In the fall of 1995, the powerful Colombian crime networks that had moved billions of dollars of illegal drugs from South America to the United States and Europe were in disarray. The leadership of the Cali cartel, which controlled most of the world's cocaine traffic from its base in that Colombian city, finally had been arrested by Colombian authorities. Promised shipments of drugs were not being delivered. Discipline was collapsing. New, unknown traffickers were emerging.
In Mexico, Amado Carrillo Fuentes, the powerful head of a new crime syndicate expanding in the border city of Juarez, sensed a historic opportunity. For years, Mexican drug traffickers had been subordinate to the Colombians, delivering their loads of drugs across the U.S. border but not controlling the business, or collecting its largest profits. With the Cali cartel kingpins in jail, the balance of power was up for grabs, and the Mexican cartels held the strongest hand. Carrillo Fuentes played it.
Known as a wily and sophisticated businessman, Carrillo Fuentes called for meetings across Central America in late 1995 and early 1996 between the Colombian and Mexican traffickers. In them, his top lieutenants offered their Colombian counterparts a deal that in fact was a thinly veiled threat: The Colombians must relinquish some of their U.S. drug markets to the Mexicans, or the Mexicans would bypass them entirely and start purchasing cocaine directly from the growers of coca in Peru and Bolivia.
"The Mexicans were very energetic and told the Colombians it was going to be a game with new rules," said a Colombian intelligence officer. "If the Colombians wanted to stay in without a fight, things were going to be different, and the Mexicans were going to call the shots."
According to drug traffickers close to the meetings, and U.S. and Colombian law enforcement officials, the meetings staved off a bloody inter-cartel war. But the pact also cemented one of the most important realignments in the recent history of drug trafficking, with far-reaching ramifications for the United States. It heralded a shift in criminal resources and power from Colombia, a South American country half a continent away from the United States, to Mexico, its populous, poor and occasionally unstable neighbor.
The evidence of the new order can now be found all along the 2,000-mile U.S.-Mexican border, as well as in a number of large U.S. cities. Dozens of Mexican trafficking organizations, including at least three large cartels, are shipping hundreds of tons of cocaine and other hard drugs into the United States annually, taking advantage of the porous border and the surge in traffic across it brought about by the North American Free Trade Agreement. The cartels are collecting billions of dollars in profits that are corrupting the economy and political system of Mexico and endangering the always sensitive U.S.-Mexican relationship.
"These sophisticated drug syndicate groups from Mexico have eclipsed organized crime groups from Colombia as the premier law enforcement threat facing the United States," said Thomas A. Constantine, director of the U.S. Drug Enforcement Administration (DEA), in Feb. 25 testimony before Congress. "They are strong, sophisticated and destructive organizations operating on a global scale."
Despite this conclusion, the Clinton administration continues to apply harsher anti-trafficking measures to Colombia than to Mexico. Earlier this month, President Clinton notified Congress for the second consecutive year that the Colombian government was not taking sufficient measures against the drug trade, triggering the withdrawal of U.S. aid. At the same time, Clinton once again certified the enforcement efforts of Mexico, despite the objections of some law enforcement officials and congressional leaders.
The consolidation of power by the Mexican drug trafficking organizations is part of a larger pattern of change in the global traffic of hard drugs in the 1990s. In the United States, demand for cocaine has remained intense yet flat, while the number of users has dropped. But globally, the large expansion of trade brought on by the end of the Cold War and a shift toward free-market economic policies have made possible a vast expansion both in markets for hard drugs and in potential suppliers.
Cocaine traffickers have made up for the stagnant market in the United States by following the new trade routes to Eastern Europe and the former Soviet republics of Belarus and Ukraine. Colombian traffickers have reacted to the Mexican move into cocaine by fulfilling the U.S. demand for heroin, a growing market dominated until recently by Asian and European networks. And a host of new players are breaking into the drug business in the United States, ranging from Russian and Chinese crime syndicates to Albanians, Nigerians and South Africans.
In the Americas, the development of the cocaine traffic over the last two decades has followed a process that has moved the center of the business -- with its associated crime, corruption and huge streams of income -- steadily closer to the U.S. border.
Most of the crops of coca plants, the raw material for cocaine, are grown in the tropical hillsides of Bolivia and Peru, and crime groups from those countries dominated the business when large-scale deliveries to the United States first developed in the 1970s and early 1980s. In 1980, a trafficking group centered in the Bolivian military and known as the "cocaine colonels" overthrew a democratically elected government and turned the government and army into a large cocaine-exporting business. Opening for Outsiders
Bolivia and Peru lacked adequate processing facilities for turning raw coca leaf into powdered cocaine, however, or efficient transport for moving the drug to the United States. That gave an opening to criminal syndicates in Colombia, which for decades had been involved in smuggling marijuana, emeralds and other contraband north.
The Colombians began taking shipments of Peruvian and Bolivian coca base for processing at laboratories in the Colombian jungles, then transporting it onward from remote airstrips. Soon, after the Bolivian government was forced out of power under pressure from Washington, a Colombian syndicate based in the city of Medellin took over the business entirely, relegating the two Andean nations to a role as suppliers of raw materials.
"In the early 1980s, the Colombians blocked the road, and said, Anything passing here, we take charge of,' " according to Fabio Castillo, an expert on Colombian trafficking organizations. Almost immediately after the rise of the Medellin cartel, contacts began with Mexican smuggling organizations, already adept at smuggling marijuana and contraband along the U.S. border. The Colombians began paying Mexican smugglers up to $1,000 for each kilo of cocaine smuggled across the border into the United States. There, the Colombians would take possession again and distribute the cocaine in major U.S. cities.
U.S. and Colombian officials said the first known contact between the two groups was in the early 1980s and was arranged by Ramon Matta Ballesteros, a Honduran trafficker who worked with the Medellin cartel and had also done business with Mexican smugglers. Matta Ballesteros, convicted of drug trafficking and serving a life sentence in the United States, introduced his Mexican contacts to Gonzalo Rodriguez Gacha, a founder of the Medellin cartel.
Rodriguez Gacha, killed in a fight with police in December 1989, so loved things Mexican that he was nicknamed "the Mexican." But, while his deal-making helped send a portion of the Medellin cartel's goods through Mexico, the large bulk of the shipments were routed through the Caribbean.
When U.S. anti-drug operations shut down the Colombians' favorite smuggling routes through the Caribbean in the early 1990s, they turned again to the Mexicans. Castillo, who obtained intelligence documents to write a book titled "The New Cocaine Riders," said a major turning point in Colombian-Mexican relations came in March 1991, at a time when the Medellin cartel had begun to give way to a rival cartel in Cali.
Under the leadership of brothers Miguel and Gilberto Rodriguez-Orejuela, the Cali cartel dispatched an aide, George Lopez, to Matamoros, Mexico. There he met Oscar Malherbe, a deputy to Juan Garcia Abrego, chief of the then-powerful Gulf cartel, which controlled the northeastern Mexican border with Texas. Malherbe was arrested last month and the Justice Department is seeking his extradition.
Castillo documented two other meetings between the organizations, one in January 1992 in Central America, most likely Guatemala, and the second five months later in Matamoros, Mexico. Castillo said that Gilberto Rodriguez-Orejuela personally attended the first meeting, where it was decided that his organization and Carrillo Fuentes would begin flying large jets loaded with cocaine directly from Colombia to Mexico.
Carrillo Fuentes soon earned the nickname "Lord of the Skies" for his mastery of air routes between the two countries. Eventually, however, his big planes were largely abandoned in favor of boats and light planes to Central America and then refrigerator trucks, which passed along the Pan-American Highway, through border crossings relaxed by a free-trade pact, to Mexico and across the U.S. border.
The Mexicans then expanded operations to guarantee delivery anywhere in the United States -- not simply at some remote warehouse near the border. Eventually, Garcia Abrego, the head of the Gulf cartel, demanded a portion of the cocaine shipment, rather than cash, as payment.
By 1994, Mexican drug mafias routinely were receiving half of each load as their payment, dramatically increasing their wealth and giving them enough cocaine to set up their own distribution systems in key U.S. cities, including Los Angeles, Chicago and Houston.
The Colombians agreed to the arrangement, according to U.S. officials, as long as the Mexicans promised not to operate in the traditional Colombian strongholds, particularly New York, Miami and the rest of the eastern seaboard. The cartels operated in tandem in some U.S. cities while the Mexicans strengthened their organizations in Los Angeles, Chicago and Denver and across large swaths of the Pacific Northwest, the Midwest and the South.
Next came the sequence of events that would push the center of drug trafficking from Cali and Medellin to Juarez, Tijuana and other cities on the Mexican-U.S. border. Ironically, the move was driven by law enforcement -- and by intense U.S. pressure on the Colombian government to break up the Medellin and Cali cartels. Crackdown in Cali
In the summer of 1995, with the direct participation of the CIA and DEA, the Colombian National Police launched an unprecedented crackdown on the Cali cartel leadership. From June through August, the police tracked down and arrested seven of the top cartel leaders, including the Rodriguez-Orejuela brothers and Jose "Chepe" Santacruz Londono.
Some Colombian drug traffickers have been able to continue managing their empires from jail. But the Cali organization soon began to break down. Colombian sources said the cartel was riven by an internal feud over whether to bargain for a deal with the government, or escape and wage war against it. Moreover, the Rodriguez-Orejuela organization failed to establish a trusted leader outside prison who could run their operations.
William Rodriguez, the son of Miguel, initially was chosen for the job. Educated in the United States with a degree in business and described by one U.S. law enforcement official as "young, brash, arrogant and stupid," William Rodriguez was sent to cut deals with other trafficking organizations but so alienated them that he was almost killed. He was sent abroad to live, and the Rodriguez-Orejuela structure fragmented into small, scattered freelance businesses.
Meanwhile, the biggest Mexican trafficking organization was getting bigger. One of Carrillo Fuentes' main competitors in Mexico, the Gulf cartel's Garcia Abrego, was arrested in January 1996. His replacement, the 33-year-old Malherbe, quickly allied himself with Carrillo Fuentes, making him Mexico's undisputed narcotics kingpin.
The new boss wanted monopoly over the traffic coming from South America. And he wanted new, reliable ground routes from Colombia through Central America, in place of the increasingly problematic air shipments.
"We see Carrillo Fuentes consolidating, and he is trying to do it through peaceful means," said a senior U.S. law enforcement official who was aware of the meetings between the Mexican and Colombian traffickers.
Carrillo Fuentes started with a display of his new muscle. With the Cali cartel leaders in hiding or in jail, he contracted to buy eight multi-ton shipments directly from Luis Amado Pacheco, one of the most important cocaine traffickers in Bolivia, which with Peru continues to produce most of the raw material for cocaine. That meant cutting out the Colombian middlemen entirely. Colombian and U.S. law enforcement officials say three loads of about four tons of cocaine each were shipped from Bolivia directly to Mexicali, Mexico, near the California-Arizona border.
The Cali organization, weakened but with a massive intelligence-gathering operation still intact, retaliated by using a method perfected during years of fighting other hostile takeover bids: They quietly alerted Bolivian authorities to the fourth part of Pacheco's shipment. Pacheco was arrested when his plane landed to refuel at the airport in Lima, Peru, on Sept. 26, 1995, and 4.1 tons of cocaine were seized.
Sources familiar with the operation said DEA agents knew of the shipment but had decided to let it go through in hopes of disrupting the Mexican operation as well. The Cali leak to Bolivian authorities ruined the plan, the sources said. Brink of Drug War
The arrest brought Carrillo Fuentes' Mexicans and the remains of the Cali cartel to the brink of war. But instead of fighting, Carrillo Fuentes demanded new meetings in which to deliver his demands for greater control of the traffic. Each side was unwilling to send senior representatives to the other's turf, so meetings were held in Guatemala, El Salvador and possibly Panama, according to Colombian and U.S. sources.
The Cali organizations were represented at two of the meetings by Juan Carlos Ramirez and Orlando Sanchez Cristancho, both of whom had long-standing ties to the Carrillo Fuentes organization. Carrillo Fuentes was represented by Malherbe, among others.
Carrillo Fuentes, through Malherbe, went straight to the point: He would, he warned, continue to cut separate deals with the Bolivian and Peruvian suppliers, a step he claimed was necessary because of the Colombians' ruptured structures, sources said. In fact, he already had sent people to Bolivia and Peru to assess the possibility of setting up parallel supply structures that cut out the Colombian middlemen.
He then proposed a new formula for business: The Colombians could continue to transport cocaine from South America but would take it only as far as Mexico. After paying the Colombians in cash, Carrillo Fuentes and his allied Mexican organizations would take over transport and distribution of cocaine in the United States. It was a bold proposal: For the Colombians, it meant less risk, but also less money and an end to their operations in the world's largest drug market.
The offer, according to intelligence sources, is still being debated by Colombian traffickers. In the meantime, a Colombian source familiar with Cali cartel operations said the Rodriguez-Orejuela brothers and others had no choice but to go along with Carrillo Fuentes' demands for a larger share of the U.S. market, including control of cocaine traffic in Los Angeles, Houston and Chicago.
U.S., Colombian and Mexican officials caution that while the shift in trafficking patterns and the consolidation of the Carrillo Fuentes gang are important, they do not mean other groups have been put out of business.
In Colombia, according to police officials, there are scores of new, smaller trafficking organizations jumping into the game, many as yet unidentified by authorities.
Still, said the Colombian source, "the organizations here are not working anymore. What we are seeing now is what we call the democratization' of the drug trade, everyone out for himself, and no one to impose order. No one could really stand up to the Mexicans now."
Gen. Rosso Jose Serrano, director of the Colombian National Police, said his intelligence indicated that the Carrillo Fuentes organization is now regularly sending operatives to Colombia to cut deals, and that it "is now by far the strongest cocaine-trafficking group. He is the one who buys and distributes almost everything." Farah reported from Colombia, Moore from Mexico. Correspondent John Ward Anderson contributed to this report from Mexico. CAPTION: POWER SHIFT AMONG DRUG CARTELS Arrests in the last two years of powerful Colombian drug cartel leaders have caused a power shift to Mexican groups that are shipping hundreds of tons of hard drugs into the United States. The development has brought the anti-drug war from a distant Latin American country to Mexico, the U.S.'s poor and sometimes unstable neighbor. Juarez Cartel: Amado Carrillo Fuentes, leader of the most powerful Mexican cartel, forced Colombians to cede part of U.S. market to Mexicans. Cali Cartel: Top leaders, including Miguel and Gilberto Rodriguez-Orejuela, arrested in 1995. Other leaders trying to run cartel from behind bars. Medellin Cartel: Top leader Gonzalo Rodriguez Gacha killed in police shootout in 1989. Other leaders trying to run cartel from behind bars. Gulf Cartel: Weakened after 1996 arrest of leader Juan Garcia Abrego. Sonora Cartel: Moves drugs into Texas and New Mexico. Tijuana Cartel: Moves drugs into California. CAPTION: Carrillo Fuentes