private security industries, she also compares this criminal corporation with ExxonMobil, Halliburton, and Blackwater (renamed "Academi," and now a Constellis company).

Combining vivid interview commentary with in-depth analysis of organized crime as a transnational and corporate phenomenon, this book proposes a new theoretical framework for understanding the emerging face, new structure, and economic implications of organized crime in Mexico. Arguing that the armed conflict between criminal corporations (like the Zetas) and the Mexican state resembles a civil war, Correa-Cabrera identifies key beneficiaries of this war, including arms-producing companies, the international banking system, the US border economy, the US border security/military-industrial complex, and corporate capital, especially international oil and gas companies.

Dr. Guadalupe Correa-Cabrera is an Associate Professor at the University of Texas Rio Grande Valley (Brownsville campus) and a Fellow at the Woodrow Wilson International Center for Scholars. We asked her to comment on the effects of President Trump’s border policy on what she identifies as the beneficiaries of organized crime in Mexico, mainly the US border security/military-industrial complex and corporations.

Criminal Corporations, Militarization, and Energy in the Age of Trump

Mexico’s so-called drug war can be characterized, in some way, as a modern war relating to the control of energy production. In the present context, it is possible to identify groups that seem to have benefited the most from a novel criminal scheme (directly or indirectly) introduced by the Zetas organization, the Mexican government’s reaction to it, and the resulting brutality. The primary (or potential) winners of this armed conflict appear to be “corporate actors in the energy sector, transnational financial companies, private security firms (including private prison companies), and the US border-security/military-industrial complex.”[1]

Moreover, Mexico’s violent spiral coincides with strengthened US border security and has had positive effects on the US border economy. Official numbers at the national level show that crime rates in US border counties are relatively low and have decreased in the past few years due to enhanced border enforcement. Similarly, forced displacements in Mexico have modified migration patterns from this country to the United States. Irregular migration flows from Mexico have declined and “a greater number of relatively more skilled and wealthier Mexicans have been legally emigrating from afflicted border areas in Mexico to the United States. Overall, the effects of the war on Mexico-US migration dynamics seem to be positive for the US economy.”

The main losers of Mexico’s new criminal model and severe armed conflict essentially seem to be the country’s most vulnerable people—those who did not have the resources to flee or defend themselves against extortion, kidnappings, and other forms of brutality carried out by criminal groups, paramilitaries, and government forces—and the national oil industry, represented by the once oil monopoly Petróleos Mexicanos (PEMEX). Their spaces are being (or will be) occupied by private companies, many of them transnational and often very powerful. In the recent years, “[f]orced displacements, massive disappearances, and militarization in key parts of the country have emptied strategic lands and left them available for future investments, mainly in the energy sector.”[2]

It is worth noting that disappearances, forced displacements, and depreciation of land values in key areas of Mexico have not halted investment in energy and commercial infrastructure. Energy contractors have not curbed their activities; “the expansion of large investment projects continues despite the high risk posed by organized crime and the large number of disappearances. It is also interesting to observe that while Los Zetas and groups following the same criminal paramilitary model have affected small and medium entrepreneurs [related to] the hydrocarbon industry as well as Pemex, they have hardly touched transnational interests.”

President Donald Trump being sworn in on January 20, 2017 at the U.S. Capitol building in Washington, D.C. 
In January of the present year, Donald J. Trump was sworn in as the 45th president of the United States. His electoral campaign was unique in the sense that it put Mexico, for the first time in history, at the center of the US electoral discourse and foreign policy agenda. Trump asserted that Mexican immigrants in the United States are, “in many cases, criminals, drug dealers, rapists, etc.” Therefore, he proposed to build a “big, beautiful, impenetrable” wall, bolster border enforcement significantly, and arrest and deport vast numbers of undocumented immigrants. Trump has pledged to get Mexico to pay for this wall—potentially, he has said, through tariffs. Indeed, the White House communicated that a 20 percent tax on imports from Mexico was being considered as a form of payment for the construction of the proposed southern border wall.

Imposing those border taxes would violate the North American Free Trade Agreement (NAFTA) as it is known today. It is also worth mentioning that Trump “ran a campaign somewhat based on NAFTA.” In his quest to “Make America Great Again” and for putting “America First,” Trump pledged in a statement to negotiate "tough and fair" trade agreements with the aim of further generating jobs for the American people. Under this new context, as soon as Trump assumed his role as President of the United States, he signed an order abandoning the Trans-Pacific Partnership: the largest regional trade accord in history that once involved the United States and 11 other Pacific Rim nations and represented roughly forty percent of the world’s economic output. Following this same logic, the new US President has set his sights on renegotiating the North American Free Trade Agreement.

During his first week in office, Trump signed an executive order authorizing the construction of a formidable 1,900-mile-long border wall to replace the sketchy fence that now runs along a fraction of the US-Mexico border. He also signed executive orders increasing the number of border patrol agents by 5,000, tripling resources for immigration officers, and targeting so-called “sanctuary cities” for immigrants. If implemented as planned (and that remains to be seen), Trump’s measures and confrontational discourse might transform US-Mexico trade and border security relations. Some have even claimed that this new reality could affect anti-narcotics and anti-human smuggling cooperation. The most recent actions and statements coming from the White House have already plunged the two countries into their worst diplomatic crisis in decades.

There is still uncertainty about the magnitude and duration of this crisis, and about the future approach of Trump’s administration in regards to US-Mexico relations, particularly in trade and border security cooperation. Renegotiations on NAFTA, on immigration, and on security at the border might transform the bilateral relation, but at this point, we cannot anticipate to what extent. What seems clearer is that trends related to the militarization of security on both sides of the US-Mexico border, insecurity in Mexico, and unconventional security strategies to fight organized crime in the US' southern neighbor will be maintained. There is no strong reason to believe the opposite. It also seems difficult to completely disintegrate NAFTA due to the very intricate trade relations that have already been woven among the three countries involved, relevant actors, and, particularly, important entrepreneurial groups in the United States and Mexico.

Mexican troops during a gun battle in Michoacán, 2007.
Mexico's drug war claims nearly 50,000 lives each year.
Mexico’s war on drugs (or militarization of security strategy) and the security situation in the country do not seem to have changed substantially in the past few years—not even with a change in administration—and will most probably stay relatively the same in the nearest future. Mexican federal forces continue performing unconventional tasks to assure public safety and combat transnational organized crime. Ironically, criminal networks have not been effectively weakened nor totally dismantled, notwithstanding the involvement of Mexico’s federal forces (the army, the navy, and the federal police), the substantial amount of resources that have been spent, international collaboration to fight organized crime, and the beheading of the major criminal syndicates in the country through what is commonly known as a “kingpin strategy.”[3] Despite the disappointing outcomes of the security strategy in Mexico and anti-narcotics collaboration with the United States, one cannot foresee a major shift in the current policy actions and bilateral cooperation. Earlier this year, Donald Trump even spoke of sending troops south of the border to help Mexico take care of its “bad hombres” (possibly referring to members of transnational criminal groups or drug trafficking organizations).

It is worthwhile noting that the militarization of security in Mexico and along the US southern border has essentially benefited US arms-producing companies and private security contractors. Such businesses have “profited from the so-called drug war through its border-security/military-industrial complex.” Mexico’s recent violent armed conflict “has become a big business for private actors who provide security services to the government, entrepreneurs, and even criminal groups.”

One key actor that has visibly benefited from Mexico’s security policies and anti-narcotics cooperation with the Unites States is the transnational corporate sector. As Dawn Paley observes in Drug War Capitalism (AK Press, 2014), this sector has experienced “improved conditions for investment thanks to reforms as well as an increasingly paramilitarized and repressive social context that allows a freer hand to pursue . . . controversial mega projects.” These policies and reforms, according to Paley, were approved in the framework of the Mérida Initiative, which was designed to disrupt drug trafficking “while transforming Mexico in three key ways: introducing a new legal system and promoting structural reforms, increasing levels of militarization, and as a by-product of the latter, encouraging the formation of paramilitary groups” (Paley 2014, 211). According to this view, the main aim of such policies is “the creation of more welcoming investment policies and legal regulations” (Paley 2014, 118).
Mexico is scheduled to receive $1.6 billion
in equipment and strategic support
from the United States through the Mérida Initiative

Following this logic, one could argue—and this is subject to further discussion—that the militarization of security as a response to the presence of groups like the Zetas has “more to do with protecting transnational economic interests—mainly in the energy sector—than with fighting organized crime. In several regions of Mexico the militarization of security seems to have contributed to further natural resource exploitation by multinational companies. Hence extractive industries—many of them based in the United States—are the big winners in this new security strategy supported by Mexico’s northern neighbor.”

Indeed, many of the corporate beneficiaries of Mexico’s war are headquartered in the United States, and some are in Canada as well (e.g., mining companies). “The process through which disappearances, forced displacements, and paramilitarism have cheapened lands and benefited the transnational corporate sector has had a very positive impact on the economy of Mexico’s northern neighbor[s],” particularly the United States. Taking this context into consideration, there are not enough reasons to believe that economic cooperation—in extractive industries and security matters—will end soon or decrease substantially. Despite Trump’s proposals for renegotiating or even cancelling NAFTA, there seem to be powerful interest groups in the region (both US and Canadian) that would have enough reasons to oppose and stop such executive decisions.

We should also remember that the “war in Mexico coincides with the process of achieving US/North American energy independence and with the so-called shale gas revolution. These developments will essentially benefit extractive industries, especially the energy sector in the United States.” Therefore, Mexico’s security crisis—which facilitated, to some extent, the passage of key reforms and contributed to the displacement of people from major hydrocarbon-rich territories—might help the United States achieve some of its immediate economic goals. After the most violent years of the war, key debates in Mexico began to focus on energy reform and the benefits that it would bring to the North American region through greater economic cooperation.

The idea of energy independence does not only apply to the United States but extends to North America (including Mexico and Canada). Some have even seen the possibility of building a new hemispheric energy coalition. Chris Faulkner, chief executive of the Dallas-based Breitling Energy Corporation, for example, proposed the creation of a “North American energy confederation,” with the aim of achieving “North American energy independence,” to become “the second largest oil producing coalition in the world next to OPEC” (Schneider 2015, par. 47). To achieve this goal, Mexico would be a key actor.[4]

In conclusion, wall or no wall, with or without NAFTA—or even with a NAFTA 2.0—transnational energy businesses and security contractors, mainly in the United States, will continue to profit from a new criminal model inspired and extended by the Zetas, from Mexico’s continued militarization of its security strategy and from close US-Mexico collaboration to fight the “bad hombres” and transnational organized crime. By identifying interest groups, as well as the winners and losers from past and proposed security and border policies, and by “following the money,” one could predict that criminal paramilitaries, the US energy sector, and private security corporations will continue to flourish during the Era of Trump.

[1] Fragments from Los Zetas Inc. (forthcoming August 2017).

[2] Los Zetas Inc. includes a number of maps of these strategic regions that support this argument.

[3] The kingpin strategy was developed by the Drug Enforcement Administration (DEA) in the early 1990s to target and eliminate, by capture or killing, the command-and-control elements or key leaders of major drug trafficking organizations.

[4] Los Zetas Inc., p. 233.

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