welcome everybody to this meeting of the Latin American briefing series sponsored by the Center for Latin American Studies and the cats Center for Mexican stories the the topic of today’s meeting is of great contemporary interest not just in Mexico but also in the United States and we are I should say extremely fortunate to have with us to analysts and experts who i think are i should say widely recognized in mexico for not just the the sharpness of their analysis but also for the clarity of their arguments and also the honesty of information that they managed in a field theme that is the drug economy and violence and politics of drug trafficking in Mexico that is inevitably full of hyperbole of distortion and of a great deal of opacity each of them will speak in turn and then we will open the floor for your questions to both of them and perhaps also I suspect for some back and forth between them and as to the interpretation of some of these issues our first presenter who is being welcomed back to the University of Chicago is Eduardo Guerrero distinguished and well-known political analyst and security policy expert has consulted in high positions with the presidency of the Republic at different times with the intelligence services and with a number of other ministries of the government and it’s particularly well known at least to the general public over the past few years for a series of incisive and provocative and sharply argue essays published in various places but mainly in the magazine the monthly magazine next was I say welcome back because while though did graduate work in political science at the University of Chicago some years ago now and so we are delighted to have him here I would say I think without exaggeration that he is today one of the clearest and more consistent voices among those in Mexico trying to make sense of the of the violins and of the conflict between the government and the drug cartels as well as between the drug cartels so it is a great honor to have him with us today our second speaker is perhaps better known already to some of you here because we’re fortunate to have him here as Tinker visiting professor from the Harris school of public policy for the entire academic year of 2010-2011 it’s professor Gerardo esquivel who is a research professor at el colegio de mexico in mexico city and economist by training with the PhD from harvard and as i’ve said in other places where i’ve already had the pleasure of introducing me in my opinion and i think in that of others as well probably if not certainly the most accomplished and distinguished applied economist or even economies period in mexico in his generation well known for know Josie’s economic publications but also for his public policy analysis in academic spaces but also in the public sphere where he is I was just joking with him increasingly known as a great blogger and twitter as well as a participant in a number of television and other public spaces newspaper internet column and things like that so that he is without question and I think I’m probably not wrong in predicting that will continue to be for a long time one of the leading voices in Mexico dealing with questions of economic policy development poverty and so on and it is therefore a great privilege for us as a university to had the fortune of having him this year as a visiting professor so I think together hidalgo esquivel and endo aldo Guerrero I’d like you to give us I hope a provocative and

unthoughtful series of ideas a bunch of view about that vexing issue which is the title of our briefing today the economics and politics of drugs and violence in Mexico as usual for those of you who’ve been to these events before we will open the floor for questions after each of them has spoken and as usual also we hope that you will stay around to talk to them and to each other for a small reception we have prepared afterwards so without further ado please join me in working welcoming Eduardo Guerrero and helado SQL thank well good afternoon thank you very much for your words Amy do I thank the Center for Latin American Studies for inviting me to talk about this palenik topic and I brought several data about violence in Mexico about how the dynamics of organized crime I hope eat the answer some of your of your questions the first place the first part of the presentation has to do with the evolution of violence in Mexico well we had organized crime violence in mexico since many years ago as you can see the violence in mexico in fox’s administration existed and we had more or less here 1,000 of death thats related to organized crime when he began his administration and he finish it with around 2000 executions per year the first year of gallium administration in 2007 with the executions go a little but suddenly in 2008 we had a wave of violence that the increase be the proportion the number of deaths in Mexico as you can see if we make a projection a linear projection of how how many executions we will happen in Cardinals administration if that trends if they can continue at the same pace we will have approximately 75 76 thousands of executions at the end of the Catalans administration of course this is an arbitrary assumption but well when I projected this one year ago many people told me that you are accelerating of course these number is longer is an acceleration it was a very precise the projection for 2010 now here we have the monthly number of deaths in Mexico related to organized crime these are not all the homicides in Mexico but only the ones that are connected related to organized crime as you can see here we have first a wave of violence peace and no one has been capable to explain this initiative what happened here but there sir here an important arrest of 13 kappa i fail at hand later in january 2008 that culminated in the split of his faction from the pacific cartel de sinaloa cartel that is the largest largest cartel in mexico and the plan lever brothers make a kind of coalition with other organizations in

mexico to fight to struggle with a sympathy card of the the wire or the fight took place in several cities of mexico but mainly into that wise there is a very important border city that like kind of strategic for cartels for passing drops to american territory so these increase of violence has to do with the number of deaths that took place into that forest during that year then we can see this kind of stabilization of of the violence but later we have one more big wave of executions but calendar well in that confrontation the military and the cream else One import other important couple was shot today in this case was a cooler with family left a glad was this was in December 16 2009 with the head of a cool event he said newborn organization they will kindly that Robert organization was kind of dismantle but these costs a lot fight between one side with the fragments of the part of the family organization and and the acidic Carter what i want to tell you with these is that they arrests important arrays of kappas or the death of Kappas frequently increases violence in a very natural menges amount now Mexico now there are kind of 777 conflicts around the country the first one is a both conflict and eat now with the Koala cartel is kind of weak and these please complete only generates kind of five percent of the debts so it’s a conflict that is not so violent then we have the most violent conflict between the Pacific of charcoal and the fire starter and this is a very bloody conflict that takes place in Chihuahua state Sinaloa and durango one year ago the number of executions in Ciudad Juarez was approximately thirty percent of the total of execution of Mexico but now because the violence has been now is dispersed in the territory now a Judith Molly to that file is only amounts for the approximately that twelve twelve percent of the executions in Mexico but now the the number of that since you that virus has stabilized but both in other new places that we will see violence has been growing during the last month this is this conflict now is not so violent violent because the family organization is kind of is disappearing this is a new conflict that has to do with a split of other particle known as millennial part of that splitting these two factions this country is now taking place in Jalisco artfully map states we have these all this conflict between clued small organizations that were part of it will translate my brother’s heart oh these are very violent conflict that has been

taken play during 2010 in newnan tamale bus Santa’s is a very aggressive organization across military organization its founders were Mexican military that deserted from from the military so its modus operandi is very very impressive they have a heavy weaponry and they are very very dangerous set us and la familia michoacana are very similar in its modus operandi also like a million rihanna is very professional to exercise violence answer a peculiar cartel in mexico people because it’s their only cartel that’s has kind of a political interests Mexican cartels are very intrapreneurial they want money they want to maximize its profits they are not interested in politics they are not ideological they are very pragmatic the only hartl that is kind of a Sicilian cartel as his healing organizations la familia michoacana has its own ideology has a kind of religious principles has also and it’s also very very vital in a very professional exercising violence but this is an original concrete community openness and regional organization only present in four or five states and say this is a national organization it has presence in around 22 states in Mexico Mexico has 32 States the most powerful cartel in Mexico now is the pacific cartel it’s a very old one it was born around the fourth in the 40s and golfo is the other traditional cartal very old too in fact this cartel exported whiskey to the united state or the provision mainly years and aldrin during the thirties pacific cartel exported marijuana after the Second World War to the states to help the American soldiers when they returned from the war they need some kind of drugs the pacific cartel exported marijuana and other drugs to american territory ok here is more or less that they drank a location of the conflicts and here if you have the recent arrests of beef tacos in Mexico as you can see this administration of President calderón has been very effective in arresting tapos but some of these arrests has has triggered a lot of violence as we will see the ones that are inbred a target one side use their as examples of how the rest are s triggers evaluate for example if we see the number of executions in baja california during this period we see that the detention of eduardo i ganna here is associated with without wave of violence important wave of violence in the in the region also hearing instrument wise they are rest of the same theory or later that is a the son of the main leader requires a heart health also provoke that was associated with the important wave of violence as I called you available time Layla was arrested this month is probable that a separation of the defender hot rollers from the city cargo until we had also

more violence than the period it’s very recently we had the definition of fun alessia cara school and we have immediately the explosion of divers in the region not only the pensions trigger values but also their seizures of drugs refer if the seizure a serve of marijuana let’s say harrowing the the wave of violence will be more intense that if you say cocaine but the wave of violence that is produced with the seizure of cocaine is stronger than if you says marijuana it depends of the value of the seizure so here to two seizures of marijuana are apparently related also with the increase of violence in this region this is the call this region is called a from there are several municipalities very close to the make American water now some some arrests and some tissues not increased violence but decrease it interestingly if you arrest gunman leaders for example not that big couple but the third level the leader of an army of sikarios then the violence will go down because you will create a problem of coordination among basic values I’m on that army so you will be capable of decreasing values for three or four months also if you say is a money or a weak ones you will be able to decrease violence so what I have a recommend some friends from the Mexican government is to change the strategy and to attack the other levels of the organization this level and to privilege this kind of seizures for decrease in violence now the factors i have mentioned are contextual factors but they are also structural factors that are related to violence for example high rates of property and violent crime during previous years are related to balance to organized crime violence because practicing criminal networks provide a day for organized crime also a change in the ruling party after their 2007 nine lunatic municipal elections provokes vitamins because these changes in municipal authorities increased uncertainty and made this rock a low by Oasis type of school finally i have found that high hyphen turnover in case of all security institutions also is associated with with violence ok when you arrest a leader of the cartel these cartels offers our process of fragmentation of division internal division during the next month’s so the number of organizations in Mexico has improved in the last year’s here we had six organization and now we have the double we have 12 important heartless in Mexico though these are smaller once of course the fragmentation of the carcass has this purse the violence geographically we violence is concentrated in these

four municipalities but during the last year they the growth rate of this value of this violence was only of twenty-seven percent but the growth rate of violence in these other municipalities was the close to two hundred percent so now we have more violence in states or municipalities were one or two years ago there was no violence at all for example see these days for example in Tamaulipas physicality see this one see this and it’s very very pressing hard violence is rolling several states in several miss apologies it’s all around the country is not only in the mexican-american border see for example critique you see Acapulco for example if we see the map the municipalities in 2007 with 50 or more organized crime related deaths we have all we have one 131 municipalities the following year we have 200 municipalities the next year we have 285 and the last year we have 376 so violent events related to organized crime are kind of there is an spillover effect all around the country if we kill some metrics to measure the concentration or discretion of violence the economics you have this is index that measures the concentration of the markets or you use the latter talavera index that measures a computationally party systems then these controls that Mexico is now having a process of dispersion of violence it’s pretty clear know the numbers there was here we had more dispersion of violence but we have a lower level of violence what your lower level now we have here the violence increased but also the concentration of violence here we have more violence but we have a dispersion effect on the values this is pretty all around the country finally let’s fill rice a little about what is happening the government our essence issues bring uncertainty incentives among including carcass incorporate diminish this has the effect of the village car collision more competition and distraught and mistrust Iraq in the drug trafficking Iranian these causes the increase in violence and the expansion of organized crime organization organizations the Bible is is a meal of enforcement and sell me love disputes finally increase violence at trax additional government health intervention is a kind of vicious circle so far which are the scenarios for the future I see two to a scenarios nowadays

we have three major cartels as if you go call for SMS that remains strong you have four cartons that has have been weakened during the last three years Beltran Leyva iguana Juarez and la familia michoacana but we don’t know if the government will be capable of winning these three big organizations if that doesn’t happen if this big three organizations are not fragmented by the government with with its arrests and seizures then I think that this organization will absorb in the next year’s the smaller ones and we will have a scenario like in the eighties in Mexico in which we had only three big organizations so that’s possible if the government is not capable of destroying fragmenting the largest organizations the other a scenario is the complete atomization of the market and then we have further division of drug cartels leads to a fragmented market with no visible regular organizations state and local police agencies are not creeper to confront new and smaller criminal sations or violence either stabilizes at high levels or keeps increasing I think the trauma now in Mexico is that we don’t have capable police agencies that are able to confront these are these new organizations that are smaller than the old ones but they are still too big too large for our local police for our state police and prepare you you need several years to construct a good police so what we can had during the next few years it’s a massive problem of Public Security in several states of the country week because you will have a lot of new small criminal organizations and will you will have an absence of state and local police or very weak and the military will not will not confront these small organizations the military will be focusing in the largest ones in Volvo Pacifica and set us so it’s a it’s a worrying listen area thank okay well I’m going to send the second part of this a a presentation this is am I took a limited economics and my view decide the issue violence I should say it from the beginning that i am not an expert in this topic i’m just starting to think about these issues because as the mexican as the prior saying any mexican i’m very concerned about this issue of violence in Mexico so I have started to sink a little bit about these topics and this is a lease not a formal work to my first thoughts about this is a very important issue i think and i’m going to success from twenty percent e i turned a media for the imitation and also for the kind words that he that he said about me the only problem with that is that this very easy please appoint you given what he said so I I’m try I will try to notify you that much but let me study with this presentation about economics and politics of drug trafficking imbalance oh I start from the end mmm so the main questions I think we should just be Sara asking ourselves is why is that drug traffic in the first place and this is this is a right the first thing we should we try to think about it and second is a given what we just saw from Eduardo’s analysis what’s the logic behind the world that the president calderón launched in 2006 and in early 2007 and which started probably at by the end of the administration of President Fox and the question is whether that makes sense weather is justified based on the premises that they had when they look down to this

initiative and protect a drug trafficking organization and the third question is what my explained is increasing by Rick violence in Mexico in recent years so these are three topics that I think are quite important to understand and let me then begin with these premises Mexican Santa drug work as of 2006 as explained in AB in a public announcement in a public add in the main newspapers in Mexico by President calderón a few months ago he sort of explain for the first time what was the logic behind this app this anti drug war and he mentioned that for things and Here I am just pointing out three because the fault I think I think four is in some sense correct which is relative to the increasing weapons availability in the US but there are three things that he mentioned in this his argument where there has been by them in two thousand six or thousand seven there was they had been an important increase in drug consumption among the Mexican population that’s one of the things he said she was very much concerned about and that ought to explain why he was concerned about this increase in consumption drugs in Mexico in many areas and he actually did the slogan for the credit for the campaign if someone who may remember is a para que la droga no llega tus hijos for the drop dinner to reach your children that’s the one of the main log is Logan from this campaign so this is the first premises from President calderón and he launched this initiative the second is that there has been a substantial increase in violence particularly in a massage in Mexico back then it was very much concerned about that he he also claimed explain to explain that it was the result of an increase in competition among cartels for the verdict for this specific cities or territories which were trying to control because they were interested in controlling the domestic market of drug consumption Mexico and the third one he also said that there had been an important case you know the price as a result of a process of crime diversification if that includes extortion a kidnapping a vehicle theft etc so these are the three main points before twice as I said the increase in weapons availability as a result of a change in the law in the u.s. a company in a few years ago so let’s see some data to to try to understand this the first thing is is a stronger having a percentage in a publishing up in this magazine nexus of you a few months ago about some what are we talking about when we talk about the market for drugs in North America and hear what I have is my one a consumption in North America according to the world rock report 2010 which is the latest data we have and we have two indicators when is it last year prevalence of consumption of marijuana which is the percentage of people between 15 and 64 years of age who actually consume marijuana last year the second is is at the same indicator but just for the Jews for young people the third which is not a meaningful Canada the third is a historical prevalence it for the Jews in terms of whether they have consume marijuana at some point in their lifetime so as you can see there and this comes from acts from surveys which are a pre standardized across countries and so it is not that is the way in which the phrase is put it that’s as I said is very standardized and that both had the rates of consumption among these three countries as you can see there and this is the latest day that he is from Exodus 2008 as you can see there in Mexico the prevalence of consumption of drugs like marijuana is very small compared to that in the US or Canada it’s about in the US Attorney’s like 12 between 12 and 13 times that of Mexico this is just in the prevalence this is the percentage of people who has he consumed my 1a last year or has ever consumed anyone in their lifetimes so if you look at other drugs like hard drugs like cocaine heroin or amphetamines and you see that the same pattern arises here and it of cocaine Mexican consumption is gradually smallest it’s like this one sixth of the prevalence consumption rate of the you of the USA and like one eighth of that in Canada and similarly to the case of Aryan and a featherless so the problems of consumption of drugs in Mexico at least yet what the evidence says is that it’s relatively small compared to this one comes in at northlake now what about prices well if you look at prices and then you should do then start to understand why is there so much interest in drug trafficking I mean why is there so much involved in terms of dr. next we do Mexican dress North America you see that for example the case might this also comes from the word from the from the from the world rock report and which is pretty much authoritative source and these studies data and you see that at the wholesale level for example my wanna because only eighty dollars per kilo kilo is more than two pounds so it’s like eighty dollars per kilo in Mexico

was in the USA that it’s that sells at the wholesale level by a voracious two thousand dollars as you move a multiple to North that price increase is substantial and in terms of in Canada that that reaches a six thousand dollars and and then the retail level as you see there it might even be in the USA an average of ten thousand dollars four hundred dollars per kilo and you can add a twelve thousand dollars and then you see the data for cooking and herring they’re pretty much the same probably important the data app is in the in last two columns which is the relative price between Mexico and this or the to market and so the calm before the last is a ratty price between Mexico and the USA and the last one is the price of Canada and Mexico the numbers in blue are distracted prices the numbers in red the coefficient between the prices at the retail level and the wholesale level so this just to give you an idea what are we talking about I mean what it means is that a kilo of marijuana multiplies its value at the wholesale level 4 25 times just by crossing the border base and the same and the same thing i wanna multiplies value about 75 times if it reaches the technology board and in addition to that if let’s say if there were I’m not saying there is but if there were like a vertical integration process between the cartels who move you might wanna cross the border and those who actually distributed so you have to multiply those two coefficients there so that actually of marijuana that makes to the US it’s actually multiplying value when when when it goes through the wholesale level to the retail level by like 1225 times that’s what we are talking about this is this is the business that this drug trafficking organization are fighting for it’s a huge market it’s a huge market is a huge profit a boddle interesting thing here is that can I do what many other people things cocaine is not the most profitable market for this job personalization I mean for one reason cockiness is expensive in Mexico because it’s not being produced in Mexico it must be produced in South America so it has to reach Mexico before getting to the US so so that’s why if you see the coefficients that the ratios of the relative prices is just 2.3 times at the wholesale level of three-point or 2.1 in between Canada and Mexico so it is not it’s not that profit of course a kilo of cocaine makes much more money than allow you have much more money than a kilo of marijuana but in terms of profitability the most profitable market in terms of rocks is they might wanna market okay I buy a lot as you can see that from the front from the blue eight points there now what’s the size of the market that we are talking about so let me just give you a how do we measure the sizes market so I measure the size of the market is P times Q that’s that the sales of our given market and P times Q we can decompose that and just by making but in these four components over there which as you can see the sea which is the number of consumers can sense each other the population which is the pop it cancels each other so it’s the same thing the only the only thing of doing that the only reason for doing that is that we have some data that we can actually analyze and we can decompose the size of the market people p times q in this for component which is one is the price p second is Q is more q which is the average consumption which is consumption per consumer PR which is the prevalence rate which is the number of consumers consumers as a share of population and then a tribulation okay so that we can decompose that the size of the matching these four components weather and and then we can do with this which is a composition we can we can look at the relative size of the market which is just just when a divided by the only 18 / market a divided melted be and if we assume which is pretty much what they what the sorbets revealed that the average consumption of a consumer is pretty much the same in different markets so that QA is equal to q be so that they make this the red tresses market is not affected by the average consumption then we end up with this result over here which is the relative market sizes is a result of three relative a coefficients one is the relative price p n market a related to the price market be taverns rating in market a relative to the present rate in market be and the population size not a a relative to the population market be so that’s the relative market size

equator if we do that for the credit for these three markets which are the most important month prolly which is my one at my wanna cocaine an arrow in her here we get this relative market size us the USA mexico market is 900 x 900 times of speaking net in the US as in given this a using this a coefficient that I just show you before the canada canadian market rattles to mexico is 300 times even though the canadian it has a relatively small population it’s because the high prevalence rate and because the high a price that the decisive market becomes much more relevant so in the cooking market is a it’s also more important in the US and canada and mexico but not as big as my element so what’s the point of this what I’m telling you all this well because the Mexican trucks market is very tiny well we’ll compare with the rest of the North America not I mean it’s basically nothing I mean if you think that they might wanna market the US is nine hundred times the US match the market then display timing whether it be talking about markets for drugs are the USA and Canada basically second the most profitable market in terms of rate I mean the Prophet the right profitability is marijuana market which as I said just crossing the border increases the price of that x 25 x so that you need like a very relatively small investment because I’m when compared with cocaine and narrowing which yes in terms of per kilo you might think that is very profitable but if you think that you have to invest in order to get the cocaine and the error in the first place then is not that profiter so that’s why this is the third result that all the cocaine and arrow in general large profits per kilo they require important investment and that’s why they are not as profitable as my one so this is the preliminary results and the preliminary conclusions from this just a small economic and eyes that I have made in terms of crisis is that it is not necessarily true that drug consumption have increased substantially reason jeez in Mexico or even if that were true it is coming from very low levels which is the low prevalence rate that I show you for and that’s why when they say when analysts have said on some people related to the government that the consumption of cocaine has doubled yes that might be true but is still very small levels I’m not saying that it’s not relevant but you should put that in perspective and second it is much more relevant to the US market on the domestic market and the fight among among a drug trafficking organization it is not much about the domestic market as for the access to the relevant market which is as I said at the rest of North America and third the level of profitability of the drug trafficking activities renders other criminal activities unattractive and Dawson I mean if you start you think about what does he mean being able to transport a kid or anyone to the border and what does that mean in terms of profitability and you think what does that it what does it mean like extorting people in your inner in a small city in Mexico and kidnapping people and all that you quickly realize that doesn’t make any sense for a really for a real drug trafficker to get to engage in this world activities I mean it is not profitable arrow I mean it doesn’t make any any sensitive comparison so what I’m trying to say is that yes there has been an increase in these activities but is probably not necessarily the directly related to the people who actually conducts the drug-traffic in Mexico that’s my hypothesis just because the relative profitability is so different if you think about and this is just a table from a paper bag by Eduardo who I to SL in terms of the of the drug consumption as you can see that in Mexico between 2002 and 2008 and a the consumption increase a slightly and we in Mexico bait in this to kill to period whereas in the US remain pretty much stable but as I said the levels are completely different as you can see there and we just skip this and as I said before it is more or less evident I think based on what it was represented and when you see where did this or this criminal activities take place what are they fighting for this is a drop rate the torrent sites for in 2010 and is this spots over there depends on the size of the number of homicides and as you can see there is pretty much clearly a pattern of roots of drug trafficking towards the US market risk so and so all they all the roots called basically and some where towards the u.s. towards the border which is as I said because of this that’s relevant market now why does

this all say about the logic of precision Caltrans strategy now what about crime rates which is the other thing that we haven’t talked about and well about the strategy as I said before I think I think it makes sense because the premises that I mentioned before are not supported by the data now in terms of the crime rates which as I said precision Katherine maked statement that the crime rates in some information makes you happy to be substantially that that’s not supported by the data either as you can see here this is the army side rate this is this come from story-wise Escalante 2010 which was also policy Nexus and this is the homicide rates ap to 1990 and 2009 this is not unlike Eduardo’s data this is this is all Oh mrs. this is not only those linked to dollar and scram so all wrong side but they pretty much follow the same the same trend as health in a mistake in other words but this is the trend that we had by 2006 so it was a steady a reduction in the homicide rates in Mexico and rapidly as you see is around ten ten thousand homicides per 100,000 inheritance which is pretty low compared to the average in other countries in Latin America or in other places so it’s relatively low so that it in the city that means that the idea that it was this increase in organized activities on crimes Mexico is not supported by the data and what happened after which is what already is rather show is this so this is the new on missile trade after after 2006 so so something happened some happen after the launching of this strategy now probably the most striking figure I have everything about in this and this discussion about evolution of crime activity Mexico exists which is the West this also comes from Escalante from finance client is a work and Nexus and this is the red line is that the AMA sites rate in those states we had joint operatives in 2007 journey operatives means the operations between the federal police and the army in Mexico they took control of the local local police and they enter into these states with this state with with your abilities in 2007 our baja california chihuahua Drago Guerrero michoacan New Orleans in alloy tamaulipas and the the great life is the rest of the country so what happened after the launching of this initiative is this so it means that yes there was an increase in violence in Mexico there was a somehow vocalize in in some specific States and it was in those estates where they will they will equate the government launched this joint operatives now you might think that there is a problem of and donated their be of course because you might wonder whether that increase as a result of the operative or because that had been increasing is that when the parrot is where they put in place so and accept that that’s that’s that’s problematic but let me show you some of the data used to make the argument that it seemed that the causality went from the launching of the joint abilities to the increase in violence so but this is the graph that shows you that most of the increase in violence that I show you before actually was related to these states in particular the words that I was actually a girl was talking about now let me show you this graph which is these these uses instead of the of the army sights raised from school on T which only only only get 2 2009 this uses the executions data have been compared by the government having a published recently that and they have data to till 2010 so what we have here our state’s the blue lines are the executions per 100,000 inhabitants in 2007 and the red line is M design indicated by 2010 so what you see when we have to felt without John comparatives and say inherited a pest everything’s those that i started a with your arm in 2007 okay so as you see what you see here is this this thing that i showed me but in pain is bad which is the increase in small increasing in execution in this stage with other party but it was a large increase in those states with don’t thirties by the beginning of 2007 and when you look at this very stage you see that there are some states which are particularly problematic like chihuahua and Sinaloa and drank those states had with the p

competitive in which an even i’ll call this and males and a lot Warren officials were detained well in that state which is where the familia michoacana is which is this organization that it was worth describing before interestingly that has had a such an increasing in imbalance interesting but these other states bordering states most of them have actually huge increases in executions rates between 2007 or 2010 we still have the problem of causality so let me just show you and unfortunately the data only start in December 2006 this is the new data has been released by the government and only study 2006 so that’s why we cannot go back that much but let me show you what happen in 2007 and 2010 with with the late state which stated the joint lady made in this Jones operators which is this deities of the operations took place between 2007 and 2008 this is the execution play in the stage without the petals throughout the cool beer this is the executions in this is the earliest which is the one I showed you before so in this state starting with a huge literally large execution rate and increases dramatically and these are the state recently joining this hand is John Locher of operatic semantics so this if you see they look pretty much the same right execution rate as both stated didn’t have any objects are one of these are having these operatives and this is actually we know this place it in sometime between between a legend 2007 2008 the executions right in those states has increased substantially since then is not as big as of course as in those a stage we tell you penalties but is quite large and if you see those specifically say dramatic in states like Nigeria and / winner and also in some others way so the point I’m trying to make is is the point that Fernando esculenta making this a knowledge have making this about this which is there has been an increase a sudden increase in violence which seems to be related non Holocaust but seems to be related to the launching of these joint operations so so what what then explains this visible Agatha oh I will say there are four hypotheses but then before getting into that let me show you this and this comes from a recent paper that was published in a small journal which is about this how to understand this describes knives in Mexico and what they did what he thought about is bunker and he finds five levels of concern about the problem she killed in Mexico one is gang the gallery gangsters so this is when the ants take control of neighborhood many prisons and rock market the second level of all rights crime stories so this is when classic artists create create songs of impunity to freely engage in illicit economic pursuit with no political agenda third as terrorism studies is the cartel use of narco-terrorism to obtain Mexican governmental concessions and the fourth and the fifth the 40s insurgency studies and where they say cartels might take over the Lions with Mexican government be a parallel shadow government politicize cartels and the fifth is what they define as future war for a worker which is an the new were making entity the conscious traitorous population centers and sovereign government this is from some American authorities in Mexico this idea of insurgency and concerned about al-qaeda joining with the setters and this too many crazy things that they have been putting in this in this arena discussion well as in reality that’s what we all service to see more something in these three levels most about in these two levels the level of failure breath so um so now having is in mind what explains the end this increase in violence in these states or cities from we see bodies for that money I think there are four hypotheses have input for so far many more I mean but but this is decided to follow check number important they are not mutually exclusive so the four can be have some part of truth one is esculentus head pot stirring sell purchasing these recent paper in nexus I think last November December he should make a nexus he says that not all the big teams are related to the drug war and there must be something else he makes this claim that there must be

something else going on him he makes this point about the dismantling of local police because when this joint operations what they do is they dismantle the local please if they say big you are corrupt so let me take to take over this the culture of the cities and all that so this dismantling local police according to galanti has disrupted illegal and informal market and so that somehow that is termed a the law of the jungle in this series and that could explain this increasing in violence in these areas after the joint operations a operating in this in sa states now second one is Eduardo’s a hypothesis which is that the capitation of drug trafficking organization has somehow encouraged having fragmentation this idea of going after the main droplet ignite fight among these second-ranked members of the drug trafficking organizations and attract rival groups to the region formerly control bodies revolute which is I think he’s basically bit about that which is a I think he has a proportion in a number of works he says this is an alternative hypothesis to Fernando excellent hypothesis which has more to do with this a strategy against this stated the ideas third which I don’t I cannot link to do anyone specifically which is the fact that what I have held it a lot among people who is concerned with these issues which is that gangs are now operating as drug trafficking organizations paramilitary forces so that what will happen is that this video’s basically contracted these gangs just to to let a little force in these states so to confront this increasing military forces in the cities and regions and have recruited them and probably the best example of that is what happened in Monterey at some point when a number of young people without work that they were living in slums they was doin down to the city and actually block the main access today to Monterey and having doing that frequently and they have actually given interviews and TV and they have said yeah I do this because I i’m getting paid 200 pesos just to do this is very easy just to to take a trod to get rid of the other driver and just put the truck in the middle of the road and implicating the whole thing in Monterey so am so this distance ed could be a to directly confront the army which is a possibility or to deviate attention from what they are doing and just to commit some other things and provide a weather has christine probably here is that the details has having giving them weapons to this group and and because of doing that and because these groups are not involved in the drug trafficking part so that they don’t have access to this hydrophones so the a try are those who are getting involved in this extortion and another minor or kidnappings and baking tests and so on a few days in these readings and a 4-1 which is none of these are mutually they could all be true and the foreign is that there are capitals and a more deeper increase in violence so that is it is not because the local police has been dismantled it’s just that people has become just more violent some ways I mean the sense that given that the magnitude of crime in Mexico is easy for someone just to kill a neighborhood a neighbor the boyfriend a girlfriend or so and they and then try to time to get rid of that and there are has many evidences many many cases in which and people just leave an argument sake so like a little message trying to to deviate attention of the real causes of the of the killing or the ODA of the crime or something metal so but the fork to be true and we don’t know probably the most important ones are to me arrays are the second and the third Eduardo’s hypothesizing is pretty robust but I also think that this idea of banks being a parameter force is sorta taste and that could also explain this increase in these kinds of violence in the city at city level which is different from drug trafficking activities now some additional preeminent conclusions based on what I have just said is that the last piece of the logic behind the war against organized crime social false I mean that being the last piece remember the fact that crime had increased in Mexico before they did the work the work instruct was launched and there is no evidence of an increase in crime rates before the launching of the column strategy and in fact crime rates in Mexico we’re following a steady decline since the early 1980s the study fall so far may have led to an increase in balance too many different channels between those the further i just mentioned so this is my interpretation what has happened understanding what the market is for drugs so is there a solution well I don’t know enough I just had these because at some point I talked to a video he said I hope too that we are going to give us not just a regulation of the prime tell you what the solution is of course are not there’s a solution but but if there is any I think it goes through thinking about that new

strategies needed I mean a different strategy has to take place we cannot keep doing the same thing and expecting different results and we keep doing the same thing will get the same results so we need to do something different and I think this is a lot of explaining this very well we cannot keep on focusing on decapitating trafficking the drug trafficking your message this could the cartels if we do that we will still generalities and this problem I mentioned before which is a defragmentation hypothesis that you are dimension which is the fantasy nine ER i mean the fantasy diner which is as you might remember this one fragmentation problem so when you think that is hitting something is good for you then he might get back to you as a with a vengeance and so this is the fantasy a hypothesis about that which is pretty much what the paranoids have said and a second at this new strategy whatever that is should address the sources of violence which might vary by region I mean they are different and are not necessarily related to drug trafficking and produced on the thing in those who actually commit this violent act which is what the world was mentioning before not not is that these these people could could could not be related to the X to the cartels right this will be just people that assets I said are being hired somehow by the cartels prayer not part of this trafficking organization I mean they don’t may not know anything about how the how the business goes but they are the ceiling weapons and all that and they are committing all these crimes because the death of giving the parent to do that second this is new strategy should attack the financial resources of traffic analysis the main reason behind this dis traffic as I argued at the beginning it’s just pure profit basically that’s what happens from so there in this aspect there has been no progress in which I think so these are quite small intelligence work and a more comprehensive approach I mean I I think in this period is that all this money that gets into the drug trafficking business has to get at some point into the legal economy to the formal economy there is no way that all these amounts of money which is as well talk about billions of dollars do not get into the into the into the financial system for example they know that they do not get into the former I think at some point they get but it so far we have been unable to identify where this money’s coming from and what is it going to and finally I think sizes should have a clear long-term objective which is legalization and all these are all the effort and I think in here the president calderón has opposed to this view even thinking about the long-term objective I’m just take it and I’m not saying this is this can be done tomorrow or next year but this should be the long-term objective and all the efforts including the dramatic once you have that tree in my opinion it is important to continue having these two very different policies or approaches in the region to the same problem I mean we have two different approaches one is the protein Mexico which is fighting against these drug trafficking organizations confronting them killing them at the 19 jesus prayed to violence in Mexico under the one is the one in the US she basically allowing implicitly the legalization the factor decided factorization such a merry one in the US and and that’s why I said we cannot keep these two too polished two approaches and I think would be legalization could be part of the solution not the solution itself but part of it if there is any for several reasons it with a low Mexican authorities to face the drug consumption as a public health problem as it is somehow in the u.s. rather than as a criminal activity second and would you expect to see imbalance in prices with the rest of North America which could be good for Mexico because this may actually had to reduce drug consumption in Mexico depending what the reaction of the supply side is but if supply side if the price increase in Mexico just as comparing prices mex upon the US then we might even even face at a diminishing of consumption in Mexico as I sort of this increase in prices I call this the cancun effect on the price of drugs in which the increase in prices because of the demand of a segment of the population which is in this case the American market which has a bigger larger income and now largely the mat might drop process up in Mexico and therefore the image consumption to that effect third even if there is only realization one market max about the u.s. we should expect to observe in general a reduction in the price of drugs and that’s fine because as we might reduce the prophet of these activities in me and missing the profits of these groups it is important in the long run because I’m the potential of these organizations to buy weapons or to corrupt the police members of the judicial system will diminish fourth realization could also represent taxes which then could be devoted to improve services institutions etc as well as to cover health costs associated to a potential increase in the consumption of drugs as a result of the greater availability so I think for all these reasons we should have that in

mind in the long run if we don’t have that at least we should do a change in strategy along the lines that I described before which is pretty much in language with Eduardo mention before now is this legalization possible well and the US as I said has taken place the fact i don’t know you know about this this is the cover and the time coloring in november 2027 but they talk about the United States my one has very nice stories about how consumption my one and treatments and that has become like am mentioning in some states I mean it’s like a normal irregular activity where nobody actually is concerned about that and I just normal okay in those states where the legalization is a a de facto at least for medical purposes American process could be you’re just you have some problems and you can request it is this treatment for example the Colorado Springs independent polishes this quarterly publication called relief it’s a quarterly publication which information on all they made the medical marijuana centers so that you can you can you know where you should go in case you want to have so marijuana and then let me show you some of the other ads that adding this in this publication one is a nice colors as you see there they offer free transportation to the medical transportation to medical marijuana center just you get to see the limited you one of these paths like my icy touch Greinke or befriended solace oh let’s see this this is how you have things like that this is full page ads in this Colorado Springs and you have also this one but you can have all sources of 53 so so it has been is the factor legalization in these states okay so even though my seem like that something that might not take place in the in the Shorin I think eventually we should have that clean in maximum a different Mexican perspective but so far the Mexican government has rejected and is very strictly opposed to that view and I think that’s the way to I mean that’s that’s my buddy even though I not seen it’s the solution it’s part of the solution at least to me I me this I think Diane thank okay okay that there was no way he could go the country now either fighting them or doing whatever money they were getting too powerful for the garden so I think is very useful and there is clearly are learning that but I think we are all very quick comparing the cost of raw work on broad with Holly size versus nothing because I’m not having this war according to the administration is Norman is integrated and coordinated by draw pillars so there is this kind of rubisco cost to having no more persons are very beautiful and very tragic situation our we have my Island home sites so I was wondering if you could talk a little bit about what these other costs are that are not violence willing the worst right so what let’s how we do so we take

the more questions very pleased why don’t we collect some questions and then if you want yeah migration yeah okay you let me take that last one from this round and i will make a second round so wise here and whether we talk okay so let’s stop here they want to offers the hard question who this answer my violin I will try to answer some of the ones that has to do with violence the problem here is that Calderon wanted to solve one problem but in my opinion he that the strategy generated another different problem that we didn’t have before that is the violence problem no the read the president and the government says well we had we had to fight these guys because there were there they were invading public spaces they were kidnapping they were extorting the problem now is that we have more public spaces now invaded by the cartels and the the rates of kidnappings the rates of extortion having also increasing a lot so in many ways I think the strategies just counter productive no you don’t the results the administration gives to us are in how to do with the input to the strategy so they say we have but a lot of modern weapons we now are professionalizing the police we have we are now spending much more money in visas but they never evaluate a strategy with the results of the strategy in the rates off of crimes because they cry all the organized crime and common crime petty crime are all of them growing a lot so I really what would be the alternative I think in first place but the government should have do done was having a good diagnosis of the problem who who are them what are their capacities quad are the capacities of the government because also there was a kind of overestimation of mexican government capacities to fight this the government in fact in the second year of the war realized that was penetrated by organized crime in their highest levels so also i think that the strategy should have been like segmented like focusing just in one area like to learn of the results and then apply the lessons to other areas but the president and the government decided to fight this war in many regions of the whole country and this strategy led to them to this broke a lot of equilibriums a glib ria that existed between the criminals and the authority and now we have this terrible scenario of generalized violence in the country so I’m pretty worried and I

think ask Gerardo that the strategy should change pretty soon I think the new government Mexico in a couple of years we’ll have to make radical changes to this strategy I think I answered it the questions I have to do with violence that what I fully agree with what from what the duardo said and I think past problem of ranching is this this this is war was also lack of proper diagnostic and I think that’s pragmatic when you are engaging in these kind of activities which as it has been shown in the end and probably we’re not as well actually counterproductive as a value set so other than this question which I basically agree with what I said I just want to respond the thing with the prices with prices is Sam these are average prices so yes there’s had a quality issue the Mexican marijuana is probably of lowest quality low quality landed and the one is domestically grown in the US so probably the average prices of of Mexican marry one is slightly lower than than the one i just presented a but even even there i mean even if you look at this the recess a website that has this information prices by by different qualities and and probably average mexican it wouldn’t be that different from the 1i show you in the in the data but yes the data is just the average a price including both important and domestically grown very Pegasus swimming I’m curious um bye from us yeah well this prices on front from the world rock report as far as i remember they come from from from actually from most of them at the retail level at least confirmed it from the street street project I mean this these guys go and ask at the end certified legal demand this is not the one that I showed you before if you look at the prices by the way and in the ads I show you it’s not even it’s much higher than the other spies I gave you before that’s because this segmentation of the market and that’s probably high end as you said so but still the main point I’m trying to make is that it’s a huge profit in that and that that’s still the case even if we use a diverse prices for Mexican a greenery or innate my one so the only thing was about some question about if adorableness I was priced the migration topic my nomination issues are I don’t know how much her related are these two get two issues we have employed an increase in migration in some areas in some parts of modern in Mexico as a result for increasing balance in these tanks so I but this is a different kind migration which people who are probably a small businessman who were concerned about being started and they are moving from Mexico and so has four generated this kind of migration and the Somalis who have probably migrating or going back to their own places as I sort of the increase in violence but I don’t see clearly how is that could be affecting the same the migration pattern in years in migration pattern is actually being affected by I wage differentials another thing other than then learn true that rocks related issue yeah a wild rural actually the revolt is interesting because it it it is as if the way they drop curtis operate and that’s at least what I know no maybe it wasn’t knows what about that is that basically in a recolor work aside like am I relate with the drug cartels like a monopsonist ‘ok relationship in the sense that they work for a cartel so they grow it is my one eye thing and then they sell it to specific content so they’re like a coptic by these cartels or they are just providing these to these specific cartels so in that sense as long as this a very Italian control of Samaria they’re still working in this business as before us in the past and many of these actually I haven’t seen that many of these crimes are ready to go up Tory cultural producers so the husband and I haven’t seen any data on that well there has been any change in this suspect in terms of the producers

but but but I really don’t know more about that then what I just said so I don’t know maybe there was any other thing so let me just take another round I mean Mexico Spain no we take okay Oh the morning okay in your direction that you last part new patient you are telling us that there are three cartons who are you good explanation of pattern that this card will work for me now growing especially not to defeat without double governments and they have a like these spaces for them what will be different because if that’s the case you will still have this problem they will still have this parts of Mexican part of part of the country and they will remain so okay okay well first the connection between fragmentation and violence no well first in informal markets more competition equals more violence like by definition or organized crime has two instruments to operate one is to co-opt and to corrupt public officials and the other one is is violence in Mexico because now of the structure of its political system is very pluralistic it’s not easy to negotiate with the criminals because you have many authorities of different levels of government involved in the negotiation so we have a federal system we don’t have a central system like in Colombia

for example in which there is a vertical juror Kiev that facilitates negotiation with criminals we have a lot of authorities from different parties so it’s a pretty difficult structure to negotiate with with criminals so I think that has to do why we have to move from a dominant strategy with a pre in which we had all these negotiations between authorities and criminals and now in a much more pluralistic scenario we have the violence as a dominant strategy of the criminals now I what I propose is not to is just to be like absent or just not to do anything what I have been proposing is government has to arrest but well now first now the problem is not drug trafficking the problem now is violence so you have to change the objective the main objective of the strategy because you have the way you have implemented the strategy to damage dope trafficking has cost are very different and in my opinion most important problem that has to do with violence so now that the objective of the governor min has to do with reducing violence and to do if you want to do that it’s not very clear for me that they want to do that because many officials think that violence is ok because are the bad guys who are dying ok that they are killing themselves because they are or it is organized crime the problem now is that with the fragmentation that with the increase increase of violence many people that has nothing to do with organized crime also died you know that for example in a scenario of great competition between organizations there is a lot of desertion of criminals from the organization’s the when this happens the organization’s kill the family of the guy who just going to the other organization people that has nothing to do many times with organized crime also we have this we have more and more frequent events in which these people goes to a party or to a bar and they just kill everyone there and they just are looking for one or two sell yourself of drugs and they kill 20 now so now I think the government is is not so sure as before about the effectiveness of its strategy but it’s now it’s too late to change it because also the administration is ending its in this final period so if if Cal they run retracts and tries to modify now the strategy it will be interpreted as a failure and in electoral terms that can be this a disaster for its party so I thought I think the president has not the incentives to change their strategy a very powerful ones that has to do with electoral matters so in that in that sense I think the strategy will not change until the next government the just I think the the fact that fragmentations increases violence is just pretty clear for me and I think is the most worrying it’s it’s in fact we are I think we are in a process of complete transformation of the Mexican drug market I think the cartels will not exist in three or four years in Mexico we will have a very new scenario with very small state and local organizations very aggressive much more powerful than the state and the local police and with increasing levels of violence until these police is more prepared and more professionalized that that will take 5-10 years but we have other one money laundering well I had bad bad news with with this argument about financial intelligence even the most successful countries that implement strategies of financial intelligence

they they are not able to to go much more than five percent of seizures of money of of organized crime I mean from the total of income of organized crime for example in the United States with the strategy of financial intelligence and seizures of of money an act of financial actives you only can see if you’re not more than five percent of the income of this organization so I think that strategy will not be very very successful to attack effectively to these criminal organizations who is winning and please rose I don’t think anybody’s winning here because you might think that the well established cartels that had not been affected by the government operations are winning in the sense that probably they’re selling more a higher price but that’s not even the case i mean the evidence or something yes that there has been an increase in price which which also means by the way that there has not been a substantial reduction in the supply side of drugs to the US so but I don’t think they are winning at all because they have to invest more resources falsin two into this em into it into this facing this these operations by the government and the rest of the society is also losing so I don’t think it’s everybody I think it’s losing from this outcome so that’s what I could say there was another question between in the previous round writing respond witches and what happens when the realization might spread more violence in some of the kids and I think that’s the part of the problem and I think that’s a concern but a but but then you have to if you have a different strategy to focus on violence then you might get a better result in that in that area but yes there is a risk I mean there is some risk in this disorder internet extreme we have in discussion and of course there is a risk that if you a letter I sadness more up it’s more available and all that you might have a additional problems imbalance in other areas or by so many people but I mean and you have to take that into account so but I agree that there are some place condo even in those policies well go after an Indian corn one now let me take the last questions so it was 10 here won’t agree the violence and the guys okay let’s do what someone else told you the defense of my daughter it makes ago legalize meaning after maybe they want rusty not avail by the drop or so okay let’s take the last debate last one yes the impact of boy and the price I have we’re excited even though there’s been enormous increase in cost of flying more drugs body cap at war it really has klaus price which re interested I suggested there are opportunities for the operatory resources cross a month would be explanation a huge increase well let me go respond this disc last question app I think paper ballot has a nice graph on seizures and there you see that the average a of seizures in the last few years has not it’s not very different from the average of situation last decade let’s say so or in the

decade before the war against drugs so what that means to me at least is that the strategy has not been successful in terms of affecting the supply side and that’s why I think that hasn’t either affect the price of these drugs in the North American market you know so you actually had a graph with that and there are some increases and spikes and and declines in the price of a cocaine for example but it’s not that dramatic so you really couldn’t see any any impact on the price of a drug scene in the US market as a result of the launch and swati so and I think that has to do with the fact that there has not really been a dramatic change in terms I mean it’s most is more difficulty operations prolly within the country but that hasn’t translated into a reduction the supply side and for some reason which I don’t know exactly what they do but this is my what I have seen for her you want to say something about it if you think that the quality is morally the same steel because production is more expensive now we should see some effect on price even if the amount of cocaine marijuana or make some more or less the same level you know crossing one kilo are you wanna pursue monkey nope okay come apart of me no more whiskey and more more expensive so to me it seems like there should be some some mecha-suits reading material what is there is any that has been contracted by something else because I said you see in the price and website here the tracks prices every month or less I mean and then you see the well that’s got really depressed and pretty much it in because scenario as at the world proper report so and you haven’t seen that so if that’s true the father has become more difficult to get the truck in into the US market that hasn’t run it and it’s not enterprise it for some reason I use something that’s going on and but yeah that has not changed so so far that they did the price in America we have a systematic data on prices of rocks in Mexico so what has happened with big seizures of drugs cocaine heroine in mexico is that what happens is that there is an increase of price but not more for four months five months and then stabilizes in the same levels and in fact the the big the larger the larger trend is decreasing prices of drugs historically in Mexico and the states has been decreasing and the policy of intensive seizures has not affect the trend oh well that yeah because they tough it is good to say but there are many people’s about this but sighs this property is in the closed friday from you see it from 20 billion dollars to 60 deliver and that that’s nothing with the tax profits or that’s only at its face it but even in that case that would represent roughly small amount in ref to the master DDP which is P dash so that’s already paralyzed with the question about 100 that’s like what we saw access lovely not this sunday morning it roughly is more so I should be more than three percent given the highest end of the this is not that laughs I mean something I think Mexico should evolve to our kind of mixed strategy as the one that is here in America in my opinion here in the states you have two ways to deal with the problem the first one is like to have these areas of tolerance for drugs in some state of day of the country and the other one is that when these criminal organizations cause you a big damage then the government concentrates its efforts in one organization and and arrests massively

500 people in simultaneously in several states and that’s just fat 0 for the criminal organization the problem is that in Mexico first we don’t have that that strength that power to to make these intelligence task for several months before they before this operation of massive arrest and our efforts are completely dispersed and are just focus on the arrest of Kappas we with our forces I think we should be capable of arresting now these Chiefs of sikarios because now i think the objective is just to decrease but to reduce violence and i think the best way to do it is with a race of chips of sikarios and thus issues of weapons that would be the two actions meanwhile the you do professor nalizar police and you can do more things in five or ten years when you have a better police but now with our capabilities we just can’t do that i think nope I find you need us that there’s something