An Exclusive Look Inside Mexico's Drug War

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With more than 10,000 drug-related murders in Mexico this year, President Felipe Calderon views his soldiers as his best hope in a blood-soaked clash that critics on both sides of the border are starting to call unwinnable, reports CBS News Travel Editor Peter Greenberg.

"We are kicking them and kicking them really hard," Calderon said.

He has deployed 45,000 troops to 18 Mexican states in an aggressive offensive against the cartels.

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Recently he toured an army base in the border city of Mexicali, honoring soldiers killed fighting the drug cartels by giving awards to their families.

"I know the Mexican soldiers are put in the place where they are risking their own lives," Calderon said. "Actually, we lost 80 soldiers in this battle against organized crime and, nevertheless, they realized that they are working for the future of Mexico."

The president showed us his top-secret, state-of-the-art, $100-million underground bunker - the Central Intelligence Command - in a secret location in Mexico City. Mexican security forces are literally wiring the country with cameras, sensors and computers to gather intelligence on organized crime.

"And when we were designing this, I said, 'Do you remember the program '24,' the TV show? Well, I want all the toys, all that. All the instruments needed to be superior to the criminals,'" Calderon said.

Advance army training like this is what he hopes will combat the drug lords. Yet despite all the technology and military muscle, more than 28,000 people have been murdered since Calderon took on the cartels four years ago. He cannot shake the perception that his country is in crisis - his drug war, failing.

"Every day there are news reports of killings, of massacres, of bodies found - more than 28,000 people killed. That's a staggering number, isn't it?" Greenberg asked.

"We have a serious problem, yes. However, we are facing the problem," Calderon said. "As I said to the Mexican people, it's going to take us money, it is going to take us time and unfortunately it is going to take human lives."

Last week when CBS News was in Mexico, dozens more lives were taken, including a three-hour shootout in the border city of Matamoros. Drug kingpin, "Tony Tormenta," was killed by hundreds of Mexican troops. In retaliation, the cartels set fires, set up roadblocks, fired guns. Near Acapulco, a mass grave with 18 decomposing bodies - all victims kidnapped by drug gangs.

Calderon insists the growing violence is a sign the cartels are feeling his government's heat.

"They are losing market, they are losing territory, they are losing capacity to do everything like in the past. So they are fighting each other in order to preserve their own territory," Calderon said.

But the casualties and violence, once isolated to border states, is spreading - to Monterrey in the east, to once quiet cities in the south and to resorts in the west. The death toll grows every year.

With more than 10,000 murders so far, 2010 is now turning into the bloodiest year on record, a 53 percent increase over last year.

"You are seeing the killings of family members, the assassination of mayors and police chiefs," said Fred Burton, the vice president for intelligence at global intelligence company STRATFOR.

Burton said Calderon is reading the situation wrong.

"The cartels are carrying out these kind of executions to show the government, the Mexican government, and the Americans to a large measure, that they are responsible for that geography and this is what is going to happen if you put your nose into places that it doesn't belong," Burton said.

Remarkably, despite U.S. State Department travel warnings tourism is up 20 percent in Mexico, including 5 million Americans.

And Calderon says his neighbors to the north are a key part of the problem. He says the $40 billion drug trade exists to feed an insatiable American appetite.

"We have a neighbor who is the largest consumer of drugs in the world and the problem is everyone wants to sell him drugs through my window or through my door, and that is beginning of the problem of violence in Mexico. So the United States needs to reduce the consumption of drugs one way or the other," Calderon said.

He claims American drug use is financing the cartels and smuggled American guns are arming them.

This is an example of the more than 90,000 weapons the Calderon government has confiscated in the last four years. Almost all of them high powered and all of them bought in the United States.

"The United States is the largest provider of weapons to the criminals in Mexico," Calderon said. "I'm talking like 50,000 assault weapons, Air 15s, machine guns, more than 8,000 grenades, almost 10 million bullets, which is amazing figures."

While U.S. has offered $1.6 billion in aid and equipment to help Mexico fight the cartels, President Calderon knows the burden of the war falls on him. And despite his best efforts, drugs, guns and violence all are increasing in his Mexico.

"What are the options for our government? Either you allow all those criminals to take over the country or you face the problem, and we decided to face that. And that's the most important decision of my government," Calderon said.

A high stakes decision with costly implications on both sides of the border.