Claudia Sheinbaum wants you to believe in a clean, convenient border.
When the Mexican President bristles at US intelligence reports claiming cartel influence has penetrated the highest levels of her administration, she is playing a tired, decades-old script. The official narrative is always the same: cartels are external, parasitic invaders. They are lawless bandits lurking in the mountains, fighting a heroic, albeit struggling, state. Meanwhile, you can explore other developments here: The Invisible Net Tightening Around Tehran.
It is a comforting bedtime story. It is also entirely wrong.
The lazy consensus peddled by mainstream media—and defended by political press secretaries on both sides of the border—is that we are dealing with a "weak state vs. strong criminals" dynamic. The reality is far more uncomfortable. Mexican drug cartels do not operate in spite of the state. They operate as a specialized, highly profitable wing of the state’s political and economic ecosystem. To explore the bigger picture, check out the recent report by NBC News.
To treat cartel violence as a mere law-and-order crisis is to fundamentally misunderstand how power, money, and sovereignty actually function in Latin America.
The Symbiosis They Cannot Admit
Let’s dismantle the premise of the outrage. When US intelligence suggests that Mexican government institutions are compromised, they are not revealing a sudden, shocking lapse in security. They are describing a feature, not a bug.
For over a century, Mexican politics and organized crime have maintained a highly sophisticated, transactional relationship. Under the long reign of the Institutional Revolutionary Party (PRI) in the 20th century, this was called la pax mafiosa. The state did not fight the traffickers; it regulated them. The government decided which plazas belonged to whom, collected its tax (often in the form of political contributions or direct bribes), and enforced peace.
What changed in the 2000s with the "War on Drugs" was not the sudden arrival of corruption. It was the fragmentation of state power. When the central government lost its monopoly on political control, the cartels became decentralized, heavily armed corporate entities.
Today, we see the logical conclusion of that evolution.
- The Cartel as a Municipal Contractor: In dozens of municipalities across Guerrero, Michoacán, and Sinaloa, cartels do not hide from local mayors. They choose them. They fund campaigns, dictate police appointments, and pocket a percentage of public works contracts.
- The Sovereign Illusion: A state that cannot monopolize violence, collect taxes in its own territory, or protect its own candidates during elections is not "linked" to cartels. It is co-habitating with them.
When President Sheinbaum rejects these claims as sovereignty violations, she is defending a concept of sovereignty that exists only on paper. Real sovereignty is the monopoly on the legitimate use of physical force. If you share that monopoly with the Sinaloa Cartel or the Jalisco New Generation Cartel (CJNG), you have already surrendered your sovereignty.
Why Both Governments Need the War to Continue
To understand why this theater persists, follow the money.
The global anti-drug apparatus is a multi-billion-dollar industry that feeds thousands of bureaucrats, military contractors, and security agencies in both the US and Mexico. If either side actually "won" this war, the funding would dry up overnight.
+---------------------------------+ +---------------------------------+
| United States Demand | ---> | Mexican Cartel Supply |
| $150B+ Annual Illicit Market | | Weaponry & Cash Flow Southward |
+---------------------------------+ +---------------------------------+
^ |
| v
+---------------------------------+ +---------------------------------+
| US Security Funding | <--- | State-Level "Coexistence" |
| (Mérida Initiative & Successors) | | Maintaining High-Margin Flow |
+---------------------------------+ +---------------------------------+
Consider the absolute hypocrisy of the American stance. US politicians love to threaten military action or brand cartels as Foreign Terrorist Organizations (FTOs) for cheap domestic points. Yet, the US financial system remains the primary laundry machine for cartel cash.
I have tracked the flow of illicit capital through global financial systems for years. You do not move tens of billions of dollars in cash across borders without the active, systemic complicity of major multinational banks. Occasionally, a bank like HSBC gets caught, pays a fine that amounts to a rounding error on their quarterly balance sheet, and everyone moves on.
The US wants the drugs; Mexico wants the cash. The cartels are simply the logistics providers.
Dismantling the "Failed State" Fallacy
Mainstream analysts love to throw around the term "failed state" when talking about Mexico. This is a profound misunderstanding of political science.
A failed state is Somalia in the 1990s—total collapse, zero infrastructure, absolute chaos. Mexico, by contrast, is a highly sophisticated, upper-middle-income economy. It is the United States’ largest trading partner. It is a manufacturing powerhouse.
Mexico is not a failed state; it is a dual-state.
Inside a dual-state, two parallel legal and economic systems exist in perfect harmony:
- The Formal State: The world of NAFTA, nearshoring, sleek automotive factories in Querétaro, and tech hubs in Guadalajara. This is the face Mexico presents to Davos and Wall Street.
- The Informal Sovereign: The parallel authority that governs transit routes, agricultural sectors (like the avocado trade), and migrant smuggling.
These two worlds do not collide; they feed each other. The cheap labor pool that drives the formal manufacturing sector is often policed and controlled by the informal sovereign. The roads built by the formal state are the very highway systems used by the informal sovereign to move fentanyl to the border.
To demand that Mexico "destroy" the cartels is to demand that it amputate half of its own body.
Stop Asking How to "Win" the Drug War
The most common question asked by foreign policy think-tanks is: How can Mexico and the US cooperate to finally defeat the cartels?
This is the wrong question. It assumes victory is a defined, achievable state. It assumes the goal of both parties is eradication.
If you want to understand the reality, you must ask the brutal, honest question: Who benefits from the current arrangement?
- For Mexican Politicians: The cartels offer localized social order, massive injections of liquidity into local economies, and a highly effective mechanism for suppressing political rivals.
- For the US Government: The perpetual "threat" at the southern border justification for massive domestic security budgets, militarized policing, and geopolitical leverage over Latin America.
- For Multinational Corporations: The ongoing instability keeps labor cheap, unions weak, and land acquisitions in resource-rich areas highly profitable because local populations are displaced by violence.
The downside to admitting this is obvious: it ruins the moral high ground. It forces us to admit that our consumer habits, our banking systems, and our foreign policies are directly funding the atrocities we claim to deplore.
The Grim Reality of Nearshoring
The current buzzword in boardrooms is "nearshoring." Companies are fleeing China and rushing to build factories in Mexico to be closer to the US market.
But talk to the logistics managers who actually have to move freight from Monterrey to Laredo. They will tell you about the "cartel tax." Every truck, every shipping container, every warehouse pays a toll.
[Factory in Bajío]
│
▼ (Cartel Toll / "Derecho de Piso")
[Federal Highway 57]
│
▼ (State Police Shake-down)
[Border Crossing]
This is not lawlessness; it is a highly organized, predictable tax regime. In many regions, the cartels are more efficient at collecting taxes than the Servicio de Administración Tributaria (SAT). They offer something the official government cannot: guaranteed transit. If you pay the right plaza boss, your cargo arrives. If you rely solely on the federal police, your driver disappears.
When Sheinbaum denies cartel links, she is trying to protect the nearshoring golden goose. She wants foreign investors to believe that the violence is confined to the margins. But any executive with boots on the ground knows that security is just another line item on the operational budget, paid directly to the informal sovereign.
The End of the Theater
We must stop treating these diplomatic spats between Washington and Mexico City as genuine policy disagreements. They are choreographed public relations stunts.
The US issues a report pointing out the obvious. Mexico reacts with righteous indignation, wraps itself in the flag of national sovereignty, and accuses the US of imperialism. Both sides go back to their respective corners, while the fentanyl continues to flow north, the assault weapons continue to flow south, and the cash is cleanly integrated into the global financial system.
Claudia Sheinbaum cannot break this cycle, not because she lacks the will, but because she lacks the power. The presidency of Mexico is not a dictatorship; it is a delicate balancing act between competing factions of oligarchs, military generals, regional governors, and cartel capos.
To expect any Mexican president to "solve" the cartel problem is to expect a CEO to voluntarily liquidate their own corporation's most profitable subsidiary. It is not going to happen.
The system is not broken. It is working exactly as intended.
