Mexico’s Drug War and Neoliberal Energy Reforms Could Be Good for Business, Especially Mercenary Companies

Mexico’s Drug War and Neoliberal Energy Reforms Could Be Good for Business, Especially Mercenary Companies

Mexico

A military parade commemorates independence in Mexico, Sept. 16, 2015. Source: Presidencia de la República Mexicana

The rapid growth of organized crime in Mexico and the government’s response to this phenomenon have caused unprecedented levels of violence and furthered major structural economic changes, including the recent passage of energy reform. My new book titled Los Zetas Inc.: Criminal Corporations, Energy, and Civil War in Mexico (University of Texas Press 2017) asserts that “these phenomena are a direct and intended result of the emergence of the brutal Zetas criminal organization”(1) and the corporate business model they have advanced in Mexico. Since the Zetas share some characteristics with legal transnational businesses that operate in the energy and private security industries, I also compare this criminal corporation with major conglomerates such as Exxon Mobil, Halliburton, and Blackwater (renamed “Academi” and now a Constellis company).

Combining vivid interview commentary with in-depth analysis of organized crime as a transnational and corporate phenomenon, my new book “proposes a new theoretical framework for understanding the emerging face, new structure, and economic implications of organized crime in Mexico.”(2) Arguing that the armed conflict between criminal corporations (like the Zetas) and the Mexican state resembles a modern civil war, I was able to identify key beneficiaries of this armed conflict, such as energy corporations, private security firms, transnational financial companies, and the U.S. border-security/military-industrial complex. In fact, the consequences of Mexico’s drug war have to do with a redistribution of territory and revenues towards economic activities that would essentially benefit transnational corporate capital, particularly extractive industries and global security contractors. This commentary will focus on security contractors.


“With new players in the industry, private investors might pressure for the approval of new legislation that would allow the participation of foreign private security firms.”


Transnational criminal corporations like the Zetas can be compared to big conglomerates such as Constellis, which is the is the largest and most diverse provider of risk management services and provides, among others, private security services. This corporate group includes a company once named Blackwater, which has been one of the U.S. government’s biggest providers of training and security services. In 2009 Blackwater changed its name to Xe Services as part of a company-wide restructuring plan and in response to a series of scandals. In 2010 a group of private investors purchased Xe’s main assets and created a new company named Academi. The services provided by Blackwater-Xe-Academi resemble some of the Zetas’ main functions, such as the provision (although illegal) of protection services. What is more, a group like the Zetas might need the services of a firm like Academi if its training capacities fall short or if it wishes to expand its operations.

Mexico’s drug war seems to promote “private security businesses and is part of a set of contract schemes that include consulting services, training, and the massive sale of weapons.”(3) These services can be offered to criminal groups, as well as to private companies and law enforcement agencies. In drug war times and in the context of the advancement of Mexico’s energy reform, the role of private security contractors can be quite prominent. In fact, the “consolidation of energy reform and the development of key energy projects require visible improvements with regard to security in strategic and still very violent regions. Alternatively, those private transnational energy firms eyeing Mexico’s energy markets might end up hiring private security … With new players in the industry, private investors might pressure for the approval of new legislation that would allow the participation of foreign private security firms.”(4)

In situations of high risk and violence, transnational energy companies and oilfield services firms have coexisted with private security conglomerates. Companies like Exxon Mobil, Shell, Halliburton, Schlumberger, Academi, and Triple Canopy (the last two are Constellis companies) have worked closely in a number of extremely violent zones, including the Middle East. They might also collaborate in Mexico “if the security situation does not visibly improve in the near future.”(5) After a so-called drug war, “private security contractors might be the new players in Mexico’s pacification process,”(6) which takes place after violent armed conflicts or wars that involves actions to return to normality such as disarming groups, reforming the police, and dealing with criminal cells. “The current legal framework might need to be modified in order to accept the participation of foreign private security contractors bearing arms in Mexico, but this is [indeed] a possibility.”(7)


“It seems plausible that foreign security contractors will enter Mexico’s market as oil, gas, and oilfield service companies ramp up their operations.”


It is certainly “plausible that foreign energy companies will invest in and enter the Mexican market even with the extended presence of irregular armed actors in violent zones … This will depend of course on the future trends of world oil and gas prices.”(8) In fact, recent experience in Iraq shows that some transnational energy companies “are willing to do business in violence-plagued areas if the reserves and the potential gains from [hydrocarbon extraction] seem to justify the risks.”(9) This reality demonstrates that “in a context of high hydrocarbon prices, violence and insecurity would not be an issue for energy investors.” Hence, while transnational energy firms “would prefer stable operating environments, they are no stranger to conflict zones and have experience in mitigating risks and violence, and are willing to pay a lot of money for private security.”(10) In the current context, and if market conditions are optimal, “new and potential investors in Mexico’s energy sector might call for private security.”

At this point, it seems that recent government efforts to secure economic interests have been “insufficient to assure the levels of security that many companies would want before taking big risks.”(11) On the other hand, “global trends seem to promote the privatization of security.”(12) There is then a possibility that Mexico will involve the private sector in future “pacification attempts” after the drug war, as it has happened in some regions of Iraq, where some key companies have “made money off the war by providing support services as the privatization of what were former U.S. military operations rose to unprecedented levels.”(13) Reliance on security contractors is a trend observed in the United States and other parts of the world. Therefore, “it seems plausible that foreign security contractors will enter Mexico’s market as oil, gas, and oilfield service companies ramp up their operations.”(14) This emerged in Mexico as a result of the paramilitarization of organized crime, militarization of security, and the opening of Mexico’s energy sector to private investment. In other word, this all took place as a response to the creation of a brutal transnational criminal corporation: Los Zetas Inc.

Dr. Guadalupe Correa-Cabrera is Associate Professor at the Schar School of Policy and Government, George Mason University and Global Fellow at the Woodrow Wilson International Center for Scholars.

Copyright, Upside Down World. May not be reprinted without permission.

Endnotes

1. Los Zetas Inc., back cover.

2. Los Zetas Inc., back cover.

3. Los Zetas Inc., 229.

4. Los Zetas Inc., 229.

5. Los Zetas Inc., 255.

6. Los Zetas Inc., 255.

7. Los Zetas Inc., 255.

8. Los Zetas Inc., 255.

9. In “American Media Misses the Story on Mexican Oil Reform” by Shannon Young (2014). Texas Observer, February 10.

10. In “Why Success of Mexico’s Oil Security Plan May Not Matter” by Arron Daugherty (2015). InSight Crime, February 3.

11. Los Zetas Inc., 255.

12. Los Zetas Inc., 255.

13. In “And the Winner for the Most Iraq War Contracts Is . . . KBR, With $39.5 Billion in a Decade” by Angelo Young (2013). International Business Times, March 19.

14. In “Contractors Reap $138bn from Iraq War” by Anna Fifield (2013). Financial Times, March 18.

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