April 26, 2010 | 0655 GMT Stratfor.com

Summary

A serious defect of East Asia’s export economic model is that it discourages the development of household consumption as a source of economic growth. Families are encouraged to save rather than spend, which depresses their consumption. At a certain point, leading East Asian economies have undergone transitions during which policies were adjusted to stabilize or boost consumption while allowing fixed investment to taper off, thereby creating more balanced economies. China, however, has yet to do so, and thus remains dangerously reliant on exports and investment.

Analysis

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At the root of the East Asian model of economic growth is the need to maintain employment for massive populations. East Asian states in general have high population densities and histories of labor-intensive agriculture. Governments that do not provide stable employment conditions inevitably end up with large and unhappy populations on their hands — frequently the cause of revolutions. In the modern context, East Asian governments have focused on harnessing the savings of the population and controlling the country’s financial system to ensure credit is directed to expanding infrastructure and industrial capacity. Cheap credit enables businesses — especially export-oriented manufacturers — to maximize employment and output and seize greater international market share, bringing in more cash to perpetuate the cycle.

Following from the East Asian model of growth, China’s economic “miracle” relies on the channeling of massive household and corporate savings into fixed capital investment to build the roads, factories, trains and buildings necessary to modernize and expand economic activity. But a serious defect of the East Asian model is that it discourages the development of household consumption as a third source of growth to complement exports and investment. Families are encouraged to save (which helps the government finance national policies) rather than spend (which would assist the local economy), depressing household consumption. Increasing government investment in recessionary periods means building more production capacity despite weak demand (domestically or abroad). This practice cannot be maintained indefinitely, and East Asian states have tended to undergo transitions (sometimes very rocky ones) during which policies are adjusted to stabilize or boost domestic consumption while allowing fixed investment to taper off. The result — if the restructuring is successful — is a more balanced economy sustained by consumption while varying degrees of exports and investment contribute to its growth.

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Both Taiwan and South Korea have gone through this process. In Taiwan, rapid growth in exports, savings and investment between 1962 and 1985 was accompanied by the decreasing importance of consumption to the overall economy. Taiwan’s exchange-rate deprecation in the late 1970s facilitated a rapid rise in exports, which outstripped domestic consumption as a

The Arrest of El Indio

Members of the Mexican military detained Jose “El Indio” Gerardo Alvarez Vasquez in Huixquilucan, Mexico state, April 21 after a firefight. The gunbattle began after the Mexican military raided a house in Huixquilucan. Alvarez attempted to escape from the scene in a Mini Cooper but was apprehended along with 17 others in the house.

Alvarez reportedly held a senior position in the Beltran Leyva Organization and was in charge of negotiating and securing shipments of drugs from South and Central America with the respective independent criminal organizations in those regions. He also reportedly was responsible for drug shipments in Guerrero and Mexico states and for the BLO’s methamphetamine trafficking, which stretched through Mexico and into the United States. The United States had placed a standing bounty of $2 million for the capture of Alvarez; Washington has now requested his extradition. He also reportedly was responsible for instigating much of the fighting that has taken place in Morelos and Guerrero states in recent weeks.

Alvarez allegedly sided with Edgar “La Barbie” Valdez Villarreal against Hector “El H” Beltran Leyva and Sergio “El Grande” Villarreal Barragan after the death of BLO kingpin Arturo Beltran Leyva in December 2009 and the subsequent conflict for leadership of the organization. Beltran Leyva and Villarreal since went on to form the Cartel Pacifico Sur (CPS).

While the violence between Valdez’s men and the CPS is not likely to subside due to Alvarez’s capture, the arrest represents a major blow to Valdez’s organization. His connections to South and Central American trafficking organizations and the duties he carried out in Mexico were undoubtedly vital for a large portion of the flow of revenue to Valdez’s organization. While he likely was not the only person in the organization with these sorts of contacts, he will not be replaced easily. Given his stature in Valdez’s organization and his role in the conflict in Morelos and the surrounding areas, the government and CPS most likely sought his demise. It is quite common for competing drug trafficking organizations to tip the authorities off to the location of rival high-ranking members, as with Hector Beltran Leyva’s brother Alfredo.

Monterrey Security Situation Continues to Deteriorate

Between 30 and 50 armed men traveling in up to 10 vehicles kidnapped a total of six people in the early morning hours of April 21 from the Holiday Inn at the corner of Padre Mier and Garibaldi streets in Monterrey, Nuevo Leon state. The previous day, the body of transit police officer Gustavo Escamilla Gonzalez, who had gone missing April 15, was thrown from a moving vehicle into Lazaro Cardenas Avenue in the Monterrey suburb of San Pedro Garza Garcia. Four flowers and a banner that read, “This is what happens to those that support the [expletive] Los Zetas” were attached to his corpse, along with a list of 20 other names of law enforcement officials who allegedly support Los Zetas. The banner was signed by the New Federation. Escamilla is the 25th law enforcement official in Nuevo Leon killed by the New Federation for allegedly cooperating with Los Zetas. Additionally, organized criminal elements used the increasingly popular tactic of blockading major thoroughfares throughout the Monterrey area April 25 to impede the response time of Mexican security forces. A total of four blockades backed up traffic in Monterrey proper, Apodaca, Guadalupe and San Nicolas de los Garza.

These three incidents indicate the conflict between Los Zetas and the New Federation is continuing its westward expansion. While the majority of the violence and conflict still is centered along the southern edge of the Rio Grande from Nuevo Laredo to Matamoros, the Monterrey area has seen a notable increase in cartel activity and violence. Monterrey has been a Zeta stronghold for several years now. The group has established networks of corrupt political and law enforcement officials and has secured trafficking routes through the city. As the New Federation zeros in on Los Zetas support structure, Monterrey is an obvious target. The Monterrey metropolitan area will therefore most likely become increasingly violent in the weeks and months ahead.

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April 19

• The dismembered body of a restaurant owner, identified as Alfredo Paredes Montiel, was found near the offices of the attorney general’s office anti-drug task force in Cuernavaca, Morelos state. A message criticizing suspected drug trafficker Edgar Valdez “La Barbie” Villarreal was found near the body. Paredes had been kidnapped the previous day.
• The body of the wife of a Chiapas state legislature candidate was discovered in the municipality of Selvas de Chiapas, Chiapas state. The victim had been shot once in the head.
• Eight prisoners escaped from the Tenancingo jail in the municipality of Tenancingo, Mexico state. Prison director Miguel Garcia Reyes Retana is being investigated in connection with the incident.

April 20

• Mexican naval troops seized a suspected drug trafficking safe-house in Cuernavaca, Morelos state. Several firearms, cellular phones, an axe and a chain saw were seized. No arrests were made.
• A former Coahuila state Communications and Transport Secretariat official, identified as Alejandrina Martinez Macias, was stabbed to death in her house.
• Approximately 30 gunmen seized a National Migration Institute detention facility in Acayucan, Veracruz state, freeing 13 illegal Guatemalan immigrants being held there.

April 21

• Suspected members of drug-trafficking cartels blocked several roads in Monterrey, Nuevo Leon state, by coercing drivers to park their vehicles across several lanes. Roadblocks were reported at the intersections of Colon and Pino Suarez streets as well as Padre Mier and Garibaldi streets.
• The bodies of two unidentified men were discovered outside a bar in the 10th of April neighborhood in Cuernavaca, Morelos state. A message addressing suspected CPS leader Hector Beltran was draped over the bodies.
• The body of the Veracruz state Maritime Customs administrator, identified as Francisco Serrano Aramoni, was discovered at an unspecified location. Serrano was kidnapped last year near the Morelos bridge in downtown Veracruz.
• Approximately 25 gunmen kidnapped six people from a Holiday Inn in Monterrey, Nuevo Leon. The kidnappers took four guests, two clerks and a security guard from the hotel premises.

April 22

• The bodies of five men were found in a van abandoned in the municipality of San Miguel El Alto, Jalisco state. All the bodies bore signs of torture and gunshot wounds to the head.
• The Secretariat of Public Security confirmed the April 19 arrest of eight suspected members of La Familia in the municipality of Donato Sierra, Mexico state.
• Residents of the La Concepcion neighborhood in Tultitlan, Mexico state, found the body of an unidentified man. The victim had been shot in the forehead.

April 23

• Soldiers arrested 16 suspected cartel members during a raid on a ranch in Panuco, Veracruz state. Two suspects were killed in the incident, and the authorities seized weapons, ammunition and vehicles.
• Soldiers and state investigative agents arrested three policemen in Apodaca, Nuevo Leon state. The men are suspected of provoking an altercation with federal policemen on June 8, 2009.
• Unidentified gunmen killed six policemen and one bystander during an ambush in Ciudad Juarez, Chihuahua state.

April 24

• Unidentified gunmen attacked Michoacan state public security head Minerva Bautista Gomez in Morelia, Michoacan state. Bautista, four bodyguards and two civilians were injured in the attack.
• Six suspected members of drug-trafficking cartels were killed in two firefights in the municipalities of San Nicolas de los Garza and Juarez, Nuevo Leon state.
• Soldiers killed three suspected kidnappers and freed four kidnapping victims during a highway chase and subsequent firefight in General Bravo, Nuevo Leon state.

April 25

• Roadblocks set up by drug-trafficking cartels were reported in the municipalities of Monterrey, San Nicolas de Los Garza, Apodaca and Guadalupe, Nuevo Leon state.
• Two explosions damaged a bank and a nightclub in the Ciudad de los Deportes neighborhood of Mexico City. No injuries were reported.
• One policeman and one suspected gunman were killed during a firefight in Zapopan, Jalisco state. A civilian and another policeman were reportedly injured.

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BISHKEK, Kyrgyzstan – Opposition leaders declared they had seized power in Kyrgyzstan on Wednesday, April 7, taking control of security headquarters, a state TV channel and other government buildings after clashes between police and protesters left dozens dead in this Central Asian nation that houses a key U.S. air base.

President Kurmanbek Bakiyev, who came to power in a similar popular uprising five years ago, was said to have fled to the southern city of Osh, and it was difficult to gauge how much of the impoverished, mountainous country the opposition controlled.

“The security service and the Interior Ministry … all of them are already under the management of new people,” Rosa Otunbayeva, a former foreign minister who the opposition leaders said would head the interim government, told the Russian-language Mir TV channel.

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The opposition has called for the closure of the U.S. air base in Manas outside the capital of Bishkek that serves as a key transit point for supplies essential to the war in nearby Afghanistan.

A senior U.S. military official says some flights were briefly diverted at the base, but as far as military officials in Washington know, the base was never closed. Scheduled troop movements in and out of Afghanistan were not affected. The official spoke on condition of anonymity because base operations are sensitive.

During the day, protesters who were called into the streets by opposition parties stormed government buildings in Bishkek and battled with police amid volleys of tear gas. Groups of elite officers then opened fire with live ammunition.

The Health Ministry said 40 people died and more than 400 were wounded. Opposition activist Toktoim Umetaliyeva said at least 100 people were killed by police gunfire.

Crowds of demonstrators took control of the state TV building and looted it, then marched toward the Interior Ministry, according to Associated Press reporters on the scene, before changing direction and attacking a national security building nearby. They were repelled by security forces loyal to Bakiyev.

After nightfall, the opposition and its supporters appeared to gain the upper hand. An AP reporter saw opposition leader Keneshbek Duishebayev sitting in the office of the chief of the National Security Agency, Kyrgyzstan’s successor to the Soviet KGB. Duishebayev issued orders on the phone to people he said were security agents, and he also gave orders to a uniformed special forces commando.

Duishebayev, the former interior minister, told the AP that “we have created units to restore order” on the streets. Many of the opposition leaders were once allies of Bakiyev, in some cases former ministers or diplomats.

Why is Kyrgyzstan Important?

Like its neighbors Uzbekistan and Tajikistan, Kyrgyzstan has remained impoverished since the 1991 collapse of the Soviet Union and has a history of stifling democratic institutions and human rights.

Kyrgyzstan is a predominantly Muslim country, but just as in Soviet times, it has remained secular. There has been little fear of the spread of Islamic fundamentalism as in other mostly Muslim regions of the former Soviet Union.

Since coming to power in 2005 amid street protests known as the Tulip Revolution, Bakiyev had ensured a measure of stability in the country of 5 million people, but the opposition says he has done so at the expense of democratic standards while enriching himself and his family. He gave his relatives, including his son, top government and economic posts and faced the same accusations of corruption and cronyism that led to the ouster of his predecessor, Askar Akayev.

In the past two years, authorities have clamped down on the media, and opposition activists say they have routinely been subjected to physical intimidation and targeted by politically motivated criminal investigations.

Many of the opposition forces had been in power with Bakiyev until Bakiyev purged his government of most opposition elements in October 2009. The purged individuals, most of whom belonged to the Social Democrats and United People’s Movement, joined forces to spearhead nationwide protests already under way due to the Central Asian country’s economic and electricity crisis.

Western corporate entities doing business in China came to the fore recently, when American based Google lodged public complaints about China’s filtering of their search engine results.  The clash between government censors and the internet-based research organization is not only an issue of freedom in a worldwide market, but causes concerns in many areas of business exchange.  Google’s top legal officer, David Drummond, said on his blog on March 22 that the company will close Google.cn, its search engine based in China, and redirect traffic to its Hong Kong-based Web site Google.cn.hk, where it will offer its services unfiltered by Chinese censors. Google will retain its two research and development units in Beijing and Shanghai, according to the statement, as well as its Chinese advertising services. The Google statement claimed that the Chinese government would not compromise on the question of censorship, and Google had said in January that it would not maintain the site if censorship persisted. The new Hong Kong-based Google search engine is expected to be subjected to blocks on the Chinese mainland. Chinese authorities have not responded to the decision. That Google has decided to close down Google.cn is not surprising, since there was little chance the Chinese government would allow an exception to its strict laws and security protocol on information. However, the Google decision to send users to its Hong Kong site raises a number of questions, foremost of which is whether the Chinese central government was complicit in this deal. After all, while Hong Kong is a special administrative region with different legal structures than the mainland, it is still China. And Google is also maintaining its other operations in the mainland, indicating it was not forced to close them. Second, it is not clear how the move to Hong Kong shields Google from the cybersecurity issues that prompted its threat to leave China in the first place, especially since it is keeping its research and development units operating in China.

Alongside this potentially divisive issue, the Chinese government’s indictment of four employees of multinational mining giant Rio Tinto has been in the news since July 2009, when the four,  three Chinese nationals and Australian citizen Stern Hu, general manager of Rio’s iron-ore division in China, were arrested in Shanghai and accused of offering bribes and stealing state secrets.

The Rio Tinto Group is a diversified, British-Australian, multinational mining and resources group with headquarters in London and Melbourne. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto river, in Huelva, Spain from the Spanish government. Since then, the company has grown through a long series of mergers and acquisitions to place itself among the world leaders in the production of many commodities, including aluminium, iron ore, copper, uranium, coal, and diamonds. Although primarily focused on extraction of minerals, Rio Tinto also has significant operations in refining, particularly for refining bauxite and iron ore. The company has operations on six continents but is mainly concentrated in Australia and Canada, and owns gross assets valued at $81 billion through a complex web of wholly and partly owned subsidiaries. In 2007, the company was valued at $147 billion.

It appears as if the relationship between Moscow and Washington is — despite public successes of the START negotiations — becoming increasingly complex. The latest developments see both powers making moves in each other’s backyard, or at least what each capital considers their backyard. Not only is Russian Prime Minister Vladimir Putin traveling to Venezuela on Friday, but reports emerged Thursday that U.S. President Barack Obama will be holding a group meeting with Central European leaders next week, on April 8 — the same day he will sign the new START treaty with Russian President Dmitri Medvedev.

On the European side of the pond, Obama has plans to meet with Hungarian Prime Minister Gordon Bajnai, Polish Prime Minister Donald Tusk, Romanian President Traian Basescu and possibly also the leaders of the Czech Republic, Slovakia, Bulgaria, Slovenia, Croatia and the Baltic States — all on the sidelines of the official ceremony accompanying the signing of the new START treaty. That the American president is choosing to meet with the Central and Eastern European leadership en masse in the same venue that is supposed to be dedicated to the pomp and circumstance of the signing of the new START treaty will not please Moscow. This is particularly true since Russia had originally planned for the signing of the treaty to be a minor stop on Medvedev’s own tour of the region, and because the event was designed to highlight Russia’s status as a superpower worthy of the United States’ undivided attention.

The time and place of the meeting is therefore not accidental. It is supposed to signal to Russia that the United States is still very much involved in Central and Eastern Europe. It is also sending the same message to the beleaguered Central Europeans who these days feel threatened more than they expected they would when they joined the European Union and NATO alliances in the last decade. Estonian President Handrik Ilves summarized it well on Thursday when he noted that the ultimate question for Europe really comes down to “how much you trust the Russians.” He also peppered the interview with references to the EU’s abandonment of Ukraine and Georgia, and the general European lackadaisical attitude regarding Moscow’s resurgence in the region.

ISRAELI PRIME MINISTER BENJAMIN NETANYAHU and Greek Prime Minister George Papandreou visited Moscow on Monday. Their agendas were different, but their shared purpose was to seek Russia’s aid on points key to the national interests of each country.

Netanyahu traveled to Moscow to ask Russian President Dmitri Medvedev for “sanctions with teeth” against the Iranian energy sector to force Tehran to reassure the world that it is not developing a nuclear weapon. Iran, an oil producer, imports between 25 and 30 percent of its gasoline due to a lack of refining capacity. Russia is central to an effort to squeeze Iran with gasoline import sanctions because Moscow is a permanent — and thus veto-bearing — member of the U.N. Security Council, and because it could easily ship gasoline to Iran via its former Soviet Union neighbors (Azerbaijan and Turkmenistan in particular) if sanctions are imposed by the West outside of the United Nations.

Meanwhile, Papandreou journeyed to Moscow — officially to talk about business and military cooperation — as his country faces a wrenching economic crisis and possible default. While Papandreou was in Moscow, his finance minister attended the meeting of the eurogroup — finance ministers of EU member states using the euro — in Brussels. The meeting concluded with no clear plans to offer Greece financial assistance despite a dire situation from which there seems no clear exit. Athens is somehow supposed to raise 33 billion euro ($44.9 billion) by June, with investors becoming increasingly worried that Athens has no real chance of consolidating its budget — which it most probably does not.

The visit to Moscow therefore can only raise eyebrows and spark rumors that the Greek prime minister is in fact going to the Kremlin “hat in hand.” This was an avenue that both Iceland and Serbia took during their economic crises, and each time the EU responded with financial aid of its own to counter Moscow’s rising influence. A Russian loan to Greece — no matter what the actual size of the aid package — would be a psychological blow to EU unity. An EU member state — a eurozone state no less — finding financial assistance in Russia rather than among its fellow euro users would lay bare the EU’s inefficiency, particularly in times of crisis management. Moscow would therefore send a powerful message to Central European states that see the EU as a counter to Russian spheres of influence on their borders.

STRATFOR finds the fact that both Netanyahu and Papandreou are in Moscow — and that they are both asking for a favor — an indication of the growing consolidation of Russia’s power, a fine note to accent the Kremlin’s return to the center of Eurasian geopolitics.

While Russia sits in the catbird seat, China is in a less enviable spot. U.S. Secretary of State Hillary Clinton visited Saudi Arabia on Monday to meet with Saudi leaders and discuss sanctions on Iran — including China’s role. The Americans have attempted to assure China that its oil supplies will be preserved — even amid heightened tensions in the Gulf due to Iranian sanctions — by facilitating a deal with the Saudis to ramp up oil exports to China.

China has shown little inclination to buy into this scheme to wean itself off Iranian oil. In recent months China has not only continued importing from Iran, but also accelerated its exports of gasoline to Iran (which are likely to be a primary target of U.S. sanctions) and hastened deals allowing one of China’s roving national oil companies to produce natural gas in Iran’s giant South Pars field. Beijing has consistently opposed talk of Iranian sanctions, emphasizing diplomatic efforts instead, and variously delaying and downgrading its participation in P-5+1 negotiations since late December.
China is decidedly against Iranian sanctions in the interests of the country’s energy security and economic stability. Iran is China’s third largest oil supplier, providing 11 percent of China’s total — this is reason enough for China to resist sanctions. While sanctions may not specifically target Iranian oil exports, Beijing reasonably fears they could create a chain reaction jeopardizing its oil supplies not only from Iran, but also from the rest of the Gulf, since these shipments pass through the Strait of Hormuz where Iran is most likely to aim any retaliation. While China’s economic growth rate is high, serious vulnerabilities exist in the banking, property and export sectors, all of which the government is attempting to address without triggering a destabilizing slowdown. Now would be an exceedingly bad time for a sudden energy shock.

Moreover, much of the credibility of China’s claims to rising international status rest on its ability to defend smaller states like Iran that are antagonistic to the United States. If China drops Iran at the first sign of American coercion, a host of other states — in Latin America, Africa and Southeast Asia — will rethink whether they can rely on China for support. In such a case, Chinese leaders would struggle to allay domestic outrage at yet another example of acquiescence to the United States, while much of the political capital they have painstakingly built up in recent years through speeches, state visits and investments across the world would be squandered.

Yet there is little China can do to stop the sanctions drive. Unlike Russia, Chinese participation is not a prerequisite to a successful sanctions regime. It is logistically more difficult for China to circumvent sanctions, as the land routes are too long and the sea routes are at least implicitly subject to American naval coercion. This means Washington does not have to negotiate with Beijing, as it does with Moscow, to address its chief concerns and try to win it over. The Chinese are external to the international diplomatic process, and while they can veto a resolution authorizing U.N. sanctions, that would only encourage the United States to lead its allies in taking action outside the United Nations, diluting the influence of one of Beijing’s primary international platforms.

Worst of all for China, an outright rejection of sanctions, or an attempt to undermine them, would result in greater external pressure from an American administration that has already shown its willingness to target China’s economy through trade protections and other tools. Of course, the United States has not yet clinched the deal on sanctions. Much remains to be done, and (crucially) Russia has not committed either way, giving Beijing room to maneuver. Still, in essence, Beijing has no way to stop sanctions against Iran, and to oppose them it must decide if it is ready to withstand the American reaction.

AP Video Report on Haiti\’s Earthquake Disaster

Wednesday, January 13, 2010

Tuesday evening a 7.0 earthquake hit Port-au-Prince, Haiti. Already the poorest nation in the Western hemisphere, the latest reports coming out of major news sources paint a grim picture. Widespread destruction throughout Port-au-Prince, including the partial collapse of the Presidential Palace, evidences a long recovery road. Airport closings have hampered the arrival of needed aid from the international community.

A powerful earthquake shook Haiti on Tuesday, leveling buildings in the capital, Port-au-Prince, and sending panicked residents into the streets, as beleaguered authorities braced for major casualties. The quake, which had a preliminary magnitude of 7.0, occurred about 4:45 p.m. and was centered about 10 miles west of the capital. The U.S. Geological Survey said it was the largest temblor ever recorded in Haiti, and witnesses reported a series of strong aftershocks. “People are out in the streets, crying, screaming, shouting,” said Karel Zelenka, director of the Catholic Relief Services office in Haiti. “They see the extent of the damage,” he said, but could do little to rescue people trapped under rubble because night had fallen.

“There are a lot of collapsed buildings,” Zelenka said in a telephone interview from Port-au-Prince. “This will be a major, major disaster.”

He reported that poorly constructed shantytowns and other buildings had crumbled in huge clouds of dust. Near the CRS headquarters, a supermarket was “completely razed,” he said, and a gasoline station and a church were reduced to rubble. Among the worst-hit areas was the impoverished Carrefour section of Port-au-Prince near the sea.

In the wealthier Petionville part of the city, where diplomats and well-off Haitians live in hillside homes, a hospital was wrecked and houses had tumbled into a ravine, according to the Associated Press.

President Obama issued a statement saying his “thoughts and prayers go out to those who have been affected by this earthquake.” The State Department said the United States will provide military and civilian disaster assistance to Haiti, and on Tuesday evening, the U.S. Agency for International Development and the military’s U.S. Southern Command had begun working to coordinate an assessment of the situation on the island.

State Department spokesman P.J. Crowley said embassy officials had begun trying to contact Americans living in the city but were hampered by a lack of communication and by roads that were impassable. “The damage is significant. Lots of walls down. There are people who have been killed by falling debris,” Crowley said. “Clearly, the situation there, the damage there, is significant.” As of 7 p.m., Crowley said, U.S. officials had been unable to reach their Haitian counterparts in the capital. He said there have been reports that the national palace was damaged in the quake.  Crowley said the State Department will continue to reach out in the hopes of offering assistance to the island nation, considered the poorest in the Western Hemisphere.

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The news video shows a young woman being handcuffed and pushed into the back seat of a black SUV.  She has “jumped bail,” failed to appear for her court date, and the bail bondsman has hired Duane “Dog” Chapman, a noted bounty hunter, to bring her back and avoid losing his money, loaned to her to post bail on her charges.  The camera pans forward, entering the SUV, and the young woman says:  “It’s not fair!  Child molesters get caught and do 3 years in jail at the most!  All I am is a drug addict, and I’m facing 28 years in prison!  I’m just a drug addict!  I ain’t hurtin’ nobody!”  Hollywood celebrities frequent exclusive rehab establishments as often as they go to the “fat farm.”  Drugs are so readily available that addiction has become an occupational hazard.  Popular sports heroes admit to use of not only illegal steroids, but also marijuana, cocaine and ecstasy.  Often, in their case, the drug use is expected and it’s the use of performance enhancing steroids that is unforgivable.  Street corners in small towns across the U.S. are inhabited by what appear to be “just young people hanging around,” but what are actually drug dealers, plying their illicit trade in ever more innocuous surroundings in ever more surreptitious ways.  Just a few months ago we heard our President set priorities for his first year in office.  Controlling the Southern border of our nation, the border with Mexico was mentioned, but ranked low in the priorities, and where other issues – the Afghan War, the Economic Situation and Finding Bin Laden – got paragraphs of  strategic explanation, the Southern Border Issue was only mentioned as a problem. While the government does little, popular media mounts a campaign to convince Mr. and Mrs. Middle America that drugs is a victimless crime.  “After all,” they intone, “a person has a right to do with their own body what they want to, don’t they?”  On one side of the issue, that statement makes sense.  However, looking at the collateral damage of the drug trade, as it erupts from South America, through Mexico and across our Southern Border, another conclusion may well be more true.

As 2010 looms on the horizon, RealIntel.com wants to step up our “no-spin reporting of world events” a notch.  We’ll still provide the basic intel we’ve been posting from excellent resources like Stratfor, OSAC, and others, to let you decide what is and what is not important.  However, starting with this report, we’ll also mine the newsboards and video archives to provide issue-based background reports like this one, on the Mexico Drug Cartels, the Southern Border Control Issue and the U.S. effort to stem the tide of Illegal Immigrants.  It’s still pretty much raw intelligence, posted as it comes to us, but with an emphasis on a particular issue:  This time, Mexico.  We’ll lean heavily on Stratfor, our excellent source for common-sense reports, the U.S. State Dept. and USAC, their public news outlet, but we’ll also take a look at other resources that can lend a bit of color to the issue at hand as well.  For now, we’ll link to the video reports on other sites.  While viewing videos in a separate window may prove a little cumbersome for our readers, it also saves the cost of maintaining expensive server space for embedded videos.   Comments are enabled.   Let us know what you think.

The refusal by the Federal Government to control the US-Mexico Border has led to the deaths of thousands of people on both sides of the border. Even CNN is now acknowledging that open borders have made most of our major cities dangerous and drug ridden. At least 28 billion dollars of drug money flows into Mexico from the US each year, funding an army of illegal aliens that are now terrorizing American cities. Each month of this insane open border's policy, drives the US further in debt and deeper into crime and chaos.

In the continuing drug war in Mexico, the assault weapons they use such as AK-47s and 50 caliber rifles are largely coming from U.S. traffickers at a rate of 2,000 a day. Ben Tracy reports.

The violence associated with drugs in Mexico is a result of factors on both sides of the border. Drug related and cartel violence in Mexico is fueled by demand and guns from the U.S. Reuters' Colin Chapman takes a look at the issues with STRATFOR expert Fred Burton.

Stratfor Special Report:  Securing The Border

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Part 1: The United States and Mexico face systemic challenges in efforts to secure their shared border from drug cartel violence. In Part 1 of a special report, STRATFOR examines the geographic and political issues that weaken Mexico’s central government and contribute to the strength of the cartels.

Part 2: The United States and Mexico face systemic challenges in efforts to secure their shared border from drug cartel violence. In Part 2 of a special report, STRATFOR examines tactics used in cross-border smuggling and patrol operations and questions of corruption on both sides of the Rio Grande.

Part 3: The United States and Mexico face systemic challenges in efforts to secure their shared border from drug cartel violence. In Part 3 of a special report, STRATFOR examines constraints on U.S. efforts to control crime and violence in the border region.

La Familia Michoacana North of the Border

By Ben West and Fred Burton

In an indictment handed down Nov. 20, the U.S. Federal District Court for the Northern District of Illinois accused 15 individuals of being involved in the trafficking of cocaine and other narcotics in the Chicago area. The 15 were arrested in a nationwide counter-narcotics operation led by the U.S. Drug Enforcement Administration (DEA) dubbed “Project Coronado,” which was aimed at dismantling the drug trafficking network of La Familia Michoacana (LFM), a mid-sized and relatively new drug cartel based in Michoacan state in southwestern Mexico.

The U.S. investigation of LFM has revealed many details about the operation of the group in the United States and answered some important questions about the nature of Mexican drug trafficking and distribution north of the border.

LFM stands out among the various drug cartels that operate throughout Mexico for several reasons. Unlike other drug trafficking organizations (DTOs) that have always been focused on drug trafficking, LFM first arose in Michoacan several years ago as a vigilante response to kidnappers and drug gangs. Before long, however, LFM members were themselves accused of conducting the very crimes they had opposed, including kidnapping for ransom, cocaine and marijuana trafficking and, eventually, methamphetamine production. The group is now the largest and most powerful criminal organization in Michoacan — a largely rural state located on Mexico’s southwestern Pacific coast — and maintains a significant presence in several surrounding states.

Thousands took to the streets in Moscow after an extreme Islamic group claimed responsibility for the bomb that blew up the Nevsky Express. But STRATFOR thinks it doubtful that this was the reason the Kremlin seems now willing to assist America in getting supplies to Afghanistan.