Pubdate: Mon, 30 Aug 2010
Source: Business Week (US)
Copyright: 2010 The McGraw-Hill Companies, Inc.
Contact: http://www.businessweek.com/custserv/letters.ed.htm
Website: http://www.businessweek.com/
Details: http://www.mapinc.org/media/753
Author: Jens Erik Gould, BW Magazine
Bookmark: http://www.mapinc.org/topic/Mexico
Bookmark: http://www.mapinc.org/people/Felipe+Calderon

IN MEXICO, A CALL TO LEGALIZE DRUGS

Escalating Violence Is Forcing Mexican President Calderon to Open 
Discussion on a New Strategy to Fight Drugs: Legalization

A record number of homicides is forcing Mexican President Felipe 
Calderon to discuss a new strategy in his country's war on drugs: 
legalization. Calderon said for the first time earlier in August that 
he was willing to rethink measures to fight trafficking after the 
death toll in the war he started against the cartels in December 2006 
reached 28,000. In the latest atrocity, 72 bodies were found on Aug. 
25 at a remote ranch near the U.S. border.

Calderon's remarks have prompted a sharp debate inside policymaking 
circles in both Mexico and the U.S. Former Mexico President Vicente 
Fox and other Mexican politicians say that legalization would cut 
funding to gangs and boost government revenue, while Director of the 
White House Office of National Drug Control Policy R. Gil Kerlikowske 
argues that legalization wouldn't solve anything.

The chances of legalization right now are slim. What's important is 
that a once-unthinkable topic is being discussed. "It's a major shift 
in the public discourse," said David Shirk, a professor of Mexican 
politics at the University of San Diego. "The government recognizes 
the current strategy is unpopular and there may be other options."

Calderon's willingness to consider legalization, even while saying he 
disagrees with the approach, shows the deep fatigue Mexicans are 
feeling over the struggle to eradicate the gangs. The increase in the 
pace of killings has drawn comparisons with Colombia in the early 
1990s, when cocaine kingpin Pablo Escobar waged a war of terror on the state.

Local business is frustrated. On Aug. 18 business associations in the 
state of Nuevo Leon, which is home to the city of Monterrey, Mexico's 
commercial capital, took out an ad in the newspaper Reforma demanding 
that authorities act faster to stop the violence and urging that more 
troops be sent to the state. The business community was reacting to 
kidnapping and murder of Edelmiro Cavazos, a mayor of a town near 
Monterrey. Violence is the biggest threat to the Mexican economy, say 
57 percent of Mexican executives surveyed in July by Deloitte Touche 
Tohmatsu. Earlier this year billionaire Ricardo Salinas Pliego, who 
controls broadcaster TV Azteca and retailer Grupo Elektra, urged the 
legalization of drugs in the U.S. and Mexico.

The government estimates that narcotics trafficking saps one full 
percentage point from gross domestic product annually. Fox wrote on 
Aug. 8 on his website that "radical prohibition strategies have never 
worked" and that legalizing the production and sale of drugs would 
curb violence, thereby bringing in more tourists and attracting 
investment. In August, Jesus Ortega, head of the Party of the 
Democratic Revolution, the No. 2 opposition party, and Fox's former 
Foreign Minister, Jorge Castaneda, voiced support for legalization as 
well. Several proposals to legalize drugs have been submitted to 
Mexico's congress, although none is up for debate. Calderon, while 
willing to consider the merits of legalization, has said it would be 
"absurd" for Mexico to act alone.

What happens in the U.S. could affect the direction the debate takes 
in Mexico. Marijuana is the primary source of drug revenue for the 
cartels because of the ease of cultivation and high American demand, 
according to the U.S. Drug Enforcement Administration. The U.S. State 
Dept. estimates that Mexico's marijuana output rose 39 percent 
between 2006 and 2008.

Fourteen U.S. states have approved laws allowing pot for medical use. 
In November, California, the nation's largest state by population, 
will vote on a referendum that would make it legal to possess an 
ounce or less of marijuana and allow local governments to regulate 
and tax sales. "If more U.S. states legalize, Mexico will take that 
step." says Gabriel Casillas, chief economist at JPMorgan Chase (JPM) 
in Mexico City.

Kerlikowske, who oversees U.S. drug control policy, says that even if 
drugs were legalized, Mexico's gangs would still wreak havoc through 
such activities as kidnapping, extortion, and theft. "The people 
involved in trafficking are engaged in horrific acts of violence," he 
says. "They're not going to suddenly turn around and apply [for jobs] 
at IBM (IBM) or Microsoft (MSFT) because they lost one part of their 
criminal enterprise."

Mexico, which spends about $8.2 billion annually on law enforcement, 
would save between 5 percent and 15 percent of GDP if narcotics were 
legal in all countries, says Luis Rayo, a finance professor at the 
University of Utah who studies the drug trade. Those savings fall to 
as low as 1 percent if drugs were legalized only in Mexico, he says. 
"The ultimate solution is for all countries to simultaneously 
legalize and regulate the drug trade. Mexico cannot succeed with 
unilateral measures."

The bottom line: Mexico is publicly debating the idea of legalizing 
drug use to weaken the cartels. It would be an effective step only if 
the U.S. did the same. 
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MAP posted-by: Richard Lake