LatAm in Focus: Drugs, Guns, and Dollars—Unpacking the Cartels' FTO Designation
LatAm in Focus: Drugs, Guns, and Dollars—Unpacking the Cartels' FTO Designation
FTI’s Pablo Zárate and ITAM’s Cecilia Farfán-Méndez explain what the U.S. security policy shift means for bilateral business and North American relations.
On February 19, the Trump administration named six Mexican drug cartels as FTOs, or Foreign Terrorist Organizations. This move widened who can be charged for supporting these groups.
That could mean big changes for businesses that operate in Mexico. “The presence of cartels in Mexico is very widespread,” explained Pablo Zárate, a senior manager director at FTI consulting. “It's not just the traditional view of you can run into cartels that demand derecho de piso, or extortion payments, so that you can continue your traditional operations. It's that cartels have established shell organizations or infiltrated organizations that appear to be legitimate.”
That means to comply with this new FTO designations, companies will need revamp their risk and compliance operations. “ And you can really make an argument that unless you can mitigate this risk adequately, you should not be operating in Mexico,” said Zárate.
The U.S. government named eight criminal groups FTOs—six from Mexico and two others associated with Venezuela and El Salvador.
But the FTO designation is not only impacting business in Mexico but also in the United States. Drug trafficking—the activity the U.S. government is hoping to defeat through the FTO designation—is a transnational business, explains Cecilia Farfán-Méndez, a security expert at the Instituto Tecnológico Autónomo de México. Cartels are producing drugs throughout North America. Firearms are being smuggled across the border. And, consumption is occurring across the continent.
Farfán-Méndez worries that the complexity of the exchange isn’t being captured by the new policy, however. “The designation is part of a discourse that places the responsibility of these deaths outside of the U.S. And I think this is one of the dangerous points that we're seeing because it frames Canada and largely Mexico as the countries that are exporting a problem,” she explained.
Will this view drive a wedge between the neighbors? “Security is definitely the part of the relationship that struggles quite a bit. And so I don't necessarily think this is the worst period in terms of security,” she said. “But what we're seeing certainly is a lot of pressure from the United States framed around fentanyl and Mexico trying to be a good neighbor and a good partner, but also within parameters of respect for each other's sovereignty.”
AS/COA is tracking the U.S. president's actions toward the region, including on trade and migration.
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