Arranged PR events aside, the
systemic faults and likely failure modes of the New Panama Canal are an example
of the combined impacts of Amigocracy, Kleptocracy, and Bureaucratic Oligarchy.
Our experience is that this trio forms a common pattern. Find one, expect to find the
The purist Amigocracy I have
seen in the Americas is Chile where the elites appear to exhibit but one skill
– that of asking for, or providing access to, a favor. All else is left to
underlings. Deprived of an aristocratic or ‘old boy’ status they would be
…The idea of an “amigocracy” [faces] two problems, one of a
fundamental nature, the other of a factual: it only works if all are friends, and it only works at a
relatively small scale. Since friendship, albeit selective, is not necessarily
exclusive, it is possible that within a small group of people everybody is
everybody’s friend or at least a friend of a friend, but this means that, if we
are talking about the polity, the visions of the common good of the people
involved must be the same or, if different, compatible, which is the case, for
example, if the common good is, precisely, the “running of the res publica in a
good manner” (this explains the proximity with republicanism). It also means
that, in practical terms, an “amigocracy” can only be an effective form of
government if the number of people involved is limited, either because only a
small section of the population participates in the polity or because the
society in question is small.
With respect to the first, “amigocracy” understood as “rule by a group
of friends” or “rule by a friendly network” is, when it is limited in number,
i.e. when the group of friends does not coincide with the dèmos, a form of aristocracy. Any form of aristocracy is
fundamentally anti-democratic, not so much because it is government by an elite
–that in itself can be the outcome of democratic procedure-, but because the
real political question at stake here, the question who decides who is an
aristocrat is answered by the aristoi
themselves: aristocracy is a form of self-appointed government, and, when
continued over time, cooptation by definition, and this is what any dèmos rightly fears when they perceive
friendly relations between those in power. To be sure, there are inevitable
elements of co-optation in representative government, too: the leading groups
within political parties, for example, are also largely self-appointed. But in
that case, the dèmos can at least
have the idea that such elites can be sent home by means of elections.
With respect to the second, it is not accidental that friendship was
regarded as an important political concept within the context of relatively
small and surveyable city-states like Athens or the Roman republic, and, later,
Italian and other city-republics. Supra-national polities such as the European
Union sometimes appear as amigocracies when the leaders of the governments of
the member states get along very well, but while this may be effective at the
level of the polity itself, the problem is immediately perceptible: these
government leaders represent democratic polities, the dèmoi of which are being disempowered by being excluded from this
friendship. Amigocracy and democracy are compatible only if the group of
friends is the dèmos. To the extent
to which friendship is ‘an affair of the few’, it is understandable that ‘some
forms of democratic sentiment are naturally hostile to it.’25
Nothing is harder to beat that an old boys’ network, and since the old boys
started out like college or university friends, it is impossible to become an
old boy. If, in large democratic polities, friendship is looked upon with
hostility by the dèmos, in
authoritarian polities it is looked upon with suspicion by those in power,
because a group of friends can be –and historically has often been- the
beginning of a conspiracy or rebellion, ‘a pocket of potential resistance.’26
This is why both democratic and totalitarian regimes in our age tend to make
friendship [a] private, not a public affair. It this connection then, it is or
becomes political when it crosses the border between the private and the public
There is an obvious tension between the idea of networks-of-friends
and the formal character of the juridico-political order. Old friends’ networks
are essentially anti-democratic and anti-republican, yet probably essential for
a working economic and political society under liberal-democratic conditions.
Moreover, if politics takes place, first and foremost, in the spheres of the
polity –the state, the government- and of political society –the part of civil
society oriented towards the polity-, then it is clear that both offer, like in
fact any societal sphere, opportunities for individuals to develop relations of
friendship… Friendship is a spontaneous process: one is struck positively by
someone else’s opinions, observations, ideas, habits, or moral stance, and one
spontaneously develops sympathetic feelings. Becoming friends with someone [is]
often [a] liberating event, and the place of politics, like the work-place, is
a place in which the relief of finding somebody who relates in the same manner
to other people or events can be very great: at last one finds somebody who
perceives things the same way. At the same time –as in the work-place- business
goes on, too, and a relation of friendship [is] at odds with a professional and
neutral approach. Only if all people
involved would be friends, things would go smoothly and, perhaps, optimally…
Amigocracy is difficult to
separate from Kleptocracy as the temptation to the elites is huge and the risk
is small to nil. Two items illustrate:
Private note to colleague,Wed
that the intersection of kleptocracy and amigocracy is Latin America, I don’t
see corruption doing anything rash against its interests. I regard corruption
as a societal tax in the countries that it permeates. Not specifically holding
the Latinos poorly; all the “Cans” worldwide named after Trashcanistan live
well and wide at the top. One reason that they are happier with the Chinese is
that the PRC will be their protector in international tribunals, they and the
DPRK will provide security assets and thugs to protect, and be their private
banker beyond US reach.
Mexican side of US/EU supply chains are corrupted and/or paying coercion monies
to stay alive and in business. The US/EU OEMs and Tier ones are still unaware
of, or willfully ignoring, the risks in their tiers. Defense, energy and mining
understand the cost and demands of security, but few others outside that fence.
Oligarchy killed and skinned democracy in Mexico
decades ago but is fond of wearing that skinned hide in any public facing event,
domestic and foreign. Peña Nieto is merely the head upon the hide.
This extends past the PRI to include the
Amigocracy network that runs business and guides politicians. Others might call
it a Kleptocracy.
We choose to accept it because we have far more
pressing issues elsewhere. There is no significant US political capital
available to pursue the goals and necessary changes you posit.
While there are severe threats to Mexican
nationals and companies, criminal elements have comparatively restrained their
predations on foreign firms and permitted them to function without significant
(A flag is up on the recent attacks on newly
arrived US shale oil-related suppliers in Tamaulipas that are being tested for
the extortion payments that their Mexican peers pay to remain operational.)
US/EU OEMs are looking for stable, skilled, low
cost (lower cost) labor, especially now that Mexico has been included in the
Backshoring “US local” category along with Canada. If foreign business gets
that, along with its lessened logistics costs, they will tolerate the charade.
Mexico is one of many states that pretend to be
free and democratic and we pretend to agree. All that I read of your work tells
me that you are attuned to ground truth but are hoping for something more.
Iron Law of Oligarchy
The iron law of oligarchy as political
theory was proposed by the German sociologist Robert Michels who claimed that
rule by an elite, or oligarchy, is inevitable as an "iron law" within
any democratic organization as part of the "tactical and technical
necessities" of organization.
At the time Michels
formulated his Law, he was an anarcho-syndicalist. He later gave up his
socialist convictions to become an important ideologue of fascist Benito
It is an axiom at our shop that "items at the edge of technology" are often unrecognizable or unidentifiable by inspectors unfamiliar with the technology. Two characteristics most contributed to a lack of recognition, robbing the viewer of visual cues as to function:
Miniaturization - a reduction of size and form.
Integration (often a handmaiden of miniaturization) - the combination of functions of multiple items into a single item, itself often miniaturized.
Defenders too often fail to recognize miniaturization and integration as crucial components in risk evaluation. The emergence of Micro-Electro-Mechanical Systems (MEMS) that exhibit both miniaturization and functional integration are already complicating timely identification of risky items. (Also see Berkeley Sensor & Actuator Center and search the domain for "mems".)
We expects fluid conditions as defenders expand their screening focus beyond larger, more recognizable items to include a proliferating class of smaller, cheaper items:
Unexpected, innovative and non-traditional methods will proliferate, finding broad applicability.
Targets will have changing vulnerabilities, technological abilities and associated risks.
Attackers' tactics will evolve in methods and operational activities from internal technological "lift" and as a response to changes by their targets.
Short of nation state confrontations, conventional operations will draw less interest as adversaries will look to escape retaliation and the cost of investments required to underwrite an overt effort.
Unless we design with the asymmetrical adversary in mind, such adversaries will continue to find ways to bypass our defenses and exploit our vulnerabilities. Such asymmetric operations will have common characteristics:
Small-scale high-impact operations.
Operations performed with greater efficiency and effectiveness, both to minimize footprint and discovery and to conserve organizational resources, in order to achieve maximum results.
Rise in operations taken to address ideological causes and this applies equally to fringe Muslim fundamentalists and single-issue groups such as Earth Liberation Front (ELF).
Creating a generalized risk assessment hierarchy
Done for the US Defense Logistics Agency (DLA),a pilot Miniaturization Threat Impact (MTI) system capable of classifying threats from miniaturization and integration was developed.
Risk characteristics spanning easily known toinsufficiently known tootherwise unknown items were captured in a generalized risk assessment tree (from least to greatest risk):
Primary function is identifiable from life experience and general training.
Primary function is identifiable from specific industry/technology experience.
Dual use/unintended use is ascertainable from specialized training and added knowledge-base.
Miniaturization (function no longer evident) becomes difficult to defeat.
Functional integration (embedding multiple functions by virtue of miniaturization) is difficult to defeat.
The relative ease or difficulty of identification scaled appropriately (from easy to most difficult):
IDENTIFICATION WITH EASE
Generalists were good at #1, generally poor at all others.
Specialists were good at #1 and #2, generally poor at all others.
#3 much harder as it requires understanding of function(s) and the ability to transfer those characteristics to new objects, especially for a "good enough" capacity.
Highly skilled and frequently retrained specialists might address #4 on an irregular basis.
Miniaturization and Integration #5 were effectively undefeatable in the short to medium term.
IDENTIFICATION MOST DIFFICULT
Capabilities difficult to automate
The author's ability to identify dual-use capability (can be used for both civil and military use) and "unintended use" capability (can be used for unintended or unimagined applications) proved difficult to transfer to existing staff without extensive retraining. Existing staff were eitherGeneralists good at #1, or modest Specialists good at #1 and #2. Staff were, in effect, being asked to perform a role for which they had no prior experience.
Implications going forward
The glide slope to the desktop that brings increasingly greater capacity in smaller form factors at lower cost to the lay user orasymmetrical attackerwill continue. Capability and/or lethalitywill rise even as components shrink.
Google Glass as an example in transition
"Wearables" (properly named the wearable computing market) has moved beyond early adopter status, but its three segments have varying degrees of acceptance:
Complex accessories - "operate partially independent of any other device, but fully operate when connected with IP-capable devices".
smart accessories - similar to complex accessories but allow users to add third-party applications.
smart wearables (notably Google Glass) - "function with full autonomy, independent of any other device except to access the Internet".
While it is now said to be a question of "when" and not "if" the wearables segment extends into the enterprise, aggressive miniaturization and integration continues to drive social unease - with more women than men in the negative. Google might benefit from flooding trusted segments with subsidized Glass, e.g., physicians, essential technicians, police and military. From Pew:
[P]ublic attitudes towards ubiquitous
wearable or implanted computing devices are the most positive, or more
accurately, the least negative. Although 53% of Americans think it would
be a bad thing if “most people wear implants or other devices that
constantly show them information about the world around them,” just over
one third (37%) think this would be a change for the better
The glide slope to the desktop will continue to accelerate as Google has already received a patent for smart contact lenses with built-in cameras and other sensors such as infrared. The technical, police and military implications are staggering.
Today's Google Glass will by then have ceased to be an issue as people look carefully at your eyes to see if you are reality augmented. I would expect a certain class of detectors to emerge to detect wearers of such contacts. And they will be mounted in contact lens, or embedded in the wearer's biologic eyes.
Though gaining notoriety for
their brutality, Mexico's organized criminal groups are rational actors who
respond to market dynamics. If not forced into a showdown or a loss of face,
their behavior can be influenced.
narrative in the Mexican press is one of
irrationality, of monsters on the loose, but reality is the exact opposite.
Yes, their methods are harsh and designed to compel compliance, but their
intense violence and cruelty is driven by objectives that can, with expert
guidance, be used to positively influence the threat they pose.
These groups are competing to
prosper in a fragmenting and hypercompetitive market that has seen its primary
market (drugs) face competitive pressure and so force entry into new markets
(corporate and personal extortion, kidnapping, robbery and oil theft).
The leadership of these
rational actors are actively trying to reduce both their own risk and their
‘costs of doing business' while maximizing profit. Properly guided, potential
targets (companies and personnel) can take advantage of this ongoing feature of
criminal planning and activity.
Mexican criminals mimic African warlords
Analysis of African "Blood
Diamond" warlord behavior is directly applicable to the 'commercial responses' of
Mexican criminal enterprises, i.e., similar operating drivers, methods,
ferocity and absence of restraint. Both cartels and warlords are attempting to
extract wealth from areas under their control while repelling competitors. In
Africa it is minerals extraction. In Mexico it was transit rights to service
the US drug market but has now diversified into wholesale extortion and other
Individuals are goal-oriented
and adaptive, and will attempt to reach their goals by what they see as the
easiest and least costly or most efficient means. (Rationality does not have to
be a universally agreed-upon mindset.)...
"Blood diamonds" [is]
a special case [of] resource-based means of civil war. To the degree that any
primary extraction process can be sequestered by a powerful minority, the
opportunity for conflict, extortion, and interruption rises. Coupling this
concept with the fact that most wars today occur within nations rather than
between them, the risk analysis of investing firms should be reevaluated...
Hoeffler found that conflicts occur when rebels respond rationally to
market opportunities, much as entrepreneurs and investors do. Civil wars that
are so often blamed on chaotic, irrational ethnic, religious and communal feuds
now have a unifying thread:
"Rebels need to meet
a payroll without actually producing anything, so they need to
prey on an economic activity that won't collapse under the weight of the
Natural resources is a good one. The same characteristics that make a commodity
readily taxable -- that it's rooted to a spot, it can't move -- makes it
readily lootable, too."...
Negotiation short of warfare
between opponents in both regions is extremely difficult as there is no defined 'court system' to adjudicate grievances and no external entity to enforce
compliance to agreements. The result is that the conflict groups take the least
risky path of immediately attempting to eliminate their opponents in a winner-take-all
effort. Again from 2008:
While most interstate wars end
in a negotiated settlement, the majority of intrastate conflicts end with the
extermination, expulsion, or complete surrender of one side. Civil wars with a
communitarian or ethnic dimension are especially difficult to negotiate and the
most likely to result in protracted strife, and closely mapping to the African
experience, often go on for years and sometimes decades. Szayna and Tellis note
that the reason is straightforward:
the differences (genocide, forced transfer of population, partition/secession,
the differences (hegemonic control, arbitration by third party, federalization,
Because the trust that would
allow for management of differences is absent once conflict starts, it is
understandable that elimination of the differences becomes the preferred choice
and that many ethnic and communitarian conflicts end up in prolonged and bloody
strife, sometimes mixed in with attempts at genocide and complete elimination
of the other side:
Criminal actions that appear
irrational to the public have very sound operational and profit-driven motives.
Mexico’s three converging threat trends
Three trends are converging to broaden
exposure of personnel and commercial assets to criminal predation:
1)Territorial incursions and
expulsions among cartels: Increasingly splintered criminal
groups violently attempting territorial incursions and expulsions of their
competitors. Such attempts are typically extremely violent.
2)Revenue expansion beyond
drugs: Established expansion
of cartel focus to personal and corporate extortion, and commercial
penetrations and takeovers.
3)Lessened reticence to
target foreign nationals and firms:
Increasing effectiveness of formerly covert US-Mexican military cooperation is
lessening cartel sensitivity to antagonizing the US.
struggles and splintering of violent groups:
President Calderon's effort to dismember
the largest cartels by focusing upon their leadership ranks has backfired.
Deprived of senior leadership, second tier members have broken away and formed
their own criminal groups.
These increasingly splintered criminal
groups are violently contesting both their former groups and other new groups,
each attempting to penetrate competitors' territory and expel the former
owners. In some cases this has resulted in many entities fighting over smaller
territories with increasing violence. The recent arson attack against the
Casino Royale in Monterrey is being cited as one such extortion effort, but in
early stages it is difficult to distinguish extortion from expulsion.
Revenue expansion beyond drugs:
The post 11 September
tightening of US borders increased cartel costs of moving narcotics to market.
While significant quantities are continue to get through, as evidenced by no
increase in US street prices, greater volumes have to be sent north to maintain
that flow. Cartels soon discovered their own citizens as consumers and
commenced a now vibrant narcotics addiction inside Mexico. A cheaper street
price, yes, but lower costs with much less risk.
The next significant leap was
institutionalized extortion of businesses large and small as well as
individuals. Largely unpublicized until now, this 'tax' upon Mexican commerce
has reached epidemic proportions up and down Mexican supply chains. Thousands
upon thousands of businesses have closed while the better financed have
relocated the businesses as well as their owners to the US. Cartel responses to
this last step have been to scour social media sites to look for relatives
still in Mexico that can be kidnapped for ransom against the fleeing owners.
Criminal enterprises have long
penetrated the petroleum sector and have now moved into penetrating commercial
firms and their suppliers to the point of taking over entire supply chains or
taking revenue from large portions of the chain.
These more recent revenue streams have
exhaustively targeted Mexican nationals but as the Mexican target set declines
due to predation, closure and emigration, criminal groups will turn to foreign
assets and those entities that have immobile fixed investments in country.
Lessened reticence to target US and foreign nationals and firms:
We have frequently commented on US drone
overflights of Mexican soil, including the March 16 observation, "Drones in
various formats have been over Mexico for some time. What is new is the open
admission coupled with deep penetration, multi-sensor efforts. Vetted sharing
is also up," it is clear that such missions are accelerating along a wide
spectrum of communications, photographic, radar and signature intelligence
This increasingly rich intelligence stream
is being put to operational use by vetted, isolated silos of Mexican assets
operating with US intelligence, even launching from US soil. A US military
officer said, "The military is trying to take what it did in Afghanistan and do
the same in Mexico."
The upshot of this cooperation will
inevitably be increasing direct criminal activity against foreign firms,
including US nationals and firms, which criminal groups have heretofore largely
sought to avoid lest they draw US retaliation. Once formerly 'retaliatory'
actions become common, these criminal groups will have less to lose in reacting
to US efforts and confronting foreign commercial assets.
recommendations for their commercial targets:
The security situation in Mexico, and
notably Monterrey, is deteriorating at an accelerating pace as threats worsen
country-wide. Risks long keenly felt by Mexican nationals are becoming evident
to foreign nationals and firms.
Criminal behavior must be influenced early,
during target selection. This cannot be accomplished without a systematic
approach to protecting potential targets. Cost and risk rise dramatically once
your personnel and assets have been selected as targets. The worst days of
Colombia saw security costs reaching as high as fifty percent of operating
Commercial firms do not understand their three
options and if, how and when to employ them:
·Deflect (move hostile intent to
·Defer (delay hostile efforts)
·Defend (interdict an incipient
The successful approach to
defend, defer, or deflect an attacker is almost all proactive process with a
modest amount of strategically placed hardware that has a specific value to the
process - one variant of which is to prevent, deter, prepare, detect, respond,
recover, and mitigate.
Remember that these rational
criminal actors are actively trying to reduce both their own risk and their
‘costs of doing business’ while maximizing profit. As Defend is rarely a
response option against such heavily armed opponents, commercial firms gravitate
to Deflect and Defer.
Properly guided, potential
targets (enterprises and personnel) can take advantage of this ongoing feature
of criminal planning and activity to make their protection more effective and
the targets they present less attractive than other potential targets under
surveillance by these criminal groups.
Surveillance for target identification and
selection, for example, has become more costly to criminal groups as their
competitors ambush one another’s surveillance team or track them back to their
operating bases. Targets seen as predictable and less risky quickly rise up the
Systematic improvements in protective
options need to be undertaken before it is too late to take advantage of
effective and relatively inexpensive options.
To avoid this fate, firms need to move
quickly and deploy a systematic program. A well designed plan could be decisive
in helping the company steer clear of the considerable losses, pain and
reputation damage that await its peers in Mexico.
First version of Zeta Region was originally
released at Frontera List, Wed, 6 Apr 2011 12:53:58 -0400
implications of Grann's A Murder Foretold* and Cirino's Latin America's
Lawless Areas and Failed States are part and parcel of why I pay attention to
the Zetas**, Zetas with gangs, Zetas in the Isthmus region, etc. Was in Guat
decades ago when the military intelligence and commando units were "draining
the sea" by day and the guerrillas were terrorizing those still alive by night.
The only worse mass horrors were Africa. (The Indios to this day are still
fodder for abuse, forced relocation and predation at will.)
unlike their criminal competitors
Zetas are unlike other criminal groups of interest; they think strategically in
a manner that I do not see in other cartels. A group of such vision is not one
to overlook the corrupt, cooperative partner at hand. Guatemala is already a
near-narcostate and almost went that way in a formal sense in a recent
Zetas are also positioned adjacent to, and in, Guatemala with the assets and
skills to exploit a cooperative partnership with Guatemalan establishment
are solidifying an arc from the Texas plazas south thru PEMEX and its illegal
oil bunkering bonanza, through Chiapas and into Alta Verapaz department of
Guatemala and its routes east to the Pan Am Highway and the Caribbean. (The
Zetas are sufficiently adroit to have also commenced an out-of-area op to stake
a position on the west coast (Colima, et al) to have access to inbound Chinese
weapons, meth precursors and other contraband.)
Zetas are forming cooperative partnerships with Latin gangs in the Central
American/Isthmus corridor, going so far as to train the more aggressive members
of what have long been described as hyperviolent gangs.
submit that the Zetas want nothing less than to solidify their control along
the Central American corridor.
control would enable the Zetas to achieve a chokehold on the Isthmus drug
pipeline, currently thought to be moving the largest percentage of cocaine into
Mexico and then onto the US and Canada.
Zetas will be able to control supply, either monopolizing and/or taxing
transport to other buyers.
is not unreasonable to suspect that other cartel groups understand the Zetas'
direction and looking at variations of planning a countermove, planning a shift
in allegiance or wondering how much time that they have given the changes
competing cartels achieve a heretofore absent operational grasp, or external
intervention backstops the remaining functional Guatemalan and Mexican assets,
I see little on the horizon to slow the Zetas' advance.
*Grann does not mention any specific cartel. What Grann's story brought out in
prose more gracious than mine was the corrupt nature of the Guatemalan
oligarchy in and out of government. Their willingness to buy and be bought is
touching in its completeness.
** The use of the term, Zetas, specifically refers to the airmobile commandos
that the US trained, that later went rogue, and became known as the Zetas. The
Zetas shifted from Praetorian Guard to cartel, appearing to lose none
of their operational focus in the bargain. In
contrast, other cartels increasingly draft younger unskilled recruits that
indiscriminately spray rounds. Bowden's sicario, among many others, makes this
point of rising unskilled assets.The Zeta organization of which I
speak is really remarkable, quite unlike the other cartels in so many ways. We subsequently trained the equivalent Kabiles in Guatemala that the Zetas are
now recruiting. We put structure and vision, tactics and strategy, into these
people. We made them; the blowback is severe.
Latin America's Lawless Areas and Failed States An Analysis of the "New Threats" Julio A. Cirino, Silvana L. Elizondo, Goeffrey Wawro CHAPTER ONE of: Latin American Security Challenges A Collaborative Inquiry from North and South Paul D. Taylor, Editor Senior Strategic Researcher, U.S. Naval War College Newport Paper Twenty-one 2004 NAVAL WAR COLLEGE Newport, Rhode Island ISSN 1544-6824
Mexican Intelligence at a Crossroad Leroy, Christophe SAIS Review - Volume 24, Number 1, Winter-Spring 2004, pp. 107-130 School of Advanced International Studies The Johns Hopkins University Press
Cartel activity moving beyond narcotics into increasing penetration of commercial supply chains for multiple purposes.
No internal Mexican solution is able to deal with this incremental, rising threat.
Business can still be transacted in concert with enhanced guidelines beyond piece part considerations.
OPENING REMARKS to 2011 update to ICG’s 2007 Mexican risk projection:
Nature of the threat
Having worked in the Americas, Middle East, Africa and Asia, we have seen conditions far worse than Mexico. Business is, and can be, done in Mexico. Problems facing businesses are not uniformly distributed (at either supplier tier or location) as some areas are clear or face diminished threat levels.
Our concern is that there are no factors in the Mexican economy effectively promoting correction or improvement of the trends we publicly identified in 2007.
Corruption is vastly wider in scope than ever experienced in Colombia. The amounts of money at play boggle the mind.
There are no blacks and whites in Mexico; there is no binary contest of good government against bad criminals. Instead, there are multiple groups of corrupt local, municipal, state, federal and judicial assets working in concert with various criminal cartels.
Different groups of the same police unit can be working for or with different cartels. There are honest members in various agencies, but their numbers are under pressure due to a combination of payoffs or death for failure to comply – what is called Plata o plomo, Silver or lead.
Cartel predation will continue to increase as it is a pure form of unrestrained, unregulated capitalism attempting to move to monopoly, likely a narcostate. Just as Adam Smith felt that capitalism must be regulated not because it is inefficient but because it is too efficient, cartel criminal actions should be regulated by the police and justice systems.
Those protective systems are unfortunately not up to the task, at least in Mexico. In the face of that rising void, our only forecast is a step series of increasing US interventions. We submit that training, joint cooperation, intelligence gathering, covert operations and interdiction are early steps along that path.
Hear, see, speak no evil
No party wants to publicly recognize Mexico’s failing state stature:
Commercial firms fear loss of business, investment and supply chain interruption.
Advisors fear loss of consulting revenue and client backlash.
Mexican authorities fear crisis of confidence.
US cannot tolerate a failed state on its border.
Criminal elements fear overt US intervention.
Consequently, we expect intervention to be held below the horizon as long as possible. Of the above actors, we suspect that it will be a cartel action that will draw matters into the open, galvanizing US public opinion in the process.
Unintended consequences of government offensive against the cartels
Cartels have been forced to diversify by attacks on their drug production and transport, both by the government and rival cartels. Those diversified areas now rival drug profits. If drugs were to disappear from the market, the cartels remain positioned to prosper and succeed.
Those diversified areas will increasingly bring criminal assets into, and adjacent to, commercial activities. We forecast expansion in:
Recurring ‘taxation’ (cuota) upon businesses in order for them to operate.
Criminal infiltration of tier suppliers.
Rising insertion of contraband packages into supplier shipments and/or contract shippers.
Criminal takeover/substitution of tier suppliers.
Rising threats to personnel. Mexico has gained the title, Kidnapping Capital, for example.
Impact on business
On an individual piece part basis, Mexico has bettered the ‘China Price’ -- the global lowest cost production price -- but we submit it has done so at structural costs to Mexico and its nationals that will become increasingly evident as time progresses.
Interestingly, we have found business to be immune to the future impact of these structural costs, preferring to focus upon immediate piece part savings and supply chain cost reductions. (If you work with purchasing officers, and know how most are compensated, you understand their near-term focus.)
The usual business process is to monetize risk such that short of relocation, production in troublesome areas, and transit to and from troublesome areas, is covered by allocating a premium. We submit that this process will not suffice once cartels increase their commercial penetration.
Companies and their staffs, both expat and national, have to better understand their risks by:
Supply chains and their supply lines
Size of firm and/or Supply tier (An automotive OEM/manufacturer has very different risks than a Tier 3 in all respects)
Expat or Local nationals
Collateral effect (Who are you adjacent to? Who are you simply in the way of?)
Growth directions of criminal groups (constantly in flux)
Recapping the 2007 Forecast, slides 2-9, 12-16
Slides with a bracketed date, e.g., , indicating the year published, recap the original forecast.
The 2007 forecast was based upon early symptoms of Calderón’s 2006 assault on the cartels. By late 2006, a cartel counterattack progression could be projected. Those Cartel counterattacks  were seen as dire, even inflammatory, in 2007. The intervening four years have shown the forecast remains valid.
By 2011, the trends begin to accelerate in the absence of any realistic governors other than cartel retrenchment or an external intervention.
Then, and still today, much industrial calculation on supplier relocation/expansion is based upon the piece part landed cost, ignoring key Mexican factors.
Failing/failed state characteristics, slides 17-18
Mexico shares characteristics of both failing and failed states. The state still functions but substantial areas have passed from sovereign to criminal control, and criminal assets have forcefully inserted themselves into the legitimate commerce that remains, leaving citizens, employees and visitors at rising risk.
The slipping veil of denial, slides 19-22
Each for their own purposes, all parties - Mexican and US governments, commercial firms and their business advisories, and the criminal elements themselves - support denial of the country's substantive problems.
As noted in the introduction, all parties are attempting to maintain the status quo below the horizon as long as possible. Some observers have remarked that such denial on the commercial side is tantamount to fiduciary breech.
Of the many actors involved, we suspect that it will be a cartel action that will draw matters into the open, galvanizing US public opinion in the process.
While many cite snippets of Chargé d’Affairs John Feeley’s primmer on Mexico for a forthcoming Defense Bilateral Working Group, Feeley's text is so important that it should be read in its entirety:
Commenting early on of the banality of certain UN documents, I was advised that its materials destined for public release had to suffer the scrutiny of many diplomatic eyes intent on defending parochial interests. The result was often text that offended no one and omitted granular, actionable recommendations.
Commercial entities are often in similar orbit, desiring furtherance of business, avoiding offense to governments and key players, and damping down public risk issues that could interrupt business continuity.
Larger top tier OEMs such as GM, Volkswagen, Chrysler and Honda have much greater resources and more protected supply transport not available to their supply tier companies.
We also maintain that investors and more senior business echelons do not share the same risk horizon with local nationals and even expat employees. For the former it is a financial risk/reward calculation. For the latter it is more pressing.
Two respected business advisory firms, Boston Consulting Group (BCG), here and here, and AlixPartners, here and here, document advantaged piece part savings for Mexican manufacturing and assembly without touching on other risk issues.
A more recent OECD report, Latin American Economic Outlook 2011, also painted a comforting view in print of all Latin America, Mexico included, but public comments by its contributors were more cautious. First the unintentional understatement by OECD economist, Jeff Dayton-Johnson:
Then Banco Santander’s chief economist and director of strategy and analysis for Latin America, Jose Juan Ruiz indirectly points out the foreign investor’s immediate lack of shared risk with regards to Mexican investments:
“In the short-term, in the past 12 months, I have not seen any drop in tolerance for investing in Latin America because of the perception of narco risk, not even in Mexico,” ...
“I do not have any evidence today that somebody decided not to make an investment in Mexico because of the war on drugs,”...
“It is clear that (drug trafficking) imposes political costs” and “reduces the attractiveness of investment” in Mexico...
Closing with a unresolved Catch-22, Dayton-Johnson and Ruiz "agreed that the Mexican state must deal with the threats from drug traffickers" while flagging its lack of resources to do so:
"The capacity of the state" must be brought to bear on the problem in Mexico, Dayton-Johnson told Efe, noting that in other countries dealing with similar situations, such as Colombia, "they have apparently had some success in recent years."
It is our opinion that such advisories along with the appropriate risk remediation guidelines should enshrined in the printed texts.
The dissenters, slide 24-26
Our consistent finding is that those closest to the threat, either as victim or police agent, see matters rather differently.
Among themselves, Mexicans speak candidly about rising crime, increasing criminal encroachment and inability of local, state and federal assets to interdict. One often has to get verbals as the Mexican press has been attacked to the point that it must self censor in order to stay alive. This is astounding to most US and EU nationals:
"You can openly criticize the president or the government ... In this administration, there has never been gag laws or censorship," Calderon said at the annual meeting of the Inter American Press Association, a Miami-based organization that groups newspapers across the Western Hemisphere.
"Now the great threat to freedom of expression in our country, and other parts of the world, without a doubt, is organized crime," Calderon added.
Many small newspapers in the most violent regions of Mexico, especially the northern areas bordering the United States, acknowledge that they no longer cover drug-gang violence because their reporters have been threatened or killed.
Even stories published without a byline can be dangerous if a co-worker tips off criminals about the identity of the reporter...
The war between the cartels is being waged not just with assault rifles but with censorship of the press, preventing media outlets from reporting adverse stories or victories over rivals.
The threats sometimes come via cops on the cartels’ payrolls, journalists said, adding that crooked police intervene to get reporters to scrap a story.
"We only publish about 10 percent of the information, a lot of it ends up in the files,”... it was dangerous to let a drug capo know what you know when he rides around the city in a convoy with 40 armed men. “We wait until they kill him or arrest him,"...
Writing small bits is better, however, than the alternative, which is to "be a hero" and get the deadly visit from the hitmen...
Voluntarily working with the drug traffickers, like some reporters do, often because they have no choice, can become a sword pointed at your neck, the journalist said.
"If the narco seeks you out and you publish according to his instructions, you can appear to the public to be a mouthpiece for the cartel, and then the other gang will go looking for you,"...
Cartels are nothing if not thorough; beyond informally and formally extorting news staffs on the article selection and reporting end, they station pre-informed ‘bystanders’ to brief arriving news staffers, and report back any comments or questions posed by reporters.
Even the nominally legitimate Mexican business sector sees itself being destabilized. Deloitte México has issued a quarterly Business Barometer (Barometro de empresas) since April 2007, covering executive expectations, trends and current event impacts. (All reports are in Spanish, with some in English.)
As late as January 2010, security was seen as a secondary, even moderate, threat:
October 2009, Business Barometer 11, based upon “Current situation compared with one previous year”. “political discord” was greatest among the “Threats to the Mexican economy within the incoming months,” followed by the “US economic downturn.”
January 2010, Business Barometer 12, ranked political discord (desacuerdos politicos) and US economic slowdown (desaceleración norteamericana) highest among the threats.
The change comes by April 2010 and further spikes in July 2010:
April 2010, Barometro de empresas 13, shows failing security emerging as a greater threat than a lapsed US economy.
July 2010, Business Barometer 14, shows a spiking increase in industry fears of failing security over the previous quarter.
See charts on pages 4, 5 and 11 of Business Barometer 14:
CURRENT CHART, page 4: All indicators are up except for “seguridad” which sinks.
FUTURE CHART, page 5: All indicators remain up except for “seguridad” which stays in the cellar.
FACTORS THREATENING THE ECONOMY CHART, page 11: Inseguridad (insecurity) goes off the chart. Conversely, issues such as corruption and social conflicts (and there are many, especially in Southern Mexico) are near zero, i.e., they are baked in the Mexican operating outlook.
The most recent issue, Barómetro de Empresas 16, January 2011, is as of this writing only available in Spanish. The key trend charts noted above, however, remain consistent.
NAFTA is a signal success from the standpoint of US/EU and foreign manufacturing companies. Lower manufacturing costs, lower transport costs, shorter supply lines, and lessened port and customs issues have seen Mexico better the China Price that was the investment go, no-go decision point for over a decade.
The China price is now in the process of increasing rather than decreasing, noticeably so for lower technical content assembly and manufacturing (due in part to the Chinese government pressure to substitute more highly engineering products in their place). The end of denim supplies at virtually any price is one of many canaries in the Chinese coal mine.
All this would normally be a boon to states such as Mexico. Unfortunately the unintended consequences of NAFTA are causing major structural fractures in Mexico.
Most businesses we speak to are surprised that the benefits they derive from NAFTA are not broadly shared by their Mexican workforce. Even within the Mexican labor pool, impact and benefit are not uniform. Engineering staffs, especially those in the OEMs and Tier 1 suppliers, fare much better than low end assembly workers.
Migration to the maquiladoras became driven less by betterment and more by desperation of decreasing opportunity. As the cost of living has nearly equalized along the border, low wage maquila workers cannot survive and so often leave. (Prices are often lower on the US side.) Here again the impacts are disproportionate with more men leaving and women remaining as head of the nuclear family. Those who remain become targets for predation or slip into criminal orbit.
We believe that business, their employees and investors do not see these effects, as with the attacks on Eagle Ottawa labor buses, investors and those employees insulated from local conditions do not share a common risk-reward envelope with local employees and their dependents at risk.
Until that gap closes, or its direct and indirect costs pierce the financial window of investors and insular employees, the focus will remain on the piece part cost. Operational cadres cannot be blamed as they have specific metrics to achieve in their procurement and production objectives, even if the metrics being measured (currency, for example) have other negative effects.
Given the plight of low end maquila assembly workers, we also marvel that no one has taken up their cause, at a minimum, as a reputational risk. The total number of injuries and fatalities from Apple/Foxconn, Nike and Adidas combined is a rounding error compared to the losses suffered by Mexican maquila workers yet there has been virtually no outcry from major US constituencies. That may change as we have seen a US group, the Pittsburgh Human Rights Network, take up the plight of employees of a Ford Motor Company supplier in China, Yuwei Plastics and Hardware.
Overlapping commercial and criminal footprints, slides 29-32
Violence is coterminous to Mexican and foreign industrial centers. The branching out of cartels into non-narcotic pursuits has brought criminals around and into the plant and corporate environments.
The cartel regional coverage in slide 31 is recent but nominal as cartels increasingly compete, fracture and recombine. Many outside observers are unaware that cartel footprints mimic the impacts of geography and culture. Slide 32 shows the geography of a central valley/plateau surrounded by two mountain ranges bordered by two coasts.
Extortion and insider threats, slides 33-35
The so-called Juarez Valley where the converted school buses were attacked has been racked by fighting between powerful drug cartels. But the more than 330 border factories, or maquiladoras, that dominate Ciudad Juarez and surroundings have [heretofore] been left out of the worst of the recent drug violence... factory buses have been burned by attackers in extortion attempts... escalating violence has forced factories and other businesses to boost security in Ciudad Juarez, where foreign manufacturers are drawn by a large workforce, mostly female, willing to work for low wages...
The automotive supplier, Eagle Ottawa, was understandably attempting to calm the situation by deflecting any threat to the maquiladora itself. The firm had no grounds for its pronouncement and, as colleagues have noted, the bilingual El Paso Times reporter did not question the firm's statement or present any contrary evidence of which there is ample supply. As chance would have it, on the same day Eagle Ottawa was in denial, the lead story in Diario (the valiant must-read paper across the Rio Grande) was devoted to the prevalence of extortion aimed at maquiladora suppliers in Juarez. Again, if you are deprived of both local ears on the ground and a nuanced reading of local Spanish language press, you will come away with a view wide of ground truth.
"This attack on the employees was a high-impact event that seeks to destabilize governments... They are fighting over their own interests, and only the bad guys know what it is about."
The buses bore the name of the company where the employees worked, Eagle Ottawa, an automobile upholstery manufacturer based in Auburn Hills, Mich., that has two plants in Ciudad Juárez...
Determining patterns in the drug war is difficult. At least seven major trafficking organizations, and their various splinter groups as they break apart and re-form, are vying for territory and supremacy.
"As the organized crime groups are pressured by the government and in a sense the military strategy, as people are arrested and drugs taken away, you are going to see internal strife and intergroup competition over the market..."
The Eagle Ottawa attack brought a wider audience to a problem that had been ongoing. Accounts from family for months earlier noted buses being attacked, people robbed or kidnapped. In addition, the ruteras in Juarez have been increasingly attacked for months. Crime is so great that residents of Ciudad Juarez have taken the unusual step of closing - with or without city permission - more than 2,000 streets in an attempt to keep out criminals.
Mexican statistics on drug war fatalities are not credible. Until late 2010, despite repeated evidence to the contrary, the Mexican government consistently repeated the view that all those killed - now 30,000 - were involved in the drug supply chain in some manner. Only recently, including the high profile innocents of the Eagle Ottawa shootings, did the government relent by admitting that homicides in the general population were under represented. Unfortunately, the opinion that all those killed are guilty also appears among US law enforcement.
Mexican criminal enterprises are increasingly inserting themselves into legitimate supply chains, or supplanting legitimate supply chains by forcing them from the market. Until those effects become manifest, it will take extraordinary political will to overcome the commercial focus on the piece part cost:
"The infiltration is often a real concern in a city like Matamoros [just] south of Brownsville (Texas), you have two unions and if you are operating a factory and you have people that you need to hire for your factory floor, you've got to work with one of the two unions... Both unions are involved with organized crime so there is a concern there that if you don't take the time to do at least a little bit of due diligence on the people that you're hiring, then you could be hiring a criminal to come do work in your factory and who knows what happens after that."
We see supply chain issues, cloaked but real otherwise no mention would have been made, in OEM discussions of insuring that materials arrive in timely fashion.
Criminal groups have begun to replace legitimate supply chains, and/or institute parallel low(er) cost supply chains, with the effect of chasing legitimate firms from the market. This is well underway in the mining/primary extraction sector.
Criminal groups are creating exclusion zones all across Mexico for production and warehousing, assumption of legitimate enterprises, access (ingress/egress routes) and security (creating their own free fire zones against opponents).
The situation raises questions about the government’s ability to defend the company, which was created after the 1938 expropriation of the petroleum industry and is now an important symbol of sovereignty and self-respect for Mexicans...
“Once Pemex … comes under regular attack from the cartels, rather than just random, disorganized thugs, then you have far more serious national security problems – much worse in the government's eyes than a bunch of homicides in the slums of Ciudad Juarez,” Mr. Beith said. “The government's management of Pemex has long been questionable, but the fact that it can't secure its pipelines from organized crime … shows just how insecure parts of the country are and could become.”
Pemex and the Petroleum Workers' Union (Sindicato de los Trabajadores Petroleros de la República Mexicana) have long been deeply permeated by corruption and have now been penetrated by criminal activity. Its problems are long standing and are now institutionalized. The citation list has numerous Pemex and organized crime items.
We believe that with state and national political and police assets compromised, even complicit, that one of the few means of recovery will come from other large established Mexican firms that can independently muster sufficient political cooperation while providing both creditable resistance and physical protection to their employees.
One such firm is Cemex (Cementos Mexicanos SAB) and its owner, Lorenzo Zambrano. It will be crucial to watch Cemex's efforts, the "change back" reactions from criminal elements; counter-responses from Cemex; and what, if any and when, allies that Cemex can draw to its side.
All firms, certainly high value targets such as Cemex, must continuously address three vulnerability areas:
Pricing model compromise (tier chain event, supplier outsourcing, subcontracting, etc.).
Each area, singly and in combination, should be examined by the criteria of Design Basis Threat (DBT):
Asset Value Assessment.
All-source vs. piece part risk, slides 38-39
Operational, reputational, geopolitical, financial and technology risks are best managed as a portfolio. We reduce the chance of adversarial surprise by using an all-source approach to risk management rather than a partial piece part approach.
Design Basis Threat (DBT) does not add new task layers for employees. On the contrary, DBT adjusts current business processes to make them more robust to penetration.
Our grounding in operational supply chain and purchasing allows us, as needed, to address chain efficiencies while insuring that the protective envelope in not pierced. Slides 40-43 are examples of our granular supply chain analytics.
Conclusion, slides 44-45
Those who rely on US/EU high street press sources unsupported by local knowledge will not have a granular understanding of what we call ground truth. Our experience is that investment decisions are too often made in the absence of that information.
Commercial calculations are necessary but not sufficient for corporate risk management. Operated in a vacuum, commercial-only risk decisions have and will lead to vulnerabilities.
Takeaway: In such instances, companies accept risk by default rather than by design.
Design Basis Threat (DBT) supplies that consistent risk amelioration approach for pricing model compromise, citadel attack and HR.
Journalists contact us from time to time, too often to make a story on the back of our disclosing proprietary research to them. In fewer but welcome cases, they want to get terms straight to educate their readers.
Do you have any insight into how best to define a car bomb versus a bomb in a car? I ask [as] it’s my impression that we haven’t really seen a proper car bomb in Mexico yet – not on the scale of the ones I saw in Iraq or other places. But what’s the right definition? When do we know the cartels are looking to get such a device?
Where do you think they got it? is that common on the international criminal market, or is that just what might be locally available [from] the mining industry in Chihuahua?
Each of the recent spate of vehicle explosions is a Vehicle Borne Improvised Explosive Devices (VBIED) and the groups employing them are coming up the experience curve.
What makes a VBIED
First, slowly deconstruct VBIED, i.e., a vehicle borne IED.
In effect, a VBIED is both a shrapnel pack and a delivery mechanism for an IED described as:
They are unique in nature because the IED builder has had to improvise with the materials at hand. Designed to defeat a specific target or type of target, they generally become more difficult to detect and protect against as they become more sophisticated.
Almost anything that blows up will do, from grenades to plastic explosives to leftover mines. The most everyday of electronics -- a cell phone, a garage door opener, a child's remote-control toy -- can be recast as a trigger. And the hiding places for these handmade bombs are everywhere: in the ground, aboard a truck, even inside an animal carcass
Though they can vary widely in shape and form...
Once the perps understand fuzing and vehicle transport, they will quickly scale the explosive content.
Second, the size and brisance of the Mexican explosions in relationship to Iraq and Afghanistan
The size and brisance of the current Mexican VBIEDs are not on the scale of devices being encountered in the Mideast and SW Asia. From a private note:
Cheap escalation, expect both IEDs (Improvised Explosive Devices) and VBIEDs (Vehicle Borne Improvised Explosive Devices) to increase in volume and lethality as actors build larger charges.
IEDs and VBIEDs in Iraq, Afghanistan and other high tempo war zones are constructed from UXO (unexploded ordnance) abandoned or captured on the battlefield or looted from former state magazines.
By contrast, Mexican devices are currently utilizing blasting explosives [Tovex] that have far less brisance than military explosives. (In lay terms this has to do with the velocity of the radiating shock waves; blasting explosives are designed to fracture rock rather than pulverize, so explosive mixtures are tuned accordingly.)
Mexico's powerful drug cartels have long been experimenting with explosives. In the northern state of Durango in 2009, more than a dozen masked gunmen stole 900 cartridges of Tovex water gel explosives from a warehouse run by the U.S.-based Austin Powder Company. Mexican authorities recovered the stolen material, but the theft underscored how easy it can be to get explosive material in the country, where armed men also have attacked transport vehicles carrying such substances.
The ATF has helped investigate several events involving improvised explosive devices around Mexico, including a roadside bomb in March at a gas station in the northern state of Nuevo Leon. That bomb, which didn't injure anyone, consisted of two large cylinders filled with nails and possibly black powder, another substance that is readily available on the black market.
The ground situation will rapidly escalate when one or more of the criminal groups begin to add military explosives (Semtex or C4) to their global shopping lists. As I noted in The reality of Mexican drug cartel weapons sourcing:
[The] cartels could easily rise above the squad subordinated weapons (assault weapons and light machine guns) currently in use to include antitank missiles and larger ordnance. Beyond the demands of ego and attempts to demonstrate superior area control, there are not enough viable targets to justify the added expense. Be certain that when the need or desire is there, so will be the weapons...
Improvised Explosive Devices (IEDs), Unexploded IEDs, Hand Grenades, Indirect Fire (mortars, rockets, and unidentified indirect fire), Rocket-Propelled Grenades (RPGs), Small Arms Fire (SAF), Vehicle-Borne Improvised Explosive Devices (VBIEDs), and Complex Attacks. The most common attacks along Route Irish are IEDs, VBIEDs, and SAF.
IEDs [continue] to evolve. Current techniques are:
Explosives positioned alongside guard rails. The large number of guard rails on the road make these devices difficult to detect and relatively easy to emplace by staging equipment in vehicles or near overpasses, and, in a matter of minutes, having the IED armed and in the desired location.
Explosives wrapped in a brown paper bag or a plastic trash bag. This is a particularly easy method of concealment, easy to emplace, and has been used effectively against Coalition Forces and civilians along Route Irish.
Explosives set on a timer. This technique is new to the Route Irish area, but is being seen more frequently.
Use of the median. The 50 meter wide median of Route Irish provides a large area for emplacing IEDs. These can be dug in, hidden, and/or placed in an animal carcass or other deceptive container.
Surface laid explosives. The enemy will drop a bag containing the explosive onto the highway and exit the area on an off-ramp with the detonation occurring seconds or minutes later depending on the desired time for the explosion.
Explosives on opposite sides of the median. Devices have been found along both sides of the median that were apparently designed to work in tandem, to counter Coalition Force tactics to avoid the right side of the highway while traveling Route Irish.
Explosives hidden under the asphalt. Insurgents pretend to do work on the pavement, plant the explosives, and repair the surface. These are usually remote-detonated devices.
Vehicle-Borne Improvised Explosive Devices (VBIEDs) contain two types of car bombs, e.g., when the vehicle is moving (suicide) and when the vehicle is parked and stationary. Both can be either command or remote-detonated:
Multiple suicide vehicles. The first vehicle either creates an opening for a second, more powerful vehicle, or acts as bait to draw other personnel, such as medics and other first responders, into the kill zone of the first vehicle. As people respond, the second VBIED engages the responders.
Suicide VBIEDs are typically used against convoys, Coalition Force patrols, or Coalition checkpoints where they can achieve maximum damage. Such vehicles will rapidly approach the convoy from the rear and attempt to get in between convoy vehicles before detonating.
Stationary VBIEDs are typically parked along main supply routes, like Route Irish, and often have been found near known checkpoints. These are usually remotely operated and may be employed in conjunction with a suicide VBIED.
Mexico demands what is called situational awareness of its citizens and visitors. While the violence in the border towns is reaching epidemic proportions, Monterrey and Acapulco (aka Narcopulco) now increasingly have what amounts to squad level firefights in the central business/tourist district.
Criminal co-optition will accelerate as groups jocky for product, plaza control, security and supremacy.
These negative events are paralleling Mexico’s betterment of the China Price, and may well deprive Mexico of added legitimate revenue and infrastructure build-out.
By early 2008 the Gulf Cartel had “begun acquiring more military-grade weapons, including FN Herstal P90 submachine guns, FN Herstal 5.7 x 28mm pistols, M72 LAW (light anti-tank weapon) rocket launchers, AT4 anti-tank rockets, RPG-7 rocket-propelled grenade launchers, MGL 37mm grenade launchers and fragmentation grenades.”
The use of Vehicle Borne Improvised Explosive Devices (VBIEDs) has started and I would expect that to accelerate with even more paralysis of Mexican judicial and police asset that US forces suffer in Afghanistan.
Missing from this first effort: Secondary and tertiary detonations, often waves of parallel ignitions, against massed first responders and receiving hospitals. The Chechens and Iraqis have perfected this progression, but for the foreseeable future these secondary detonations will be IEDs and VBIEDs and not suicide vests. As time progresses: Multiple targets, simultaneous attacks, multiple vehicles per target and armed assault/breaching cadres to clear security personnel and gain access to the primary target...
Last week's Mexico car bomb in the border town of Cuidad Juarez killed three. It is the first known use of a car bomb against authorities and marks a troubling new level of violence in the country's brutal drug war.
From my vantage point, Mexican violence is merely trending towards a truly epic level of systemic violence. Despite the sad drumbeat of killings in Mexico chronicled by Frontera List, that nation has yet to experience the savagery that Africa has found itself awash.
My wildcard is the US and various US-based groups. While such groups vary widely in their intent, some would appear to go so far as to support a false flag event against the US with the intent of forcing the legitimate government to move assets into Mexico.
Misreading the patterns
We believe that it is a misleading of the data to believe that:
The government's crackdown "has achieved significant results as far as breaking up the leadership, financial, logistical and operational structures of organized crime"...
The informe [Calderon's annual report] lists more than two dozen top-ranking or local drug bosses taken down since last September. The most significant were kingpins Arturo Beltran Leyva and Ignacio "Nacho" Coronel, both killed by Mexican troops.
The sudden spate of captures of high level operators from various competing groups begs attention as coincidence does not exist for an intel analyst. Always possible we say, but unlikely and only accepted after all other avenues have been exhausted. (And only accepted once as twice is a pattern.)
By leaking information to selected (or neutral) authorities, these groups, who are likely corrupt themselves but not a partner to the personages being surrendered, gain leverage and advantage without having to endanger themselves or make themselves a target for retribution.
As the arresting agency has been selected on the basis of their tolerance to, or payment by, the leaking criminal group, those agency members will get a handsome bonus for removing the leaker’s competitor.
We long ago dispensed with the DTO (drug trafficking organization) label as the binary fiction of criminal cartels against honest government has been replaced by what we define as criminal groups:
Corrupt groups comprised of traditional organized crime, corrupt state and federal police, corrupt military and corrupt politicians who compete against one another in a fluid Co-Opetition [cooperative competition] in which only those at the top of their game survive.
In this operational environment the 'intelligence' cited by various parties is very likely not coming from a single legitimate sovereign source but rather from a series of interested parties seeking to damage another of the parties.
There is a yet to be written analysis of intelligence and counter-intelligence operations of Mexican criminal groups against one another.
All data from Mexico is suspect
Mexican statistics, especially those regarding criminal matters, are supremely suspect. As Molloy has diligently noted regarding this WSJ comment:
Each side of the US-Mexican border has its myths; one shared by both is the preponderance of weapons used by the drug cartels are US sourced and transited south to Mexico. Between deserting Mexican military selling their weapons, weapons harvested from armories further south in the Americas, and purchases made on international arms markets, the cartels can acquire whatever they desire from a price/performance level.
In other words, the cartels could easily rise above the squad subordinated weapons (assault weapons and light machine guns) currently in use to include antitank missiles and larger ordnance. Beyond the demands of ego and attempts to demonstrate superior area control, there are not enough viable targets to justify the added expense. Be certain that when the need or desire is there, so will be the weapons:
A 40mm grenade launcher capable of firing up to six grenades in 30 seconds and a disposable projectile launcher are among the South African weapons seized recently from Mexican drug traffickers...
Other weapons being stored at the warehouse include AR-15 and AK-47 assault rifles, different types of grenades – including Israeli-made grenades – and .50-caliber Barrett rifles capable of penetrating armor and downing helicopters at a distance of two kilometers (1.2 miles)...
The Mexican states where the largest number of seizures of these types of weapons has occurred are (in order): Baja California, Michoacan, Chihuahua, Coahuila, Tamaulipas and the Federal District (Mexico City). Drug-trafficking gangs and other organized crime groups are known to operate in those jurisdictions...
Obama would have been correct to say that 90 percent of the guns submitted for tracing by Mexican authorities were then traced to the U.S. The percentage of all recovered guns that came from the U.S. is unknown.
The 5,114 figure is simply wrong. What Newell said quite clearly is that the number of guns submitted to ATF in those two years was 11,055: "3,312 in FY 2007 [and] 7,743 in FY 2008." Newell also testified, as other ATF officials have done, that 90 percent of the guns traced were determined to have come from the U.S...
Fox News reporters William La Jeunesse and Maxim Lott note, quite correctly, that Mexico doesn’t submit all the guns it recovers to the U.S. for tracing. Furthermore, Fox News reported, this is "because it is obvious from their markings that they do not come from the U.S." And it quoted a law enforcement official as to why:
Fox News, April 2: "Not every weapon seized in Mexico has a serial number on it that would make it traceable, and the U.S. effort to trace weapons really only extends to weapons that have been in the U.S. market," Matt Allen, special agent of U.S. Immigration and Customs Enforcement (ICE), told FOX News.
If that’s true, then the guns given to ATF for tracing constitute a badly biased sample of all crime guns seized in Mexico...
Given the bribery rife in Mexico, my assumption is that both criminal elements and corrupt politicians would prefer to mask the source, at best, of their weapons or, at least, distract the lay reader from ground truth.
The vault nestled in a Mexican military base is the government's largest stash of weapons... The warehouse [in] northeastern Mexico City [is] surrounded by five rings of security. There are two military guards at the door and five more are in the lobby. Inside, another 10 soldiers sort, clean and catalog weapons. Some are dismantled and destroyed, a few assigned to the Mexican military... The security, bolstered by closed-circuit cameras and motion detectors, makes the warehouse practically impenetrable, said Gen. Antonio Erasto Monsivais, who oversees the armory...
But the process of getting, keeping and identifying weapons bound for, or in, storage is fraught with peril, and can lead to weapons, and their records, being lost and recycled back into criminal hands:
"Many of these rural municipalities that may come into a gun seizure ... may not even know anything about tracing guns,"... A police officer in Mexico submits a description, serial number and distinctive markings of the gun. The weapons are then turned over to the military for storage in one of a dozen armories such as the one in Mexico City.
When U.S. investigators need additional details, as they often do, the request goes back to the original police officer, who must retrieve the gun from a military vault — sometimes hundreds of miles away... Many mistakes are made because of difficulty translating technical terms about firearms...
Mexican police must ask permission each time they need to look at a stored gun... Even if that permission is granted, the investigator cannot go past the metal fencing separating a reception desk and the shelves holding the guns. A soldier has to bring out the requested weapons...
Given my interviews and research on cartel weapons sourcing, I find this statement difficult to believe:
But [General Monsivais] said that despite the type of weapons in the possession of the drug-trafficking gangs, their firepower still does not exceed that of the Mexican armed forces and police.
My opinion is that the only reason that this and similar warehouses are not thoroughly penetrated is that it is cheaper and easier for cartels to source new weapons, paid for with drugs, en masse from overseas.
With a grounding in chemistry, most notably to understand which reactions will generate sufficient heat to precipitate cook off, basic mechanical engineering, and model rocketry, coupled with access to a machine shop and painful attention to process detail, I can attest to the relative ease of constructing asymmetrical devices. As a teenager with access to EOD/UXO (Explosive ordnance disposal/Unexploded ordnance) manuals dealing with WWII German anti-handling and anti-tampering devices installed in ordnance dropped on England, I started to build booby trapped training devices with anti-handling features for the local bomb squad to train officers. While the 'detonator' in those devices was the now old fashioned flash bulb sticking out the side of the devices, a parallel interest in chemistry led to product, which drove the interest in rocketry. DISCLAIMER: I was fortunate. I had mentors who offered guidance. Some of my efforts took on a 'class project' level of general interest. Access to the internet is NOT a substitute for skilled laboratory practice. I categorically do not recommend trying this at home.
Good transnational border bomb design
If Palestinian master bombers are any guide, militant groups should be able to produce basic device architecture and BOM (bill of materials) with variants tailored for local conditions. (For example, being able to substitute and wire a CDMA phone in lieu of a GSM phone.) These plans could be accessed electronically and implemented locally. It addresses what colleagues have spoken to me as the ‘holy grail’ of an attacker coming in clean, then building the device locally from locally sourced components that do not attract attention.
Short of this, I concur with the assessment that reliable device construction that neither detonates prematurely or fails to detonate on target is not easy:
Skills needed can include the refrigeration or heating of chemicals to a precise temperature, mixing chemicals to an exact proportion, or understanding the degree of concealement needed to smuggle a substance through an airport scanner.
[It] was far more difficult to get something to "go boom" for the average untrained person than people think. "This is why, for example, training for construction of explosives and explosives devices in terrorist training camps has historically taken up to two years, as opposed to the usual basic training where people are trained how to 'use' explosives instead of how to build devices"...
"It is an ongoing problem for militant groups. This is why some [groups] often sent the detonator or a key part of it back with those it was deploying to carry out attacks, especially for the more sophisticated attacks."
Current state of militant designs
Too many gloat over the ineptitude of the Times Square bomber. With a better designed device - amateurish was appropriate to describe that one - and/or an actor that was willing to die rather than escape, much of what followed would be post blast forensics.
The Time Square failure is even more remarkable in that improvements to the basic design of the 2007 London car bomb outside the Tiger Tiger club in Haymarket, and a second car a few hundred yards from the first, were not disseminated among the faithful. See diagram and image.
Remember that they go to school on us. All details noted in the Times Square and other attempts that document both the failure of the device to function and the perp’s identification and capture will be added to their playbook. Example:
Investigators found that the vehicle identification number (VIN) on the dashboard of the 1993 Nissan Pathfinder had been removed. But that's not the only place to find the VIN. According to AutohauzAz.com it can be found: Left side of dash (thru windshield), front left floor panel, right inner fender, right strut housing, firewall, and engine block.
I decided to bet that I could capture a working preparation library for explosives, incendiaries, igniters and basic device constructions in less than 30 minutes. The goal was to have sound operational materials that with a modicum of laboratory practice and mechanical and electrical skill would produce operational devices. The process took less than 20, and that was with citation documentation.
Start with likely keywords or phrases, or if you know anything about the field, start with a classic: FM 5-25 Explosives and Demolitions. FM 5-25 is devoted to placement technique as opposed to manufacture, but wherever FM 5-25 appears there will be fertile ground. My paper copy is 1971; subsequent changes are minor.
Second search tip is to limit searches to PDF documents as most manuals are rendered in PDFs on the web.
Third search tip is, when you find a promising item, rerun your search limiting your search to that domain.
Leaving aside the many Torrent feeds and the occasional scribd.com sources, you will soon have PDFs of all that you need for technical preparation from ordinary materials as well as mechanical fabrication and placement. The citations noted here are representative, but not exhaustive. Some sites could be, or should be, honey pots. Other than Cryptome, most English sites represent themselves as patriot, militia, or survivalist stock.
The items cited in Preparer Resources below are but a sampling of technique available on the web.
The next question was why, with these materials easily available, weren't the jihadist community producing better device designs for export.
Questioning the lack of tradecraft in recent militant devices
Despite the volume of information that is publicly available, mercifully much of which is wanabee, actual fabrication has been poor in many recent devices in the US, UK and Europe.
Readers may think that, 'It is only a matter of time. They cannot stay stupid forever,' but the truth is that the necessary information has been in jihadist, paramilitary, and patriot right hands for decades. My only surprise is that so much tradecraft appears to have been lost in jihadist training over the past decade.
The documents — including student notebooks, instructor lesson plans, course curriculums, training manuals, reference books and memorandums — show that one tier, by far the busiest, prepared most of the men who enlisted in the jihad to be irregular ground combatants... The other provided a small fraction of the volunteers with advanced regimens that prepared them for terrorist assignments abroad.
American military instructors who reviewed the documents said the first tier of instruction was sophisticated in a conventional military sense, teaching, one said, "a deep skill set over a narrow range" that would reliably produce "a competent grunt." The second tier was similarly well organized, albeit with more sinister curriculum.
Implicit in the split levels of training was the Islamic groups' understanding of the need for different sets of skills to fight on several, simultaneous fronts: along trench lines against the Northern Alliance in Afghanistan; against armor or helicopter assaults from conventional foes in Chechnya; as bands of foot-mobile insurgents in Kashmir, Central Asia or the Philippines; and as classic terrorists quietly embedded in cities in the Middle East, Africa, the former Soviet Union and the West.
To instill these diverse lessons, the schools applied ancient forms of instruction — teachers pushing students to copy and memorize detailed tables and concepts — to modern methods of killing. [in effect, using] "Islamic pedagogy to teach Western military tactics."
Evident as well in the documents, which were translated for The Times, were signs that in developing martial curriculums, the groups were cannily resourceful in amassing knowledge. Some lessons were drawn from manuals from the former Soviet Union. Others, the use of Stinger missiles or Claymore mines, were derived from instruction underwritten by the Pentagon and the Central Intelligence Agency in the 1980's, when Washington backed the Afghan resistance against Soviet occupation.
In the years after the Soviets withdrew and American money evaporated, the groups aggressively cribbed publicly available information from the United States military and the paramilitary press. Ultimately, American tactics and training became integral parts of the schools.
One camp, used by the Islamic Movement of Uzbekistan, gave instruction in movements by four-man fire teams that was modeled after formations used by the United States Marine Corps... The Uzbeks also used reconnaissance techniques long taught at the Army's Ranger School in Fort Benning, Ga. Other documents show that jihadi explosives training covered devices and formulas lifted from a Special Forces manual published in 1969.
While these materials are available through open sources, from on-line booksellers to rural gun shows, military officials said it was a feat to digest far-flung sources, translate them into Arab and Asian languages and assemble them in an orderly way. Bomb-making instruction, for instance, combined the electrical engineering necessary to make detonation systems with Vietnam-era Army formulas for home- brewed explosives, then was translated into Arabic, Uzbek and Tajik. "It indicates a tremendous amount of filtering and organization to get to that," an American military instructor said.
Moreover, notebooks from several camps demonstrate that even in courses taught in different languages and hundreds of miles apart, many lessons were identical, sharing prose passages, diagrams and charts. This was an important achievement, military officials said, as it created compatibility between members of what essentially became an Islamic foreign legion.
It also marked a significant advance beyond training that the United States sponsored for Afghans in the 1980's.
"One of the problems we had against the Soviets was getting the mujahedeen to be uniform," said an American official familiar with that movement. "We couldn't get them on the same page. When you went to one valley, they fought one way. When you went to the next, they fought another. To the extent these guys were able to level the training and make it consistent, they were on the right track."
But officials also noted that the breadth of the camps' curriculum search resulted in uneven quality. Some material was well- chosen, some not... Officials also said even useful references could be problematic. One said that while cautious handlers could use some Special Forces bomb recipes, others would endanger themselves. "People have had to be scraped off of their ceilings after trying these things," he said.
The jihadis seemed to know this. One notebook warned: "Make sure that first aid kits are available at all times in order to deal with any mishaps that might result from the performance of this experiment."
Whatever the shortfalls, the two tiers of training worked.
The value of interrupted training sanctuaries without asset predation
The military models gathered, perfected and delivered to successive jihadist classes in the late 1990s required time, place and human resources for both instructors and qualified students:
Law enforcement officials have described a multivolume set of terrorist instructions, dubbed the Encyclopedia of the Afghan Jihad, as a sort of master guide for the camps. Parts of the encyclopedia were found by The Times at four training sites, and officials said parts of its explosives section were incorporated into classes at the camps.
But records from students and teachers also show that most jihad courses lasted several weeks to a few months and that rather than covering the encyclopedia's breadth, stayed intensely focused on small sets of skills. To create those classes, the groups relied heavily on an array of sources obtained from the West: military training manuals, American hunting magazines, anarchist manuals, popular action movies, chemistry and engineering textbooks, and Web sites hawking James Bond-like tricks.
Signs of this collection effort are sprinkled throughout their documents. American military trainers who reviewed the jihadi students' notes quickly identified lessons from their own playbooks, including Islamic Movement of Uzbekistan reconnaissance techniques also used by Army Rangers, or four-man weapon deployments and formations — wedges, columns, echelons, lines — that are the Marine Corps standard.
One senior military instructor noticed a familiar streak of professionalism in class schedules, a carefully selected mix of lectures, demonstrations and practice. "Wherever they got this, it was modeled after somebody's program"...
Again, why isn't the current jihadist community able to produce better device designs for export? I believe that answer lies in both denial of sanctuaries and predation on jihadist human resources. In other words, the number of skilled instructors was severely reduced with the balance redirected to operational roles. Likewise, the traning infrastructure was degraded, reducing the available training syllabus and hands-on field work.
That will change once they absorb the lessons of the master bomber.
The Islamic groups training recruits in Afghanistan managed to standardize their lessons, bridging ethnic and linguistic divides to ensure that all the soldiers had a similar base of knowledge. The student notebooks, taken from different camps and safe houses, show nearly identical diagrams in lessons like map reading, compass training, basic demolition and weaponry, as in the sight for a rocket-propelled grenade, explained here in Uzbek, Tajik, Arabic and Urdu.
The Jihad Files: Al Qaeda's Grocery Lists and Manuals of Killing