The administration has declared drug cartels and gangs in Mexico and Venezuela to be “terrorist organizations,” the Central Intelligence Agency (CIA) is flying MQ-9 Reaper drones over Mexico, and intelligence is being leaked to the media about how Chinese nationals are operating as cartel money launderers in the United States.
This is on top of the 10 percent additional tariffs that President Donald Trump imposed on China over the fentanyl issue and the 25 percent tariffs threatened against Canada and Mexico for their fentanyl and border security issues.
The Reaper drones are currently surveilling cartels and fentanyl labs. The surveillance is provided to the Mexican government, which ought to take definitive action against the cartels soon. If Mexico fails in this, Washington has officially designated the cartels as terrorist organizations, making them fair game.
The Trump administration noted the enemies in the new war on drugs in the Jan. 20 executive order designating them as terrorist organizations. Their names were revealed in the Feb. 20 edition of the Federal Register, including the Sinaloa and Jalisco New Generation cartels in Mexico, the Tren de Aragua in Venezuela, and the Mara Salvatrucha (MS-13) in El Salvador.
Mexico’s President Claudia Sheinbaum opposes the designations, which is telling. According to The Wall Street Journal, “A range of businesses on both sides of the U.S. southern border worry that they could be affected by the designations, given the integration between the U.S. and Mexican economies and the presence of organized crime in all levels of Mexican society.”
This just goes to show that the designations came too late. The United States should never have allowed organized crime to get so out of hand that the country’s banks, transport companies, and agricultural companies are apparently at least in part beholden to organized crime.
Trump went further, publicly accusing the Mexican government of an “intolerable alliance” with the cartels, against which he has promised to “wage war.”
The terrorist designation ups the ante for not only the Mexican government but also for any banks involved with the cartels, including those in China. U.S. intelligence agencies are also starting to pressure China’s underground financiers and fentanyl precursor producers by revealing how they launder their money.
A single U.S. investigation of the Sinaloa cartel last year led to the discovery of $50 million in laundered money and 24 indictments. This is the tip of an iceberg of as much as $750 billion in annual laundered drug money globally that is in significant part allegedly brokered by Chinese nationals.
According to the Journal’s sources, a few such money launderers in the United States accept the dirty fentanyl cash from the cartels, sell it to other Chinese nationals who invest it in U.S. real estate, gamble the money, or pay it in tuition, in exchange for yuan payments to the launderers back in China. Much of this flows through banks over which Beijing has oversight, even though it helps Chinese nationals evade Beijing’s capital controls.
The launderers get a 1 to 2 percent commission from both sides of the transaction. The rest is typically paid to Chinese exporters, who send products (including fentanyl precursors) to the cartels, thus closing the loop. The products could also be legitimate exports to Mexico, giving the launderers Mexican pesos that can then be given to the cartels. The commission charged by the cartels for this service is far cheaper than their previous Colombian money launderers, who charged as much as 10 percent for a black market Colombian peso exchange.
The Trump administration’s tougher stand against deadly fentanyl trafficking and China’s money laundering is a welcome change that should have happened years ago. At more than 80,000 U.S. deaths from synthetic opioids every year, America can no longer sit on its hands and wait for the grim reaper to strike again. We prefer the MQ-9.
