Tuesday, 1 January 2013

Mexican Drug War Spilling in United States

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We’ve all heard about Mexico’s war on drugs, a fight between rival drug cartels and government forces. Ciudad Juarez remains Mexico’s murder capital and across the border in El Paso it’s also very dangerous. “It’s a war in which the new president can’t claim victory, can’t pull out and which only gets worse”. “Mexico’s drug war could become its Iraq”. So is it really this bad? Yes and its coming closer to home sooner than you think!

The drug-mafias/cartels is one of the most dangerous and evil in our societies, because it is more organized and patronized than the terror perpetrated by the evil fanatics terrorist extremists.
These mafias, with support of some rich and powerful elements of the societies, are bloody ruthless in wiping out any opposition to their wicked activities, which mostly revolve around ‘money for crime’. The best way to deal with them is to strike them where it hurts the most, which is to wipe out their drug-distribution points mostly operated/controlled by their small cartels;

In Mexico, although this job, to attack and incapacitate the small cartels, is well undertaken by the Army, yet it lacks proper intelligence network and coordination.
So Should the Mexican government continue to fight the war on drugs and the cartels? Or should the focus be on tackling its causes like unemployment, lack of education and corruption? How is this affecting day to day life in Mexico? And is the violence just restricted to Northern Mexico?
And Within the last year, there has been a sharp increase in drug-related violence across the US as the war against the Mexican drug cartels reaches catastrophic levels of violence across the border. Some border towns on the Mexican side have turned into literal war zones, with the Mexican police fighting for control with drug lords armed with military-grade weaponry. So will the violence spread to the borders of the United States and eventually Canada?  And will the drug cartels on day be using  fear, cohesion and torture to try to intimidate American Politicians, citizens, police and the government into backing down. And will we see more  Extortion , Kidnappings, beheadings, assassinations and mass killings on the Streets of the United States as the new bullies are in town and set there mark!
Mexico Drug War

The Questions we should be all asking is,” is it too late “as The Mexican Cartels are setting shop across the U.S.A? Or have the crackdown in Mexico and the increased border enforcement have impacted the Mexican drug cartel’s business in North America?

Today live from an undisclosed location and is on assignment is Mr. Jerry Brewer is a 'former" CIA 'officer' in the Counter-terrorism Center., who has served the U.S. government as a counterterrorism specialist- practitioner and senior trainer with extensive operational activity in Latin America and the Middle East as an intelligence community operative , He will discuss with us about who are these thugs in Mexico and how the violence is spilling in United States and how its affecting legitimate business in Mexico and in North America?

My name is Samuel Ezerzer, your host to the Money & Business show on Radio Shalom, CJRS 1650 AM. Thank you for tuning in live on the Money & Business show, with our Business studios headquarters in Montreal, the financial capital and the home to the greatest hockey team, the Montreal Canadians. We have another great show for you today and as always, you can call if you have any questions, comments, or criticisms on today's topic. Please call us direct at 514 738 4100 ext 200 or email me at if you have any inquiries. You can also visit our website at – all our shows are archived there.


Mr. Jerry Brewer is a 'former" CIA 'officer' in the Counter-terrorism Center , has served the U.S. government as a counterterrorism specialist- practitioner and senior trainer with extensive operational activity in Latin America and the Middle East as an intelligence community operative- with a fluency in Spanish.
With over thirty years of professional managerial and leadership experience in the field of Criminal  Justice (fifteen years as Chief of Police in 3 states); Jerry’s awards include U.S. Congressional and  State Senate and House, honors. He is a published author. columnist, keynote speaker, consultant, and expert witness on extensive  international criminal justice topics- Intelligence; terrorism/counterterrorism; transnational organized crime and drug cartels; policing; leadership; major case criminal investigation/homicide. and related  world events
He is the President and CEO of Criminal Justice International Associates, A global threat mitigation Firm located in northern Virginia."

United States of America
Washington, D.C.
(archived at: and

Jerry you where assigned to go to Argentina to investigate the July 18th bombing of the Jewish community centre in Argentina , Despite all the international attention, despite investigative help from Israel and the United States, no one has been convicted for the July 18, 1994, bombing of the community center in Argentina , in which 85 people died and more than 300 were injured?

Israeli intelligence has uncovered most of the details of Iran's involvement in the July 1994 bombing of the Jewish community center in Buenos Aires that left some 100 people dead and 250 wounded. The details include an account of a meeting of the Iranian Supreme Council for National Security at which the decision to go ahead with the bombing was made. Israel also has the name of the bomber, Ibrahim Hasin Baro, a Hezbollah man, as well as the transcript of his farewell phone call to Lebanon.
Wanted by Argentina for the 1994 bombing of a jewish charity centre

The Argentine government recently released details of its investigation into another terror incident - the bombing of the Israeli Embassy on March 17, 1992, in which 30 people were killed and more than 200 were wounded. That bombing was also conducted by Iranian intelligence services, with Hezbollah playing a key role in its execution. The methods of operation in both cases were the same.
The decision in principle to strike at the Jewish community center was made in August 1993 at a meeting chaired by Iranian spiritual leader Ayatollah Ali Khamenei. Other participants included President Rafsanjani, Intelligence Minister Ali Fallahian, Khamenei's intelligence and security adviser, Muhamed Hijazi, and the country's foreign minister at the time, Velayati.

The meeting was convened because it was to be the second major explosion in the Argentine capital after the embassy bombing 18 months earlier. Israeli intelligence believes the reason Buenos Aires was chosen a second time was because of a deterioration in relations between the two countries at the time.

Intelligence Minister Fallahian was given responsibility for the job. To back up the mission, Khamenei issued a fatwa instructing him to undertake the mission. Fallahian ordered the mission be given to the Overseas Operations Unit of the Hezbollah, headed by Amad Amiad Maghnieh, with Iranian intelligence providing full aid and cooperation. That Hezbollah unit was also responsible for the embassy bombing. The Hezbollah found the suicide bomber, Baro, a Hezbollah man, who arrived a few days before the bombing. A few hours before the bombing, Baro called his family in Lebanon, telling them he was going to be unified with his brother, who was killed in a car bombing attack on Israeli soldiers in Lebanon in 1989.

The Iranian foreign service provided much of the diplomatic cover for the operation. There was an unusual number of Iranian couriers coming in and out of the country before the bombing, with some staying longer than usual in Argentina, and there was a dramatic increase in telephone traffic between various Iranian elements in Argentina and Iran in the days leading up to the bombing.
The Culture and Islamic Guidance Ministry representative in Argentina, Mahsan Rabani, also was involved. In 1993, he began inquiring about renting a commercial van in Buenos Aires, asking specifically for a Renault Traffic, the type of van used by the bomber.



-A powerful car bomb exploded outside the home of the top police official of the northern Mexico border state of Tamaulipas early yesterday, killing two policemen and injuring four officers and three civilians, Jerry although the drug problem has been around for many years, how and when did the situation in Mexico get way out of control?
 The country is in the midst of a civil 'drugwar.

-Why did Mexico and the U.S. begin early denial of the severity of what was happening in Mexico in 2005 and even a year later?
American pessimism over Mexico's drug war grows

-Jerry can you tell us the $$ Magnitude of this massive drug Trade?
With billions in drug money the "war" will never end.

-Most North Americans don’t realize it, but Mexico is a major player in global oil production. According to the Energy Information Agency, it was the seventh largest oil-producing country in 2008. Mexico is the U.S.'s second-largest source of imported oil, behind Canada. Oil and gas is the biggest official slice of the Mexican economy, but oil is running out , Mexico's legendary Cantarell field , discovered in 1976 is the sixth largest oil field on Earth but is running out of oil. The government may not have a choice but to turn a blind eye on drug trafficking ?
 Diehl: U.S. falls short in helping Mexico end its drug war

-I think Mexico’s drug war has been out of control for some time now jerry . Some agree to legalize some drugs , and the laws that apply to alcohol would apply to marijuana. Surgeons, pilots, bus drivers, etc., have to submit to routine drug and alcohol testing, so I don’t see how that would be any different. Even though alcohol is legal, it is not legal to drink while on the job and the same would go for marijuana. Mexico’s problem has been allowed to fester so long, I don’t see how they are going to get out of it. What about those, as well as some Latin American governments that are talking about drug legalization?
In Tijuana, protestors call for drug legalization and US agents out

-The US shut down the pathway of drugs from Colombia to the US through the Caribbean, but drug lords found an alternate route through Mexico. Whatever didn’t cross the border was sold in the local market,  as cartels gained power, they started to get violent because they couldn’t control the market, there were several cartels competing. Due to intense competition, they have turned to kidnapping and racketeering, hence, diversifying their business. Is this why they are getting more barbaric due to competition?
 Mexico drug wars: 49 headless, dismembered bodies found dumped

-Was the short or long term answer to the initial problems for the U.S. Homeland just simply building walls and fences for 2000 miles how useless of taxpayer’s money is that?

-Los zetas is the enforcement arm of the gulf cartel , how did the relationship begin?

-What are the financial aspects and structure of this drug war as to transportation from the source countries; routes; and related logistics until they reach the consumer; as well as money laundering to conceal the massive profits?

-Pat Fogarty, superintendent of the RCMP’s combined forces special enforcement unit, is certain that Mexican cartels have made their way above the Canada-U.S. border. It started about a decade ago when Canadian demand for hard drugs took off. Much of that happens along the stretch of border that divides Detroit from Windsor, Ont. It’s “the busiest border crossing for vehicular traffic in North America,”; 28 per cent of Canada-U.S. trade—more than $113 billion per year—crosses the Detroit-Windsor tunnel or Ambassador Bridge. Jerry it seems Some of the drugs stay in Windsor, but a lot “makes its way across the 401 corridor to Toronto or to Montreal via  trucks that cross every day?

-From a terrorism standpoint, how are some of the other governments in Latin America confronting this issue, as well as any governments that may be involved in drug and other criminal activity in this hemisphere?

-You have mentioned the Tri-Border of Argentina, Paraguay, and Brazil with the significant Middle Eastern population and terrorist groups; what involvement might they have had in 1992 and 1994 with the bombings in Argentina against the Jewish community?

-What does the new election in Mexico mean to the future of this hemisphere under the new President- elect Pena Nieto?

-This is my suggestion jerry;

First, declare a state of emergency and invoke marshal law in Mexico. Second, seal the border to limit the amount of guns coming over the border from the US. This one needs to be a joint operation with the US authorities. Third, treat the fight against the drug cartels as a military operation.
Target the crops, then the warehouses, then the distribution points.
Invoke No Fly Zones to limit the opportunity to get the drugs out of the country. Authorized civilian aircraft such as airlines be restricted to flying corridors. If any aircraft is found to be outside of a designated flight path they are challenged and shot down if necessary.
Am I going too far?
628 × 424 - The continuing tide of drug-related killings in Mexico has drawn thousands

ANSWERS TO QUESTIONS; (not numbered- but mostly in sequence):

After the bombing incident of Centennial Olympic Park in 1996 at the Atlanta summer games, I went on short government assignment to Buenos Aires, Argentina. In March 17, 1992 in Buenos Aires  terrorists  had bombed the Israeli Embassy and killed 29, wounding 242 people. The Islamic Jihad organization  (which has been linked to Iran and  Hezbollah) claimed responsibility for that bombing.

On July 18, 1994, a van with a bomb loaded with about 275 kilograms of ammonium nitrate fertilizer and fuel oil explosive mixture, was detonated in front of the five story Jewish Community Center (AMIA).. Eighty-five people died, the majority of who were Jewish (although many non-Jews were also killed). More than 300 others were wounded.

Although the rural Tri-Border Area (TBA) of Argentina, Brazil, and Paraguay was growing with a Middle Eastern population during those early years, the festering lawlessness had begun. CIA at the time, from a counterterrorism standpoint, had little operational activity in Argentina due to the heavy Israeli Mossad presence.  Things were to pick up hence forward and the region covered more proactively.

The Mexican drug cartels have essentially morphed into Transnational Organized Criminals (TOC). There are no borders anymore as it applies to their movement and operational acts. They are at least in 230 major US cities and have assimilated with the U.S.  prison gang population. They are saturating the northern cone of Central America, and their presence is indicated as far south as Argentina. The so called war on drugs is now primarily a war against violent organized crime. Beyond drug trafficking, new lucrative crimes of kidnapping/extortion for ransom, robbery, murder for hire, human/sex trafficking, oil thefts, and related violent crime is on the rise.

Mexico and the U.S. missed the wake-up call in August 2005 of what would ultimately become the current state of affairs of over 55,000 killed, unknowns missing, and elusive criminal insurgents traversing borders at will and spreading terror.

I wrote an Opinion-Editorial (OP-ED) published in the Houston Chronicle ( on August 16, 2005 entitled: “Out-and-out terrorism on the border near Laredo / Situation puts Americans right in the crosshairs.”
A firefight had occurred in Nuevo Laredo, Mexico (across from Laredo, Texas) that revealed a large cache of military-style armament. These items included AK-47 assault rifles, grenades and grenade launchers, bazookas, bullet resistant vests, police uniforms, and vast amounts of ammunition.
The additional scary part of this seizure that demanded instant attention at that time from officials on both sides of the border revealed a terrorist modus operandi (MO).   Pictures of police officers and other officials were found with addresses and maps to their homes; where their children went to school; where their families shopped, and officer’s work schedules. This was clearly terrorist tradecraft M.O. that is known as part of the terrorist attack cycle known as “pre attack surveillance.”
Mexican police have detained one their own commanders

Police chiefs and other local officials began to be murdered with impunity. Over 40 police chiefs were eventually murdered to date, with  hundreds threatened and run out of town. Even U.S. Border Patrol had reported being shot at and stalked by paramilitary-style narco-traffickers in their “Tucson Sector” region near Nogales (Arizona). The reports revealed the highly militarized sophisticated nature of the narco’s cover and concealment methods, and “spotting” of Border Patrol agents. There have also been bounties put out on the lives of Border Patrol Agents and police.

Mexico and U.S. knee-jerk reactions stated that this was all a dispute over drug turf by local drug traffickers. Soon these traffickers began to directly ambush Mexican military convoys and police head-on; murder journalists; and terrorize Mexican communities torturing and beheading people. Even the U.S. consulate office in Nuevo Laredo had to be shut down for a while due to the violence.

FINALLY, in December 2006 Mexican President Felipe Calderon recognized the substance of the intensity of what had been occurring on the Mexican soil and began to understand this new enemy that was killing with impunity and looking to overtake Mexican government authority. The rule of law had become non-existent and lawlessness was now the norm. Calderon recognized that his “policing infrastructure” was essentially useless against the superior training and weapons of this enemy, and had no alternative but to use his military.

Mexico, other nations, or even U.S. police were never designed nor created to face military-style armament and espionage-like tradecraft.  It became a major and even bloodier battle now for control of Mexico’s homeland. The previous drug cartels were now engaged in much more than drug trafficking, and the U.S. stepped up “plans” to build billions of dollars of  fences along the border in what was described as for “illegal immigration.”  We were way behind the 8 ball at this point and remained there until more U.S. aggressive and strategic initiatives for Mexico were offered.

The impractical and costly issue of building the 2,000 mile fence in the U.S. continues to be debated. The numbers of sophisticated tunnels under the border continue to increase. The theory of building a 10 foot wall as “they” build an 11 foot ladder evokes a serious thought process. Ranchers in Texas and Arizona have reported helicopters landing on the U.S. side of the border and off-loading drugs to awaiting trucks. Fences/walls around metropolitan areas and other cities  on and near the border is a good and necessary idea, but there are hundreds of miles of border across Indian land and wilderness that would not allow for manpower to be present to monitor, successfully engage and interdict effectively. Military logistics are necessary for this type of insurgency (as in a war or major conflict). Signal intelligence (SIGINT), air surveillance/tracking, drones, naval/coast guard interdiction on the coasts, as well as the gunboats on the Rio Grande that Texas recently deployed are proactive measures.

The magnitude of the massive drug trade  is based on an estimated U.S. $50B drug demand. Drug addiction in the U.S. most certainly should rule out calls for legalization, as drug overdoses have risen 540% since 1980. Prescription drug addiction has risen 500% alone. The TCOs have shown that they can make incredible mass profits in alternatives to drug trafficking such as kidnapping/extortion, robbery, murder for hire, human/sex trafficking, oil thefts and related violent crimes. Legalization will not stop the violence, for it is about control and power- superior weaponry and threat and intimidation, as well as involvement in Mexico’s political process. Even legalized drugs would need to be purchased, and so many of those with addiction and strong use demand would need to be able to pay for them- even if they had to commit crimes to do it. Much like what has been happening for decades.
President Calderon recently stated that “they (TCOs) )are trying to take over;” and admitted Mexico could become a failed state.
Mexican police guard the residence of Mexico's President

Calderon eventually purged 284 police commanders from  31 Mexican states and the Federal District. The Chief of the organized crime division and the director of Interpol in Mexico were arrested.
Thirty or so former Mexican military conscript troops that were serving in “Air Mobile and special forces deserted the Mexican ranks back in early 2000; became “Los ZETAS, and were recruited by the Mexican “Gulf Cartel,” as their power, muscle, and enforcement arm. Although it is believed that they broke ranks with the Gulf Cartel in 2010 to form their own powerful organization; many reports show that their gradual greedy and bloody withdrawal began much sooner.

The expansion into fully blown violent organized crime allowed Los Zetas and other splinter cartel gangs battered by the Mexican military and some elements of the Federal Police to continue to proclaim “plata o plomo (money or lead). Many mass graves have been found with former kidnapped migrant workers from all over Central America; robbed, tortured, murder, and women raped. Some of the ransoms had been paid, as well as many that were not. Drugs for guns (and vice versa) were another alternative to the usual drug transactions. Mexican and other TCO money laundering in the U.S. is rampant.

Extra questions  

-Second biggest money maker for cartel s; kidnapping?
The man who Mexican authorities say is a leader in a violent drug cartel ...

-There is an expression in Mexico ‘PLATA OR PLOMO “ (SILVER OR LEAD)?
-Is there an Elaborate credit system whereby drugs rather than money are exchanging hands? Barter system that is hard to trace?

-Under Arizona law, a conviction for a charge of marijuana possession of less than two pounds can result in up to one and a half years behind bars. If the prosecutor can prove intent to sell, you will face up to three years. That’s right. Possessing a single one-ounce bag of marijuana could potentially land you in jail or prison for up to three years, unless you and your attorney can mount an effective defense.?

-The local police is corrupted and lets the cartels know whats going on inside the intelligence units. That’s why they never get caught. That’s why we’ve got the military forces into this. Since marihuana represents 60% of the drug sales, legalizing it can ease a lot of this pain. Things can be settled in court, and cartels would not have to resort to violence, as stated by Chicago economist Gary Becker. That could be a huge step towards fixing this problem. Then of course, cleaning up the local police.

-In my opinion, the only way to decrease the power of narcos in Mexico is legalizing drugs and start working effectively in social programs to decrease the gap between rich and poor (30 million in Mexico live below the poverty line). Sacrificing soldiers and civilians has not worked.



Mexican Drug Cartel Violence Spills Over Border
Children increasingly targeted in Mexico

Within the last year, there has been a sharp increase in drug-related violence across the US as the war against the Mexican drug cartels reaches catastrophic levels of violence across the border. Some border towns on the Mexican side have turned into literal war zones, with the Mexican police fighting for control with drug lords and their cohorts armed with military-grade weaponry.
While the violence in the US has not reached the level of violence in Mexico, cities across the country are experiencing more drug-related kidnappings, extortion and murders in the wake of the de facto Mexican war. While Arizona has been a hotspot for Mexican drug cartel activity and related violence, it is not the only state suffering. According to the US Justice Department’s National Drug Intelligence Center, 230 US cities have been listed as places the Mexican drug cartels have set up shop to distribute their drugs and conduct their criminal activities.

Mexico: Ground Zero
When Mexican President Felipe Calderón took office, he promised to combat the illegal drug trade at home and work with the US to stem the flow of illegal drugs across the US/Mexican border. As Mexico increased its policing efforts, the cartels went on the offensive: In 2008, over 7000 Mexicans were killed as a result of drug-related violence.
The drug cartels are using fear, cohesion and torture to try to intimidate Mexican citizens, police and the government into backing down. Kidnappings, beheadings, assassinations and mass killings have become common tools in the war. In Ciuidad Juarez, a town less than a quarter of a mile from El Paso, Texas, there were more than 1700 drug-related murders last year.
The Mexican drug cartels have profited from the decrease in power of the Columbian cartels. Previously, marijuana was the main cash crop for the Mexican cartels (and it still makes up the majority of the cartels’ drug trade). But with US and Columbian authorities cracking down on the Columbian cocaine trade and disrupting their trade routes into Florida, the Columbian cartel has turned to the Mexican cartels to help move the profitable drug into the US. Additionally, methamphetamine “super labs” have sprung up across Mexico. Now the cartels are dealing not only in marijuana, but also supplying American drug users with cocaine and meth.

On the US side, there have been increased calls by states and towns on the 2,000 mile border with Mexico for deployment of the National Guard to protect them from the escalating violence in Mexico. So far, the Obama administration has been reluctant to send in armed troops, but it has sent more federal agents to the border with enhanced equipment to check for drugs and guns moving into the US.
Arizona: A Hub for the Cartels
The crackdown in Mexico and the increased border enforcement have impacted the Mexican drug cartel’s business in the US. The cartels are having a more difficult time getting their drugs into the country and smuggling arms and their profits back into Mexico. This, in turn, has led to higher drug prices and increased violence by the cartels as they use more severe methods to punish those who do not pay their drug debts, drug runners who fail to turn over profits and competing cartel members who steal their drugs.

Arizona shares a 370-mile border with Mexico. More than 60% of the illegal drugs in the United States enter the country through Arizona. The state has seen a sharp increase in the past 12 months in drug-related violence. Cities like Phoenix and Tucson have had to create special police task-forces to deal with kidnappings and home invasions — signature drug crimes. Last year, there were more than 700 reported kidnappings related to the Mexican drug cartels in Phoenix, while Tucson authorities reported more than 200 kidnappings.

It is estimated that 95% of the Mexican drug cartels’ weapons come from the United States. There are more than 6600 licensed gun dealers on the US-side of the border with Mexico. The weapons are purchased, legally or illegally, within the United States. The guns then make their way into the drug cartels’ hands, either in the US or across the border into Mexico, where the cartels use the weapons against each other, the police and innocent Mexican citizens.

One of the World's Biggest Oil Producers Is Going Bust
By Matt Badiali, editor, S&A Resource Report
Saturday, April 10, 2010

"What this means is that we require, in one way or another, the collaboration of other companies on an international level precisely in order to recuperate our levels of production."
From time to time, my job as a resource stock analyst means I get to act as "BS interpreter."
This quote above, uttered by Mexican Energy Minister Georgina Kessel at an international conference a few weeks ago, is a mouthful of government gobbledygook. Here's what she's actually saying... and what it means for your resource portfolio...

Most Americans don't realize it, but Mexico is a major player in global oil production. According to the Energy Information Agency, it was the seventh largest oil-producing country in 2008. Mexico is the U.S.'s second-largest source of imported oil, behind Canada.
You read that correctly: We import more oil from Mexico than we do Saudi Arabia, Iraq, Kuwait, or any other Middle Eastern country. You don't read about it much in the papers, but Mexico is a critical supplier to American drivers.
Now, Mexican oil officials like Georgina Kessel have a problem... one the entire world has: There are no easy barrels left.

You see, in the oil business, there are "easy barrels," like the kind discovered in Mexico, Texas, and Saudi Arabia decades ago. These easy barrels burst from the earth when you puncture a highly pressurized oil field with a drill pipe. These are the barrels you see in movies and cartoons.
There are also "hard barrels," like the kind locked inside oil sands. They require enormous amounts of digging and processing in order to become the "light, sweet" crude that we turn into gasoline.
Another example of a "hard barrel" is one located hundreds of miles out into (and miles under) the ocean. This requires hundreds of millions of dollars in ships, advanced drilling technology, and undersea pipelines.
The world has plenty of hard barrels in reserve. Brazilian oil major Petrobras has discovered several "supergiant" fields (greater than 1 billion barrels) off the coast of Brazil. Canada and Venezuela have extraordinary amounts of oil trapped in tar sands. The U.S. has over a trillion barrels locked in shale formations out West. And since 2004, 63 new fields have been discovered in the Gulf of Mexico – 16 of those in water at least a mile deep.

It takes billions of dollars in infrastructure spending to develop these difficult fields. Hardly the easy oil of Mexico's past.
Mexico's legendary Cantarell field – discovered in 1976 and named for the fisherman who found it – is the sixth largest oil field on Earth. And it was once the second largest producing field in the world, after the massive Ghawar field in Saudi Arabia.
Output at Mexico's main oil field Cantarell will continue sliding

Cantarell was a once-in-a-lifetime discovery... so for years, Mexican officials could pretend they were oil experts. The field was so ridiculously productive, they could afford to nationalize the industry, steal the company blind, and pump the oil with abandon.
Production peaked in 2004 at 2.1 million barrels per day, which accounted for 64% of total oil production at Mexico's state-owned oil company, Pemex. But years and years of mistreating the golden goose has left its world-class oilfield in a sorry state of underproduction. Oil fields are like children... you have to take care of them and invest in their future.
The problem is that the government has done a terrible job of "upkeep."
Production at Cantarell plummeted 30% in 2008. It produced less than 780,000 barrels per day in 2009. And Pemex's total oil production fell 21% from 3.3 million barrels per day in 2004 to just 2.6 million barrels per day today.
Worse yet, thanks to decades of complacency, Pemex can't find more oil. In 2007, it managed to replace just 50% of its production. In 2008, it replaced just 70%. The new reserves it does find come from much smaller fields. The company is replacing million-barrel-per-day fields with 150,000-barrel-per-day fields.
Mexico – for years a major oil exporter – could become an oil importer within a decade. This is a disaster for the Mexican economy. Pemex employs over 100,000 people and supplies the Mexican government with around 40% of its revenue... and its oil revenue is wilting away.
Cantarell accounted for about two-thirds of the oil Mexico produced at the

Now that Cantarell isn't blasting out oil, industry insiders are seeing exactly how incompetent Pemex is. It's the General Motors of the oil world... If it weren't such an important exporter, it would be a joke.
What Mexico and Georgina Kessel are finally doing is admitting they need outside expertise in righting their ship. Take out the flowery government speak from Georgina's quote and you get:
"We are running out of oil. We underinvested in our infrastructure in favor of huge social programs. We've mismanaged our fields so badly that we need immediate help to find and pump more oil."
This is from a major player in the global oil export market.
For investors, this sort of comment is further reason to own oil and oil-service stocks for the long term. Major producers used to easy barrels – like Mexico, Venezuela, and Iran – are experiencing production declines... so much so that they will pull their exports from the market, sending prices higher. I wouldn't' be surprised to see oil over $200 a barrel in five years (especially if our spendthrift government keeps debasing the paper currency we use to price oil).
This will make "hard barrels" – like the kind in Canada's tar sands or deep offshore – much more valuable... But only the expensive and high-tech expertise that skilled oil-service companies provide can unlock that value.
Stay long oil... and stay long oil services.
Good investing,
Matt Badiali
Editor's Note: DailyWealth is a free e-letter published by Stansberry & Associates, one of the world's largest independent publishers of financial research. To learn about another opportunity they've uncovered -- a unique way to own real silver bullion .

United States of America

Out-and-out terrorism on the border near Laredo / Situation puts Americans right in the crosshairs

TUE 08/16/2005 HOUSTON CHRONICLE, Section B, Page 09, 3 STAR Edition

Garza, the U.S. ambassador to Mexico, recently described a brutal gun battle that took place on July 28 in Nuevo Laredo, Tamaulipas, between "armed criminal groups," as having "included unusually advanced weapons." This since the combatants used an arsenal that combined automatic weapons, bazookas and hand grenades, in the attack on an apparent safe house of one drug cartel by those of another.

Actually, hundreds of different caliber shells were subsequently found at the war zone-like scene, along with AK-47 rifles, handguns and ski masks. And if that is not disturbing enough, a state policeman who asked not to be identified said that investigators found numerous photographs of municipal police officers at the residence, an apparent hit list of officials sentenced to death. Further intelligence revealed that each of the photographs listed the officer's name and assigned location, along with maps to their homes.
As a result of this firefight and other killings, kidnappings and criminal acts in the violence-torn city across the border from Laredo, Garza declared that the U.S. Consulate in Nuevo Laredo would be closed, temporarily at least.

And then, on Aug. 5, Nuevo Laredo City Councilman Leopoldo Ramos Ortega was shot dead as he innocently sat in his truck. Ramos also chaired the council's security committee.
Yet, after meeting with Mexican officials, Garza announced that the consulate would reopen Aug. 8.
Immediately following the cartels' shootout in Nuevo Laredo, Mexico's presidential spokesman, Ruben Aguilar, said that federal efforts to stop the violence in Nuevo Laredo "have been successful." But to those without rose-colored glasses, the attacks and the death toll continue to mount at an alarming rate, and the sophistication and firepower of the Mexican Mafiosos are outrageously astounding.

Officials are quick to call this a war between rival drug cartels, and they brazenly state that Americans are not targets of the violence. Yet U.S. Border Patrol agents are being fired upon, and U.S. border area police officials are witnessing Mexican paramilitary types escorting drug shipments north onto U.S. soil.
The targeting of law enforcement officials on both sides of the border, and specifically the planning and routine execution of Nuevo Laredo police officers and city officials shows that the specter of terrorism is hiding out in the open along our national border with Mexico, although not everyone sees this clearly.
Terrorists are ideologically, politically or issue oriented. They commonly work in small, well-organized groups or cells. They are sophisticated, skilled with weapons and attack strategies, and they possess efficient planning capabilities. And the differing types of terrorists pose national, international and paramilitary threats.

The attacks on Mexican and U.S. soil, along with the paramilitary sightings, should convince U.S. and Mexican officials, as well as the public at large, that these are terrorist attacks. Must there be suicide-homicide and related bombers to convince us that these are terrorist acts?
The U.S. Embassy has offered to help to reorganize the Tamaulipas state police. There is a lot of dialogue on both sides about swiftly bringing the situation under control. A lot of knee-jerk lip service.
However, there can be no reasonable expectation of any police force in Mexico having, or acquiring on its own, the resources necessary to effectively fight gangs and groups that are so well armed, trained and financed.

These terrorists pose an immediate threat to anyone who attempts to stop or control them. They have clearly and often demonstrated that they are bold and resourceful, and will intimidate, kidnap, torture and kill anyone who is in conflict with them.
Misdiagnosing and ignoring the symptoms of this plague will continue to prove disastrous, for these criminals and wannabes-to-follow will exploit every weakness perceived in pursuit of their goals.

As the U.S. government continues to assess the risk to citizens and consulate offices in Nuevo Laredo, the Counter-Terrorism Center of the Central Intelligence Agency, and its Latin America Division, have their work cut out for them. A week certainly could not give them a "snapshot" of the overall border problem.
Operational and vulnerability assessments take time. Operational planning and execution to identify high-risk personnel, and effectively counter potential hostile activity, should be the mandate. Country surveys and facility/personnel assessments, although needed and probably outdated, require a systematic and diligent effort.
Findings should expeditiously result in recommendations and implementation of ways to neutralize or strengthen vulnerabilities and other identified weaknesses. The United States must take a stand in protecting this border, as well as protecting U.S.-based commercial businesses and their employees residing in Mexico.

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