Scott Stewart – Economy Watch

The Economics Of Global Arms Trade

Scott Stewart — Thu, 15 Aug 2013 09:01:05 +0000

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Weapons are durable products that can outlast even the countries that manufactured them. Weapons also retain their value and are easily converted to cash, which explains why they so readily flow to conflict zones where there is an increased demand for them. In the case of Syria, we may be years away from a ceasefire, but rest assured that shortly after its final crescendo, economic forces will work to ensure that arms from this theater of war begin to make their way to the next global hotspot.

The many and diverse efforts to arm the various actors in the Syrian civil war are really quite amazing to watch. These efforts are also quite hard to decipher – and intentionally so – since many of the arms transfers occur on the murky gray and black arms markets. Indeed, it is quite doubtful that anyone, whether Syrian intelligence, the Russian Foreign Intelligence Service or the CIA really has a complete picture of all the channels used to funnel arms into the conflict. Certainly, I cannot hope to catalogue all of them here. However, the efforts to arm all of the factions fighting in Syria do provide a great opportunity to discuss the global arms trade and its various facets.

The Nature of Weapons

To understand the global arms markets we must first understand some critical things about the nature of weapons. First of all, it is important to realize that weapons are durable goods. While certain types of weapons and weapon components have a limited shelf life – such as battery-coolant units for the FIM-92A Stinger missile – numerous other weapons remain functional for many decades. It is not unusual to find a militant or a soldier carrying an AK-47 assault rifle manufactured before he was born – and in many cases even before his father was born.

Because of this durability, weapons provided to the anti-Soviet fighters in Afghanistan in the 1980s are still being used against coalition troops in Afghanistan. But 1980s-era weapons are not the only durable weapons in the theater: The Taliban is also attacking coalition forces in Afghanistan with British Lee-Enfield rifles sent to South Asia during the Victorian era. These antique main battle rifles with their larger cartridges and longer barrels have a demonstrated ability to engage targets at longer distances than the more modern AK-47.

[quote] But Afghanistan is not the only place where the durability of weapons is seen. Weapons provided by the United States and the Soviet Union to rebels and governments during Central America’s civil wars are still making their way into the arsenals of Mexican drug cartels, and M-40 recoilless rifles provided by the United States to the government of Libya before Moammar Gadhafi’s 1969 coup proved to be a very effective weapons system in the battle of Misurata, and today are being shipped from Libya to the rebels in Syria. [/quote]

Sometimes, weapons can even outlast the countries that manufactured them. East German MPiKMS and MPiKM assault rifles are still floating around the world’s arms markets more than two decades after the German Democratic Republic ceased to exist.

It is important to recognize that ammunition is also an important facet of the global arms trade. Ammunition tends to be less durable than weapons, and is also consumed at high rates. This means that while weapons are durable, they can only remain functional if sufficient supplies of the appropriate ammunition are available. One of the reasons weapons like the AK-47 have proliferated so widely is the ease and low cost of finding compatible ammunition for the rifles. In the case of Syria, the rebels can both purchase ammunition for weapons like the AK-47 and seize it from the government.

Weapons are also fungible, or interchangeable. An AK-47-style rifle manufactured in Russia is essentially the same as one manufactured in Pakistan or Egypt, and an M16-style rifle manufactured in China can easily replace an M16 manufactured in the United States. Indeed, in a place like Afghanistan or Syria, it is not unusual to find AK-47-style rifles manufactured in various countries and decades being carried within the same rebel group. Journalist C.J. Chivers has done a wonderful job chronicling the proliferation of the AK-47 in his book The Gun and in his blog.

Weapons are also goods that tend to retain their value and are easily converted to cash. Combined with their durability and fungibility, this explains why they so readily flow to conflict zones where there is an increased demand for them. Buying weapons from a place where there is an oversupply and then selling them in a place where there is a heavy demand can be highly lucrative. After the fall of the Soviet Union, arms merchants like Viktor Bout became incredibly rich buying excess Soviet weapons for very low prices in places like Ukraine and selling them for much higher prices in places like Liberia. In addition to cash, guns can also be exchanged for commodities such as diamonds, drugs and even sugar.

Arms Markets

There are three general types of markets for arms. The first is the legal arms market, where weapons are bought and sold in accordance with national and international law. The legal arms market also includes military aid sent by one government to another in accordance with international law. The parties in a legal arms deal will file the proper paperwork, including end-user certificates, noting what is being sold, who is selling it and to whom it is being sold. There is a clear understanding of who is getting what and under what conditions.

The second arms market is that involving illicit, or gray arms. Gray arms transactions involve a deceptive legal arms transaction in which legally purchased arms are shifted into the hands of someone other than the purported, legal recipient. One of the classic ways to do this is to either falsify an end-user certificate, deceiving the seller, or to bribe an official in the purported destination country to sign an end-user certificate but then allow the shipment of arms to pass through his country to a third location. This type of transaction is frequently used in cases where there are international arms embargoes against a particular country (like Liberia) or where it is illegal to sell arms to a militant group such as the Revolutionary Armed Forces of Colombia.

In one example of a gray arms deal, Ukrainian small arms were sold to Ivory Coast on paper but were then transferred in violation of U.N. arms embargoes to Liberia and Sierra Leone. Another example occurred when the government of Peru purchased thousands of surplus East German assault rifles from Jordan on the legal arms market ostensibly for the Peruvian military. Those rifles then slipped into the gray arms world and were dropped at airstrips in the jungles of Colombia for use by the Revolutionary Armed Forces of Colombia.

The third market is the illegal, or black arms market. In this market, the weapons are clearly transferred in violation of national and international law and there is no attempt to cover the impropriety with devices such as forged end-user certificates. Black arms transfers can involve regimes, such as when the Gadhafi regime in Libya furnished weapons to terrorist groups like the Abu Nidal Organization or the Provisional Irish Republican Army. Nation-states will often use the gray and black arms markets in order to deniably support allies, undermine opponents or otherwise pursue their national interests. This was clearly revealed in the Iran-Contra scandal of the mid-1980s, though Iran-Contra only scratched the surface of the untold tons of arms that were smuggled during the Cold War. But other times, the black arms market can involve non-state actors or even organized crime groups. The transfer of Libyan weapons from militia groups to Tuareg rebels in Mali or of weapons from the conflicts in the Balkans to criminals in Europe exemplify this.

Some weapons are also made in an unregulated manner, such as the homemade rockets and mortars made by Palestinian militant groups or the Syrian resistance. The cottage industry of illicit arms manufacture in Darra Adam Khel Pakistan has long supplied militants and tribesmen on both sides of the Pakistan-Afghanistan border.

Weapons Flows to Syria

Currently, Syrian President Bashar al Assad’s regime is being supplied through the legal arms market by Russia. At the same time, they are being supplied by Iran, but since Iran is forbidden from exporting weapons under U.N. Resolution 1747, these transactions are illegal or occurring on the black arms market.

Similarly, the Iranian and Syrian weapons provided to the al Assad regime’s ally, Hezbollah, are illegal under U.N. Resolution 1701. Advanced Chinese weapons have also found their way into Hezbollah’s arsenal, such as the C-802 anti-ship missile used in a July 2006 attack on the Israeli corvette Hanit. It appears Hezbollah received these weapons from Iran, which has purchased some of the missiles from China and manufactured its own copies of the missile.

[quote] The rebel groups in Syria are quite fractured. The weapon flows to these groups reflect this diversity, as do the number of different actors arming them. To date, the United States and EU countries have resisted directly arming the rebels, but covert efforts facilitate the flow of arms from other parties to the rebels have been going on for well over a year now. [/quote]

One of the functions of the U.S. presence in Benghazi, Libya, was to help facilitate the flow of Libyan arms to Syrian rebels. From the American point of view, sending weapons to Syria not only helps the rebels there, but every SA-7b shoulder-fired surface-to-air missile sent to Syria to be fired at a regime helicopter or MiG fighter is one less missile that can find its way into the hands of militants in the region. Promoting the flow of weapons out of Libya to Syria also makes weapons in Libya much more expensive, and can therefore reduce the ability of local militia groups – or regional militant groups such as al Qaeda in the Islamic Maghreb or Boko Haram – to procure weapons from Libya.

Even though the U.S. and Turkish governments are involved in the process of passing arms from Libya to Syria, it is nonetheless a black arms channel. The Austrian Steyr Aug rifles and Swiss-made hand grenades in rebel hands were purchased by Saudi Arabia and the United Arab Emirates through legal channels but then diverted to the Syrian rebels several years later via black market channels. I have not seen any of the documentation pertaining to the Croatian weapons sold to Saudi Arabia and then channeled to the Syrian rebels via Jordan, so it is difficult to judge if they were arms sold legally to the Saudis and then diverted via an illicit gray arms transaction or if the entire transfer was clandestine and hidden in black arms channels.

Obviously, the weapons supplied by the Islamic State of Iraq to Jabhat al-Nusra and other jihadist rebel groups is another case of black arms transfers. But some rebel groups have purchased weapons with cash on the black market in Lebanon and Turkey while other rebel groups have even purchased weapons from corrupt officials in the Syrian regime. Of course, the rebels have also captured some sizable arms depots from the government.

[quote] As one steps back and looks at the big picture, it becomes clear that as these diverse channels move instruments of war into Syria, their individual themes are being woven together to orchestrate a terrible symphony of death. It may be years before the symphony is over in Syria, but rest assured that shortly after its final crescendo, economic forces will work to ensure that the durable and fungible weapons from this theater of war begin to make their way to the next global hotspot. [/quote]

By Scott Stewart

Scott Stewart supervises the day-to-day operations of Stratfor’s intelligence team and plays a central role in coordinating the company’s analytical process with its business goals. Before joining Stratfor, he was a special agent with the U.S. State Department for 10 years and was involved in hundreds of terrorism investigations.

Global Arms Markets as Seen Through the Syrian Lens is republished with permission of Stratfor.

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Has ‘Partial Intervention’ In Syria Failed?

Scott Stewart — Wed, 06 Feb 2013 07:38:14 +0000

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Unlike recent military interventions in Mali or Libya, the West and its Middle Eastern partners have chosen to pursue a middle-ground approach in Syria by providing logistical aid to the various Syrian rebel factions, rather than intervening directly. This method of ‘partial intervention’ is likely to have long-term consequences for foreign powers, and particularly for Saudi Arabia.

The French military’s current campaign to dislodge jihadist militants from northern Mali and the recent high-profile attack against a natural gas facility in Algeria are both directly linked to the foreign intervention in Libya that overthrew the Gadhafi regime. There is also a strong connection between these events and foreign powers’ decision not to intervene in Mali when the military conducted a coup in March 2012. The coup occurred as thousands of heavily armed Tuareg tribesmen were returning home to northern Mali after serving in Moammar Gadhafi’s military, and the confluence of these events resulted in an implosion of the Malian military and a power vacuum in the north. Al Qaeda in the Islamic Maghreb and other jihadists were able to take advantage of this situation to seize power in the northern part of the African nation.

As all these events transpire in northern Africa, another type of foreign intervention is occurring in Syria. Instead of direct foreign military intervention, like that taken against the Gadhafi regime in Libya in 2011, or the lack of intervention seen in Mali in March 2012, the West – and its Middle Eastern partners – have pursued a middle-ground approach in Syria. That is, these powers are providing logistical aid to the various Syrian rebel factions but are not intervening directly.

[quote]Just as there were repercussions for the decisions to conduct a direct intervention in Libya and not to intervene in Mali, there will be repercussions for the partial intervention approach in Syria. Those consequences are becoming more apparent as the crisis drags on.[/quote]

Intervention in Syria

For more than a year now, countries such as the United States, Turkey, Saudi Arabia, Qatar and European states have been providing aid to the Syrian rebels. Much of this aid has been in the form of humanitarian assistance, providing things such as shelter, food and medical care for refugees. Other aid has helped provide the rebels with non-lethal military supplies such as radios and ballistic vests. But a review of the weapons spotted on the battlefield reveals that the rebels are also receiving an increasing number of lethal supplies.

For example, there have been numerous videos released showing Syrian rebels using weapons such as the M79 Osa rocket launcher, the RPG-22, the M-60 recoilless rifle and the RBG-6 multiple grenade launcher. The Syrian government has also released videos of these weapons after seizing them in arms caches. What is so interesting about these weapons is that they were not in the Syrian military’s inventory prior to the crisis, and they all likely were purchased from Croatia. We have also seen many reports and photos of Syrian rebels carrying Austrian Steyr Aug rifles, and the Swiss government has complained that Swiss-made hand grenades sold to the United Arab Emirates are making their way to the Syrian rebels.

With the Syrian rebel groups using predominantly second-hand weapons from the region, weapons captured from the regime, or an assortment of odd ordnance they have manufactured themselves, the appearance and spread of these exogenous weapons in rebel arsenals over the past several months is, at first glance, evidence of external arms supply. The appearance of a single Steyr Aug or RBG-6 on the battlefield could be an interesting anomaly, but the variety and concentration of these weapons seen in Syria are well beyond the point where they could be considered coincidental.

This means that the current level of external intervention in Syria is similar to the level exercised against the Soviet Union and its communist proxies following the Soviet intervention in Afghanistan. The external supporters are providing not only training, intelligence and assistance, but also weapons – exogenous weapons that make the external provision of weapons obvious to the world. It is also interesting that in Syria, like Afghanistan, two of the major external supporters are Washington and Riyadh – though in Syria they are joined by regional powers such as Turkey, Jordan, Qatar and the United Arab Emirates, rather than Pakistan.

In Afghanistan, the Saudis and the Americans allowed their partners in Pakistan’s Inter-Services Intelligence agency to determine which of the myriad militant groups in Afghanistan received the bulk of the funds and weapons they were providing. This resulted in two things. First, the Pakistanis funded and armed groups that they thought they could best use as surrogates in Afghanistan after the Soviet withdrawal. Second, they pragmatically tended to funnel cash and weapons to the groups that were the most successful on the battlefield – groups such as those led by Gulbuddin Hekmatyar and Jalaluddin Haqqani, whose effectiveness on the battlefield was tied directly to their zealous theology that made waging jihad against the infidels a religious duty and death during such a struggle the ultimate accomplishment.

A similar process has been taking place for nearly two years in Syria. The opposition groups that have been the most effective on the battlefield have tended to be the jihadist-oriented groups such as Jabhat al-Nusra. Not surprisingly, one reason for their effectiveness was the skills and tactics they learned fighting the coalition forces in Iraq. Yet despite this, the Saudis – along with the Qataris and the Emiratis – have been arming and funding the jihadist groups in large part because of their success on the battlefield. As my colleague Kamran Bokhari noted in February 2012, the situation in Syria was providing an opportunity for jihadists, even without external support. In the fractured landscape of the Syrian opposition, the unity of purpose and battlefield effectiveness of the jihadists was in itself enough to ensure that these groups attracted a large number of new recruits.

But that is not the only factor conducive to the radicalization of Syrian rebels. First, war – and particularly a brutal, drawn-out war – tends to make extremists out of the fighters involved in it. Think Stalingrad, the Cold War struggles in Central America or the ethnic cleansing in the Balkans following the dissolution of Yugoslavia; this degree of struggle and suffering tends to make even non-ideological people ideological. In Syria, we have seen many secular Muslims become stringent jihadists.

[quote]Second, the lack of hope for an intervention by the West removed any impetus for maintaining a secular narrative. Many fighters who had pinned their hopes on NATO were greatly disappointed and angered that their suffering was ignored. It is not unusual for Syrian fighters to say something akin to, “What has the West done for us? We now have only God.”[/quote]

When these ideological factors were combined with the infusion of money and arms that has been channeled to jihadist groups in Syria over the past year, the growth of Syrian jihadist groups accelerated dramatically. Not only are they a factor on the battlefield today, but they also will be a force to be reckoned with in the future.

The Saudi Gambit

Despite the jihadist blowback the Saudis experienced after the end of the war against the Soviets in Afghanistan – and the current object lesson of the jihadists Syria sent to fight U.S. forces in Iraq now leading groups such as Jabhat al-Nusra – the Saudi government has apparently calculated that its use of jihadist proxies in Syria is worth the inherent risk.

There are some immediate benefits for Riyadh. First, the Saudis hope to be able to break the arc of Shiite influence that reaches from Iran through Iraq and Syria to Lebanon. Having lost the Sunni counterweight to Iranian power in the region with the fall of Saddam Hussein in Iraq and the installation of a Shiite-led government friendly to Iran, the Saudis view the possibility of installing a friendly Sunni regime in Syria as a dramatic improvement to their national security.

Supporting the jihad in Syria as a weapon against Iranian influence also gives the Saudis a chance to burnish their Islamic credentials internally in an effort to help stave off criticism that they are too secular and Westernized. It allows the Saudi regime the opportunity to show that it is helping Muslims under assault by the vicious Syrian regime.

Supporting jihadists in Syria also gives the Saudis an opportunity to ship their own radicals to Syria, where they can fight and possibly die. With a large number of unemployed, underemployed and radicalized young men, the jihad in Syria provides a pressure valve similar to the past struggles in Iraq, Chechnya, Bosnia and Afghanistan. The Saudis are not only trying to winnow down their own troubled youth; we have received reports from a credible source that the Saudis are also facilitating the travel of Yemeni men to training camps in Turkey, where they are trained and equipped before being sent to Syria to fight. The reports also indicate that the young men are traveling for free and receiving a stipend for their service. These young radicals from Saudi Arabia and Yemen will even further strengthen the jihadist groups in Syria by providing them with fresh troops.

[quote]The Saudis are gaining temporary domestic benefits from supporting jihad in Syria, but the conflict will not last forever, nor will it result in the deaths of all the young men who go there to fight. This means that someday the men who survive will come back home, and through the process we refer to as “tactical Darwinism” the inept fighters will have been weeded out, leaving a core of competent militants that the Saudis will have to deal with.[/quote]

But the problems posed by jihadist proxies in Syria will have effects beyond the House of Saud. The Syrian jihadists will pose a threat to the stability of Syria in much the same way the Afghan groups did in the civil war they launched for control of Afghanistan after the fall of the Najibullah regime. Indeed, the violence in Afghanistan got worse after Najibullah’s fall in 1992, and the suffering endured by Afghan civilians in particular was egregious.

Now we are seeing that the jihadist militants in Libya pose a threat not only to the Libyan regime – there are serious problems in eastern Libya – but also to foreign interests in the country, as seen in the attack on the British ambassador and the U.S. diplomatic mission in Benghazi. Moreover, the events in Mali and Algeria in recent months show that Libya-based militants and the weapons they possess also pose a regional threat. Similar long-lasting and wide-ranging repercussions can be expected to flow from the intervention in Syria.

By Scott Stewart

Scott Stewart is the Vice-President of Tactical Intelligence at the private intelligence corporation Stratfor. He is a former Diplomatic Security Service Special Agent who was involved in hundreds of terrorism investigations, most notably the 1993 World Trade Center bombing.

The Consequences of Intervening in Syria is republished with permission of STRATFOR.

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Mexico’s Economic Risks: Will Ending Cartel Violence Prove An Impossible Task?

Scott Stewart — Mon, 26 Nov 2012 07:37:51 +0000

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Despite a deepening slowdown across Latin America, Mexico, the region’s second largest economy, is still headed for an annual growth rate of nearly 4 percent this year – more than double the expectation for rival Brazil. In order to sustain this growth however, Mexico now needs to not only reform its labour, financial and energy laws; but to put an end to its drug cartel violence, which has had a dampening effect on outside investment and tourism.

Enrique Pena Nieto will be sworn in as Mexico’s next president on December 1. He will take office at a very interesting point in Mexican history. Mexico is experiencing an economic upturn that may become even more pronounced if Pena Nieto’s Institutional Revolutionary Party administration is able to work with its rivals in the National Action Party to enact needed reforms to Mexico’s labour, financial and energy laws.

Another arrestor to further expanding Mexico’s economy has been the ongoing cartel violence in Mexico and the dampening effect it has had on outside investment and tourism. Pena Nieto realizes that Mexico’s economy would be doing even better were it not for the chilling effect of the violence. During his campaign, he pledged to cut Mexico’s murder rate in half by the end of his six-year term, to increase the number of federal police officers and to create a new gendarmerie to use in place of military troops to combat heavily armed criminals in Mexico’s most violent locations.

According to Mexico’s El Universal newspaper, Pena Nieto is also proposing to eliminate the Secretariat of Public Security and consolidate its functions, including the federal police, under the Secretariat of the Interior. This move is intended to increase coordination of federal efforts against the cartels and to fight corruption. The federal police are under heavy scrutiny for the involvement of 19 officers in the Aug. 24 attack against a U.S. diplomatic vehicle in Tres Marias, Morelos state. This incident has long faded from attention in the United States, but the investigation into the attack remains front-page news in Mexico.

Of course, there are also commentators who note that Pena Nieto’s election is a return to power for the Institutional Revolutionary Party, which held power in Mexico for some 70 years prior to the election of Vicente Fox of the National Action Party in 2000, and Felipe Calderon in 2006. This narrative claims that Pena Nieto will quickly return to the Institutional Revolutionary Party policy of negotiating with and accommodating the cartel organizations, which will solve Mexico’s violence problem.

Unfortunately for Mexico, neither law enforcement reforms nor a deal with the cartels will quickly end the violence. The nature of the Mexican drug cartels and the dynamic between them has changed considerably since Pena Nieto’s party lost the presidency, and the same constraints that have faced his two most recent predecessors, Vicente Fox and Felipe Calderon, will also dictate his policy options as he attempts to reduce cartel violence.

Constraints

As George Friedman noted about the U.S. presidential election, candidates frequently aspire to institute particular policies when elected, but once in office, presidents often find that their policy choices are heavily constrained by outside forces. This same concept holds true for the president of Mexico.

Fox and Calderon each came into office with plans to reform Mexico’s law enforcement agencies, and yet each of those attempts has failed. Indeed, recent Mexican history is replete with police agencies dissolved or rolled into another agency due to charges of corruption. The Federal Investigative Agency, established in 2001 by the Fox administration, is a prime example of a “new” Mexican law enforcement agency that was established to fight – and subsequently dissolved because of – corruption. Pena Nieto’s plans for law enforcement reform will be heavily constrained by this history – and by Mexican culture. Institutions tend to reflect the culture that surrounds them, and it is very difficult to establish an institution that is resistant to corruption if the culture surrounding the institution is not supportive of such efforts.

Another important constraint on the Pena Nieto administration is that the flow of narcotics from South America to the United States has changed over the past two decades. Due to enforcement efforts by the U.S. government, the routes through the Caribbean have been largely curtailed, shifting the flow increasingly toward Mexico. At the same time, the Colombian and U.S. authorities have made considerable headway in their campaign to dismantle the largest of the Colombian cartels. This has resulted in the Mexican cartels becoming increasingly powerful. In fact, Mexican cartels have expanded their control over the global cocaine trade and now control a good deal of the cocaine trafficking to Europe and Australia.

While the Mexican cartels have always been involved in the smuggling of Marijuana to the United States, in recent years they have also increased their involvement in the manufacturing of methamphetamine and black-tar heroin for U.S. sale while increasing their involvement in the trafficking of prescription medications like oxycodone. While the cocaine market in the United States has declined slightly in recent years, use of these other drugs has increased, creating a lucrative profit pool for the Mexican cartels. Unlike cocaine, which the Mexicans have to buy from South American producers, the Mexican cartels can exact greater profit margins from the narcotics they produce themselves.

[quote]This change in drug routes and the type of drugs moved means that the smuggling routes through Mexico have become more lucrative then ever, and the increased value of these corridors has increased the competition to control them. This inter-cartel competition has translated into significant violence, not only in cities that directly border on the United States like Juarez or Nuevo Laredo but also in port cities like Veracruz and Acapulco and regional transportation hubs like Guadalajara and Monterrey.[/quote]

Related: Drug Capitals of the World

Cartels Evolve

The nature of the Mexican cartels themselves has also changed. Gone are the days when a powerful individual such as Miguel Angel Felix Gallardo could preside over a single powerful organization like the Guadalajara cartel that could control most of the drug trafficking through Mexico and resolve disputes between subordinate trafficking organizations. The post-Guadalajara cartel climate in Mexico has been one of vicious competition between competing cartels – competition that has become increasingly militarized as cartel groups recruited first former police officers and then former special operations soldiers into their enforcer units. Today’s Mexican cartels commonly engage in armed confrontations with rival cartels and the government using military ordnance, such as automatic weapons, hand grenades and rocket-propelled grenades.

It is also important to realize that government operations are not the main cause of violence in Mexico today. Rather, the primary cause of the death and mayhem in Mexico is cartel-on-cartel violence. The Calderon administration has been criticized for its policy of decapitating the cartel groups, which has in recent years resulted in the fragmenting of some cartels such as the Beltran Leyva Organization, La Familia Michoacana and the Gulf cartel – and thus an increase in intra-cartel violence. But such violence began in the 1990s, long before the decapitation strategy was implemented.

[quote]Because the struggle for control of lucrative smuggling routes is the primary driver for the violence, even if the Pena Nieto administration were to abandon the decapitation strategy and order the Mexican military and federal police to stand down in their operations against the cartels, the war between the cartels would continue to rage on in cities such as Monterrey, Nuevo Laredo, Guadalajara and Acapulco.[/quote]

Because of this, Pena Nieto will have little choice but to continue the use of the military against the cartels for the foreseeable future. The proposed gendarmerie will be able to shoulder some of that burden once it is created, but it will take years before enough paramilitary police officers are recruited and trained to replace the approximately 30,000 Mexican soldiers and marines currently dedicated to keeping the peace in Mexico’s most violent areas.

One other way that the cartels have changed is that many of them are now allied with local street gangs and pay their gang allies with product – meaning that street-level sales and drug abuse are increasing in Mexico. Narcotics are no longer commodities that merely pass through Mexico on their way to plague the Americans. This increase in local distribution has brought with it a second tier of violence as street gangs fight over retail distribution turf in Mexican cities.

Finally, most of the cartels have branched out into other criminal endeavours, such as kidnapping, extortion, alien smuggling and cargo theft, in addition to narcotics smuggling. Los Zetas, for example, make a considerable amount of money stealing oil from Mexico’s state-run oil company and pirating CDs and DVDs. This change has been reflected in law enforcement acronyms. They are no longer referred to as DTOs – drug trafficking organizations – but rather TCOs – transnational criminal organizations.

With the changes in Mexico since the 1990s in terms of smuggling patterns, the types of drugs smuggled and the organizations smuggling them, it will be extremely difficult for the incoming administration to ignore their activities and adopt a hands-off approach. This means that Pena Nieto will not have the latitude to deviate very far from the policies of the Calderon administration.

By Scott Stewart

Constraints Facing the Next Mexican President is republished with permission of STRATFOR.

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Life After Gadhafi – The Challenges Ahead : Scott Stewart

Scott Stewart — Mon, 29 Aug 2011 07:23:16 +0000

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29 August 2011.

As the remnants of the Gadhafi regimes is slowly washed away, the National Transitional Council (NTC) now faces tough decisions and challenges in order to rebuild the country from scratch. While it is too early to predict the future of Libya, the NTC must address fault lines that have already emerged.

With the end of the Gadhafi regime seemingly in sight, it is an opportune time to step back and revisit one of the themes we discussed at the beginning of the crisis: What comes after the Gadhafi regime?

29 August 2011.

As the experiences of recent years in Iraq and Afghanistan have vividly illustrated, it is far easier to depose a regime than it is to govern a country. It has also proved to be very difficult to build a stable government from the remnants of a long-established dictatorial regime. History is replete with examples of coalition fronts that united to overthrow an oppressive regime but then splintered and fell into internal fighting once the regime they fought against was toppled. In some cases, the power struggle resulted in a civil war more brutal than the one that brought down the regime. In other cases, this factional strife resulted in anarchy that lasted for years as the iron fist that kept ethnic and sectarian tensions in check was suddenly removed, allowing those issues to re-emerge.

As Libya enters this critical juncture and the National Transitional Council (NTC) transitions from breaking things to building things and running a country, there will be important fault lines to watch in order to envision what Libya will become.

Divisions

One of the biggest problems that will confront the Libyan rebels as they make the transition from rebels to rulers are the countryÊ¼s historic ethnic, tribal and regional splits. While the Libyan people are almost entirely Muslim and predominantly Arab, there are several divisions among them. These include ethnic differences in the form of Berbers in the Nafusa Mountains, Tuaregs in the southwestern desert region of Fezzan and Toubou in the Cyrenaican portion of the Sahara Desert. Among the Arabs who form the bulk of the Libyan population, there are also hundreds of different tribes and multiple dialects of spoken Arabic.

Perhaps most prominent of these fault lines is the one that exists between the ancient regions of Tripolitania and Cyrenaica. The Cyrenaica region has a long and rich history, dating back to the 7th century B.C. The region has seen many rulers, including Greeks, Romans, Arabs, Ottomans, Italians and the British. Cyrenaica has long been at odds with the rival province of Tripolitania, which was founded by the Phoenicians but later conquered by Greeks from Cyrenaica. This duality was highlighted by the fact that from the time of LibyaÊ¼s independence through the reign of King Idris I (1951-1969), Libya effectively had two capitals. While Tripoli was the official capital in the west, Benghazi, King IdrisÊ¼ power base, was the de facto capital in the east. It was only after the 1969 military coup that brought Col. Moammar Gadhafi to power that Tripoli was firmly established as the seat of power over all of Libya. Interestingly, the fighting on the eastern front in the Libyan civil war had been stalled for several months in the approximate area of the divide between Cyrenaica and Tripolitania.

After the 1969 coup, Gadhafi not only established Tripoli as the capital of Libya and subjugated Benghazi, he also used his authoritarian regime and the countryÊ¼s oil revenues to control or co-opt LibyaÊ¼s estimated 140 tribes, many members of which are also members of LibyaÊ¼s minority Berber, Tuareg and Toubou ethnic groups.

It is no mistake that the Libyan revolution began in Cyrenaica, which has long bridled under GadhafiÊ¼s control and has been the scene of several smaller and unsuccessful uprisings. The jihadist Libyan Islamic Fighting Group (LIFG) has also traditionally been based in eastern Cyrenaican cities such as Darnah and Benghazi, where anti-Gadhafi sentiment and economic hardship marked by high levels of unemployment provided a fertile recruiting ground. Many of these jihadists have joined the anti-Gadhafi rebels fighting on the eastern front.

But the rebels were by no means confined to Cyrenaica. Anti-Gadhafi rebels in Misurata waged a long and bloody fight against government forces to gain control of the city, and while the Cyrenaican rebels were bogged down in the Ajdabiya/Marsa el Brega area, Berber guerrillas based in the Nafusa Mountains applied steady pressure to the Libyan forces in the west and eventually marched on Tripoli with Arab rebels from coastal towns such as Zawiya, where earlier uprisings in February were brutally defeated by the regime prior to the NATO intervention.

These groups of armed rebels have fought independently on different fronts during the civil war and have had varying degrees of success. The different roles these groups have played and, more important, their perceptions of those roles will likely create friction when it comes time to allocate the spoils of the Libyan war and delineate the power structure that will control Libya going forward.

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Fractured Alliances

While the NTC is an umbrella group comprising most of the groups that oppose Gadhafi, the bulk of the NTC leadership hails from Cyrenaica. In its present state, the NTC faces a difficult task in balancing all the demands and interests of the various factions that have combined their efforts to oust the Gadhafi regime. Many past revolutions have reached a precarious situation once the main unifying goal has been achieved: With the regime overthrown, the various factions involved in the revolution begin to pursue their own interests and objectives, which often run contrary to those of other factions.

A prime example of the fracturing of a rebel coalition occurred after the fall of the Najibullah regime in Afghanistan in 1992, when the various warlords involved in overthrowing the regime became locked in a struggle for power that plunged the country into a period of destructive anarchy. While much of Afghanistan was eventually conquered by the Taliban movement — seen by many terrorized civilians as the countryÊ¼s salvation — the Taliban were still at war with the Northern Alliance when the United States invaded the country in October 2001.

A similar descent into anarchy followed the 1991 overthrow of Somali dictator Mohamed Said Barre. The fractious nature of Somali regional and clan interests combined with international meddling has made it impossible for any power to assert control over the country. Even the jihadist group al Shabaab has been wracked by Somali divisiveness.

But this dynamic does not happen only in countries with strong clan or tribal structures. It was also clearly demonstrated following the 1979 broad-based revolution in Nicaragua, when the Sandinista National Liberation Front turned on its former partners and seized power. Some of those former partners, such as revolutionary hero Eden Pastora, would go on to join the “contras” and fight a civil war against the Sandinistas that wracked Nicaragua until a 1988 cease-fire.

In most of these past cases, including Afghanistan, Somalia and Nicaragua, the internal fault lines were seized upon by outside powers, which then attempted to manipulate one of the factions in order to gain influence in the country. In Afghanistan, for example, warlords backed by Pakistan, Iran, Russia and India were all vying for control of the country. In Somalia, the Ethiopians, Eritreans and Kenyans have been heavily involved, and in Nicaragua, contra groups backed by the United States opposed the Cuban- and Soviet- backed Sandinistas.

Outside influence exploiting regional and tribal fault lines is also a potential danger in Libya. Egypt is a relatively powerful neighbor that has long tried to meddle in Libya and has long coveted its energy wealth. While Egypt is currently focused on its own internal issues as well as the Israel/Palestinian issue, its attention could very well return to Libya in the future. Italy, the United Kingdom and France also have a history of involvement in Libya. Its provinces were Italian colonies from 1911 until they were conquered by allied troops in the North African campaign in 1943. The British then controlled Tripolitania and Cyrenaica and the French controlled Fezzan province until Libyan independence in 1951. It is no accident that France and the United Kingdom led the calls for NATO intervention in Libya following the February uprising, and the Italians became very involved once they jumped on the bandwagon. It is believed that oil companies from these countries as well as the United States and Canada will be in a prime position to continue to work LibyaÊ¼s oil fields. Qatar, Turkey and the United Arab Emirates also played important roles in supporting the rebels, and it is believed they will continue to have influence with the rebel leadership.

Following the discovery of oil in Libya in 1959, British, American and Italian oil companies were very involved in developing the Libyan oil industry. In response to this involvement, anti-Western sentiment emerged as a significant part of GadhafiÊ¼s Nasserite ideology and rhetoric, and there has been near-constant friction between Gadhafi and the West. Due to this friction, Gadhafi has long enjoyed a close relationship with the Soviet Union and later Russia, which has supplied him with the bulk of his weaponry. It is believed that Russia, which seemed to place its bet on GadhafiÊ¼s survival and has not recognized the NTC, will be among the big losers of influence in Libya once the rebels assume power. However, it must be remembered that the Russians are quite adept at human intelligence and they maintain varying degrees of contact with some of the former Gadhafi officials who have defected to the rebel side. Hence, the Russians cannot be completely dismissed.

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Outside Actors

China also has long been interested in the resources of Africa and North Africa, and Gadhafi has resisted what he considers Chinese economic imperialism in the region. That said, China has a lot of cash to throw around, and while it has no substantial stake in LibyaÊ¼s oil fields, it reportedly has invested some $20 billion in LibyaÊ¼s energy sector, and large Chinese engineering firms have been involved in construction and oil infrastructure projects in the country. China remains heavily dependent on foreign oil, most of which comes from the Middle East, so it has an interest in seeing the political stability in Libya that will allow the oil to flow. Chinese cash could also look very appealing to a rebel government seeking to rebuild — especially during a period of economic austerity in Europe and the United States, and the Chinese have already made inroads with the NTC by providing monetary aid to Benghazi.

The outside actors seeking to take advantage of LibyaÊ¼s fault lines do not necessarily need to be nation-states. It is clear that jihadist groups such as the Libyan Islamic Fighting Group and al Qaeda in the Islamic Maghreb see the tumult in Libya as a huge opportunity. The iron fist that crushed Libyan jihadists for so long has been destroyed and the government that replaces the Gadhafi regime is likely to be weaker and less capable of stamping down the flames of jihadist ideology.

There are some who have posited that the Arab Spring has destroyed the ideology of jihadism, but that is far from the case. Even had the Arab Spring ushered in substantial change in the Arab World — and we believe it has resulted in far less change than many have ascribed to it — it is difficult to destroy an ideology overnight. Jihadism will continue to affect the world for years to come, even if it does begin to decline in popularity. Also, it is important to remember that the Arab Spring movement may limit the spread of jihadist ideology in situations where people believe they have more freedom and economic opportunity after the Arab Spring uprisings. But in places where people perceive their conditions have worsened, or where the Arab Spring brought little or no change to their conditions, their disillusionment could create a ripe recruitment opportunity for jihadists.

The jihadist ideology has indeed fallen on hard times in recent years, but there remain many hardcore, committed jihadists who will not easily abandon their beliefs. And it is interesting to note that a surprisingly large number of Libyans have long been in senior al Qaeda positions, and in places like Iraq, Libyans provided a disproportionate number of foreign fighters to jihadist groups.

It is unlikely that such individuals will abandon their beliefs, and these beliefs dictate that they will become disenchanted with the NTC leadership if it opts for anything short of a government based on a strict interpretation of Shariah. This jihadist element of the rebel coalition appears to have reared its head recently with the assassination of former NTC military head Abdel Fattah Younis in late July (though we have yet to see solid, confirmed reporting of the circumstances surrounding his death).

Between the seizure of former Gadhafi arms depots and the arms provided to the rebels by outside powers, Libya is awash with weapons. If the NTC fractures like past rebel coalitions, it could set the stage for a long and bloody civil war — and provide an excellent opportunity to jihadist elements. At present, however, it is too soon to forecast exactly what will happen once the rebels assume power. The key thing to watch for now is pressure along the fault lines where LibyaÊ¼s future will likely be decided.

By Scott Stewart

Libya After Gadhafi: Transitioning from Rebellion to Rule is republished with permission of STRATFOR.

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The post Life After Gadhafi – The Challenges Ahead : Scott Stewart appeared first on Economy Watch.