The cost of doing business in Mexico

Rampant organized criminal activity continues to impact companies’ security operations in the country

To date, it is estimated that the ongoing drug war in Mexico has claimed the lives of more than 70,000 people across the country as drug cartels battle each other, as well as government forces to stake their claim in the multi-billion dollar industry of illegal narcotics trafficking. This bloodshed has added an additional layer of risk that corporate security managers have had to incorporate into their enterprise risk management plans, which in Mexico, also have to account for a wide range of other crimes such as kidnapping, extortion and cargo theft. Despite these risks, Mexico remains an attractive country to do business in for many large, multi-national corporations.

However, as the risks change, security executives and the organizations they work for have to remain nimble enough to adapt to the changing threat landscape. For example, according to a story published by CBS News, the Mexican government in January decided to legalize various vigilante groups and integrate them into quasi-military units called the Rural Defense Corps. Many analysts suspect, however, that these so-called “self-defense groups” are actually being supplied and funded by the drug cartels. In fact, Samuel Logan, director at Southern Pulse, a strategic advisory group that helps organizations understand how the security, political and economic landscapes of Latin American countries will impact them, thinks that this a “very dangerous” decision that the Mexican government has made.

“The cyclic history in the Mexican criminal underworld is that you start out as vigilante community protection group, but eventually you’re co-opted by these bigger groups because they don’t want to fight you anymore and they just buy you,” said Logan. “I guess it’s a politically expedient way to sublimate the presence of these groups in Mexico in a way that makes it more digestible for the public and it makes it easier for them to make a media spin and play off of it. And it buys them some space and some time to figure out what the heck is really going on. Meanwhile, in other communities that have suffered from a lack of (government) services, they’re looking around saying, ‘what happens if we start a local vigilante group? Chances are we have a pretty good chance of being legalized and getting money and support from the government.’”

Charlie LeBlanc, vice president of security services for FrontierMEDEX, believes that there has been some consolidation of power among the cartels and that people can’t discount the involvement of rival drug gangs in these vigilante groups.

“It would make a nice movie to assume that wasn’t the case – that this was truly a grassroots uprising to the violence that these people have seen over the years - but the reality is there’s a lot of connecting the dots to rival cartels in arming these groups and empowering these groups,” said LeBlanc. “The problem, which started in the very beginning with the war on the cartels, is that it’s a war on many fronts. You’ve got a government that does not have anywhere near the sheer numbers needed to disable the cartels, you’ve got a citizenry that has been the victims of these cartels, you’ve got no true localized law enforcement or justice capacity or capabilities, and then you also have a rising drug use problem within the middle class in Mexico. I hate to use the term ‘perfect storm,’” but it does add up to the cartels to continue to run large parts of Mexico without the government being able to hold what we would consider basic justice reforms. There’s absolutely no fear of justice in Mexico when it comes to the cartels.”   

Looking at how the security landscape has changed in Mexico over the last several years, Logan said that as of six months ago, much of the big, high-level conflicts among the cartels over various territories and logistical routes had died down somewhat. However, Logan believes the trend could be headed back towards increased violence depending on the rise and prevalence of these vigilante groups.

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