Mexican cartels on the terrorist list?
In late March Rep. Mike McCaul (R-Texas), chairman of the House Homeland Security Subcommittee for Oversight, Investigations and Management, penned a Houston Chronicle column with a new proposal for the U.S. role in Mexico’s fight against violent organized-crime groups. McCaul called for Mexico’s drug “cartels” to be added to the U.S. State Department’s list of international terrorist organizations.
Classifying Mexican drug cartels in the same manner as al-Qaida, the Taliban or Hezbollah would make them a higher priority for American law enforcement and would subject them to laws that target their finances and networks in the United States.
Elsewhere in Texas, McCaul’s “terrorist list” proposal was echoed April 7 by Dallas Morning News editorial writer Tod Robberson, whose column got a quick response from Mexico’s ambassador to the United States, Arturo Sarukhan. The ambassador’s letter to the editor said that calling Mexico’s cartels “terrorists” was a bad idea.
Misunderstanding the challenge we face leads to wrong policies and bad policy making. If you label these organizations as terrorist, you will have to start calling drug consumers in the U.S. “financiers of terrorist organizations” and gun dealers “providers of material support to terrorists.” Otherwise, you really sound as if you want to have your cake and eat it too.
Sarukhan’s point deserves more attention. Adding Mexico’s Sinaloa, Gulf, Zetas, Beltran Leyva, Tijuana and La Familia cartels to the U.S. terrorist list might give an impression of U.S. resolve. But that resolve would likely disintegrate the moment that the U.S. government would have to apply the law – in this case, the PATRIOT Act – against a powerful U.S. constituency that, through negligent behavior, finds itself accused of “aiding and abetting terrorists.”
Imagine that the State Department added Mexico’s main cartels to its list. First, that would confuse the distinction between politically motivated terrorist groups and criminal groups that use terror tactics. The logical conclusion of that would be pressure to list other criminal groups – Central American maras, Italy’s N’dragheta, the Russian mafia, Chinese Triads, and others – who, though not as ruthless as the Mexican cartels, nonetheless use violence to achieve their objectives.
Second, if Mexican organized crime groups were suddenly to become the equivalent of Al Qaeda under U.S. law, the greatest impact would likely be felt by U.S. gun dealers and U.S. banks – two sectors that strongly support Rep. McCaul’s political party.
A U.S. gun dealer is in huge trouble today if it negligently sells a weapon to a suspicious buyer who turns out to be linked to Al Qaeda. If Mexican cartels are added to the terror list, the same trouble would apply to U.S. gun dealers or gun shows if a weapon confiscated from one of Mexico’s “Al Qaeda equivalents” should be traced back to them. Such tracings involving Mexican cartels are commonplace today, as 10 percent of U.S. gun retailers are located near the U.S.-Mexico border.
U.S. banks would also be in much larger trouble if they stood accused of laundering money not for drug traffickers, but for terrorist groups in the same legal category as Al Qaeda. Currently, when U.S. banks launder drug profits, whether knowingly or through lack of due diligence, the U.S. Justice Department prefers to negotiate plea deals instead of carrying out criminal prosecutions under the Bank Secrecy Act of 1970.
Bloomberg News did an excellent report on this last June:
No big U.S. bank … has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.
Large banks are protected from indictments by a variant of the too-big-to-fail theory.
Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.
The theory is like a get-out-of-jail-free card for big banks, Blum says.
That Bloomberg story covered a 2010 “deferred prosecution agreement” in which Wells Fargo Bank paid a $160 million fine and agreed to internal reforms after a bank it had purchased, Wachovia Bank, was revealed to have failed to adequately scrutinize $378 billion in questionable money from Mexican currency exchange houses widely alleged to be laundering cartel money.
Had Mexican cartels been on the Foreign Terrorist Organization list last year, it would have been much harder to imagine Wachovia/Wells Fargo paying a fine and avoiding further prosecution. Laundering billions for organizations that are Al Qaeda’s legal equivalent would surely have meant far stiffer penalties, including jail time for bank executives. The charges of materially supporting terrorism under the PATRIOT Act would be serious enough to threaten the viability of a “too-big-to-fail” bank.
Adding Mexican cartels to the U.S. terrorist list would make doing business much more difficult for both U.S. banks and U.S. gun dealers. They would have to spend far more money on due diligence, investigating their customers’ backgrounds, in order to avoid the far harsher penalties that U.S. law demands for those who support terrorist groups. As a result, both banks and gun dealers would likely line up against the idea of adding Mexico’s criminal organizations to the U.S. terrorist list. With opposition from such domestically powerful quarters, Rep. McCaul’s proposal probably won’t get very far.