Mexico: Dynamics of the Gun Trade

By Fred Burton and Scott Stewart

The number of drug-related killings in Mexico in 2007 already has surpassed 2,000, an increase of 300 over the same period last year, according to statistics reported by Mexican media outlets. Moreover, sources familiar with the issue say police officials in some jurisdictions have been purposely underreporting drug-related homicides, suggesting that the real body count is even higher.

In addition to the Mexican drug cartels that engage in torture and killings (at times involving beheadings), armed criminal gangs are notorious kidnappers -- prompting some to call Mexico the "kidnapping capital of the world." This has resulted in a boom for armored car manufacturers and security companies, given that most wealthy people living in the country own armored vehicles, and many employ executive protection teams to provide security for themselves, their families and their homes. Additionally, heavily armed criminal gangs regularly commit armed robberies, muggings and express kidnappings.

The one constant in these violent crimes is guns. Mexico's robust gun culture stretches back to revolutions, counterrevolutions and revolutionary bandits such as Pancho Villa. Because of this culture, guns are common in Mexico -- despite strict gun-control laws and licensing procedures. This demand for guns has created an illicit market that not only is intimately related to the U.S. market for illegal narcotics but also, in many ways, mirrors the dynamics of that market. Drugs flow north and guns flow south -- resulting in handsome profits for those willing to run the risks.

Mexican Laws

Similar to the U.S. Constitution, the 1917 Mexican Constitution guarantees Mexico's inhabitants the right to have "arms of any kind in their possession for their protection and legitimate defense." However, the constitution includes many caveats on private citizens' ownership of guns, prohibiting those "expressly forbidden by law" and those "the nation may reserve for the exclusive use of the army, navy or national guard." Furthermore, Mexican law calls for long prison terms for violators.

Mexico, then, has some of the world's strictest gun-control laws -- making guns difficult to obtain legally. Average citizens who want to purchase guns for self-defense or recreational purposes must first get approval from the government. Then, because there are no private-sector gun stores in the country, they must buy weapons through the Defense Department's Arms and Ammunition Marketing Division (UCAM). In accordance with Mexican law, the UCAM carefully limits the calibers of guns it sells. For example, it does not sell handguns larger than a .380 or .38 Special. Also, under Mexican law, popular handguns such as .357 magnum revolvers and 9 mm pistols are exclusively reserved for the armed forces.

Regardless of these efforts, the illicit arms market has been thriving for decades -- not only because firearm laws are not evenly enforced but also because criminals have found a way to circumvent efforts to stem the flow of guns. Moreover, not all illegal guns are in the hands of cartel members and street criminals. A healthy percentage of them are purchased by affluent Mexicans who are not satisfied with the selection of calibers available through the UCAM. Sources say it is not at all unusual to find Mexicans who own prohibited .357 magnum revolvers or .45 caliber pistols for self-defense against kidnappers and armed robbers. In addition to ballistic considerations, Latin machismo is also a factor -- some Mexican men want to own and carry powerful, large-caliber pistols.

The Mechanics of the Gun Trade

This mixture of the historical Mexican gun culture, machismo, strong desire for guns, lax enforcement of gun laws, official corruption and a raging cartel war has created a high demand for illegal guns. Guns sold on the black market in Mexico can fetch as much as 300 percent of their normal market value -- a profit margin similar to that of the cocaine trafficked by the cartels. The laws of economics dictate that where there is a strong demand -- and a considerable profit margin -- entrepreneurs will devise ways to meet that demand. Of course, the illicit markets are no different from the legitimate economy in this respect, and a number of players have emerged to help supply Mexico's appetite for illicit weaponry.

Millions of Mexicans reside (legally and otherwise) in the United States, and the two countries conduct a staggering amount of commerce (legal and otherwise) across the border. In this context, then, when one considers that there are more gun stores in a typical small town in Texas than there are in all of Mexico City, it should come as no surprise that a large number of the weapons found on the illicit arms market in Mexico originated in the United States. In fact, Mexican officials say that as much as 90 percent of the illegal weapons they seize are of U.S. origin.

The most obvious players in the gun trade are the cartels themselves, which not only have the financial resources to buy guns in the United States but also are in a position to receive guns in trade for narcotics from their distribution contacts north of the border. The traditional pattern for cartel operations over the past few decades has been to smuggle drugs north over the border and return with money and guns -- many times over the same routes and by the same conveyances. In addition to the problem of the notoriously corrupt Mexican customs officials, efforts to stem the flow of guns into Mexico also have been hampered by technological limitations. For example, until recently, Mexican authorities lacked X-ray equipment to inspect vehicles entering the country, and this inspection capacity still remains limited.

The cartels also obtain weapons from contacts along their supply networks in South and Central America, where substantial quantities of military ordnance have been shipped over decades to supply insurgencies and counterinsurgencies. Explosives from domestic Mexican sources also are widely available and are generally less expensive than guns.

Aside from the cartels, other criminal syndicates are dedicated to the arms trade. These groups can range from small mom-and-pop operations involving a few individuals who obtain weapons from family members residing in the United States or Central America to large organizations with complex networks that buy dozens or hundreds of weapons at a time.

As in other criminal enterprises in Mexico, such as drug smuggling or kidnapping, it is not unusual to find police officers and military personnel involved in the illegal arms trade. On Sept. 12, three high-ranking police commanders from Baja California and Baja California Sur states were arrested by U.S. Bureau of Alcohol, Tobacco and Firearms (ATF) agents in Phoenix for illegally purchasing weapons at a gun show. (U.S. law prohibits foreigners from buying weapons.) Over the past few years, several Mexican government officials have been arrested on both sides of the border for participating in the arms trade.

Although it is illegal for Mexican nationals to buy guns in the United States and for Americans to haul guns to Mexico, entrepreneurs have found a variety of ways to skirt such laws. Perhaps one of the least recognized ploys is plain old document fraud. Fake documents -- which are easily obtained along the border -- range in quality (and price) from poorly rendered counterfeits to genuine documents obtained with the assistance of corrupt government officials. Using such documents, a Mexican citizen can pose as a U.S. citizen and pass the required background checks to buy guns -- unless, that is, the prospective gun buyer was foolish enough to assume the identity of an American with a criminal record.

Perhaps the most common way to purchase guns is by using a "straw-man" buyer (sometimes in combination with document fraud). That is, paying a person with a clean record who has legal standing to buy the gun. This also is a tried-and-true tactic used by criminals in the United States who are ineligible to purchase guns due to prior convictions. The "straw man" in these cases often is a girlfriend or other associate who is paid to buy a gun for them. Also, with so many family relations spanning the border, it is easy for a Mexican citizen to ask an American relative to purchase a gun or guns on their behalf.

While document fraud and straw-man purchases can be used to bypass the law and fool respectable gun dealers, not all gun dealers are respectable. Some will falsify their sales records in order to sell guns to people they know are not legally permitted to have them -- especially if the guns are being sold at a premium price. ATF does conduct audits of gun dealers, but even after a steep decline in the number of federal firearms dealers over the past decade, there still are not enough inspectors to regularly audit the records of the more than 50,000 federal firearms license holders. This lack of oversight and the temptation of easy money cause some dealers to break the law knowingly.

Guns also can be obtained for the Mexican black market through theft. The cartels traditionally have tasked groups of young street thugs in the United States with stealing items (such as pickup trucks and sport utility vehicles) for the cartels to use or resell in Mexico. Now, intelligence reports suggest that these thugs have begun to rob gun stores in towns along the border. One such group is the Gulf cartel-related "Zetitas" (little Zetas), which is active in the Texas cities of Houston, Laredo and San Antonio, as well as other places.

A cartel connection is suspected when the weapons and ammunition stolen are popular with the cartels, such as assault rifles and FN Five-Seven pistols. The FN Five-Seven and the FN P-90 personal defense weapon shoot a 5.7 x 28 mm round that has been shown to penetrate body armor, as well as vehicle doors and windows. Because of this, they recently have become very popular with cartel enforcers, who have begun to call the weapons matapolicias -- police killers. Several police officials have been killed with these guns this year -- though officers also have been killed with .357 magnum revolvers, .45-caliber pistols and AK-47- or M-16-style assault rifles. Still, due to the rising popularity of the 5.7 x 28 mm weapons among cartel gunmen, many of these somewhat esoteric (and excellently manufactured) weapons are acquired in the United States and end up south of the border. Any time one of these weapons is connected to a crime on either side of the border, a cartel link should be considered.

The gun problem in Mexico is similar to the drug problem in the United States in that it is extremely difficult to reduce the supply of the illicit items without first reducing the demand. Any small reduction in the supply leads to an increase in price, which further stimulates efforts to provide a supply. Therefore, as long as the demand for such weapons persists, people will continue to find creative ways to meet that demand and make a profit. With that demand being fed, at least in part, by drug cartels that are warring for control of drug trafficking routes into the United States, the two problems of drugs and guns will continue to be deeply intertwined.

This report may be distributed or republished with attribution to Strategic Forecasting, Inc. at www.stratfor.com. For media requests, partnership opportunities, or commercial distribution or republication, please contact pr@stratfor.com.

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