China loans to Latin America causing alarm

Πηγή: Journal Sentinel

By Andres Oppenheimer

March2 201

A new study showing that loans from China's state-owned banks to Latin America rose by 71% last year is drawing alarm bells on both sides of the Pacific.

The study, released last week by the Inter-American Dialogue and the Global Economic Governance Initiative at Boston University, says that Chinese banks lent Latin American countries $22 billion last year, and a total of $119 billion over the past 10 years.

Chinese loan commitments to Latin America last year amounted to more than the combined loans from the World Bank and the Inter-American Development Bank, the study says.

Virtually all of Chinese banks' lending went to raw material extraction-related projects in countries that have a hard time getting loans from world markets, such as Venezuela, Argentina, Ecuador and Brazil. Cash-starved Venezuela alone got 47% of China's state-owned banks' loans to Latin America last year, it says.

Kevin P. Gallagher, a Boston University professor who co-authored the study with Margaret Myers, told me in an interview that China's loans to Latin America have been a blessing that has helped the region's economy grow in recent years. But they also have been a curse that, increasingly, poses risks for both Latin America and China, he said.

Among the downsides for Latin America:

First, Latin American countries — especially Venezuela and Argentina — are becoming increasingly indebted to China. Their debts will be increasingly hard to pay because they have to be repaid in U.S. dollars at a time when their currencies are depreciating.

"These are dollar-denominated debts," Gallagher says. "With commodity prices going down, economic growth going down, and their currencies depreciating, the risk is that what looked like manageable debt one day may be unmanageable debt the next day."

Second, Latin America's China dependence has made the region's manufacturing industries less competitive in world markets.

In recent years, China's massive purchases of Latin America's primary commodities such as copper, iron and soybeans helped Latin America grow at record rates. But it also boosted world commodity prices, causing Latin American currencies to appreciate, and has made the region's non-commodity exports — such as electronics and textiles — more expensive to sell in global markets.

In 2000, Latin America and China both had 9% of the world computer hardware market. But by 2011, Latin America had 6% of the world computer market, and China had 55% of it, Gallagher said.

"Latin America failed to take advantage of the massive profits from commodity exports

to reinvest them into upgrading industrial competitiveness," he said. "Today, the region is facing low commodity prices and lacks competitive industries."

Third, China's loans, which come with very few strings attached, pose significant political and environmental risks. Because they don't demand recipient governments to follow strict environmental or anti-corruption standards, they can lend themselves to government abuses.

In Brazil and Ecuador, China's loans to major mining projects are already drawing protests from indigenous people and international environmental groups.

Fourth, Chinese loans are perpetuating Latin America's dependence on commodity exports, especially in South America, at a time when commodity prices are plummeting.

"It continues to lock in the region's commodity-centric model, which for decades has made Latin American economies boom and bust. They need to have both commodities exports and industries to raise their standards of living," he said.

Gallagher, who is also the author of a forthcoming book titled "Saving the China Boom," said China's massive loans to Latin America also have a downside for Chinese banks.

"Chinese banks are overexposed to Argentina and Venezuela," he said. "What happens if one of these countries defaults? These loans do not have default cla

uses, at least not that we know of."

My opinion: In many ways, China's massive commodity purchases and investments have been a blessing for South American countries over the past decade.

But there are growing concerns from both economists following China and in Latin America that China's state-run bank loans will leave the region over-indebted and more commodity-dependent than ever.

In Brazil and Argentina, leading private sector associations and independent economists have been voicing these concerns publicly in recent weeks.

The biggest problem with China's loans is that they have helped generate a culture of complacency in Latin America, which has badly hurt the region's

high-tech and manufacturing exports.

Latin America should welcome these loans, but — as Gallagher said — use them to promote innovation and make their high-tech and manufacturing industries more competitive. Otherwise, loans from China's state banks will do more harm than good.

The Trans-Pacific Partnership: free trade at what costs? – analysis

Mexico, Canada, and Japan are all looking to join the agreement (the TPP-12), which would make the TPP the largest trade bloc in the world

Πηγή: bilaterals
By Eric Stadius and Elizabeth Briggs
August 22 2012

In November 2011, Secretary of State Hillary Clinton announced Washington’s official pivot to Asia. Outlining a vision for an Asia-Pacific Century, Secretary Clinton described a desired symbiotic and unfettered relationship between the two regions that will provide “unprecedented opportunities for investment, trade, and access to cutting-edge technology.”[1] Washington hopes this engagement will help in “strengthening bilateral security alliances, deepening working relationships with emerging powers, engaging with relational multilateral institutions, expanding trade and investment, forging a broad-based military presence, and advancing democracy and human rights.” With the TPP as a first step, the ultimate goal is to “build a web of partnerships and institutions across the Pacific that is durable and consistent with American interests and values.”

At the center of this pivot has been the Trans-Pacific Partnership (TPP), an enigmatic trade pact that has been hailed as a true “21st century agreement.”[2] In negotiation since 2008, the TPP would link the United States with Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam (the TPP-9) across a variety of economic platforms. Mexico, Canada, and Japan are all looking to join the agreement (the TPP-12), which would make the TPP the largest trade bloc in the world, encompassing some 700 million people and about $26 trillion USD in various forms of economic activity.

But, for the most part, the member countries have conducted negotiations for the TTP under the mantle of utmost secrecy. The true scope of the agreement has only become apparent due to a few leaked texts and sporadic reports from the signatory countries. Evidently, trade is only the beginning of the TPP’s jurisdiction as it also contains chapters on customs, cross-border services, telecommunications, government procurement, competition policy, cooperation and capacity building, investment, financial services, environmental regulations, and intellectual property rights.[3] The very breadth of the agreement would require the rewriting of numerous domestic laws in every signatory country, threaten the sovereignty and autonomy of domestic legal systems, enable environmental degradation by transnational corporations, impose harsh patent regulations, and severely limit access to information across the globe. However, the most significant issue regarding the TPP is the very lack of transparency. Hailed as a new century trade agreement, the lack of information made available to the public, including the U.S. Congress, hardly embraces the realities of the twenty-first century. Ultimately, it is evident that the TPP has the power to transform the global economy and the Pacific community alike, with serious ramifications, both positive and negative, throughout the region.

Trade and Agriculture

Although the initial goal of the TPP was the promotion of free trade, only 2 out of 26 chapters concern this subject. The countries involved stand to benefit from lower prices resulting from fewer barriers to trade, but damage to the livelihoods of many workers appears to be inevitable. In 2011, the TPP-9 generated a GDP of $17.8 trillion USD, with the United States contributing 85 percent of this figure. Approximately 5 percent of U.S. trade flows are to its fellow TPP-9 countries; in 2011, U.S. exports totaled $105 billion USD to these countries while imports reached $91 billion USD.[4] The addition of Japan, Mexico, and Canada would bring both the combined GDP to $26.6 trillion USD and the TPP’s share of U.S. trade flows to 40 percent.[5] The TPP in its current form is estimated to augment the U.S. economy by $5 billion USD by 2015 and $14 billion USD by 2025, but this figure would drastically increase under the potential TPP-12.[6] These fiscal benefits would be far less for the U.S. than for other of its partners as Washington already has signed free trade agreements with Australia, Canada, Chile, Malaysia, Mexico, Peru, and Singapore. Nevertheless, the U.S. hopes that this agreement will help it pivot its focus toward Asia politically by means of this regional forum, as well as economically by tapping East Asia’s increasing large disposable income.

Agriculture primarily drives regional trade and governmental control over domestic agricultural sectors will be significantly impacted by the TPP. Canada, in particular, is concerned about the mandate that would force Ottawa to alter its supply management policy that presently protects approximately 15,000 dairy and egg farmers. This action would effectively neutralize the industry on the world market because they would not be able to compete against cheaper goods coming from Australia and New Zealand. The OECD estimates that Canadians spend an additional $3 billion USD on food products annually as a result of Canada’s supply management policies.[7] Despite these concerns, Canadian Prime Minister Steven Harper reiterated his eagerness to join negotiations at the June G20 summit in Los Cabos, declaring, “This is a further example of our determination to diversify our exports and to create jobs, growth and long-term prosperity for Canadian families,” especially because Canada lacks FTAs with East Asian countries.[8] Canada’s dairy supply management program is only one a number of policies practiced throughout the region that would detract from the benefits of free trade and manipulate the agreement to benefit domestic interests.

Nevertheless, there is no question that the TPP as it now stands would benefit regional trade. As Laura Dawson, an expert on Canadian trade relations explained, the number of regional alliances and FTAs complicates transactions and creates a “noodle bowl” of international trade, one that increases the cost of exportation by an average of 5 percent.[9] Consolidating the restrictions and regulations under one agreement would help cut down these costs, hopefully inducing further economic integration. With billions of dollars in potential gains, this integration is what truly generates interest in specific countries and points to what could be the most salient benefit from the TPP.

Transparency

The major concerns regarding the TPP surround the dearth of transparency provided by signatory countries. At the beginning of the negotiations, the United States Trade Representative (USTR) issued a statement declaring that the TPP is an “ambitious, next-generation, Asia-Pacific trade agreement that reflects U.S. priorities and values.”[10] President Obama’s own endorsement stated that the TPP will “boost our economies, lowering barriers to trade and creating more jobs for our people.”[11] But beyond these vague declarations, no one outside of the negotiators’ inner circles has been allocated detailed information regarding the treaty. Indeed, the public probably knows more about the defense budget and the aggregate deployment of U.S. nuclear warheads than it does about the U.S. position on the TPP.

In the recently concluded 13th round of negotiations in San Diego, the USTR invited 300 registered stakeholders to participate in a “Stakeholder Engagement Forum;” however, save for the cleared advisors—primarily industry representatives—few “had any clue what was really going on.”[12] As David Levine, an associate professor at Elon University School of Law and one of those invited to attend the forum, reflected, “The only thing that I knew with certainty was that I didn’t know much about what was happening in the TPP negotiations, and therefore I couldn’t offer much in the way of substantive questions and input.” Levine also signed an open letter from law professors around the world to USTR Ambassador Ron Kirk, which argued that the USTR must improve transparency in the negotiating process if indeed the goal is “to create balanced law that stands the test of modern democratic theories and practices of public transparency, accountability, and input.”[13]

Not even Congress effectively has participated in the TPP negotiation process. On June 27, 132 members of Congress petitioned Ambassador Kirk to “provide [them] and the public with summaries of the proposals offered by the U.S. government.” They pushed the USTR to adopt a similar approach as during the Free Trade Area of Americas (FTAA) negotiations, when drafts of the text were released to Congress and the public.[14] In a largely symbolic move, Senator Ron Wyden (D-Ore.) introduced a bill that would require the White House to distribute TPP documents. His calls have been mirrored by congressmen from both sides of the aisle; as Senator Richard Burr (R-N.C.) declared: “When our staff requested to review the TPP on behalf of the senator, even staff with what we consider to be appropriate clearance were denied.”[15]

Clearly, these closed-door negotiations do not resemble the White House’s vision of the TPP as a “21st century trade agreement.” Alarmingly, the President noted that the TPP was supposed to become “a high-level trade agreement that could potentially be a model, not just for countries in the Pacific region, but the world in general.”[16] However, the Obama Administration is not embracing the realities of the modern informative network, setting a detrimental precedence for such an important agreement. The USTR claims that this has been the most transparent FTA to date. Yet the USTR also argues that the TPP is not simply an FTA, but rather an international agreement in which trade is only one element involved in the negotiations. In this respect, the TPP has not lived up to the precedent set in such negotiations as the FTAA or in organizations such as the Asian Pacific Economic Community (APEC). Indeed, beyond any substantive concerns regarding the text of the TPP, the lack of transparency might be the most troubling aspect of the proposed pact.

Investment Chapter[17]

In a 2008 campaign speech, President Obama promised: “We will not negotiate trade agreements that stop the government from protecting the environment, food safety, or the health of its citizens; or give greater rights to foreign investors than to U.S. investors.”[18] Almost every provision promised in this speech has been violated by the TPP proposal, primarily in the recently leaked investment chapter. This chapter has become particularly contentious even within the sealed negotiations with Australia refusing to sign the provision. Using a broad definition of investment, provisions contained in the chapter will enact international laws that will protect anything from existing investments by domestic firms in foreign countries to shares and derivatives, public-private partnerships, mining and manufacturing licensing and permits, as well as expected future profits of other TPP investors. Therefore, the chapter defines investment far beyond the traditional bounds of real property.

The investment chapter threatens the national sovereignty of signatory nations due to the creation of an arbitrary international tribunal that could bypass domestic laws when it comes to ruling on investor-to-state disputes. This tribunal follows the trend of treaties subordinating the role of national legal systems in dispute resolutions. Thus, if an investor believes that a law, regulation, policy, or program in a foreign country has violated his or her rights—even if the foreign government implemented those laws for the welfare of its citizenry—the investor can sue the foreign government for compensation in an international tribunal.[19] As B.S. Chimini argues, “it is not the greater internationalization of interpretation and enforcement of rules that is problematic but its differential meaning for, and impact on, third world states and people.”[20] Over $350 million USD have been paid out by governments to corporations in these investor-state cases, such as the one between Renco and the Peru (detailed later), which attack anything from natural resource policy to health and safety measures.[21]

Because the TPP removes the host state of the foreign investors from litigation, investors would be capable of exploiting loopholes such as Most Favored Nation (MFN) status or utilizing the broad definition of indirect expropriation to pick advantageous standards and dispute settlement mechanisms.[22] These investor-to-state negotiations will enable transnational corporations to reap profits from foreign citizens over policy in the countries where the corporations operate, even when no international state-to-state disputes exist.

Intellectual Property Chapter[23]

The intellectual property chapter appears to carry with it the most substantive changes to international law to be found in the entire TPP. A leaked text, available via House Oversight Committee Chairman Darrell Issa (R-Calif.), details a harsh copyright law, mirroring that of the United States, which has the potential to alter domestic laws throughout the region. This chapter, driven primarily by the U.S., if adopted in its current state, would enact the strongest intellectual property protection and enforcement standards in any FTA to date. The proposed document embraces the controversial Anti-Counterfeiting Trade Agreement (ACTA) and recalls the rejected Stop Online Piracy Act (SOPA), pushed by the powerful pharmaceutical and Hollywood-funded lobbying firms in Washington, by altering the ability to access information and vital resources for developing countries. The primary issues in the intellectual property chapter surround the extension of copyright, restriction of parallel importation, the enforcement of new laws, and the ramifications for such products as textbooks and medicine. The intellectual property chapter best exemplifies the maximalist stance Washington has taken in these negotiations, which contradicts the development agenda proposed in more transparent, multilateral agreements such as the 1994 WTO Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS).

In terms of copyright, the TPP will dramatically expand its minimum international standards in scope and length, many of which do not even reflect settled U.S. law. The treaty proposes to lengthen copyrights on published works; under the treaty they would expire 70 years after the death of the author or no less than 95 years from the first authorized publication. This would extend the length of copyright in a significant portion of signatory countries as well as annul the TRIPS standard of 50 years after death or 50 years after publication. Although this copyright period mirrors U.S. law, the U.S. law sets 70 years post-mortem as a ceiling, while the TPP denotes this as a minimum length. These extended laws go against economic rationality, as the government cannot incentivize the creation of work that already exists under copyright, thus it draws no additional economic benefits. Rather, the extended laws would cut supply in the creative goods sector, particularly in developing countries where the public domain plays an increasingly important role in information dissemination.[24]

The intellectual property chapter further enables the patent or copyright holder to block parallel importation of copyrighted works. Parallel importation is the practice of importing a legitimate copyrighted good, not an illegal reproduction, at lower prices than what is available domestically without the permission of the copyright holder.[25] Many of the smaller TPP countries benefit from this practice because they lack the sufficient population or demand to attract a low market entry price. For example, with the TPP in effect, a school in Malaysia or Peru would be forced to purchase textbooks at higher domestic prices rather than contracting with a buyer who could purchase the textbooks at a lower price in a market such as the United States and then sell them to the school at the lower price. The restrictions on parallel imports remain unsettled or unenforced in every TPP signatory nation, including the United States. The current international laws surrounding this practice, denoted in TRIPS, leave countries free to adopt their own policies based on their domestic intellectual property laws.[26]

Another area where the proposed TPP text threatens domestic laws and the pre-existing international intellectual property framework involves the easing and expansion of patentability standards. The TRIPS provision only allows for additional patents on a product or process if the addition has industrial applicability or alters the function of the product.[27] The TPP, however, would allow additional patents for any new form, use, or method of utilizing an existing product, even if no applicability or efficiency measure exists.[28] Where this technique, known as evergreening, is most applicable is within the competing pharmaceutical and generic medicine industries. As Doctors Without Borders argued, evergreening allows major pharmaceutical companies to extend monopoly protection by making slight alterations to existing formulas, delaying the arrival of a more affordable generic version.[29] The first generation of HIV antiretroviral drugs, in 2000 shortly before the patent expired, cost an average of $10,000 to $15,000 USD per person per year—far outside the means of an average person living in a developing country. However, by 2011, the price of a similar generic drug combination had fallen to merely $60 USD per person annually.[30] Under the current intellectual property chapter of the TPP, such a devaluation process would take far longer, keeping these important innovations in health care out of developing countries in exchange for greater profits for the major pharmaceutical companies. This provision further contradicts President Obama’s position on refusing to negotiate trade agreements that “prevent developing country governments from adopting humanitarian licensing policies to improve access to lifesaving medications.”[31]

The final area of concern in the proposed intellectual property chapter is the enforcement aspect of copyright infringement. The U.S. has proposed a multi-faceted scheme for patent violations that allows for prosecution based upon pre-existing or statutory damages, a provision that appears in U.S. law, but not in that of any other signatory nation. This part of the TPP proposal takes the ability to punish infringers one step further by allowing for the prosecution of every infringer, rather than only willful ones.[32] This provision encourages a rent-seeking behavior on patent filing and deters innovation, both of which could prevent advances beneficial to social and economic development.

The Buffer Between Mexican Cartels and the U.S. Government

Πηγή: Stratfor
By Scott Stewart
August 17, 2011, 1913 GMT


It is summer in Juarez, and again this year we find the Vicente Carrillo Fuentes organization (VCF), also known as the Juarez cartel, under pressure and making threats. At this time in 2010, La Linea, the VCF’s enforcer arm, detonated a small improvised explosive device (IED) inside a car in Juarez and killed two federal agents, one municipal police officer and an emergency medical technician and wounded nine other people. La Linea threatened to employ a far larger IED (100 kilograms) if the FBI and the U.S. Drug Enforcement Administration (DEA) did not investigate the head of Chihuahua State Police intelligence, whom the VCF claimed was working for the Sinaloa Federation.
La Linea did attempt to employ another IED on Sept. 10, 2010, but this device, which failed to detonate, contained only 16 kilograms of explosives, far less than the 100 kilograms that the group had threatened to use.
Fast-forward a year, and we see the VCF still under unrelenting pressure from the Sinaloa Federation and still making threats. On July 15, the U.S. Consulate in Juarez released a message warning that, according to intelligence it had in hand, a cartel may be targeting the consulate or points of entry into the United States. On July 27, “narcomantas” — banners inscribed with messages from drug cartels — appeared in Juarez and Chihuahua signed by La Linea and including explicit threats against the DEA and employees of the U.S. Consulate in Juarez. Two days after the narcomantas appeared, Jose Antonio “El Diego” Acosta Hernandez, a senior La Linea leader whose name was mentioned in the messages, was arrested by Mexican authorities aided by intelligence from the U.S. government. Acosta is also believed to have been responsible for planning La Linea’s past IED attacks.
As we have discussed in our coverage of the drug war in Mexico, Mexican cartels, including the VCF, clearly possess the capability to construct and employ large vehicle-borne improvised explosive devices (VBIEDs) — truck bombs — and yet they have chosen not to. These groups are not averse to bloodshed, or even outright barbarity, when they believe it is useful. Their decision to abstain from certain activities, such as employing truck bombs or targeting a U.S. Consulate, indicates that there must be compelling strategic reasons for doing so. After all, groups in Lebanon, Pakistan and Iraq have demonstrated that truck bombs are a very effective means of killing perceived enemies and of sending strong messages.
Perhaps the most compelling reason for the Mexican cartels to abstain from such activities is that they do not consider them to be in their best interest. One important part of their calculation is that such activities would remove the main buffer that is currently insulating them from the full force of the U.S. government: the Mexican government.

The Buffer

Despite their public manifestations of machismo, the cartel leaders clearly fear and respect the strength of the world’s only superpower. This is evidenced by the distinct change in cartel activities along the U.S.-Mexico border, where a certain operational downshift routinely occurs. In Mexico, the cartels have the freedom to operate far more brazenly than they can in the United States, in terms of both drug trafficking and acts of violence. Shipments of narcotics traveling through Mexico tend to be far larger than shipments moving into and through the United States. When these large shipments reach the border they are taken to stash houses on the Mexican side, where they are typically divided into smaller quantities for transport into and through the United States.
As for violence, while the cartels do kill people on the U.S. side of the border, their use of violence there tends to be far more discreet; it has certainly not yet incorporated the dramatic flair that is frequently seen on the Mexican side, where bodies are often dismembered or hung from pedestrian bridges over major thoroughfares. The cartels are also careful not to assassinate high-profile public figures such as police chiefs, mayors and reporters in the United States, as they frequently do in Mexico.
The border does more than just alter the activities of the cartels, however. It also constrains the activities of U.S. law enforcement and intelligence agencies. These agencies cannot pursue cartels on the Mexican side of the border with the same vigor that they exercise on the U.S. side. Occasionally, the U.S. government will succeed in luring a wanted Mexican cartel leader outside of Mexico, as it did in the August 2006 arrest of Javier Arellano Felix, or catch one operating in the United States like Javier’s oldest brother, Francisco Arellano Felix. By and large, however, most wanted cartel figures remain in Mexico, out of the reach of U.S. law.
One facet of this buffer is corruption, which is endemic in Mexico, reaching all the way from the lowest municipal police officer to the presidential palace. Over the years several senior Mexican anti-drug officials, including the nation’s drug czar, have been arrested and charged with corruption.
However, the money generated by the Mexican cartels has far greater effects than just promoting corruption. The billions of dollars that come into the Mexican economy via the drug trade are important to the Mexican banking sector and to the industries in which the funds are laundered, such as construction. Because of this, there are many powerful Mexican businessmen who profit either directly or indirectly from the narcotics trade, and it would not be in their best interest for the billions of drug dollars to stop flowing into Mexico. Such people can place heavy pressure on the political system by either supporting or withholding support from particular candidates or parties.
Because of this, sources in Mexico have been telling STRATFOR that they believe that Mexican politicians like President Filipe Calderon are far more interested in stopping drug violence than they are in stopping the flow of narcotics. This is a pragmatic approach. Clearly, as long as there is demand for drugs in the United States there will be people who will find ways to meet that demand. It is impossible to totally stop the flow of narcotics into the U.S. market.
In addition to corruption and the economic benefits Mexico realizes from the drug trade, there is another important element that causes the Mexican government to act as a buffer between the Mexican cartels and the U.S. government — geopolitics. The Mexico-U.S. relationship is a long one that has involved considerable competition and conflict. The United States has long meddled in the affairs of Mexico and other countries in Latin America. And from the Mexican perspective, American imperialist aggression, via the Texas War of Independence and the Mexican-American War, resulted in Mexico losing nearly half of its territory to its powerful northern neighbor. Less than a century ago, U.S. troops invaded northern Mexico in response to Pancho Villa’s incursions into the United States.
Because of this history, Mexico — as with most of the rest of Latin America — regards the United States as a threat to its sovereignty. The result of this perception is that the Mexican government and the Mexican people in general are very reluctant to allow the United States to become too involved in Mexican affairs. The idea of American troops or law enforcement agents with boots on the ground in Mexico is considered especially threatening from the Mexican perspective.

A Thin Barrier

While Mexican sovereignty and international law combine with corruption and economics to create a barrier to assertive U.S. intervention in Mexico’s drug war, this barrier is not inviolable. There are two distinct ways this type of barrier has been breached in the past: by force and by consent.
An example of the first was seen following the 1985 kidnapping, torture and murder of U.S. DEA special agent Enrique Camarena. The DEA was not able to get what it viewed as satisfactory assistance from the Mexican government in pursuing the case despite the tremendous pressure applied by the U.S. government. This prompted the DEA to unilaterally enter Mexico and snatch two Mexican citizens connected to the case. Because of his involvement in the Camarena case, Honduran drug kingpin Juan Matta-Ballesteros was also rendered from his home in Honduras by U.S. government agents.
As a result of the U.S. reaction to the Camarena murder, the Guadalajara Cartel, Mexico’s most powerful criminal organization at the time, was decapitated, its leaders — Miguel Angel Felix Gallardo, Ernesto Fonseca Carrillo and Rafael Caro Quintero — all arrested and convicted for their part in ordering the killing. The tremendous pressure applied to Mexican authorities by the U.S. government to arrest the trio, coupled with the fear that they too might be rendered, ultimately led to their detention, although they did maintain sufficient influence to ensure that they were not extradited to the United States.
The Guadalajara Cartel also lost its primary connection to the Medellin cartel (Matta-Ballesteros) as a result of the Camarena case, and the cartel was eventually fractured into smaller units that would become today’s Sinaloa, Juarez, Gulf and Tijuana cartels. The Camarena case taught the Mexican cartel bosses to be careful not to provoke the Americans to the point where it will bring the full power of the U.S. government to bear upon their organizations (a lesson recently demonstrated by the unilateral U.S. operation to kill Osama bin Laden in Abbottabad, Pakistan).
But in addition to unilateral force, sometimes the U.S. government can be invited into a country despite concerns about sovereignty. This happens when the population has something it fears more than U.S. involvement, and this is what happened in Colombia in the late 1980s. In an effort to influence the Colombian government not to cooperate with the U.S. government and extradite him to the United States, Colombian drug lord Pablo Escobar, leader of the Medellin Cartel, resorted to terrorism. In 1989 he launched a string of terrorist attacks that included the assassination of one presidential candidate, the bombing a civilian airliner in an attempt to kill a second presidential candidate and several large VBIED attacks, including the detonation of a 1,000-pound truck bomb in December 1989 targeting the Colombian Administrative Department of Security (DAS, Colombia’s primary national intelligence and security service) that caused massive damage in the area around the DAS building in downtown Bogota. These attacks had a powerful impact on the Colombian government and Colombian people and caused them to reach out to the United States for increased assistance despite their concern about U.S. power. The increased U.S. assistance eventually led to the death of Escobar and the systematic dismantling of his organization.
The lesson in the Escobar case was: Do not push your own government or population too far or they will turn on you and invite the Americans in.

U.S. can't justify its drug war spending, reports say

 Πηγή: Los Angeles Times

By Brian Bennett, June 09, 2011

Government reports say the Obama administration is unable to show that billions of dollars spent in the anti-drug efforts in Latin America have made a significant difference.

Reporting from Washington— As drug cartels wreak murderous havoc from Mexico to Panama, the Obama administration is unable to show that the billions of dollars spent in the war on drugs have significantly stemmed the flow of illegal narcotics into the United States, according to two government reports and outside experts.

The reports specifically criticize the government's growing use of U.S. contractors, which were paid more than $3 billion to train local prosecutors and police, help eradicate fields of coca, operate surveillance equipment and otherwise battle the widening drug trade in Latin America over the last five years.