Peter Zeihan here. Coming to you from Colorado, it is the 23rd of February. And the big
news over the weekend is that yesterday the Mexican government, using some Intel from
the United States, tried to capture a guy by the name of Al Menchu, who was one of the
drug kingpins in Mexico. He got shot up, and then he died on an air evac to Mexico City.
I'll mention Meadows because he is the leader. Or was the leader of one of the greatest
drug smuggling organizations in human history, a group known as ESCO New Generation,
or more simply, the Healthscope cartel. Let me give you a bit of the backstory. Then we'll
talk about where we're going. So after the United States decided in the 80s that it really
liked cocaine, we saw a change in enforcement.
It used to be that most of the stuff came in through the Caribbean to a place like Miami,
and then the rest of the country. That's where literally we got the stories that go into the
show. Miami Vice. But eventually the United States increased its interdiction in that path,
and so the drugs instead were smuggled by sea and by air into Central America and then on
land through Mexico up to the US border, where they would cross at the various plazas
where it happened to be Brownsville or El Paso or San Diego.
And then for future distribution north of the border. What that meant is we had a country
with a lot of mountains that was serving as a transit system. And so what would happen is
organized crime. And each little town along each little road would take a little piece of that
smuggling route was a little bit like the Silk Road back in the day a thousand years ago.
And eventually they would use that to try to expand their networks up and down their
mountain valley and then bigger and bigger and bigger and merge with other groups to feed
other groups, absorb them. And eventually we were left with three very broad coalitions
known as the Zetas, the Sinaloa Cartel, and then later, that was the last one to develop was
the wholesale cartel in this process.
So the cartels became more and more powerful, more and more economically viable, and
a greater and a greater threat to the Mexican state. And the Mexican state knew that it
couldn't fight all of them at the same time. So it would start to unofficially ally with some of
them against the others. And the first big ally was the Sinaloa Cartel, and the first big
enemy was the Zeta cartel.
And over the course of several years of collaboration between the government and one of
the big three, we basically had the disintegration of the Zetas as a political and economic
force. And even to this day, it's a very, very loose grouping at most. Really, what you have
are dozens or really hundreds of groups that are at one another's throats, fighting over the
remnants of what used to be one of the big Three empires.
The guy on the Sinaloa side who took advantage of this was a guy by the name of El Chapo,
and he went on to form the largest organized crime group in human history and the Sinaloa
Cartel, and expanded north of the American border. And it started interfacing directly with
the drug distribution systems in our country, and eventually wiped out a lot of the black
and white gangs in the countries and allied with the Hispanic gangs to take over
distribution.
They also, spread horizontally into related industries like kidnaping and extortion and
protection rackets, fuel theft, cargo theft and all the rest. And that lasted until during the
Obama administration years, collaboration with the Mexican government captured El
Chapo. He then escaped and we captured him again. And he is now serving multiple
consecutive life sentences in the American prison system.
This is the guy who was like, shocked, shocked that when he publicly offered the American
judge a bribe, that the judge said no and he just didn't know how to process. That was kind
of funny, actually. Anyway, that left this remaining group Politico. Now, the big difference
between who and what came before is basically approach. So Sinaloa under El Chapo was
more or less like a conglomerate.
They basically made it clear to their members that you don't fight one another, you don't
wear your sleep, you don't steal purses from little old ladies. We are drug smugglers, and
that is our core business. And why we can and we will diversify. You do not alienate the
people in the places in which you live. So there are still ballads sung in the part of Mexico
where the Sinaloa was in charge, but mostly the northwest, about the good times, the
golden age of Sinaloa.
But since El Chapo fell, his sons Los Chapitos, his former accountant, El Mayo, basically,
they've gone into a civil war and now the Sinaloa portion of the gang networks, if you will, is
actually more violent than anything we ever saw with the Zetas. They're basically in a state
of civil war, with Sinaloa state being ground zero for it.
And it has once again made Mexico the murder capital of the world, because we no longer
have a single authorities think a single political structure that's running the whole thing.
Everyone's fighting for their own little piece. That's about what we're going to see with the
whole Osco Cartel with Alimentos Fall. But it's going to be a lot worse because while El
Chapo and the Sinaloa were a single unified confederation, if you will, you had a very
different management theory when it came to El mentioned in the police go for them.
The shit was the point. So the first thing they did when they moved into a new city after
getting rid of the other cartels, is they kill the police chief in his office. They'd go after the
church, they'd go after anyone who they thought might look at them weird sometimes just
cause their ideas. They wanted everyone to be so terrified of them that they would never
even considering standing against them.
It's very different from the bribe in hearts and minds strategy that El Chapo followed. I'm
not trying to say El Chapo was a nice guy, still a mass murderer, but El Menchu like, reveled
in the blood. And now that he's gone, we have an institution that he created with
paramilitary tactics and is basically said, you know, kill anyone who might theoretically get
in your way, and then maybe five people on the side just to be sure.
With him gone, that pressure cooker is now going to explode. And we're already seen in
telescoped state, which is down to the south of the country, just south of Mexico City. A
Puerto Vallarta area, is already on fire because the people who used to pay homage to El
Chapo are basically burning vehicles and stores, and anyone that if ever had a gripe with.
And it's only going to be a matter of probably days before his lieutenants and the people
who run these, some of these regional operations start to try to grab that piece of the
operation for themselves, like we've seen with Sinaloa, but with a much, much, much
higher tolerance for violence. So we're now in a situation in Mexico where there is no single
coalition that used to run an entire territory.
They've all broken into dozens, hundreds, maybe thousands of pieces. Throw fentanyl into
the mix of that which you can synthesize in a lab, as opposed to having an agricultural
supply chain that stretches back to the South American continent. And we're also one of
the things people forget about the cartels is it's not just methamphetamines or fentanyl or
cocaine and maybe some pot anymore.
They have spread into all kinds of classic organized crime groups, and each of those
individual groups is going to want to have autonomy over any sort of central control. So we
are looking at a significantly more violent Mexico moving forward for the next several years,
until one of three things happens. Number one, we have something like happened the first
time, and we get a consolidation of these groups into big umbrella organizations like the
Lesko, like the Zetas, like Sinaloa.
Number two, somehow, somehow, the Mexican state is able to insert themselves into the
chaos and provide people, especially in the poorer areas, the more rural areas, an option
that for them is far more attractive than collaborating with organized crime. Considering
the amount of fear that these cartels can generate, especially the telescope. That's a really
tall order, or number three, and this is my preferred solution.
Don't do cocaine, because if you can rob the cartels of that income, then a lot of the rest of
their logic goes away. And they're just normal crime groups that you can break one at a
time, as opposed to having this broad geography spanning logistics network that naturally
accrues into a larger organization. Food for thought.
news over the weekend is that yesterday the Mexican government, using some Intel from
the United States, tried to capture a guy by the name of Al Menchu, who was one of the
drug kingpins in Mexico. He got shot up, and then he died on an air evac to Mexico City.
I'll mention Meadows because he is the leader. Or was the leader of one of the greatest
drug smuggling organizations in human history, a group known as ESCO New Generation,
or more simply, the Healthscope cartel. Let me give you a bit of the backstory. Then we'll
talk about where we're going. So after the United States decided in the 80s that it really
liked cocaine, we saw a change in enforcement.
It used to be that most of the stuff came in through the Caribbean to a place like Miami,
and then the rest of the country. That's where literally we got the stories that go into the
show. Miami Vice. But eventually the United States increased its interdiction in that path,
and so the drugs instead were smuggled by sea and by air into Central America and then on
land through Mexico up to the US border, where they would cross at the various plazas
where it happened to be Brownsville or El Paso or San Diego.
And then for future distribution north of the border. What that meant is we had a country
with a lot of mountains that was serving as a transit system. And so what would happen is
organized crime. And each little town along each little road would take a little piece of that
smuggling route was a little bit like the Silk Road back in the day a thousand years ago.
And eventually they would use that to try to expand their networks up and down their
mountain valley and then bigger and bigger and bigger and merge with other groups to feed
other groups, absorb them. And eventually we were left with three very broad coalitions
known as the Zetas, the Sinaloa Cartel, and then later, that was the last one to develop was
the wholesale cartel in this process.
So the cartels became more and more powerful, more and more economically viable, and
a greater and a greater threat to the Mexican state. And the Mexican state knew that it
couldn't fight all of them at the same time. So it would start to unofficially ally with some of
them against the others. And the first big ally was the Sinaloa Cartel, and the first big
enemy was the Zeta cartel.
And over the course of several years of collaboration between the government and one of
the big three, we basically had the disintegration of the Zetas as a political and economic
force. And even to this day, it's a very, very loose grouping at most. Really, what you have
are dozens or really hundreds of groups that are at one another's throats, fighting over the
remnants of what used to be one of the big Three empires.
The guy on the Sinaloa side who took advantage of this was a guy by the name of El Chapo,
and he went on to form the largest organized crime group in human history and the Sinaloa
Cartel, and expanded north of the American border. And it started interfacing directly with
the drug distribution systems in our country, and eventually wiped out a lot of the black
and white gangs in the countries and allied with the Hispanic gangs to take over
distribution.
They also, spread horizontally into related industries like kidnaping and extortion and
protection rackets, fuel theft, cargo theft and all the rest. And that lasted until during the
Obama administration years, collaboration with the Mexican government captured El
Chapo. He then escaped and we captured him again. And he is now serving multiple
consecutive life sentences in the American prison system.
This is the guy who was like, shocked, shocked that when he publicly offered the American
judge a bribe, that the judge said no and he just didn't know how to process. That was kind
of funny, actually. Anyway, that left this remaining group Politico. Now, the big difference
between who and what came before is basically approach. So Sinaloa under El Chapo was
more or less like a conglomerate.
They basically made it clear to their members that you don't fight one another, you don't
wear your sleep, you don't steal purses from little old ladies. We are drug smugglers, and
that is our core business. And why we can and we will diversify. You do not alienate the
people in the places in which you live. So there are still ballads sung in the part of Mexico
where the Sinaloa was in charge, but mostly the northwest, about the good times, the
golden age of Sinaloa.
But since El Chapo fell, his sons Los Chapitos, his former accountant, El Mayo, basically,
they've gone into a civil war and now the Sinaloa portion of the gang networks, if you will, is
actually more violent than anything we ever saw with the Zetas. They're basically in a state
of civil war, with Sinaloa state being ground zero for it.
And it has once again made Mexico the murder capital of the world, because we no longer
have a single authorities think a single political structure that's running the whole thing.
Everyone's fighting for their own little piece. That's about what we're going to see with the
whole Osco Cartel with Alimentos Fall. But it's going to be a lot worse because while El
Chapo and the Sinaloa were a single unified confederation, if you will, you had a very
different management theory when it came to El mentioned in the police go for them.
The shit was the point. So the first thing they did when they moved into a new city after
getting rid of the other cartels, is they kill the police chief in his office. They'd go after the
church, they'd go after anyone who they thought might look at them weird sometimes just
cause their ideas. They wanted everyone to be so terrified of them that they would never
even considering standing against them.
It's very different from the bribe in hearts and minds strategy that El Chapo followed. I'm
not trying to say El Chapo was a nice guy, still a mass murderer, but El Menchu like, reveled
in the blood. And now that he's gone, we have an institution that he created with
paramilitary tactics and is basically said, you know, kill anyone who might theoretically get
in your way, and then maybe five people on the side just to be sure.
With him gone, that pressure cooker is now going to explode. And we're already seen in
telescoped state, which is down to the south of the country, just south of Mexico City. A
Puerto Vallarta area, is already on fire because the people who used to pay homage to El
Chapo are basically burning vehicles and stores, and anyone that if ever had a gripe with.
And it's only going to be a matter of probably days before his lieutenants and the people
who run these, some of these regional operations start to try to grab that piece of the
operation for themselves, like we've seen with Sinaloa, but with a much, much, much
higher tolerance for violence. So we're now in a situation in Mexico where there is no single
coalition that used to run an entire territory.
They've all broken into dozens, hundreds, maybe thousands of pieces. Throw fentanyl into
the mix of that which you can synthesize in a lab, as opposed to having an agricultural
supply chain that stretches back to the South American continent. And we're also one of
the things people forget about the cartels is it's not just methamphetamines or fentanyl or
cocaine and maybe some pot anymore.
They have spread into all kinds of classic organized crime groups, and each of those
individual groups is going to want to have autonomy over any sort of central control. So we
are looking at a significantly more violent Mexico moving forward for the next several years,
until one of three things happens. Number one, we have something like happened the first
time, and we get a consolidation of these groups into big umbrella organizations like the
Lesko, like the Zetas, like Sinaloa.
Number two, somehow, somehow, the Mexican state is able to insert themselves into the
chaos and provide people, especially in the poorer areas, the more rural areas, an option
that for them is far more attractive than collaborating with organized crime. Considering
the amount of fear that these cartels can generate, especially the telescope. That's a really
tall order, or number three, and this is my preferred solution.
Don't do cocaine, because if you can rob the cartels of that income, then a lot of the rest of
their logic goes away. And they're just normal crime groups that you can break one at a
time, as opposed to having this broad geography spanning logistics network that naturally
accrues into a larger organization. Food for thought.
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