Cartels As Protection Rackets

How Mexican mobs took over the government’s shake-down industry

At CrashOut, I love to bring in hard-hitting narco journalists on the ground like Luis Chaparro with his interview with Mini Lic. But I’m also fascinated by the thinking of the best academics trying to make sense of the bloodshed.

Historian Benjamin T. Smith grabbed attention with his excellent book “The Dope: The Real History of the Mexican Drug Trade.” So I’m stoked to publish this essay in which he expands on his writing to bring forth a powerful thesis for the first time about the evolution of protection rackets and their links to the birth of cartels in Mexico. It sheds important light on the chaos we see today, and could become a central point in understanding the bloody phenomenon. IG

In 1993, the head of Mexico’s federal judicial police, Guillermo González Calderoni, a hardened cop with a reputation for busting narcos, fled to the United States and asked for asylum. He told his friends in the DEA that he was tired of doing the Mexican government’s dirty work and feared for his life. After winning his case, “Calderoni” gave an interview to PBS news in 2000 and laid out how Mexican police shook down gangsters.

“Why are so many Mexican police commanders corrupt?” the interviewer asked.

“What did you do to turn them into real police officers?” González Calderoni replied. “Did you give them the budget? Did you give them gas for the trucks? Did you give them better weapons, trucks, vehicles, intelligence, information, technology, than the traffickers had? If you didn't give them any of this, really, what did you give them? You sent them off to become what they became - to take money from drug traffickers in order to fight them. Maybe they take the money from some of the traffickers to fight the other traffickers.”

The extraordinary confession didn’t save the fallen super cop. Three years later he was shot dead in a Texas parking lot. But the interview was the most explicit inside account till then of the relationship between the Mexican state and gangsters. The police, González Calderoni admitted, ran a protection racket; they protected some traffickers from prosecution in return for bribes. They then went after narcos who hadn’t paid enough or ran out of favor to make it look like they were doing their job.

Protection rackets are key to understanding the explosion of cartels in Mexico and their relationship with the state. But it’s not a model that is static but one that is violently evolving.

In this article, I look at three distinct phases. The first runs up until the late 1980s when state forces shook down traffickers and created the system of territories or plazas, where they operated. A second phase was when the gangsters took over these shakedowns and became the fearsome cartels we know today who tax other traffickers in their territory. They still work with the government but more as privatized enterprises that have become more powerful than many elements of the state, such as city police who become their employees. This creates a constant power struggles and endemic violence that has characterized the last two decades.

Yet we now see a third phase in which the cartels have expanded into extorting many legitimate businesses, from avocado growers to silver mines to chicken sellers. And they even shake down mayors for chunks of city budgets. As the presidency of Andrés Manuel López Obrador draws to an end, his successor (likely Claudia Sheinbaum) will have to face a country wrenched by the expansion of cartels into vast protection rackets and a potentially explosive social response to them.

Phase I: The Powerful Corrupt State

In criminologist Diego Gambetta’s landmark book on the Sicilian underworld, he argues the Mafia first emerged in the nineteenth century by selling protection from bandits to the island’s property owners. It was a transaction with an implicit threat. Pay us and no one will touch your citrus groves; or rather pay us and we won’t touch your citrus groves. It was also a system that tended towards monopoly as farmers were unwilling to pay a thug from one clan if they had to pay another the next week. And it relied on geographical control; Mafiosi had specific territories, within which they could charge, and which they defended from rivals and bandits.

As the state expanded and started to guarantee the rights of legal entrepreneurs, the Mafia moved from the licit to the illicit economy, an area the state was still unwilling to protect. Pay us and no one, especially us, will touch your untaxed cigarettes, your gambling house, your brothel, or your drug shipment.

Most protection rackets then are private criminal enterprises who sell protection to those who cannot legally receive security from the state. Most, but not all.

In some countries, including Mexico, protection rackets have historically been run by the state. But rather than just being “corruption,” these bribes, as journalist Alan Riding, said were the “oil and glue” of the one party state that ran Mexico for most of the twentieth century. These bribes even supported the state. As González Calderoni stated, at least some of the money went into catching other criminals.

State protection goes back to the earliest days of Mexico’s trafficking. The first U.S. customs case into opium smuggling in 1916 focused on a group of Chinese Mexicans who were paying off the governor of Baja California for the right to smuggle through his territory. In 1948, the queenpin Dolores Estévez Zuleta, aka “Lola la Chata,” wrote to the president accusing the “mafia” of Mexico City cops of “extorting” her in return for not sending her to jail.

In 1980, two journalists from the San Diego Union spent a year investigating the practice in Tijuana. They discovered the profits of border crime had swelled the shakedowns into a complex racket with three elements of the government involved: the attorney general’s office, the federal police, and the secret service, or Dirección Federal de Seguridad. The protection rackets were divvied up, with the DFS focusing on car thieves and human smugglers, and the others on drug traffickers and dealers.

Each institution employed dedos or informants among the criminals, who gave them information on who to arrest. But they were more than snitches and acted as bag men, collecting money from other criminals to pay the cops, and even carrying badges and beating up extortion victims. They later become termed madrinas, a play on the words godmother and madrazo, or beating.

As the officials oversaw the drugs, they became more deeply involved in them. The head of the AG’s office confiscated dope and sold it to a group of favored traffickers. He regularly dined with Juan N. Guerra, a notorious drug smuggler from Matamoros when he came to Tijuana, and even employed Guerra’s nephews. This lethal cocktail of gangsters and corrupt cops formed the cartels.  

Phase II: The Cartelization of Mexico

During the late 1980s and early 1990s radical changes buffeted the state-run protection rackets. The DFS was closed down after being implicated in the killing of DEA agent, Enrique “Kiki” Camarena. A principal intermediary between the traffickers and their state protectors, Miguel Ángel Félix Gallardo, was arrested in 1989. And democratization started to usher in the election of opposition governors in key smuggling zones. Officials were still corrupt but they were not all on the same team anymore.

The most important change though was in crime. Cocaine profits exploded and made drugs dwarf all other rackets. After the United States clamped down on the cocaine cowboys in Florida, Colombians shifted to trafficking through Mexico. Mexicans now got a larger slice of the profits and helped U.S. cocaine consumption increase in the 1990s. Though figures on drug earnings are famously unreliable, some observers estimated the money that went to Mexican traffickers shot up from between $2 and $6 billion during the 1980s to over $30 billion by the mid 1990s.

Amid these changes, traffickers started to take over the state’s protection rackets. They, not the state spies or the federal cops, now charged independent producers particularly of marijuana and heroin, to move merchandise through their regions of control. To do so they created their own small-scale armies, which like the state agents, could provide both intel and muscle.

In Tijuana, the Arellano Félix family employed a mix of rich kids (known as narco juniors) and toughs from the Hispanic barrio of Logan Heights in San Diego. In Juárez, Amado Carrillo Fuentes used ex cops and spies, who formed a roving intel unit and state and municipal policemen, who were dubbed “La Linea.” In Tamaulipas, Juan García Abrego started by using former federal cops. In fact, the early iteration of the Gulf Cartel was often called “La Banda de Charola” or the “Gang of the Badge”.

This shift from officials to traffickers running the protection rackets was described by Tijuana journalist Jesús Blancornelas in his book El Cartel. He claims that after the arrest of Félix Gallardo, the country’s major drug lords had a gangster conference in Acapulco. The idea was “to meet, and come to an agreement, no fights, one territory for each person” The territories or plazas were divided as follows:

Ciudad Juárez: Rafael Aguilar Guajardo

Tecate: Joaquín Guzmán Loera aka El Chapo

San Luis Río Colorado: Hector Palma aka El Guero

Nogales and Hermosillo: Emilio Quintero Payan

Tijuana: Jesus Labra Aviles

Sinaloa: Ismael Zambada aka El Mayo and Baltazar Díaz Vega.

Mexicali: Rafael Chao López.

The state still had some control over the arrangement, getting money from the enterprises. The head of the federal police, González Calderoni, who was a childhood friend of the Gulf cartel head, seemed to have acted as negotiator between the factions. (Félix Gallardo even claimed González Calderoni was the one that actually handed out the territories in Acapulco).

There is strong evidence that from 1988 to 1994 the president’s brother, Raúl Salinas de Gotari also played a central role, taking payments from the traffickers and distributing them to the politicians. But in the spirit of the Salinas government privatizing many industries, it was more of a privatized enterprise close to the state. 

The initial system soon fell apart, however. To move drugs through a region, you needed to pay the owner, and most of the traffickers were not keen to do so. Narco junior Tijuana hitman, Alejandro Hodoyan in an interview with the Mexican police summed it up. “Once handed out, no one respected the system, and everyone started to work in the territory of the others,” he said. “Then the killings started”.

The first murder of this new era was suitably gruesome. Rigoberto Campos Salcido could theoretically roam wherever he liked without paying protection. The owners of the Tijuana, Sinaloa, and Tecate plazas reacted by partially feeding him through a combine harvester in late 1990. Both his arms were amputated but he survived until Ramón Arellano Felix unloaded 600 bullets into his car. As a famous drug ballad about the killing says: “He wore prosthetic arms; But no one noticed them; Because the guns of every calibre; Destroyed them.”

Over the next decade, the old state officials in charge of the plazas left or were murdered and bloodshed ensued. In 1991, El Mayo and El Chapo refused to pay the Arellano Felix brothers to move cocaine through Tijuana. Shootouts followed at the Christine disco in Puerto Vallarta and then most famously at the Guadalajara airport where Cardinal Posadas was killed. Also in 1991, the soldier-turned-trafficker Oliverio Chavez Araujo, refused to pay the Gulf cartel to move cocaine through Tamaulipas. The cartel sent in a gang of federal cops into Matamoros prison and shot 20 of his supporters.

In 1998, agreements again broke down. The Sinaloans refused to pay either the Gulf or the Tijuana cartels to bring cocaine through their areas. The Tijuana cartel, in return, refused to pay the Sinaloans to move marijuana through theirs. In Ensenada, the Tijuana cartel murdered an entire family in the El Rodeo ranch outside Ensenada. The following year the Gulf cartel’s enforcers, the Zetas, rolled tanks of gas into Sinaloa operator’s house in Ciudad Camargo and took out half a block.

These conflicts presaged the large set-piece battles between cartels in Nuevo Laredo from 2004-5 and Ciudad Juárez from 2007-11 when the drug war escalated to catastrophic levels. These conflicts were essentially over who had the monopoly of the plazas and the protection rackets from controlling them. One cartel was demanding money for drug transit, and the other was refusing to pay.

Emilio Ramírez, a former police detective in Chihuahua, who worked for the Juarez Cartel described it in a 2020 trial. “One of my main responsibilities is to safeguard the plaza in Ciudad Juárez, as well as the state of Chihuahua, to make sure that other cartels wouldn't go try to come and sell, export, or pass drugs through Juárez,” he told the court. “Because nobody was allowed to sell cocaine except for the Juarez Cartel.”

The new cartel armies also discretely took out independent traffickers. In Ciudad Juárez, a hitman interviewed for a book edited by Charles Bowden and Molly Molloy said, “There were times when many people made mistakes and tried to traffic independently.” In response the cartel would “take all of the cargo and kidnap all of the guys carrying it… who would then end up buried in more graves in one of the many clandestine cemeteries in this city.”

Phase III: Shake Down Everything

By the turn of the millennium, Mexico’s cartels essentially played two roles. First, they put together deals between wholesale drug buyers, chemists, and smugglers to move drugs into the United States. Second, they ran small armies which checked that rival networks or independent traffickers didn’t move product through their turfs. They played, in short, the roles of both Mafia and trafficker.

Yet, the criminal takeover of protection rackets was not complete. Federal and state police units still shook down non-trafficking criminals. In Morelos, for example, the head of the state police, Armando Martínez Salgado protected the state’s kidnappers in return for a cut of the profits throughout the 1990s. In Mexico City the capital’s cops (dubbed by some The Brotherhood) ran the protection racket for smuggled goods and drug selling in the barrio of Tepito well into the 2000s.

The group which finally wrestled control of all the protection rackets from the control of the state were the Zetas. Around 1998, the new head of the Gulf cartel Osiel Cárdenas started to employ former soldiers from the Mexican army’s special forces as his personal bodyguards. Unlike the traffickers, these Zetas did not come from a background in drug growing (like the Sinaloa cartel) or drug smuggling (like the Gulf operatives). In fact they knew very little about drugs at all.

The Zetas came from inside the security forces of the state. What they did know what to do was run a protection racket. So in the 2000s, they moved down the Gulf cartels trafficking routes, in Tamaulipas, Veracruz and Campeche, then into Michoacán and took over the remaining rackets. Units of Zetas descended on the principal cities. They met the local car thieves, the illegal loggers, the CD and DVD pirates, the housebreakers, the kidnappers, and the local policemen, who had previously taken a cut of such businesses. They now ordered these groups to pay the Zetas a monthly fee. Those that refused were killed.

The scheme was quick, efficient, and brutal. In 2007, for example, Zetas arrived in the commercial center of Torreón. They immediately kidnapped a local police chief and filmed him listing the city’s illegal enterprises. The chief was never seen again. They then sent a letter—together with the film—to local business representatives. Anyone the police chief mentioned was now ordered to pay off the Zetas. Those that refused were threatened with “irreversible consequences.”

The Zetas also started to shake down legal businesses. Again, this had a precedent in the Mexican state. Cops had often forced poorer entrepreneurs to give fees in order to prevent the thieves they controlled from robbing their businesses. In Mexico City in the early 1980 the police chief, Arturo “El Negro” Durazo was famous for it. But this time it was much more vicious.

The Zetas tracked down shopkeepers, farmers, and small business owners and demanded that they also pay their quota. These were often small— between 200 and 500 pesos. Yet they could build up, especially after the economic crash of 2008. Burly men armed with semiautomatics now visited car mechanics in small-town Michoacán and taxi drivers in Veracruz. A cantina owner in Oaxaca City described to me how they came to him in the middle of the night and demanded a cut of the profits. “If not, they said they would kill my wife and my children,” he said. “Then they would kill me. I knew they weren’t joking. They had already disappeared a lot of others.”

Where the Zetas led, the other cartels followed. Anthropologist Natalia Mendoza describes how the Sinaloa cartel moved into human smuggling in Sonora’s Altar region around 2005. The routes were privatized. Polleros or smugglers were now forced to pay cuotas to the cartel rather than the municipal police.

By the 2010s, protection rackets were endemic across Mexico and they have continued to expand in the 2020s. Some smaller organizations rely on protection as their main income, having lost out to tumbling demand for marijuana and heroin and having no links either to Asian chemical producers or border smugglers. But even the Sinaloa cartel now takes a taste. Last year Damaso López Serrano aka “El Mini Lic” alleged that the Chapitos were earning money from protecting the Culiacán cock-fighting ring, the casino, the junkyards, the brothels, pirated music sellers, and the operators of slot machines. They are not just drug traffickers but regional Mafiosi.

The situation continues to be unstable. Protection rackets could be affecting millions of regular citizens. When the Mexican state fails to protect people, it loses legitimacy, which can have serious consequences. The shake downs could provoke new uprisings like those from the vigilantes in Michoacán and Guerrero. A fourth phase of Mexico’s evolving rackets could be even bloodier still.

Photos 1,2,4,5 by Erik Camargo

Edited by Ioan Grillo

Copyright Benjamin T. Smith and CrashOutMedia 2024