Geopolitical Monitor – Mexico Country Risk

by Olivier on January 19, 2009

I come across these kind of news related to Mexico more often lately.
This goes to show you should closely monitor what kind of country risk the mining stocks you are in are exposed to.
Stay nimble.

Mexico in danger of “sudden collapse”

January 16, 2009 ( – America may be forced to intervene in Mexico to prevent the country’s “rapid and sudden collapse” at the hands of organised crime and drug cartels, according to the US army.

A report on the “Joint Operating Environment”, compiled by the army’s high command, places Mexico alongside Pakistan as a possible failed state of the future. America, which shares a 2,000 mile border with Mexico, would be the obvious destination for massive refugee flows if its neighbour descended into civil war.

President Felipe Calderon has deployed Mexico’s army in a new offensive against organised crime. This battle against four major drug cartels, along with a myriad of local syndicates, claimed the lives of 5,367 members of the security forces or suspected criminals last year alone.

“Two large and important states bear consideration for rapid and sudden collapse: Pakistan and Mexico,” reads the US army’s report.

“The Mexican possibility may seem less likely, but the government, its politicians, police and judicial infrastructure are all under sustained assault and pressure by criminal gangs and drug cartels. How that internal conflict turns out over the next several years will have a major impact on the stability of the Mexican state.”

Mexico, with a population of 110 million, provides America with more migrants than any other country. It also lies astride the crucial smuggling routes linking the US with the drug-growing areas of South America, notably Colombia, which remains the world’s biggest source of cocaine.

If Mexico became a failed state, millions would flee across the northern border and organised crime gangs would have a secure base from which to penetrate America. This could leave Washington with little choice but to intervene, possibly by military means.

“Any descent by Mexico into chaos would demand an American response based on the serious implications for homeland security alone,” says the report.

Mexico’s crime gangs have retaliated for Mr Calderon’s offensive by targeting members of the security forces for murder. Dozens of soldiers have been beheaded. Many ordinary police officers and security officials accept bribes from the drug rings. This corruption, which may reach into the highest levels of the government itself, is a crucial factor obstructing Mr Calderon’s campaign. Ultimately, it may also have the effect of destroying the state itself.

The US army’s report stresses that countries can collapse very quickly, pointing to the example of Yugoslavia which broke up during the civil wars of 1991 – 95. “The collapse of Yugoslavia into a chaotic tangle of warring nationalities suggests how suddenly and catastrophically state collapse can happen – in this case a state which had hosted the 1984 Winter Olympics at Sarajevo, and which then quickly became the epicentre of the ensuing civil war.”

Mr Calderon won Mexico’s presidency by a tiny margin of less than one per cent during a controversial election held in July 2006. Despite this slender mandate, he has made the fight against organised crime the central goal of his leadership.

Have a great evening!

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