| | |  Business News 
U.S. Warns Mexican Drug War Curbing Investment
 Jason Lange & Krista Hughes - Reuters
go to original
November 05, 2010
Mexico City - Mexico's vicious drug war could force more companies to scale back investment in the country unless security forces quickly quell cartel violence, the U.S. ambassador to Mexico said on Thursday.
 |  | Nearly a third of those surveyed said their company had experienced acts of extortion in Mexico - ranging from random phone calls demanding money to abduction - and almost half said their organization had been directly affected by drug cartel-related violence. |  | | |
A survey of 220 private U.S. companies by the State Department showed 15 percent have postponed investments or expansion plans in Mexico due to the drug war and nearly 80 percent saw the drug war as a long-term threat to Mexico's political and economic stability.
Mexican president Felipe Calderon has sent the military to fight drug cartels, while Washington has pledged $1.3 billion in related assistance, including Black Hawk helicopters.
"If we don't take seriously the tension that is being created by the insecurity and work in a very deliberate and accelerated way to reduce it, then there is a very serious prospect that the spillover into the investment climate can become more significant," U.S. Ambassador Carlos Pascual said in an interview with Reuters.
The drug war has killed more than 30,000 people in Mexico since December 2006, when Calderon took office and launched a major offensive on cartels who were already fighting one another for control of U.S. smuggling routes.
Mexican cartels supply most of the cocaine consumed in the United States, packing it on trucks and trains or ferrying it through cross-border tunnels.
Mexico's wave of drug violence has been particularly acute in the industrial north, where thousands of foreign-owned factories dot the border with the United States.
Calderon insists Mexico can overcome drug cartels. "Together I know we will succeed in our efforts," he said during a visit to the border town of Mexicali
Pascual said Mexico is still a land of opportunity for U.S. companies seeking to cut costs, and that there is no sign that the capital flight seen in drug war flashpoints like Ciudad Juarez on the U.S. border is taking hold nationwide.
Despite the violence, foreign companies are pouring billions of dollars of fresh investment into Mexico as the country rebounds from its deepest recession in decades. Foreign direct investment climbed 28 percent in the first six months of 2010 from a year earlier.
CANCELED PROJECTS
But the State Department survey, conducted in July and released in October, shows at least some companies have pulled out of Mexico while one canceled construction of a factory. Three in four companies have put restrictions on employees' living or travel arrangements.
"We talk to companies all the time about it," Pascual said.
Nearly a third of those surveyed said their company had experienced acts of extortion in Mexico - ranging from random phone calls demanding money to abduction - and almost half said their organization had been directly affected by drug cartel-related violence. This included reduced sales and additional security costs.
Some companies have closed mines in areas where gangs grow marijuana and heroin poppies, while oil services giant Schlumberger Ltd said in September that worsening violence is undermining energy projects in Mexico.
A root cause of the violence is the massive economic power of the cartels. U.S. law-enforcement agencies say Mexican drug cartels bring between $19 billion and $29 billion into Mexico from the United States every year, while authorities on both sides of the border seize less than $1 billion, Pascual said.
Even as Mexico tries to reform its police and judicial systems to better confront the cartels, "there are potentially tens of billions of dollars available to them to fuel their ability to resist," he said.
"If you can't cut off the resource flows ... or increase their cost of business significantly, the cartels will use the resources in front of them to either increase levels of violence or try to corrupt more people."
(Editing by Mohammad Zargham)
|
|
| |
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us