Mexico's Army Kills Drug Chief Allied With Guzman, Signaling Calderon Win

Mexican military personnel killed a leader in billionaire Joaquin “Chapo” Guzman’s drug trafficking cartel, signaling the biggest win for President Felipe Calderon in his four-year-old war on organized crime.

The army shot dead Ignacio “Nacho” Coronel today during an operation in the western state of Jalisco, Defense Ministry official Edgar Luis Villegas told reporters in Mexico City. Coronel controlled the so-called Pacific Route for Guzman’s Sinaloa Cartel, which sends cocaine to U.S. markets.

The killing will create a power vacuum in the cartel, causing infighting that may weaken Guzman’s organization, the most powerful of its kind in Mexico, according to Tony Payan, a political scientist at the University of Texas in El Paso. That may help Calderon, who is struggling to maintain public support for his war as retaliation killings increase, he said.

“We’re talking about the person who is right next to the most powerful gangster in Mexico,” Payan, who also teaches at the Juarez Autonomous University, said in a telephone interview. “This is the biggest fish Calderon has captured so far.”

Coronel shot at members of the armed forces during the raid, killing one soldier and killing another, the Defense Ministry said. Military personnel killed Coronel when they returned fire, according to an e-mailed statement.

Guzman, the head of the drug cartel based in the western state of Sinaloa, made Forbes magazine’s annual billionaires list last year for the first time with a net worth of $1 billion.

$5 Million Reward

The U.S. Federal Bureau of Investigation was offering a $5 million reward for information leading to Coronel’s capture.

“With actions such as this, the federal government reiterates its unfailing commitment to fight, energetically and without exception, organized crime in all its manifestations,” the ministry official said late today.

Mexico has reported almost 25,000 deaths related to organized crime since Calderon took office in December 2006. The government estimates violence shaves one percentage point from gross domestic product each year.

The U.S. closed its consulate office in Ciudad Juarez, the Mexican border city, to review its security measures. The consulate will be closed all day tomorrow and will stay closed until the review is completed, the State Department said today on its website.

The impact of violence is the biggest threat to the Mexican economy, according to 57 percent of Mexican executives, up from 49 percent in March and 22 percent in December 2009, a survey published this month by Deloitte Touche Tohmatsu showed.

Politicians Targeted

The second-most cited concern was a U.S. economic slowdown, according to the June 7-29 poll of 381 Mexican business leaders.

The U.S. government has delivered only about 9 percent of the $1.6 billion in drug-war aid promised to Mexico through the 2008 Merida Initiative, the U.S. Government Accountability Office said in a July 21 report to Congress.

In northern Torreon, Coahuila state, suspected gang members stormed into a party and opened fire, killing 17 people.

Politicians have also come under attack. Ex-senator and former presidential candidate Diego Fernandez de Cevallos was reported missing May 15 from his ranch in the central state of Queretaro and has yet to be found.

Fernandez de Cevallos appeared blindfolded this week in photographs posted on Twitter and reported in Mexican media. The photos were accompanied by a message demanding $50 million in ransom.

Those threats will remain after the killing of Coronel, according to Payan.

“This is winning a battle, not necessarily winning a war,” he said.

To contact the reporters on this story: Jonathan J. Levin in Mexico City at Jlevin20@bloomberg.net