March 28 (Bloomberg) -- The Mexican vigilante “El Americano” and 400 armed comrades besieged a ranch ringed by police and soldiers in the western state of Michoacan earlier this month. Three days later, they drove away free.
The U.S.-born El Americano, whose real name is Luis Antonio Torres, said rival outlaws holed up inside the ranch had killed two of his colleagues and taken orchards his group had originally seized from the Knights Templar drug cartel. Government forces arrived before the siege turned violent. Torres’s militia, part of a broader citizen-led effort to fight organized crime, ended its assault after police arrested another former associate for murder.
The showdown demonstrated how vigilante groups initially praised by President Enrique Pena Nieto’s administration for fighting drug traffickers are now becoming thugs working against the government, according to Jorge Chabat, a security analyst at Cide, a Mexico City-based university. Vigilantes have stormed more than a dozen towns in Michoacan this year, disarming local police they say collude with criminals.
“We can’t adapt to the laws of the government,” the 34-year-old Torres, who claims to have 10,000 armed supporters in the state, said in an interview outside the ranch while the siege was under way. “We want to enter all of the places where the Templars are. We want to make it to Morelia,” the capital of Michoacan, he said, surrounded by men with rifles.
While Pena Nieto’s 15-month-old administration has captured or killed the heads of three of the nation’s four major drug cartels, including Joaquin “El Chapo” Guzman, it’s still struggling to control large swaths of Michoacan and neighboring Guerrero state. Armed civilian groups currently operate in at least 10 of 31 states, including Mexico state just outside the capital, the nation’s human rights commission said in January.
Pena Nieto’s first year in office hasn’t led to a great improvement in security, Rogelio Velez, chief executive officer at railroad operator Ferrocarril Mexicano SA, and Samantha Ricciardi, Mexico’s country head at BlackRock Inc., said March 20 at the Bloomberg Mexico Economic Summmit in Mexico City. While the number of killings fell 16 percent in 2013 from the previous year, kidnappings rose 21 percent and extortion climbed 11 percent, according to Mexico’s Interior Ministry.
Extortions and kidnappings are what led vigilante groups to take up arms in Michoacan and Guerrero last year. Initially hailed as saviors by local citizens, they’re now seen as fueling the unrest they meant to combat.
The government has played down the fighting as Pena Nieto opens up the $1.2 trillion economy to more foreign investment, seeking to turn it into Latin America’s star performer in the next decade.
“They’re trying to create the perception that we have a new Mexico, where the rule of law is much more important than it has been in the past,” said Luis Maizel, who manages about $5.5 billion as president of the San Diego-based LM Capital Group LLC. “The vigilantes are a signal in the opposite direction.”
At a March 13 event, Pena Nieto said that while he can list “achievements” in Michoacan’s security, restoring order “will perhaps take time, because of the complexity of the social and political breakdown that Michoacan has lived through for many years.”
Ana Maria Fabian Garcia’s two teenage boys were holed up with other vigilantes in the ranch surrounded by Torres. All she could do to help was pass them food and water through a line of police separating the two groups. It is a far cry from a year earlier, when she says the local community regarded vigilantes as heroes for taking up arms to fight drug cartels that have left more than 92,000 dead or missing since 2006, including her husband.
‘Let Them Come’
“I won’t leave my kids alone,” said the 39-year-old Fabian Garcia as she paced outside the ranch. “Let them come and kill me with my children.”
Torres blockaded the ranch for three days. His men milled around in their SUVs on the dusty highway flanked by lime groves in full bloom, drinking beer and shouting threats at those trapped inside.
Hundreds of soldiers and federal police in bulletproof vests separated the two vigilante groups, eventually removing those trapped in the ranch under heavy guard.
“We should be helping each other, not fighting each other,” said Fabian Garcia, who wore a green baseball cap against the glaring sun of the Tierra Caliente valley. “Now they’re sacking our homes.”
The government denies the armed brigades have spun out of control. Alfredo Castillo, Michoacan’s top federal security official, said the vigilantes in the state number about 2,000, with about 900 of them registered to form a rural police brigade.
The authorities have begun to crack down on vigilante activity. This month they arrested Hipolito Mora, a founder of the militia movement with Torres, for allegedly participating in the killing of the two men that sparked the ranch showdown and for theft and looting. His lawyer, Eduardo Quintero, denied the accusations.
“The slightest activity of these groups becomes news and that generates the perception that they are taking over, but it’s not the case,” Castillo said in a March 12 interview. Many who joined the vigilantes “have now returned to their normal jobs,” he said.
The city of Apatzingan in Michoacan state, where drug traffickers set fire to stores in January as the police and vigilantes closed in on them, now bustles with traffic and street vendors.
The vigilante movement is unlikely to damp foreign investment in Mexico, Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB, said by phone from Mexico City. Foreign direct investment has maintained its $20 billion yearly average even through the worst of the violence, Camarena said.
Mexico local-currency bonds returned the highest dollar-based gains of any major Latin American government debt last year after Pena Nieto broke decades-old monopolies in both energy and telecommunications sectors. Government debt returns totaled 0.5 percent, compared with losses of 13 percent for Brazil, 2 percent for Chile, 7 percent for Colombia and 18 percent for Peru.
While companies that have invested in Mexico before may be undeterred by the paramilitary-style groups, those that don’t know the country’s security landscape could be turned off by them, said Araceli Espinosa, a Mexico strategist at Bank of Nova Scotia, said in an e-mailed response to questions.
An energy overhaul last year allowed private investment in oil and gas drilling for the first time in 75 years. Bank of America Corp. says the law will boost foreign direct investment by as much as $20 billion next year, double current levels. The government estimates it will lift growth in gross domestic product 1 percentage point by 2018 in an economy that’s expanded slower than the Latin American average over the past decade, expanding 1.1 percent last year.
After pledging on Feb. 28 to always operate alongside federal police, civilians armed with AR-15s guarded sandbagged checkpoints alone on highways in and around Apatzingan this month and stormed the municipality’s city hall.
In the citrus market of Apatzingan, where most of the state’s limes flow to the rest of the country, a dozen vigilantes sat in the shade to escape the blistering heat. While the vigilantes say they don’t force growers to help fund their movement, Alejandro Martinez, who runs his father’s lime grove, says he’s intimidated by them.
“They’re just grabbing power,” said Martinez, who had driven his yellow Nissan pickup to a traffic circle in Apatzingan at dawn to hire laborers. “This is what the Knights Templar were fighting for and now the self-defense groups are doing the same.”
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