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A bust in Hong Kong and Deviant Globalization

Wednesday, September 21, 2011
The recent arrest of five Mexican nationals, one Colombian, and one American in Hong Kong has lifted the veil a little more on a growing demand market for cocaine in China and offers another example of deviant globalization.

In total, Hong Kong police seized just over a half ton of cocaine, likely destined to the wholesale cocaine markets in several Chinese cities, where millionaires abound.

The last bust I could find after a quick search occurred in May 2006, when Chinese authorities discovered 300 kilos of cocaine, which had allegedly arrived directly from Colombia.

Since the 1980s, Mexican criminals have slowly captured control over the supply of methamphetamines. Shortly after he escape from prison in 2001, El Chapo likely spurred his men to get deeper into the methamphetamine trade. Soon after, the Sinaloa Federation deepened ties in India, Thailand, and China to source ephedrine, the precursor for meth.

It makes sense that these same pipelines have evolved into two-way channels as business links develop. It wouldn’t surprise me to learn that several cells of Sinaloa Federation operators are at work in China and India to develop cocaine demand markets in two of the world’s fastest growing economies.

It’s becoming harder to argue that Eastern Europe is the emerging market for cocaine. We will see what comes of this case in Hong Kong, due to go to court on 14 November 2011. Deviant globalization suggests that as the licit economy grows, so grows the illicit economy. The EU is mired in economic malaise while China and India continue to flourish. My bet is on Asia becoming the next emerging market for cocaine, if it hasn’t done so already.

Several headlines on Los Zetas in the past few days...

Wednesday, September 21, 2011
September 21, 2011

Zeta training camp captured in northern Nuevo Leon

September 20, 2011

35 alleged Zetas killed, bodies dumped in Veracruz

September 19, 2011

Knights Templar threaten Zetas in Guanajuato

Cartels aligned to combat Los Zetas in Jalisco

Alleged Zeta leader captured, linked to Monterrey casino attack

September 15, 2011

Zetas allegedly behind hanging of two youngsters for their social network activity

Tracking Los Zetas - The Zeta Cross

Monday, September 19, 2011

For months, I have continued to ask a series of simple questions to contacts around Mexico and the US who I know retain a special interest in Los Zetas. 

The primary question is: "do you think Los Zetas are strategizing to cut the country in half?" This question usually surfaces within a longer conversation about Zeta activity in Mexico and, most recently, in Guatemala, where the organization's effect on society has riveted local and international observers.

The first response to my question about Los Zetas in Mexico, however, is usually physical: a quixotic look, raised eyebrows, a frown. The question is open-ended; as intended, it sparks further discussion, and an informal interview ensues. The resulting information, carefully procured over months of discussion and interaction, has fused together into what is so far a loosely tethered theory I call, simply, The Zeta Cross (see map at bottom of post).

Since what we call in our book the "War in the North" began, Los Zetas have fought for control of Nuevo Laredo. I continue to believe that they, through Miguel Treviño's own special brand of barbarism, hold on to this plaza. 

The next node to the south is Monterrey. As current events unfold, it remains clear that Los Zetas are still fighting for control of the plaza. (I will discuss Monterrey in detail in a separate post.)

If you trace a finger on a map down Mx Federal highway 54, the next major stop along the Zetas Cross is Zacatecas. This is the hub and where the vertical and horizontal lines meet. 

Part of my theory, while focused on strategy, breaks down the management of the organization, as it plays out between El Lazca, considered Los Zetas number one, and Miguel Treviño, considered number two. Many of us agree that Treviño remains focused on the drug trafficking side of the Zetas business enterprise, while El Lazca remains focused on other business streams, especially extortion. I would argue that for the sake of their relationship, the men do communicate, engage in profit sharing like two Sr. partners in a professional services firm, and mostly stay out of one another's business. As such El Lazca, while on the move, has made the state - and city - of Zacatecas an important hub for Los Zetas activity across Mexico, whereas Treviño remains entrenched in Nuevo Laredo.

Recent activity in Zacatecas points to what appears to be a "better late than never" move by rival groups to construct a united front to block Zeta expansion south.

The united front against Los Zetas in Zacatecas looks a lot like what we saw in February 2010, when the Gulf Cartel, elements of the Sinaloa Federation, and the Familia Michoacana - as it was then known - grouped together to force Los Zetas out of Tamaulipas. Their offensive was largely successful, pushing Los Zetas into a tactical retreat, which I believe pulled their front lines back north to Nuevo Laredo and south to Tampico. Since then, Los Zetas have pushed back into Tamaulipas, but have yet to regain position in Matamoros.

In Zacatecas, the same sort of united front has formed, though I'm not sure if it will be as strong or as effective as the first "united cartels" joint venture. The united front in Zacatecas is made up of two splinter groups, still within their own start up phase, and the Gulf Cartel. According to my friends at the Excelsior, La Resistencia, El Cartel Jalisco Nueva Generación, and members of the Gulf Cartel are all pushing back against Los Zetas' expansion south from Zacatecas into Aguascalientes and Jalisco - namely Guadalajara. The line up is interesting: we have three disparate groups formed together under a loose alliance to fight against a single paramilitary organization. Gunmen on both sides are well-armed, poorly trained, and highly motivated by pay, reward of ascension within their organizations, and the promise of loot - the perfect recipe for a blood bath.

For a review of these splinter groups, check out InSight Crime's coverage of the atomization of Jalisco in the wake of Ignacio "Nacho" Coronel's death in mid-2010.

The battle lines in Zacatecas have been drawn and mapped, thanks again to Excelcior:

Now, moving south from Zacatecas, and assuming that Los Zetas have a good chance at breaking through the Resistencia-CJNG-CDG united front, Aguascalientes and Guadalajara are the next two stops on the route south. If Los Zetas capture control of Guadalajara, the hard part is over. It would be a matter of time, I would argue, before the organization forces south to capture the port at Manzanillo in Colima. I cannot overemphasize, however, the difficult task of capturing Guadalajara. Since the days of "El Padrino" who helped El Chapo - apart from the Arellano-Felix brothers and Amado Carrillo-Fuentes - get started, Guadalajara has been tightly held by Sinaloa Federation interests. Any Zeta offensive to take this city will be a long, nasty fight.

So, back to the question: "do you think Los Zetas are strategizing to cut the country in half?"

There is still no clear answer, but if Los Zetas push into Jalisco, it would make sense for them to complete the line by taking a Pacific port and completing the vertical division. A north-south corridor, from Nuevo Laredo to Manzanillo would afford Los Zetas several important elements:

1. A secure connection from a Pacific port to a US border crossing - ideal for drugs trafficking

2. Separate the Knights Templar from the US border and their friends in the Sinaloa Federation

3. Contain the Sinaloa Federation to the north of their line, where the Sierra Madres west of Durango form a natural barrier to keep them on the Pacific coast.

These points are all important, though number three is the most interesting. I believe that Los Zetas are the number two criminal organization in terms of staying power - a summation of their size, revenue generation, territorial control, and several other, minor details about training, force strength, and political penetration.

The number one group undoubtedly remains the Sinaloa Federation, which Los Zetas can only contain, not destroy. The Zetas Cross theory assumes that Los Zetas seeks to contain the Sinaloa Federation, while isolating the Knights Templar and the Gulf Cartel.

The east-west, horizontal line of the Zetas Cross completes that isolation. Stretching from Tampico, Tamaulipas, and passing west through Ciudad Valles, San Luis Potosí (SLP), Zacatecas, and ending in Durango, the horizontal line of the Zetas Cross, if completed, isolates the operational hub of the Gulf Cartel in Matamoros from the rest of the country.

Currently, I would argue that when considering the points along this horizontal line, Los Zetas do not control Durango - traditionally a stronghold of the Sinaloa Federation. Part of the complication with pushing their forces into the city is the ongoing battle for complete control of the Torreón-Gomez Palacio plaza on the Durango-Coahuila border. Los Zetas continue to battle for control of that plaza. If they win that battle, we would almost certainly watch Los Zetas push their influence south into Durango, pressuring El Chapo's people from the north in Coahuila and from the south in Zacatecas.

Today, on 19 September 2011, I would argue that Los Zetas have completed approximately 60 % of this cross, give or take about 10 %. Most of the fighting between Los Zetas and the organization's rivals will undoubtedly be at the Zacatecas-Jalisco border. And if Los Zetas break this alliance, we'll see them push into Guadalajara - though not an operation likely initiated until after the Pan American games. 

The recently announced Zeta alignment with rogue segments of the Milenio Cartel is interesting because it implies, at least, that Los Zetas have lured defectors to their ranks, possibly improving local knowledge, intelligence gathering, and recruiting capabilities from within rival organizations. This alliance, if true, also grants Los Zetas a small beachhead in Guadalajara, from where the group may be able to attack the united cartels from behind the battle lines drawn in southern Zacatecas…

I'll continue to report on The Zetas Cross as events unfold. As I learn more from colleagues on the ground, I'll focus on some of the points along the cross, including: Monterrey (Saltillo), Tampico, Ciudad Valles, SLP, Zacatecas (Fresnillo), Durango, Aguascalientes, Guadalajara, and Manzanillo.

Meanwhile, Guatemala hovers as an item of high interest. Reporting on this blog will ensue as we confirm rumors.

Zetas Cross map legend: 

Yellow is Sinaloa Federation; Green, CDG; Blue, the Knights Templar

Kill the Economics of Weapons

Monday, July 18, 2011
We’ve recently spent some time reviewing the transcripts and fallout from the recent ATF testimony over the blowback from the Fast and Furious program. Latin America’s Moment has a thorough review of the policy side of the story, while La Plaza, a LA Times blog, digs a little deeper into the revelations that while the ATF knew about the guns leaking into Mexico, the FBI and DEA are also at fault for running separate operations that “could have a material impact on Fast and Furious.”

By now, the whole throbbing mess has devolved into a political sword fight. Heads will roll; the “iron river” will still flow into to Mexico, and Central America, another important source of weapons, continues to fly below radars in Washington and Mexico City.

Like drugs, the weapons market is all about supply and demand. The economics favor anyone selling high-powered rifles in Mexico. If we shut down the United States, weapons will flow from Central America. If both are shut, weapons will flow in from the Caribbean, from Europe, China, Israel, etc.

Meanwhile, this media splash reminds us that criminals continue to benefit from the paradoxical need for effectiveness and multilateral cooperation. In 2006, I wrote on how guns and cocaine are one market out of control. What I said then is just as true today, despite any progress President Calderon or the Merida Initiative has made since December of that year:

Tens of thousands of illicit actors propagate a market that proves to be highly lucrative, flexible, and networked. There is no center, no head, no leader to kill.

Latin America’s Moment asks in the 18 July 2011 post, “what else can and should be done?”

I immediately thought of Central America, especially Guatemala and El Salvador. Here is a sub-region that plays a significant role in regional weapons trafficking, but it has managed to avoid detection at the international level - despite the strong links (we're told) between stolen grenades in El Salvador and the grenades that exploded 100 meters from the US Consulate in Monterrey.

Central America’s low-level of attention, and the ongoing Fast and Furious scandal in Washington, support a strong argument: the issue of weapons trafficking is little more than a political pawn surrounded by much more important issues - namely immigration, energy supply, and macro economics - in an ongoing geopolitical chess match between the United States and Mexico.

The criminal system is larger than any one government, and politics always trumps security.

Any efforts to stymie gun trafficking from the United States to Mexico, and from Central America to Mexico, require a matched effort from at least three nations – the United States, Mexico, and Guatemala. All three are currently in one stage or another of a presidential election cycle. The United State is the furthest away (November 2012), with Mexico not far behind (July 2012), though unofficial campaigning started earlier this month after the 4 July 2011 Mexico state gubernatorial elections. Official campaigning in Guatemala began in May, ahead of September 2011 first round elections.

Any tri-lateral discussions held today would not begin to track until after the January 2013 inauguration of the next president of the United States, when the new presidents of each country (whether Obama wins or not) would have to re-seat the issue amid a new political environment, despite what the latest security statistics look like.

…Which brings us back to Fast and Furious. Everyone knows that the ATF is the red-headed step child of the Justice Department, and it’s punching above its weight class by taking on the FBI and DEA. But none of that matters; it's just another squabble between brothers, like the House of Ghosts incident. The deeper the US wades into the muck that is organized crime in Mexico, the more likely we're to be entertained by political blowback.

In a recent event in Mexico City, I learned that Los Zetas – a criminal organization with a strong presence in the United States, Mexico, and Guatemala – spends as much as US$4 million a month on its war with the Gulf Cartel. How much of that cash purchases weapons and ammunition? Once everyone is over the politics, maybe we can get down to business. Rather than remove the weapons used to kill, kill the economics behind the weapons.

Guatemala: Too Late to Worry?

Wednesday, July 13, 2011
Over two years ago, we drafted a post on Guatemala entitled, "Why doesn't anyone worry about Guatemala?"

Much has changes in two years. Now "we" are worried about Guatemala, but is it too late?

At the time, the Guatemala Times hoisted a list of important events related to the country's ongoing public security challenges. The list was detailed and helped readers get past the big news that today splashes down on the pages of CNN (once and again) and other international media portals. The May Petén massacre and the following, recent murder of Argentine troubadour,  Facundo Cabral, are just two of the most salient examples.

Election violence, then in 2007, and now in 2011 is another symptom of the deeper, structural level of flaws inside the Guatemalan democratic system.

A recent article, "El tenebroso cartel de los 'Durmientes'," illuminated the historical presence of a de facto institution of corruption, altogether different and more threatening than simply corruption in the institution. Just a quick review of this piece snaps into place the reality that everything we've observed during Colom's administration is only the latest chapter in a long tale of woe that has brought Guatemala to the brink of what at least one observer has considered the region's best candidate for failed state status.

The same observer, we were pleased to see, drilled down on the reality of how a flurry of international donation plays out inside an institution of corruption. The mid-June meeting of political minds in Guatemala City ushered in hundreds of millions in pledged donations, but as the Brookings Institution pointed out:

...Relatively modest pledges made in Guatemala suggest that the event's real value la in its political message, evidenced in the convergence of a remarkably broad group of nations and organizations all rallying in the name of an unprecedented regional effort ti improve the isthmus' dire security situation.

Bravo for us - all of us. Bottom line: in September, a new man will be calling the shots, and notably not a woman. Colom's x-wife Sandra Torres has all but been legally blackballed from the race. The front runner, General Otto Perez, sits on a 44% lead, which could place him as the clear winner, with more than 50% of the vote, after the first round of elections - campaign violence be damned.

Guatemala too, unfortunately. Perez, as a former military intelligence official, narrowly lost to Colom in 2007. The 2011 campaign is a carbon copy of his 2007 campaign. His focus on public security will collect votes, but implementation of these ideas will be a nightmare - again, the institution of corruption will present a Sisphian task. Apart from weak democratic institutions, there are new gremlins in the woods. In 2007, Guatemala's main concern was the MS-13. Today, it's arguably Los Zetas.

Make no mistake, if Perez assumes the position, he'll follow through with a militarization - far beyond Colom's brief, decorative use of states of siege - that will dramatically rachet-up violence in Guatemala. After all, if Los Zetas are willing to take on the military in Mexico, they'll do the same in Guatemala.

From the perspective of pure intellectual curiosity, it will be interesting to see how far Guatemala goes down the line with its fight against Los Zetas, and others. Will the US be asked to bring trainers, drop boots on the ground (not likely), or something else we can't see right now? Could there be a "Plan Guatemala?" There should be, but there should have been.

It's almost too late for the US to worry about Guatemala. That should have happened at the end of the civil war in 1996, not today. Though there are silver linings, we're concerned that when you mix an institution of corruption with hundreds of millions of international donations, a militaristic president, Los Zetas, and hundreds of millions of narco dollars the outcome can't be pleasant.

Warlord Entrepreneurs

Thursday, July 07, 2011
We recently posted a report on the strength of criminal systems versus the weakness of the organizations themselves, one of several chapters submitted to the Warlord Entrepreneurs project organized by Noah Radford.

Our take on warlord entrepreneurs, such as it was, gathered a "must read" posting from the Council on Foreign Relations, we were pleased to note. And it's likely that readers of CFR pages grabbed our report to publish a couple of pieces on El Chapo Guzman in Mexico, who we referred to at the end of the report:

As long as institutional reforms lag behind, every ‘win’ for security forces creates a more atomized and violent set of drug trafficking organizations. This is the pattern that explains why 2010 was so violent in spite of numerous successes by security forces in Mexico, Guatemala, Honduras, and El Salvador. As this pattern repeats itself moving forward, leaders in Latin America may find themselves at the precipice of a new phase of evolution of the criminal system, where successful warlords, such as Joaquin “El Chapo” Guzman, the leader of the Sinaloa Federation, seek to find sustainable power beyond the criminal realm, in the political world, where the transition from criminal king to political king maker is relatively swift to complete and nearly impossible to reverse.

In this piece, we presented four key questions, pasted below. Share your thoughts for what the answers might look like in the comments section.

  1. How do governments exploit these weaknesses in individual terrorist and criminal groups to hasten their decline or disintegration? 
  2. Can fear of a brief and awful life convince enough entrepreneurs to avoid the criminal route? 
  3. Do government operations to destroy individual groups actually make the problem worse by allowing the system to adapt more quickly? 
  4. Do governments speed up the evolutionary adaptation process of the criminal system by undermining the individual groups within it?

Introducing the new Southern Pulse Blog

Wednesday, June 01, 2011
Welcome to the new Southern Pulse blog!

In future posts, we will present ideas, thoughts, clippings, interviews, field notes, and other items relevant to our pursuit of investigating security, politics, energy, and business in Latin America.

These posts will, at times, resemble the now dormant Security in Latin America, blog formerly run by Southern Pulse Managing Director Samuel Logan. At times, we'll simply re-post some of the more interesting tidbits we're picking up across the web. And from time to time, we expect to feature guest posts from our contributing editors, members of the advisory board, and SP investigators on the ground across the Americas and beyond.

We will also use this blog to announce new products, changes on our web site, and other items related to the Southern Pulse organization. Media interviews, domestic and foreign press pickups, etc will also be folded into this forum.

Finally, as we run into rumors, loose pieces of information, and other random, but relevant, items of interest, we'll be sure to post those too.

Thank you for visiting, and, as ever, we are happy to hear from you.