Mexico's Dangerous Illegal Economy

When I first saw the images of bloodied bodies and heard the tales of severed heads coming out of Mexico, I was riveted. It reminded me of Iraq, the shock value of chopping off heads and leaving the bodies on display, as powerful in Mexico as it was on the streets of Baghdad or Mosul or Falluja.

But when I went to Mexico, what I discovered was even more disturbing, as unsettling as the savage nature of the violence is to anyone.

It's not as dramatic, but just as dangerous. And it was explained to me like this:

Mexico has two economies – the legal economy and the illegal one. The problem is that Mexico's illegal economy, (fueled by drug trafficking) is worth billions – far more than the legal economy.

And where you have two economies, you have two states, each with a ruling power. Those in charge of Mexico's legal state, the officially elected government, are not as powerful as those in charge of Mexico's illegal narco-state – the drug cartels.

Not only do the drug cartels enjoy vastly greater revenues and wealth than the government – they can choose how to spend their money with no regard to civil considerations. They do not have to worry about health care or education or the people that elected them. They spend only to ensure their hold on power continues. They serve only themselves.

Photos: Mexico Border Violence
Drug-related violence along the U.S.-Mexico border has spiked in recent months(Photo: AP)

And one of the main ways in which they serve their own interests is weapons. The drug cartels are better armed, and better equipped than Mexico's army and police.

So you have an illegal state co-existing with the official state, but it is more powerful, richer and vastly better armed, accountable to no one.

While the Mexican army stands accused of human rights abuses and Mexican police and officials are discredited by corruption, the drug cartels chop off people's heads, murder and kidnap at will and dissolve people in acid … with no one to hold them to account.

Until Mexican President Felipe Calderon decided he was going to be the one to do this and has been using the army – and U.S. intelligence assets – to some effect against the cartels.

He has taken down some of their most powerful leaders. What remains to be seen is what it will take to bring down an entire cartel – if that is even possible. And how quickly leaders are being replaced, so far appears to limit the effectiveness of the government strategy.

The possibility remains that it will work over time, if the pressure is relentless … and if President Calderon survives.

But the Mexican war on drugs will never be won as long as the focus remains on weapons coming from the U.S. and nothing is done about the weapons flooding into Mexican ports from the black markets of Latin America, China and Russia.

Much is being made of the fact that the U.S. is supposedly responsible for 90 percent of the weapons fuelling Mexico's drug war.

That is the official statistic being peddled by the Mexican government – their foreign minister, Patricia Espinosa, repeated it when I sat down to interview her the day before U.S. Secretary of State Hillary Clinton, quoted the same statistic on her first official visit.

The problem with that statistic is that it is only partially true.

There is a word missing – and that word is "traced."

The U.S. is responsible for over 90 percent of the traced firearms found in Mexico, but the vast majority of guns recovered in Mexico are not sent back to the U.S. to be traced because they are obviously made somewhere else.

Mexico is a virtual arms bazaar with weapons, like their illegal drugs, pouring into Mexican ports. And most importantly, the most powerful weapons like rocket propelled grenades, hand grenades and fully automatic assault weapons – are all illegal in the U.S. These are not weapons that can be bought over the counter in Texas and smuggled illegally into Mexico.

Yet these are the weapons being used to the most deadly effect by the drug cartels, these are the weapons that make them more of a force than the Mexican police and army – these are the weapons at the heart of the bloodshed threatening the legitimate state.

So while the U.S. is right to take responsibility for its part in the drug violence, the problem will not be resolved by looking solely to the U.S.

Mexican authorities have to look at their own ports, and the routes from the ports across their country to the U.S. border. The cocaine being smuggled into the U.S. across the Mexican border has often travelled across Mexico to get there. More effort needs to be made to stop it along the way.

And more attention needs to be given to the growing power of the narco-state that is using its influence to undermine the official state. Journalists have been paid (and threatened) to plant stories of human rights abuses by Mexican soldiers in the media. There is obviously a campaign underway to undermine the authority of the Mexican government – but less obvious, the campaign to undermine the government's credibility.

This is what makes the legitimate Mexican state so vulnerable.

And it's what makes Mexico's drug problem even more urgent.

  • Lara Logan

    Lara Logan's bold, award-winning reporting from war zones has earned her a prominent spot among the world's best foreign correspondents. Logan began contributing to 60 Minutes in 2005.