Summary
The Mexican government is taking steps to limit the effect of instability on critical infrastructure that is vital to the functioning of the country's economy. On Nov. 3, the government sent the military to take over security at one of Mexico's most important ports, Lazaro Cardenas in Michoacan state. In addition, due to complaints of collusion, the military disarmed the Lazaro Cardenas municipal police and submitted them and select customs officials to background checks and training.
The military's deployment is part of a larger trend unfolding over the past year in which the federal government is becoming increasingly concerned with instability in the western state of Michoacan. Insecurity has been a perennial issue in Michoacan, but intercartel violence and the emergence and proliferation of community vigilante groups have exacerbated existing problems.
Analysis
Security in Michoacan state has become more precarious in 2013. Organized crime-related violence and increased social unrest, partly in response to rampant crime, have brought about the creation of citizen-organized militias, commonly referred to as community police. The competition between two criminal groups, the Cartel de Jalisco Nueva Generacion (based out of neighboring Jalisco state) and the Knights Templar (the dominant group in Michoacan), has greatly contributed to rising violence. Moreover, the expanding presence of community police has intensified violent conflicts with the criminal groups and resulted in periodic challenges to government control. These issues have largely been contained within the interior of Michoacan and, at times, in the outskirts of Lazaro Cardenas. Even then, insecurity has not threatened economic activity at the Lazaro Cardenas port.
However, as many as 1 million Michoacan residents were left without electricity for several hours Oct. 27 after gunmen attacked several facilities belonging to the state-owned Federal Electricity Commission (commonly known by its Spanish acronym, CFE) in addition to several Petroleos Mexicanos gasoline stations. Among the facilities attacked were electric substations providing residents and businesses in their respective areas with power. While there have been no official statements attributing the attacks to a specific group, the attackers are likely affiliated with the most powerful organized crime group operating in Michoacan, the Knights Templar.
Aside from attacks on military, law enforcement and politicians, Mexican organized crime has thus far generally avoided directly targeting government-owned infrastructure. For this reason the Oct. 27 attack is very troubling for Mexico City. It signals that crime groups in Michoacan are willing and able to attack economic infrastructure. The specific intent behind the attacks on CFE's facilities remains unknown, but it is clear now that important infrastructure is not off limits. Shortly after the attacks, the government intervened in Lazaro Cardenas to show its control and prevent the spread of violence to the all-important trade hub.
Mexico's Military Intervenes in MichoacanThe port of Lazaro Cardenas is significant for a number of reasons. First, as China has emerged over the past decade, the Pacific port has become Mexico's largest by volume (excluding oil) and the fastest-growing port in North America. In addition to serving as an import hub for Chinese goods and materials, which supply the domestic consumer market, the manufacturing core in the Bajio and the United States, it is also becoming a platform for Mexico to export to both Asia and the Pacific coast of the Americas. The Kansas City Southern de Mexico railway, also known as the NAFTA railway, connects the port with the emerging manufacturing core in central Mexico and with the United States through the Laredo border crossing. It is also a potential alternative to occasionally bottlenecked North American West Coast ports and the Panama Canal for shippers looking to access Midwest and East Coast markets.
These dynamics have led to significant investment over the past few years, further increasing the port's significance to Mexico's economy. In December 2011, APM Terminals, an affiliate of AP Moller-Maersk, won a $900 million concession to design, finance, build and operate a container terminal in Lazaro Cardenas to double container capacity. The first of four phases of the project will be completed in 2015. The port also received a $38 million investment from SSA Mexico, a subsidiary of Carrix, to build a terminal for automobile exports, the first batch of which was shipped to Latin America. The fact that the port of Lazaro Cardenas is the only Mexican port deep enough to handle post-Panamax vessels will further increase its importance as the Panama Canal expansion is completed and the overall size of the global shipping fleet continues to grow.
By cleaning out corrupt elements and securing the Lazaro Cardenas port, the Mexican government is trying to prevent what happened to CFE from happening at the port. Having the military in control of security also ensures a faster and more prepared response to any violence on the scale of the attacks against the CFE facilities. However, Mexico City has used the military as a complete replacement for local law enforcement in several other areas, particularly in cities in Tamaulipas state, something that often triggers upticks in low-level crime. Because the military has little interest or experience in dealing with low-level criminal activity such as robberies, assaults, extortion or even kidnapping, criminals unaffiliated with wider-reaching organized crime may enjoy impunity.
Nevertheless, the Mexican government has bigger concerns. It has struggled thus far to improve the security climate in Michoacan, but it can at least try to contain the impact to the regional level.
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