The Sinaloa Cartel Civil War

Hi everybody, Peter Zeihan here. It’s September 22nd here in Colorado. Well, I guess not just in Colorado. Anyway, the news today is from the state of Sinaloa in Northern Mexico, where there have been at least 100 murders and a lot of kidnappings, as the Sinaloa Cartel basically descends into civil war.

Now, the Sinaloa Cartel is pretty unique among organized crime groups because it’s not just about power or money. It’s run like a business. There was a guy named El Chapo who ran it, and he basically brought all of his chapter leads together to compare best practices and figure out how to smuggle drugs into the United States with less friction and disruption for local law enforcement and the local population.

The concept was simple enough: “Don’t shit where you sleep.” The goal was to maintain good relationships with the people they operated among, so they wouldn’t attack the cartel or go to the government for help. This strategy made Sinaloa by far the largest organized crime group in Mexico.

However, they were so successful that the United States made El Chapo public enemy number one. Eventually, the US was able to capture and extradite him. He is now serving multiple life sentences in the US prison system, where he will never see the light of day again.

That left his organization in the hands of others who were not as capable as he was. El Chapo was, without a doubt, a murderous thug, but he was a murderous thug with a business degree and some management skills. Since his capture, the factions he used to control have gone their separate ways.

Things really started to unravel in July, when Ismael Zambada, aka El Mayo, who used to be the accountant and has taken over most of the operations, was lured to Texas by one of El Chapo’s sons. As soon as he landed, he was arrested by U.S. law enforcement. It appears that El Chapo’s son betrayed El Mayo and turned him over to the authorities.

El Chapo now has more than one son, and each of them controls a faction of the organization. With El Mayo out of the picture, they fight among themselves for his share of the cartel.

Cartels are not monolithic, especially in a place like Mexico where internal transportation is difficult. The cartel consists of dozens of groups, usually locally defined, where local chapters may even use different names, have different organizational structures, and pay only lip service to the central leadership. It’s like Canadian politics, only with far less civility.

As long as there is a strong leader who is skilled with words and has a firm hand, this system can work and endure. But when the leader is in jail, his replacement is in jail, and his children are fighting over what is left, things quickly fall apart.

Now we are seeing the largest organized crime group in Mexico disintegrate, and Sinaloa, the heart of the organization, is where the split is taking place. In the coming weeks, we can expect this violence to spread not only beyond Sinaloa into the rest of Mexico, but also north of the border.

El Chapo’s business approach has made Sinaloa not only the largest drug trafficking group in Mexico, but also the largest organized crime group in the world, including the United States. As the leaders fight among themselves, we will see similar collapses in their local distribution and retail operations, especially in the U.S., where much of their business is run by local gangs.

This will likely lead to higher drug prices due to disruptions in distribution and more violence as the organization breaks down at regional and local levels. Whether that is good or bad, I am not sure.