Why Is Juarez So Hotly Contested, and Why Should This Be Important to the USA

“Why is Juarez so hotly contested, and why should this be important to the USA??”

Violence in Juarez has been significant and increasing over the last six years -- but that battle for Juarez involves a great deal of complexity not apparent to the average observer, or even many regional residents. According to STRATFOR sources Juarez has long had money-laundering operations in the business districts, possibly dating back to the US Prohibition era. In the 1980s, when the Guadalajara cartel was large, powerful, and moving huge quantities of cocaine into the U.S. for Colombian drug lord Pablo Escobar, the Juarez business sectors are known to have been laundering Guadalajara revenues. Certainly the area's US Ports of Entry (POEs), particularly the Paso del Norte, Stanton Street and Bridge of the Americas POEs, are of high value to the cartels. Level of control of the international POEs on the border directly ties to levels of revenue for the cartels in any given sector of the border. But while the Arellano Felix Organization (AFO, aka the Tijuana cartel) fought bitterly to retain their control of their Tijuana and Mexicali plazas when the Sinaloa cartel sought to take control over the last 8-10 years, an accommodation was reached. The AFO remains in place and continues to generate revenues in the drug trade, but as a “vassal state” which pays tribute to Sinaloa to remain in place and operational. That the Vicente Carrillo Fuentes organization (VCF, aka the Juarez Cartel) has refused to relent or compromise, much less collaborate, raises these questions for STRATFOR: Why is Juarez so hotly contested? Why is the VCF absolutely unwilling to relinquish control, with the very real consequence of annihilation at the hands of the Sinaloa and/or MX Military forces? And why should this be important to the United States?

FIRST SOME BACKGROUND

In order to understand the dynamics of the Sinaloa-VCF battles, it’s worth looking to the past. STRATFOR has touched on this history in the past [link], so this is a very truncated overview for context. In 1980 there were no “cartels” per se in Mexico. Pablo Escobar’s Medellin cartel was taking losses from USG interdiction efforts in the Gulf of MX & Florida Straights, so an alternative was sought. A nucleus group formed of Rafael Caro Quintero, Miguel Angel Felix Gallardo, and Ernesto Fonseca Carrillo – in large part due to the earlier experiences and contacts of Fonseca Carrillo (in Ecuador) and Felix Gallardo’s contacts with Escobar. Very swiftly the organization grew in scope, size and territory in the early 1980s, initially being paid by the Medellin cartel with currency but within a few years the Mexican group was paid in product. According to some reports, 35-50% of the cocaine which passed through Mexico from Colombia was received as payment for services rendered – which gave rise to the Mexican organization’s move from pure logistics to direct trafficking and distribution. So began what became known as the Guadalajara cartel.

In November 1984, MX federal police raided Rafael Caro Quintero’s rancho at El Bufalo, Chihuahua state, enabled by intelligence developed by an undercover DEA agent. In that raid, authorities found and burned a marijuana cache reported to be over 10,000 tons’ worth – a loss to the cartel of an estimated $160 million USD. In retaliation the DEA special agent, Enrique “Kiki” Camarena, and his pilot Alfredo Zavala were kidnapped on Feb 7 1985 in Guadalajara, Jalisco. Zavala was killed quickly, but Camarena was tortured over the course of several days – with a doctor in attendance who reportedly resuscitated Camarena several times so that he could be tortured some more. The US investigation and follow-on Operation Leyenda resulted in the captures of Caro Quintero on April 4, 1985, in Costa Rica, and Fonseca Carrillo in Puerto Vallarta three days later. Caro Quintero was extradited to Mexico, and both men were convicted in Mexican courts – but were not extradited to the United States despite DEA’s efforts toward that end. This left Miguel Angel Felix Gallardo in sole control of the vast operations of the Guadalajara cartel – and a price on his head. He assumed a very low profile, and moved his family to Guadalajara in 1987.

Shortly after this move, Felix Gallardo decided to divide up the business by regions for the sake of efficiency and to mitigate law enforcement incursions/interdictions, so he convened a meeting of his top lieutenants at a house in Acapulco.  Tijuana routes & plazas given to Arellano Felix brothers to control  Juarez/Chihuahua routes & plazas given to Carrillo Fuentes family to control  Sonora state routes given to Miguel Caro Quintero (Rafael’s brother)  Matamoros & the Tamaulipas state plazas & corridors left intact with Juan Garcia Abrego, who founded the Gulf cartel (CDG)  Pacific coast operations given to Joaquin “El Chapo” Guzman Loera (who Felix Gallardo mentored for about a decade prior) and Ismael Zambada Garcia  Felix Gallardo retained control of nat’l operations & remained #1 leader of whole org, but regional ops were delegated as mentioned above

Felix Gallardo was captured on April 8, 1989, tried in MX courts & convicted. Sentenced to 40 yrs. Initial years he was able to run the orgs from his cell via cellular phone, but was transferred to the Altiplano maximum security prison in Mexico state in the 1990’s [precise date unknown].

The initial assignments of operations by region evolved into some of the main players STRATFOR discusses currently:  the Sinaloa cartel, run by Chapo Guzman (originally a young street punk who was mentored by Felix Gallardo)  The Juarez cartel, run by Vicente Carrillo Fuentes, brother of its original leader Amado Carrillo Fuentes  The Gulf cartel which struggles to regain its former territories from Los Zetas

THE SIGNIFICANCE OF JUAREZ

Following the capture and incarceration of Felix Gallardo, the regional organizations broke from their former allied structure.  In 2001 a (unknown) number of VCF members defected from the Juarez cartel and aligned themselves with Sinaloa under Chapo Guzman’s leadership (the info I read said “many” VCF members defected, but that could mean 20-80% of the VCF…it’s just not clear)  In 2004 Guzman (reportedly) had Vicente Carrillo Fuentes’ brother Rudolfo assassinated  Shortly thereafter (same year, I believe) Vicente retaliated by having Guzman’s brother killed in prison  Huge and very personal turf war started in late 2004 o Hiatus in hostilities during 2005-2006 while Sinaloa took on the Gulf cartel in direct battles for territory o Juarez/Sinaloa battle renewed in earnest after Prez Calderon took office in 2006 and initiated the military actions which destabilized several regions [link to Lost Equilibrium piece] Beyond personalities, loyalties and historical dynamics, Juarez has been a money-laundering center since the early days of the Guadalajara cartel and then the Carrillo Fuentes family’s control. During the 1990s, Amado Carrillo Fuentes shipped vast quantities of cocaine and marijuana into the US – often directly into metro areas like Manhattan, NY – with his fleet of 27 private 727 jets. That fleet earned him the moniker “El Senor de Los Cielos” or “The Lord Of The Skies” – but his revenues funneled back to him by land through El Paso into Juarez, where it was laundered. When Amado Carrillo Fuentes died on the operating table in 1997, while having plastic surgery to alter his facial features, he was estimate by some sources to be worth $25 billion USD. If even a quarter of his revenues funneled into Juarez, the laundering operations in Juarez must have been robust and extensive. It’s likely that those operations remain viable – the nephew of Amado, Vicente Carrillo Leyva, was arrested and charged with money laundering in 2009. Though he was acquitted by a Mexican jury, it does not disprove continued money laundering operations in Juarez. But the existence of significant financial logistics is likely to be a strong motivator for Sinaloa to take the plaza – and for Amado’s brother Vicente to fight to keep it.

Dynamics:  Sinaloa actively working to acquire and absorb the Juarez plaza as it did the Tijuana plaza  Sinaloa battled AFO for several years for control of Tijuana plaza BUT there are differences o AFO has remained o Violence subsided in TJ . Because an accommodation apparently was reached between the AFO and Sinaloa  AFO likely chose diminished profits over elimination . Assumption (because AFO still in place in TJ) is that Sinaloa pays piso to AFO to use TJ POEs (according to some press & “think tank” reports) . Reality is that Sinaloa owns the TJ POEs and AFO pays piso to Sinaloa to use their erstwhile plaza (STRATFOR security sources)  Vicente Carrillo Fuentes and the Juarez cartel display zero willingness to come to some sort of agreement or compromise with Sinaloa o Likely causes are rooted in the history delineated above . Very personal and long-standing enmity between Guzman and Carrillo . Carrillo Fuentes highly unlikely ever to be willing to be a vassal of Guzman’s organization  VCF in recent weeks has made specific threats against MX and US entities o Particularly important were the pointed threats of bombing one or more POE’s and the US Consulate . Bomb threats per se are not uncommon, but they tend to be vague and don’t result in actions . Grenades have been thrown at the US Consulate wall, but no structural damage resulted . Remind of the targeting of US Consulate worker/dependents last year [link to MSM – or an S-Weekly] o Specific narco-manta threats of dismemberment of DEA agents recently . Again, threats or rants against the DEA are not unknown, but these recent threats are much more pointed that past examples  There is a distinct possibility that desperate VCF actions may result (my estimate 40%) in a no-going-back act – “desperate times [tend to] call for desperate measures” o As the Juarez cartel is squeezed by Sinaloa [link to Q1 update] and supply lines for drugs to generate revenues are restricted or lost, Juarez cartel leadership likely will begin to consider actually doing things which previously were not in their best interest as an organization o Overall, the cartels have known for 2+ decades (after Camarena case mentioned above) that directly engaging the US is NOT in their best interests . But times they are a’changin’ (continued Sinaloa aggression and GOM actions likely are causing VCF to re-evaluate options.  Yes, the cartel itself has not ever been large in numbers  They counterbalanced that deficiency with paid partners in the form of gangs (Aztecas, Barrio Aztecas, several others in Juarez of smaller size)[link to recent MSM] o But these gangs will be “loyal” to whomever pays them o Sinaloa has the ability to buy the loyalty of VCF’s gang associates o That change is a matter of time, and likely is directly tied to Juarez revenues dropping due to strangulation by Sinaloa o This means the switch in loyalties could occur tomorrow, next month, before the end of this year…or two years from now  If the large gang affiliates defect soon (Stick thinks it’s imminent, I’m leaning more toward 6-12 months out) there will be a rapid shift by VCF to what could be termed a “hail mary pass” type of actions o When VCF desperation peaks, (again, possibly next week – possibly next year) we expect that the threats we saw 2 wks ago (referenced above) are likely to be very real and followed through upon . Desperate actions will not necessarily spell the destruction of the VCF (as in “suicide by cop” results) . The Juarez cartel demonstrated in 2010 that they have the knowledge and wherewithal to create remotely detonated explosive devices [link to Juarez bombing targeting first responders MSM] . Recall that the history of the Carrillo Fuentes family is rooted in the Guadalajara cartel – which was largely dismantled by the DEA, but not wiped out else the VCF would not exist today, therefore o It’s safe to assume that VCF would expect significant US actions if US interests/assets are hit hard, but it’s also reasonable to expect that those US actions would be directed at any/all cartels in the region – . Meaning that there is a potential, if pushed too far into the corner, that VCF would strike at US assets with the INTENT of pulling the US into direct battle with the cartels . Likely accomplished with one or more large car-bombs . Probably would target the consulate or one or more of the central, high- volume POE bridges . The benefit to VCF:  VCF starts the conflagration, causing Sinaloa to be pulled into direct conflict with US elements o VCF limps out of the way while Sinaloa takes a beating from the US o VCF waits for the storm to die down, and rebuilds . Remember, they’ve done it before, in the aftermath of the dismantlement of the Guadalajara cartel by DEA . Failing that:  In an “If we’re going down, you’re going down too” scenario, VCF may be dismantled but Sinaloa would take an enormous hit too (or be dismantled with US assets hunting Chapo down, etc) o Remember too that the US has done that before…it just takes a big enough event in MX to trigger a US response . IF THIS IS THE EVENTUALITY:  We expect that VCF would over time re-establish itself (unknown whether the cartel would continue alliance with Zs)  We expect that VCF potentially could construct a stronger partnership with CPS (vs the current but somewhat distant alliance) in order to secure commodities supply lines and provide for a wider perimeter  We expect that relations between the US and MX could be very strained for several years following a direct US action o Political ramifications for Calderon and/or his successor o Political ramifications for Obama and/or his successor o Trade relations potentially could suffer o In the US: . Calls from the right to close or severely restrict the border . Calls from the right to remove illegals of MX natlty . Calls from the left to legalize drugs . Calls from the left to bestow amnesty on current illegal population would increase  There is a possibility (my estimate 30%) that Sinaloa may succeed in removing the VCF from Juarez in a big move, before the VCF can do anything to avoid it o Certainly a switch in allegiance of the street-gang foot-soldiers from VCF to Sinaloa would help accomplish a large chunk of this o IF THIS IS THE EVENTUALITY: . We expect the violence to die down (not all at once, but fairly quickly nonetheless) . We expect that Sinaloa would move in and take over the Juarez plaza and the money-laundering and smuggling operations in it . We expect that the Calderon administration would declare a victory (so long as Sinaloa ends the violence in Chihuahua state and does its business quietly)  There is a slightly lesser possibility (I’m goin’ with about 25%) that the VCF maintains its hold on their Juarez territory – and all-important revenues o This would require the concerted assistance of any allies – meaning Zs and Cartel Pacifico Sur (CPS) o It too would require some level of destabilization/interference of Sinaloa by GOM . Which is why the probability of this scenario is rather low – but it cannot be ruled out o IF THIS IS THE EVENTUALITY: . We expect the violence to die down . We expect that the VCF would make efforts to solidify it’s hold on Juarez and re-establish its long supply lines for narcotics . We expect that the Calderon administration may let it stand, for any cessation of violence will be preferable from the political viewpoint

In the VCF/Sinaloa fight for dominance and control of the area, there are enormous and far- reaching implications inherent in the threats leveled by VCF over the last 10 days. Bomb threats are regular events at the POEs, but any substantial follow-through of those threats that includes (true) car-bombing of the US Consulate or the POEs likely will trigger one or more large, overt, and powerful responses by the US Military. As the VCF becomes more hemmed in and their revenues plummet, the potential for large-scale "hail Mary" attacks is likely to increase in proportion to the cartel's level of desperation.

Wkly Avgs: July 2011 Oct 2010 RGV: 23681.55 EP: 1858.28 3208.21