The contents of this unclassified report in no way represent the policies, views, or attitudes of the United States Department of State, or the United States Government, except as otherwise noted (e.g., travel advisories, public statements). The presentation was compiled from various open sources and unclassified embassy reporting. Please note that all OSAC products are for internal U.S. private sector security purposes only. Publishing or otherwise distributing OSAC-derived information in a manner inconsistent with this policy may result in the discontinuation of OSAC support. Inside This Report: 1)OSAC Program 2)Mexico –Trends in Mexico –Area Overviews –Areas of Concern –Implications –Best Practices –Outlook Mexico: Opportunities and Challenges July 12, 2011

OSAC Overview Formed in 1985 to Promote Security Cooperation Between U.S. Government and Private Sector –Over 7,000 registered users, 17+ analysts and coordinators – and telephonic consultations, detailed written analysis, events, and conferences Country Council Program Promotes Information Sharing at the Local Level –Seven active country councils throughout Mexico –Opportunity to network and share best practices with Regional Security Officers (RSOs) and private sector participants For Further Information 2

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Trends Mexico is Averaging 253 Cartel-related Homicides Per Week –Homicides in 2011 could reach or exceed the record set in 2010 Cartels are Less Organized and Disciplined –Takedowns of leadership; fracturing and infighting –Collateral damage increasing Escalation in Tactics –VBIEDs, large-scale shootouts, narco-roadblocks Violence Continues to Intensify and Spread –Decapitations, mutilations, daytime shootouts –Guadalajara, Central Mexico Corruption and Involvement of Authorities in Criminal Activity Diversification into Traditional Criminal Activities 4

Source: University of San Diego’s Trans-border Institute

Source: University of San Diego’s Trans-border Institute

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Monterrey Epicenter of Gulf-Zetas Conflict –Over 4,000 cartel members 663 Cartel-related Homicides in Nuevo Leon as of May –Exceeds all of 2010 Unprecedented Levels of Corruption –Ineffectiveness of local authoriti es Kidnapping and Carjack ing –56 percent increase in stolen vehicle reports U.S. Government Response –Partially unaccompanied status, curfew, armored vehicles 8

Mexico City Relatively Immune from Cartel- related Violence –Isolated incidents of violence in lower income suburbs; associated with small-scale narcotics sales Crime Rates in Mexico City Remain Critical –Armed robbery, kidnapping, carjacking Criminals Typically Select Victims Opportunistically Based on Perceived Wealth –Expensive watches, jewelry, electronics 9

Guadalajara Significant Increase in Cartel- related Violence –Nacho Coronel’s death in July 2010 Conflict Between La Resistencia and CJNG –Possible Zetas incursions High-profile Incidents in January and February –Narco-roadblocks –February 12 Butter Club attack Increased Security Presence for Pan-American Games 10 February 2 Narco-roadblock in Guadalajara February 12 Butter Club Attack

Areas of Concern Tamaulipas and Michoacán –Travel warning advises U.S. citizens to defer non-essential travel Monterrey –Significant security concerns in the city –U.S. Consulate is a partially unaccompanied post Chihuahua and Sinaloa –Statistically the two most violent states in Mexico –Travel warning advises U.S. Citizens to defer non-essential travel to Ciudad Juarez and Culiacan; visit Mazatlan only during daylight hours Durango, Coahuila, and Zacatecas –Travel warning advises U.S. citizens to defer travel to Durango, Gomez Palacio, Torreon, Saltillo, Piedras Negras, Ciudad Acuña, Fresnillo and surrounding areas 11

Areas of Concern San Luis Potosi –Travel warning advises U.S. citizens to defer non-essential travel on highway 57D Nayarit and Jalisco –Travel warning advises to defer non-essential travel to Colotlan and Yahualica near the Zacatecas border; exercise extreme caution near borders with Michoacán and Zacatecas as well as in or near the cities of Tepic and Xalisco, Nayarit Nogales and Surrounding Areas Guerrero and Morelos –Travel warning advises to exercise extreme caution in northwestern Guerrero; do not take road through Ciudad Altamirano to Ixtapa and Zihuatanejo –Acapulco has experienced a significant increase in violence 12

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Implications Direct Impact of Violence Still Heavily Concentrated Among Cartel-affiliated Individuals –Indiscriminate tactics, such as large- scale shootouts, are leading to increased collateral damage Restricted Travel in Some Areas Limits Ability to Operate Rising Security Costs and Insurance Premiums Reduced Expatriate Willingness to take Assignments in Mexico Psychological Impact on Employees 14

Best Practices Restricted Travel to High Risk Areas –Spending the night on U.S. side in border areas Travel During Daylight Hours –Scheduling flights and overland trips Maintain a Low Profile –Most criminals select victims opportunistically based on perceived wealth Avoid High-risk, Compromising Situations –Excessive alcohol consumption and staying out late at bars Minimize Overland Transportation Travel on Toll Roads and Only Use Radio Dispatched Taxis 15

Mexico in Perspective 16

Homicide Rates 17

Outlook Violence will Continue and Likely Rise in the Near-term Violence will Continue to Spread –Guadalajara, Central Mexico Continued Cartel Expansion into Traditional Criminal Activities –Rising crime in many areas Any Improvement will Likely be a Long-term, Gradual Process –Institutional reform –Availability of legitimate opportunities Despite Violence, Mexico Remains an Attractive Location for U.S. Investment and Expansion 18

19 Justin Lamb Regional Coordinator for Western Hemisphere Shari Peart Country Council and Outreach Coordinator for WHA