Mexico’s war on drugs is an ongoing conflict in which an estimated 164 thousand people have lost their life to drug violence. This paper argues that the U.S.-Mexican relationship regarding economic legislation like NAFTA and their methods for fighting the “war on drugs” have played an important role in causing the growth in Mexican drug cartels and their production. Historically the United States has played an important role in shaping Mexico’s economic policy and still does currently to this day through agreements like NAFTA. These policies have resulted in an increasingly globalized Mexican economy in which local unskilled laborers have lost their jobs due to the influx of foreign goods and have had to resort to other means to support themselves. Not only that, but the United States has often used its political hegemony over Mexico to enforce neoliberal policies that is concurrent to the United States’ political ideology and has coerced Mexican institutions like the military to enforce these reforms and destabilize political opposition which in turn has led to a loss of trust on government institutions amongst the general public and an increase in government corruption.
A background factor contributing to Mexico’s drug violence is the lack of other sustainable means of living. While NAFTA has brought many opportunities for Mexican business and the Mexican middle class, it has only increased the poverty divide in Mexico by taking away value to jobs that have become cheaper thanks to increased globalization. Since the ratification of NAFTA to 2011 there has been an increase of 500 to 600 thousand jobs in Mexico in the manufacturing industry, but there has been a loss of 2.3 million jobs in the agricultural sector which comes from the importation of cheaper subsidized corn from American Agribusinesses (Mercille, 2011, pg 1642). These losses in market share caused Mexican farmers to have to give up their land. These farmers, often uneducated, are forced to migrate to the US in search of better work or move to the cities along Mexico’s northern border to become cheap labor for the growing manufacturing industry known as maquiladoras that exports to the United States. However even the maquiladoras in the 2000’s experienced outsourcing to China and India, furthering layoffs. There has also been an increase in Mexico’s informal economy, from 53% of the workforce in 1992 to it being 57% in 2004 (Mercille, 2011, pg 1642). These employers in these jobs do not pay well, often pay no taxes, offer no health care, and have horrible working conditions.
Mexico’s small business felt the burden of NAFTA as well, as global chains like Walmart provided cheaper goods through their global market network compared to small locally owned general stores. By 2000, 28,000 small businesses were displaced as a result of NAFTA’s globalization, showing that not even Mexico’s middle class is completely safe from globalization. Poverty in Mexico over the years has continued to increase, as the proportion of the population living in moderate to extreme poverty rose 35% in 2006 to 46% in 2010 (Mercille, 2011, pg 1647). This lack of sustainable jobs for many of Mexico’s working class provided willing workers for Mexico’s burgeoning illegal drug economy. In 2012 it was estimated that Mexican Cartels directly employ up to 500 thousand people and furthermore, 3.2 million people jobs within Mexico are indirectly supported by the money generated from the drug trade.
NAFTA has been jokingly referred to by United States officials as the “North America Free Trafficking Agreement”. This is because with the increase of legal trade goods between borders there has also been a rise in the amount of illegal narcotics being sent through. In 1998 the Department of Transportation OIG office released results of an audit of the Federal Highway Administration’s motor carrier safety program for commercial trucks at U.S. Borders, the audit showed that very few trucks crossing the border are actually inspected. It found that from 1993, the year NAFTA was passed, only 2.5 million trucks were inspected and in 1997 it increased to only 3.7 million, only about 1 percent of the trucks that went through the border that year were inspected (La Rue, 2000, pg 40). Considering this lack of inspection for commercial trucks, there is also similar lack of inspections among cross-border railroads and ocean transit. This sort of incompetence on behalf of Mexican-American border security has led to the embedding of Mexican drug connections within the United States over time.
Not only has NAFTA aided in transporting Mexican product over the border to the United States but NAFTA has made it easier and more common for drug cartels to launder money through U.S. banking institutions. Money laundering is so important for these cartels because it allows them to make it seem like their money comes from legal means through their shell companies. Due to the trading boom ignited by NAFTA, there is now a higher velocity of money flowing to and from Mexico every year. The high velocity of money moving between borders causes prosecutors to have a hard time prosecuting individuals transferring large sums of money who claim it is from a legitimate source. American banking institutions have been caught doing it in the past as well. In 2010 Wachovia bank, which is now a part of Wells Fargo, had to give up $110 million dollars to US authorities for drug related financial transactions of that amount, and they also had to pay a $50 million dollar fine (Mercille, 2011, pg 1649). However, even though it was proved that Wachovia did have knowledge of the legality of the money no one was sent to trial nor were there any criminal convictions, perhaps due to the huge amount of power that the banking sector holds with the United States. The non-governmental organization No Money Laundering estimates that a total of $59 Billion are made from cartels a year and the Mexican Ministry of Finance in 2015 noted a $10 Billion unexplained surplus in the financial system (Laurell, 2015, pg 252). This unexplained surplus is indubitably connected with cartel money laundering.
In order for the Mexico and the U.S. to combat drug cartels, administrators from both governments need to come together and discuss the underlying economic issues that push people towards the cartels as well as the ease with which product and capital is moved across the border. The Mexican government needs to look at providing economic stimulus towards its working class and expand its social safety net in order to prevent people becoming depraved enough to enter the criminal underworld. The American government has to put more economic regulation on its banking institutions regarding suspicious foreign money transfers. Stopping the laundering of money within American banking institutions will result in cartels not being able to use “dirty money” in their legal business investments which will ultimately hurt their profits overall. As well as increased inspection for all forms of cross-borders travel, because America is Mexico’s number one consumer of illegal drugs. With increased disruption of drug transportation methods, less money would reach American Markets reducing the profitability and the willingness of Cartels to transport drugs. More importantly however the American Government has to focus on quelling the demand for illegal drugs within the United States, instead of punishing non-violent drug offenders the government has to focus on rehabilitation. Doing this will eliminate the market which the drug cartels were created as a response.
- Laurell, A. C. (2015, April). Three Decades of Neoliberalism in Mexico The Destruction of Society. International Journal of Health Services, 45(2), 245–264. doi:10.1177/0020731414568507
- Mercile, J. (2011, October 31). Violent Narco-Cartels or US Hegemony? The political economy of the ‘war on drugs’ in Mexico. Third World Quarterly, 32(9), 1637–1653.
- Larue, P. J. (2000, Summer). The Ill-Icit Effects of NAFTA: Increased Drug Trafficking into the United States through the Southwest Border. Currents: International Trade Law Journal, 9, 38–48.