News In Brief

Postcard from Monterrey, Mexico

Jeff Tyler Feb 2, 2011

This restaurant in Monterrey, Mexico, specializes in BBQ goat and fresh blood soup.

Monterrey — Mexico’s third largest city — looks a lot like southern California. Strip-malls house familiar names, like Chili’s and Starbucks, Office Max and Bally Total Fitness.

The city is also home to some massive multi-national corporations. It’s traditionally been one of the Mexico’s richest and safest cities. But these days, things are all turned around.

Last summer, Hurricane Alex damaged the roads, so now even long-time residents get confused by all the redirections and detours.

At least as disruptive — the increase in violent crime. Like much of northern Mexico, Monterrey has been caught in the crossfire as drug-lords battle for territory. Last year, drug-related violence claimed more than 15,000 lives in Mexico.

While I was in town, I asked everyone I met if the violence had affected them directly.

A taxi driver told of being car-jacked at gun point. Police later recovered his car with two corpses in the trunk. Another man saw two federal policemen killed in a shootout.

But for most Monterrey residents, the insecurity is experienced on a more psychological level.

People are afraid to go out at night. Business is down for taxis, restaurants and nightspots as folks choose to stay home. Anecdotal evidence suggests that one of the few businesses to benefit from the security problem is Blockbuster. The video chain has stores all over the city.

Drug dollars also have a more insidious impact. In the small towns outside Monterrey, drug-lords have tried to buy community support through economic development. They build new schools. Or a new church. It’s good PR. A way to say, ‘What has the government done for you? At least we care.’

But in some of the poorer neighborhoods in Monterrey, gangs are resorting to more than persuasion. According to locals, cartel recruiters go door to door and conscript young men. They can either work for the drug cartel, or their whole family will suffer.

And drugs are no longer the sole business. Some criminal gangs have expanded into kidnapping and extortion.

With this insecurity, I had expected more folks would have invested in armored cars. In another city I’ve visited — Sao Paulo, Brazil — even people who aren’t rich are routinely kidnapped for ransom. But in Monterrey, there is an ironic wrinkle. Drug kingpins prize armored cars. So, instead of protecting you, that armor could make you a target.

Sounds pretty bleak, right? Well, people in Monterrey don’t act like this is the new normal. More like they’re living through the eye of the storm. And just like the hurricane, residents expect this dark cloud of violence will pass too.

And there are some reasons to be optimistic.

Mexican police have killed or arrested many of the drug cartel leaders. And the increase in kidnapping suggests to some that the cartels are making less money from drugs and desperate for new sources of income.

The country is in the midst of changing its criminal justice system. The trial process is shifting from written to oral arguments. Considering that people in the drug trade arrested under the old system had a 97% chance of avoiding jail, Mexicans have high hopes for the reform.

President Calderon has proposed dissolving Mexico’s corrupt municipal police forces. He wants to replace them with new, better trained state police.

Mexico has also changed some finance rules, opening the door to venture capital. Historically, Mexican entrepreneurs have not had access to the seed capital needed to launch start-ups. The new rules could spur growth in new companies. And that means new jobs – alternatives for the unemployed young men recruited to work for the cartels.

According to one businessman in Monterrey, the insecurity is expected to knock a whole percentage point off GDP. That would still leave Mexico with 3-4% growth this year.

Some American investors look at Monterrey and don’t see havoc. They see opportunity. I met one businessman who is so confident in the region’s potential that he recently moved here with his wife and young kids. His grandparents had been chased out of Mexico by Pancho Villa. He’s determined not to let it happen again.

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