Confronting Drug Gangs in Central America

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Central America is the world's latest drugs hot-spot: up to 90% of the South American cocaine bound for the US now transits the region, most of it passing through the so-called 'northern triangle' of Guatemala, Honduras and El Salvador. The three countries are plagued by the highest peacetime murder rates in the world, as powerful cartels from Mexico have moved south into a region already destabilised by years of civil war, plagued by gangs and corruption, and with authorities too weak to control large swathes of territory. Ineffective tax regimes mean that governments have few resources with which to restore security.

With a bloody drug war raging in Mexico since 2006, drug-trafficking organisations have also become a de facto political power on the Central American isthmus, killing officials and levying 'war taxes' on people and businesses. In the northern triangle, the Sinaloa and Zetas cartels control most of the international trade while delegating transportation, killings and vendettas to smaller local gangs, including mafia-like families known as maras.

The combination of drug and street violence - the pattern of which differs slightly in each of the three northern triangle countries - has contributed to 33,000 homicides across Central America since 2010. Some of the violence in the region has been political. After the coup that ousted Honduran President Manuel Zelaya in 2009, for example, there have been assassinations of activists and journalists. However, the vast preponderance of murders has been at the hands of the cartels and maras.

The Zetas cartel is a relative newcomer to Central America, and its attempts to establish itself in a market long dominated by powerful families and the Sinaloa cartel, has ratcheted up the violence. Formed in the late 1990s by former members of Mexico's elite Airborne Special Forces Group, it is especially brutal. Whereas the Sinaloa has been open to negotiations with its trafficking partners and has provided social benefits such as jobs and health care for local communities, the Zetas cartel rarely negotiates. Its fighters are better-armed and more likely to resort to violence to resolve disputes.

The maras are another singular phenomenon. Founded in Los Angeles and other US cities by refugees from civil wars in El Salvador (1979-92) and Guatemala (1965-96), they became a scourge across the northern triangle after gang members were deported back to the region. Identified by members' prominent tattoos, gangs such as the Mara Salvatrucha (or MS-13) and the Mara 18 were already involved in murder, rape and extortion before becoming embroiled in the drug trade.

The drug-infested Mosquito Coast

To add to the equation, Central America's famous rainforests and jungles have offered safe havens for drug-trafficking groups. In particular, the remote and sparsely unpopulated La Mosquitia region, on the northern coast of Honduras, has become a major landing zone for illegal drug flights and a transhipment point for maritime and river vessels carrying drugs.

If Honduras's defence minister is correct that 87% of all cocaine entering the US goes via his country, up to 140 tonnes may follow this route. This has concerned Washington enough for it to announce a $2 million naval base (to be operated by Honduran forces) in the Bay Islands, just north of Mosquitia, and three forward bases across the country, to help stop trafficking. The US Drug Enforcement Administration also operates a Foreign-Deployed Advisory Support Team.

Between late April and mid-July 2012, the US mission to disrupt drug routes in Honduras, Operation Anvil, intercepted 2.3 tonnes of cocaine - a modest step forward from 2011. The US military says the disruption of the trafficking route is building stability in the region, but two deadly raids have already raised questions about the mission.

Across the border, much of northern Guatemala is in the hands of drug groups. Before the September 2011 elections, President Otto Perez Molina admitted that the cartels controlled parts of Peten, Alta Verapaz and Izabal departments, opening up a strategic corridor between Honduras and Mexico along Izabal's Caribbean coast. In May this year, the United Nations warned that the situation put Guatemala on the verge of becoming a narco-state.

Peten has become a recruitment and operational centre for Los Zetas - the group is thought to control up to 80% of the department, another large, densely forested region and home to just 3% of the Guatemalan population. Zetas operatives have taken mara members from across the region to Peten for training. The cartel has also tried to recruit members of the army, the police and the highly skilled Guatemalan special forces (the Kaibiles) to conduct such training. So keen are Los Zetas to attract special forces soldiers that they have advertised via a local pirate radio station. A deployment of 500 Kaibiles to Peten to fight drug-trafficking groups announced by the Defence Ministry this year was likely to be closely scrutinised, given the cartel's interest in them.

Salvadoran truce

Mara gangs wreak havoc across the region. In Honduras, for example, the Mara Salvatrucha extracts an estimated $28m a year in ‘taxes' from public transportation companies and taxi drivers in the capital, Tegucigalpa; about 500 schools are being forced to pay the tax as a guarantee of their security, especially in poor neighbourhoods.

However, they have the strongest association with El Salvador, with the Mara Salvatrucha (MS-13) established in the capital, San Salvador as early as 1992. The maras' influence in El Salvador is evidenced by the sharp drop in violence that followed a March 2012 truce between the two main groups - the MS-13 and Mara 18 - mediated by the Catholic Church. Since then, the country has marked its first murder-free day in nearly three years, but there are concerns about the truce's long-term viability, as some other criminal organisations, such as the Texis cartel, are not bound by it.

In fact, the Salvadoran government has reportedly lost control of large areas in the north of Santa Ana department north to the Texis cartel, whose members include lawmakers, police, mayors and thugs. The region forms part of a strategic route to the northern border with Guatemala.

Governments struggle to respond

Governments across the region have struggled to combat the cartels and gangs. As much as 90% of all crime in Central America in 2009 went unpunished: in Guatemala the figure stood at 96.5%. Governments have put soldiers on the streets and sent them to assist in fighting organised crime. However, they have focused on short-term measures, instead of addressing systemic failures in law-enforcement capacity. Police forces lack basic equipment and have been accused of being involved in arms and drugs trafficking. (Businesses and individuals have turned to private security as a result; there are an estimated 235,000 private guards in Central America, or three private guards for every police officer.)

In response to the growing violence, the governments of Honduras, Guatemala and El Salvador increased security spending by an average of 8.7% between 2006 and 2010. However, their ability to finance operations is limited by their ineffective tax regimes. Central American tax revenues, at 17.2% of GDP in 2010, are among the lowest in the world. (In fact, direct taxes accounted for only 4% of GDP in 2010; despite the fact that 47% of the Central American population lives in poverty, most fiscal revenue is derived from value-added tax on consumer goods). This leaves security forces dependent on sporadic international assistance. This has come predominantly from the US, even though Washington's counter-narcotics aid to Central America from 2008 to 2011 accounted for less than one-fifth of that directed to Mexico.

In 2011, then-Guatemalan president Alvaro Colom admitted to the Financial Times that his country's security forces were inadequately equipped, with many boats and aircraft dating from the Second World War. Guatemala's new Tecun Uman Task Force to patrol the Pacific Coast relies on vehicles and communications equipment donated by the US. Most of the region's air forces consist of Cessna A-37 A/B Dragonfly aircraft from the 1960s and 70s.

Honduras, the largest northern triangle economy, recently told the US it needed cutting-edge aircraft and radars, though it cannot afford to pay for them. It has shelved plans to buy four new Brazilian Embraer Super Tucano light fighter aircraft. In fact, the 2012 Honduran military budget includes no significant procurements, focusing instead on internal operations and support for the police. Similarly, El Salvador's defence minister, Jose Benitez, announced his country has temporarily abandoned plans to buy new light aircraft from Embraer and decided instead to restore existing Cessnas.

Washington's own budgetary constraints mean that security aid is unlikely to increase substantially in the near term. Even if it did, it would never be a complete answer. The bulk of US resources provided through the Central American Regional Security Initiative (CARSI) is spent on security-related equipment and training, when a broader range of institutions needs to be involved. Additionally, the US argues that CARSI's job is to implement pilot programmes, but that it is up to individual governments to fund nationwide initiatives afterwards.

Hard-fought tax reform

The three northern triangle states have taken steps in the past few months towards increasing their tax revenue, despite strong opposition from their business communities. In September 2011, the Honduran Congress approved a ‘security tax' on financial transactions; in December, El Salvador raised income tax rates by 5%; and in March this year, Guatemala increased income tax for those earning more than US$38,709 per year from 5% to 7%, meaning the state will collect an additional $637m in 2013 and 2014.

Although this is considered a step in the right direction by the Central American Institute for Fiscal Studies, such extra revenue is too small to have much impact on security. In Honduras, the National Association of Industries has suggested that the government planned to use most of the revenue to pay for social programmes. The general public shares this scepticism: 70% of the population believed the ‘security tax', aimed to collect $80m per year, was unlikely to improve security, according to a CID Gallup poll.

The countries of the northern triangle face a complicated crisis, requiring them to act on multiple fronts, improving the justice system and governance as well as security forces. Ultimately, they cannot effectively confront one of the most severe security crises in the world with one of the lowest rates of state revenue. The recent tax reforms in Honduras, Guatemala and El Salvador are likely to have more impact on fiscal deficits than on security. Insufficient external help and deep institutional fragilities mean that more ambitious tax reforms offer these countries the best chance to improve security.

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