Organized Crime and the Coronavirus in Mexico

It is well known that the Covid-19 pandemic has dramatically impacted the global economy, and the U.S. and Mexican economies are no exception. However, the impact of the Covid-19 pandemic on illicit economies, including its impact on organized crime in Mexico, is lesser known but equally important. The uncertain nature of how long it will take to develop a vaccine for Covid-19 or for communities to develop “herd immunity,” means that analyzing the impact of the pandemic on organized crime is difficult.

In this paper we argue that the Covid-19-related disruptions of supply chains for organized crime are likely to lead to an expansion of predatory activities such as kidnapping and extortion for smaller organized crime groups—an amplification of existing trends. Larger organized crime groups in Mexico will likely use “information warfare” to win the hearts and minds of locals to support their criminal enterprises and to weaken the legitimacy of the Mexican government. These crime groups will also likely have the capacity to further expand their alliances and capitalize on weakened local traffickers, allowing groups such as the Cártel de Jalisco Nueva Generación (CJNG) to expand their sphere of influence.¹ Extended drug supply chain disruptions could privilege local extortion business models, though many drug markets are likely to adapt and shorten drug supply chain logistics where feasible. Additionally, data from April 2020—one month after lockdowns began in Mexico—suggest that violence will continue its slow increase with a 2.2% increase in homicides in the first quarter of 2020, compared to the same period in 2019.² Altogether, we predict that the Covid-19 pandemic will have drastic impacts on organized crime in Mexico, and policy makers and law enforcement agents in both the U.S. and Mexico will need to adapt their strategies for fighting such crime accordingly.

Useful Concepts From Academic Literature

The existing literature provides a number of useful concepts for understanding the actions of organized crime under the conditions of the coronavirus pandemic and social distancing lockdowns. For example, John Sullivan has applied the concept of “social banditry”³ developed by Eric Hobsbawm to organized crime in Latin America and beyond in his third-generation gang literature.⁴ This kind of “social banditry” has been evident during the pandemic with cartels publicizing their distribution of food via pantries to portray themselves as “Robin Hoods.” Tom Wainwright, editor of The Economist, has discussed a similar concept, looking at how drug cartels, like corporations, engage in “corporate social responsibility.”⁵ Vanda Felbab-Brown has discussed how criminal organizations engage in altruism to improve their “political capital,”⁶ and Guadalupe Correa Cabrera has also used corporate models to analyze organized crime. Her work, in addition to the work of Rodrigo Canales,⁷ examines the concept of “branding” among organized crime groups.

Recently, Falko Ernst, a senior fellow with the International Crisis Group, used his Twitter account to point to early examples of the Los Viagras gang handing out food in the midst of the coronavirus lockdowns. Robert Bunker and John Sullivan also reviewed the existing verifiable cases of food pantries run by gangs and other cases of “social banditry” in a strategic note.⁸ Some of the known cases where organized crime groups were distributing food include the food pantries in Guerrero and Estado de Mexico, set up by La Familia cells operating under the leadership of El Pez.⁹ The Gulf Cartel leader El 46 also distributed food in Ciudad Victoria, and the CJNG and their rivals in the battle for Michoacán—Los Viagras—gave out food to gain support from local populations. It was also reported that presumed members of the Gente Nueva, an armed wing of the Sinaloa Cartel, distributed food in Chihuahua.¹⁰

Reporting from InfoBae demonstrates another possible explanation for the social work of organized crime in Mexico. Local support can help keep an eye out for potential rivals encroaching on their territory, as the reporting of Oscar Balderas demonstrated when he interviewed a La Familia food pantry worker from Michoacán who was told that the price of social support was patrolling the territory to keep out rivals. Further, the message of the gangs is implicit; they are providing the services the state fails to provide.¹¹ Organized crime groups are also using this kind of social work or “social banditry” to gain legitimacy for their profitable activities such as drug trafficking, extortion, loansharking, territorial activities, and battling other groups for territorial control to expand those activities.

Covid-19: Impacts on Drug Markets

Covid-19 has had varied effects on the drug trafficking supply chain, the people handling the supply chain in source countries and transit countries, and the demand side of the equation, particularly at the U.S.- Mexico border and in the continental U.S. To fully understand how Covid-19 has impacted the world of drug trafficking in the U.S. and Mexico, it is essential to review the drug trafficking business cycle, which is comprised of several critical nodes—namely capitalization, production, transportation, distribution, and re-capitalization of the enterprise. In the case of Mexico, the production and transportation nodes are most at play as discussed in Table 1.

Table 1 — Primary Drugs Produced or Transported Through Mexico Impacted by Effects of Covid-19 on the Supply Chain

The critical nodes of production and transportation are affected by two key factors. The first is geography, or where the critical activity is happening. China’s role in the supply chain, for example, is crucial. Consider that: (1) China is a key supplier of essential and precursor chemicals for Mexican drug producers, and the lockdowns related to Covid-19 in China could impact supply chains; and (2) China has a presence at several Mexican deepwater ports that process intermodal shipments (ship-rail-truck). China, like many other countries including the United States, is also becoming nationalist on trade issues related to personal protective equipment and chemicals related to potential Covid-19 treatments.¹³

The second main factor affecting the production and transportation nodes is demographics, or how the people performing the activity are being affected on both the supply and demand sides.

On the supply side, traffickers are at risk of contracting and spreading the Covid-19 virus but will likely not stop their activities. Infection to or among traffickers due to contact with drugs or packaging is less likely than person-to-person contact,¹⁴ and despite the toll on human life that Covid-19 may take on people in any country, drugs will continue to move in sizeable quantities. For example, on or around March 31, 2020, a San Diego Multi-Agency Tunnel Task Force “seized 1,300 pounds of cocaine, 86 pounds of methamphetamine, 17 pounds of heroin, 3,000 pounds of marijuana and more than two pounds of fentanyl,”¹⁵ in a tunnel that opened in the Otay Mesa section of California.¹⁶ Thus, while there may be 

short-term stockpiling to avoid high risk trafficking due to lower legal trade volumes, we can expect organized crime to adapt and find new ways to move drugs.

Despite lesser traffic, the U.S.-Mexico border is still open to commercial travel and trade, and this provides significant opportunities for traffickers to move drugs to the U.S.¹⁷ Trafficker violence in Mexico will continue unabated despite trafficker deaths caused by Covid-19. This is partly because traffickers likely will (1) not observe good hygiene practices other than makeshift face masks; (2) not observe stay at home orders; (3) increase crime by stealing medicines, medical supplies, and equipment at the retail and wholesale levels; (4) not stop intra-cartel fighting if Covid-19 provides opportunities for any one organization, as others would be negatively impacted due to loss of routes, corrupt contacts, etc.

Covid-19 will have cyclical effects (ups and downs) on the movement of people who make up the demand market (and who frequent bars, restaurants, and public places where drugs are exchanged), but it will not stop the supply from reaching its customers. More clandestine street sales will occur, instead of at public places that may or may not be open for business. We may also see new delivery models during quarantines. Just as the licit market has adapted to grocery delivery, so too may retail drug distributors adapt to home delivery. Sam Quinones’ book Dreamland discusses the Xalisco Boys’ business model, which was essentially a delivery system that transported drugs to a neutral location.¹⁸ Adapting the retail U.S. drug market for home delivery or using the cover of other delivery services to distribute illicit drugs would be fairly simple and has already occurred in Europe.¹⁹

Drug prices at the retail or street level are already increasing, but these price hikes will be temporary. Some of the price hikes are tied to price increases for chemicals from China, and others are tied to the price manipulation of drug dealers that take advantage of the slower movement of stoppages in the supply chain.²⁰

At the end of the supply chain, illicit drug consumers have paid a heavy price in overdose deaths. According to U.S. Attorney General William Barr, last year, 70,000 people in the U.S. died because of drugs.21 That number, when added to the number of Covid- 19 deaths in the U.S.—which presently stands at over 100,000—will be a staggering loss.

However, disruption of chemical precursor supply chains could change drug markets in some ways for the better. For example, a disruption in the supply of chemical precursors for fentanyl could lead to a market shift back to heroin grown from opium. This could have numerous effects. First, it could reduce overdose deaths in the United States and Mexico. The spike in overdose deaths in the United States was attributed to opiates and especially synthetic opiates, like fentanyl. Synthetic fentanyl is incredibly potent and thus hard to dose safely. Slight mismeasurements can be deadly, but a return to less potent heroin could result in fewer overdose deaths. However, this, of course, may not occur if users shift to other types of synthetic drugs through pharmaceutical diversion and overall drug abuse increases due to lockdown conditions. Second, other authors have already discussed the possibility that if shutdowns and Chinese market disruptions continue long-term, Mexican crime organizations will invest in domestic production to shorten supply chains.²² This might reduce efficiency in normal times but will dramatically increase resilience in bad times.

Third, given that Guerrero is the primary poppy producer in Mexico, this could mean that the poppy crop in the area could become more valuable.²³ This could increase violence as groups fight for control of crops and expand their “rip crew” activities. “Rip crew” specialists, called tumbadores in Central America and bajadores in some areas of Mexico, including Sonora,²⁴ fill a particular niche in the drug market ecosystem, stealing from drug whole-sellers and disrupting the supply chain. However, as rip crews increase their activities, drug suppliers are likely to step up their security measures and become more resilient.

Expanded Diversification of Criminal Activities

Many analysts have predicted an expansion of local predatory crime as criminals become desperate and traditional criminal activities, such as drug trafficking, slow. Scholars such as Zepeda Gil have predicted an expansion of extortion activities as the business model of criminal organizations is disrupted due to changes in the global supply chain. Alfredo Corchado’s on-the-ground reporting for the Dallas Morning News found Mexican citizens in cartel conflict zones expect a rise in extortion from these groups.²⁵

More broadly, organized crime in Mexico has not been just about drugs for some time. The annual drug violence report from the University of San Diego’s Justice in Mexico project has changed its name to “Organized Crime Violence in Mexico,” noting the trend.²⁶ Organized crime in Mexico has heavily diversified, emphasizing territorial control and local activities such as kidnapping, extortion, oil theft, etc.²⁷ We expect these activities to continue but now under conditions of scarcity. Thus, existing organized crime groups will now battle even harder for far less in revenue.

Expanded Loansharking

Relatedly, the lockdown in Mexico, although implemented late, will dramatically impact the financial health of Mexican citizens.²⁸ One place we predict expanded activities is in loansharking, especially if private debts to organized crime groups increase. In the past, those who couldn’t pay their debts were manipulated by gangs to participate in other activities such as using their positions of trust with their employers to allow organized crime to infiltrate licit businesses. We saw this with the Zetas and utility companies in the 2000s, and we predict to see more of this.

Impact on Organized Crime Landscape: Possible CJNG Expansion

We can expect organized crime groups with large capital reserves to be able to withstand the lockdowns better than smaller groups with fewer assets.²⁹ This is similar to large corporations such as Halliburton being able to withstand oil price drops better than smaller firms. On the other hand, smaller groups with fewer assets often have highly diversified revenue streams out of necessity. Thus, there may be competing tendencies at play, allowing some of these groups to survive on their own without effectively being bought out.

Large criminal organizations such as the CJNG may be able to take advantage of the conditions brought about by the Covid-19 pandemic. As Zepeda Gil writes, “aggressive territorial conquest by larger cartels, like Jalisco Nueva Generación, against smaller ones could happen because the former has enough funds to resist the effects of the global recession.”³⁰

The CJNG has been masterful at “adopting orphan cells” from other fragmented groups, according to Hector de Mauleon, and also at engaging in highly diversified activities.³¹ Its financial success in money laundering and its Los Cuinis financial operator partners could help it to buy local criminal cells and expand its footprint.³² On the other hand, this may not happen, because much of the CJNG business model is focused on the control of ports for the importation of chemical precursors and the laboratories around the Tierra Caliente region.

The Sinaloa Cartel, with its large potential capital reserves and money laundering assets, might also be capable of expansion. However, its capital reserves are likely to be decentralized among numerous figures given its “federation” organization style.³³ The Sinaloa Cartel’s response will be contingent upon the individual decision-making of its top leaders such as Joaquín “El Chapo” Guzmán’s sons and Ismael “El Mayo” Zambada. The Sinaloa Cartel has seen fit to play spoiler to the CJNG expansion, likely sponsoring smaller fragment groups such as La Nueva Plaza in Guadalajara led by “El Cholo.” Our prediction is that they will continue this strategy as it is in their interest to keep a low profile. We acknowledge this analysis may seem misdirected given the Battle of Culiacán in 2019, a failed attempt by the Mexican National Guard to capture of Ovidio Guzmán, one of the top leaders in the Sinaloa Cartel.³⁴ This type of confrontational activity against the state may prove to be the exception rather than the rule for the Sinaloa Cartel vis-à-vis the state, though not other cartels.

Large Battles

At the micro-level of analysis, we can expect large battles between rival cartels to continue despite the pandemic lockdowns. This maintains the status quo prior to the lockdowns. We have already seen this occur with battles between the Cartel de Santa Rosa de Lima and CJNG in Guanajuato and battles between forces aligned with the Sinaloa Cartel and the Juarez Cartel (La Línea) in Sonora, among others. From the individual perspective of a cartel sicario, or hitman, the coronavirus means little. A 2% chance of death (the approximate fatality rate of Covid-19) pales in comparison to the daily threats faced by sicarios in Mexican cartels. Thus, fear of infection and the admonishments of a weak state are unlikely to deter strategically important battles between enforcer cells in battlegrounds such as Sonora, Chihuahua, and Guanajuato.

Conclusion

The pandemic could worsen if Mexico ignores basic Covid-19 precautions and if the United States does not establish an effective test and trace regime. The failure to control the contagion may cause many Mexicans to cross into the United States to obtain health care, as is already happening with dual citizens.³⁵ Further, Central Americans may flee in larger numbers. These migrants could put additional strain on the health care systems in both the U.S. and Mexico.

As discussed, Covid-19 and the resulting closures are likely to have the following effects in Mexico: (1) it will benefit large organized crime groups; (2) it will disrupt synthetic drug markets, at least in the short-term; (3) it will not deter battles between large drug trafficking groups; and (4) Mexican organized crime will expand its loansharking activities, which will increase the potential for deepening corruption and insider threats within the private and public sectors. To prevent the worst-case scenario, we offer the following policy recommendations:

1. The U.S. Congress should invest in the Mexican and Central American health sectors as a defensive measure and to reduce the influx of Covid-19.
2. As many have argued, both Mexico and the United States should establish robust testing and contact tracing regimes to reduce the spread of Covid-19 and “flatten the curve” to reduce strain on health care systems in both countries.
3. Mexico’s government should extend legal micro-credit services in addition to stimulus payments to keep the economy afloat.
4. Increased insider threat precautions should be taken as multinational corporations operating in Mexico can expect more indebted employees and an increase in potential insider threats as crime organizations use this as a leverage point against employees and their family members.
5. Mexico’s government should work to strengthen the rule of law via the court system and the local police. Mexico’s government should also refocus the National Guard’s efforts on organized crime rather than on the myriad other missions. This will be necessary to combat the increase in local, predatory crime activity and the more consolidated organized crime groups that take advantage of the Covid-19 disruptions to expand.³⁶
6. The Mexican government should work to expand real territorial control and distribute food and support to their citizens rather than allowing crime organizations to control this activity, weakening state legitimacy.

Endnotes

1. Raul Zepeda Gil, “Criminal Governance during the COVID-19 Lockdown in Mexico,” The Urban Violence Research Network, April 17, 2020, https://bit.ly/3enYrH6.

2. “Murders in Mexico Reach Record Levels in First Four Months of 2020,” Reuters, May 20, 2020, https://reut.rs/3eqLwEv.

3. John P. Sullivan, “Criminal Insurgency: Narcocultura, Social Banditry, and Information Operations,” Small Wars Journal, December 12, 2012, https://bit.ly/2Z1auDV; E.J. Hobsbawm, Bandits (New York: Delacorte Press, 1969).

4. Sullivan, “Criminal Insurgency: Narcocultura, Social Banditry, and Information Operations.”

5. Tom Wainwright, Narconomics: How to Run a Drug Cartel (New York: Public Affairs, 2016).

6. Vanda Felbab-Brown, “Lessons Learned from Felipe Calderón’s Swift Response to H1N1 in 2009,” Brookings (blog), March 30, 2020, https://brook.gs/2Nlivhq.

7. Guadalupe Correa-Cabrera, Los Zetas Inc.: Criminal Corporations, Energy, and Civil War in Mexico (Austin: University of Texas Press, 2017); Rodrigo Canales, "The Deadly Genius of Drug Cartels," filmed October 2013 at TEDSalonNY2013, video, 17:44, https://bit.ly/2AQveq1.

8. Robert J. Bunker and John P. Sullivan, “Mexican Cartel Strategic Note No. 29: An Overview of Cartel Activities Related to COVID-19 Humanitarian Response,” Small Wars Journal, May 8, 2020, https://bit.ly/2YWJXHV.

9. La Redacción, “La Familia Michoacana se une al reparto de despensas,” Proceso portal de noticias (blog), April 18, 2020, https://bit.ly/2AWUuus.

10. La Redacción, “Presuntos miembros del crimen organizado entregan despensas en Chihuahua - Estados - La Jornada,” April 23, 2020, https://bit.ly/3dojS9N.

11. “Donde no llega el estado, llega el narco: los cárteles aprovechan crisis por coronavirus para infiltrarse en territorios,” Infobae, April 2020, https://bit.ly/3fLiPCo.

12. Jim Mustian and Jake Bleiberg, “‘Cartels Are Scrambling’: Virus Snarls Global Drug Trade,” AP News, April 19, 2020, https://bit.ly/2Cz1xu5.

13. “Coronavirus: US ‘Wants 3M to Stop Mask Exports to Canada and Latin America,’” BBC News, April 3, 2020, https://bbc.in/2V7Dvg0.

14. CDC, “Coronavirus Disease 2019 (COVID-19),” Centers for Disease Control and Prevention, February 11, 2020, https:// bit.ly/3hTzk0U; Madeline Farber, “CDC Now Says Coronavirus ‘does Not Spread Easily’ via Contaminated Surfaces,” Fox News, May 20, 2020, https://fxn.ws/3hKYtep.

15. David Williams, “Almost $30 Million in Drugs Seized in Nearly Half- Mile-Long Tunnel Linking US and Mexico,” CNN, accessed May 22, 2020, https://cnn.it/3fNR9g2.

16. Neil Vigdor, “$30 Million in Illegal Drugs Seized From Cross-Border Tunnel in San Diego, U.S. Says,” The New York Times, March 31, 2020, https://nyti.ms/2YQXa4I.

17. Sandy Fitzgerald, “Customs Chief Morgan: Cartels Still Pushing Drugs Into US,” Newsmax, April 10, 2020, https://nws.mx/3esaCTe.

18. Sam Quinones, Dreamland: The True Tale of America’s Opiate Epidemic (New York: Bloomsbury Publishing, 2015).

19. “Criminals Using Food Delivery Services to Transport Drugs during Lockdown -Interpol,” Reuters, April 30, 2020, https://reut.rs/2zSF3TC.

20. Fitzgerald, “Customs Chief Morgan: Cartels Still Pushing Drugs Into US.”

21. William P. Barr, “William Barr: Fentanyl Could Flood the Country Unless Congress Passes This Bill,” Washington Post, January 10, 2020, https://wapo.st/3fGREIO.

22. See quote from Westhoff: Jim Mustian and Jake Bleiberg, “‘Cartels Are Scrambling’: Virus Snarls Global Drug Trade,” AP NEWS, April 19, 2020, https://bit.ly/2Cz1xu5.

23. Chris Kyle, “Violence and Insecurity in Guerrero,” Building Resilient Communities in Mexico: Civic Responses to Crime and Violence, Woodrow Wilson Center for International Scholars, January 2015, https://bit.ly/3dmdSyo.

24. Antonio L. Mazzitelli, “Mexican Cartel Influence in Central America,” Florida International University, Western Hemispheric Security Analysis Center, September 2011, https://bit.ly/3dke2WN; Jeremy Slack and Scott Whiteford, “Violence and Migration on the Arizona-Sonora Border,” Human Organization 70, no. 1 (March 2011): 11–21, https://bit.ly/3erB27H.

25. Corchado and Olivares, “Drug Crime Is Thriving in Mexico.”

26. Laura Y. Calderón, Kimberly Heinle, Octavio Rodríguez Ferreira, and David A. Shirk, “Organized Crime and Violence in Mexico: Analysis Through 2018,” Justice in Mexico, Department of Political Science & International Relations, University of San Diego, April 2019, https://bit.ly/2V5lAXq.

27. Nathan P. Jones and John P. Sullivan, “Huachicoleros: Criminal Cartels, Fuel Theft, and Violence in Mexico,” Journal of Strategic Security 12, no. 4 (2019): 1, https:// bit.ly/2NjPenx; John P. Sullivan and Adam Elkus, “Open Veins of Mexico: Strategic Logic of Cartel Resource Extraction and Petro-Targeting,” Small Wars Journal, November 3, 2011, https://bit.ly/3eoQKAp; Guadalupe Correa-Cabrera, Los Zetas Inc.: Criminal Corporations, Energy, and Civil War in Mexico (Austin: University of Texas Press, 2017).

28. Tony Payan, "Organized Crime and the Coronavirus in Mexico," filmed April 29, 2020 at Rice University’s Baker Institute, Houston, TX, video, 1:03:27, https://bit.ly/2zYcQuO.

29. Andres Schipani, Gideon Long, and Jude Webber, “Cocaine Trade Caught in Disrupted Global Supply Chains,” Los Angeles Times, May 9, 2020, https://lat.ms/2YnvIwq.

30. Zepeda Gil, “Criminal Governance during the COVID-19 Lockdown in Mexico.”

31. Hector de Mauleon, “CJNG: La Sombra Que Nadie Vio,” Nexos, June 2015, https://bit.ly/3fHeEr8; Nathan Jones, “The Strategic Implications of the Cártel de Jalisco Nueva Generación,” Journal of Strategic Security 11, no. 1 (2018): 19–42, https://bit.ly/3dpLTxu.

32. Josh Eells, “The Brutal Rise of El Mencho,” Rolling Stone, July 11, 2017, https://bit.ly/2V6ascP.

33. L. Astorga, “Seguridad, Traficantes y Militares,” El Poder y La Sombra. México DF, Tusquets, 2007, https://bit.ly/3enyUOs; June S. Beittel, “Mexico: Organized Crime and Drug Trafficking Organizations,” Congressional Research Service, December 20, 2019, https://bit.ly/3epZgz3.

34. Azam Ahmed, “The Stunning Escape of El Chapo’s Son: It’s Like ‘a Bad Netflix Show,’” The New York Times, October 18, 2019, https://nyti.ms/2AYUEBG.

35. Maya Srikrishnan, “Border Report: Officials Worry About Cross-Border Cases as Coronavirus Slams Tijuana,” Voice of San Diego, April 20, 2020, https://bit.ly/3i1mZYS; Steve Gorman, "California Border Hospitals Hit by Surge in Covid-19 Cases from Mexico," Reuters, May 19, 2020, https://reut.rs/38BCsKO.

36. Nathan P. Jones and Samuel Gonzalez Ruiz, “Forecasting the Next Twenty-Five Years of the US-Mexico Public Safety and Security Relationship,” in The Future of US-Mexico Relations, ed. Tony Payan (Houston: Arte Publico: University of Houston Press, 2020); Viridiana Rios and Duncan Wood, eds., The Missing Reform: Strengthening the Rule of Law in Mexico (Washington, D.C.: Woodrow Wilson Center for International Scholars Mexico Institute, 2018), https://bit.ly/2BrS871.

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