How the Mexican Drug Cartel Operates

Patrick Keefe’s New York Times Magazine piece on the Mexican cartel is one of the best things I’ve read this year, and certainly one of the best things I’ve read this month. He goes in depth on the operations of the Mexican drug cartel, its relationship with clients, suppliers, politicians, and law enforcement personnel. I couldn’t stop reading it…

On the Sinaloa cartel and its distribution:

The Sinaloa cartel can buy a kilo of cocaine in the highlands of Colombia or Peru for around $2,000, then watch it accrue value as it makes its way to market. In Mexico, that kilo fetches more than $10,000. Jump the border to the United States, and it could sell wholesale for $30,000. Break it down into grams to distribute retail, and that same kilo sells for upward of $100,000 — more than its weight in gold. And that’s just cocaine. Alone among the Mexican cartels, Sinaloa is both diversified and vertically integrated, producing and exporting marijuana, heroin and methamphetamine as well.

On the drug war in Mexico and the cartel’s ability to thrive in the recession:

The drug war in Mexico has claimed more than 50,000 lives since 2006. But what tends to get lost amid coverage of this epic bloodletting is just how effective the drug business has become. A close study of the Sinaloa cartel, based on thousands of pages of trial records and dozens of interviews with convicted drug traffickers and current and former officials in Mexico and the United States, reveals an operation that is global (it is active in more than a dozen countries) yet also very nimble and, above all, staggeringly complex. Sinaloa didn’t merely survive the recession — it has thrived in recent years. And after prevailing in some recent mass-casualty clashes, it now controls more territory along the border than ever.

On how modern technology isn’t stopping the drugs from crossing the U.S. border (the catapult bit):

Moving cocaine is a capital-intensive business, but the cartel subsidizes these investments with a ready source of easy income: marijuana. Cannabis is often described as the “cash crop” of Mexican cartels because it grows abundantly in the Sierras and requires no processing. But it’s bulkier than cocaine, and smellier, which makes it difficult to conceal. So marijuana tends to cross the border far from official ports of entry. The cartel makes sandbag bridges to ford the Colorado River and sends buggies loaded with weed bouncing over the Imperial Sand Dunes into California. Michael Braun, the former chief of operations for the D.E.A., told me a story about the construction of a high-tech fence along a stretch of border in Arizona. “They erect this fence,” he said, “only to go out there a few days later and discover that these guys have a catapult, and they’re flinging hundred-pound bales of marijuana over to the other side.” He paused and looked at me for a second. “A catapult,” he repeated. “We’ve got the best fence money can buy, and they counter us with a 2,500-year-old technology.”

A wise reminder:

There’s a reason coke and heroin cost so much more on the street than at the farm gate: you’re not paying for the drugs; you’re compensating everyone along the distribution chain for the risks they assumed in getting them to you.

And:

Smugglers often negotiate, in actuarial detail, about who will be held liable in the event of lost inventory. After a bust, arrested traffickers have been known to demand a receipt from authorities, so that they can prove the loss was not because of their own negligence (which would mean they might have to pay for it) or their own thievery (which would mean they might have to die). Some Colombian cartels have actually offered insurance policies on narcotics, as a safeguard against loss or seizure.

On corruption being king:

The surest way to stay out of trouble in the drug business is to dole out bribes, and promiscuously. Drug cartels don’t pay corporate taxes, but a colossus like Sinaloa makes regular payments to the federal, state and municipal authorities that may well rival the effective tax rate in Mexico. When the D.E.A. conducted an internal survey of its top 50 operatives and informants several years ago and asked them to name the most important factor for running a drug business, they replied, overwhelmingly, corruption…The cartel bribes mayors and prosecutors and governors, state police and federal police, the army, the navy and a host of senior officials at the national level.

An anecdote of one man’s accumulation of cash while working for the cartel:

In 2007, Mexican authorities raided the home of Zhenli Ye Gon, a Chinese-Mexican businessman who is believed to have supplied meth-precursor chemicals to the cartel, and discovered $206 million, the largest cash seizure in history. And that was the money Zhenli held onto — he was an inveterate gambler, who once blew so much cash in Las Vegas that one of the casinos presented him, in consolation, with a Rolls-Royce.

There is so much more in the piece. Set aside half an hour and read the whole thing.

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