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Mexico's Monterrey, famed for industrial might, slipping into gangsters' grip

MONTERREY, Mexico — Out of the desert scrub, the tycoons of Monterrey have erected an industrial powerhouse that is a beacon across Latin America.

Nestled against mountains near the border with Texas, Mexico's richest city is home to an array of steel, glass and banking industries that have earned it the nickname Sultan of the North. Its corporate ranks include the world's largest supplier of building materials and the largest beverage company in Latin America.

But with a speed that has surprised even astute industrialists, gangsters have brought the prosperous metropolis to its knees. The news in Monterrey grows darker by the day.

The Aug. 25 firebombing of a casino in broad daylight, leaving 52 people dead, certainly brought a global spotlight to the city of 4 million. But the wave of crime that has engulfed this industrial colossus is far broader and is pulling the city into a swirling spiral of violence.

It's now no longer unusual for mobsters to hang their victims from bridges for commuters to see on their way to and from work. The city's old quarter, once crowded with weekend revelers along its cobbled streets, is now a ghost town, plastered with "For Sale" signs. Gunmen roam in convoys in broad daylight hunting for vehicles to carjack.

"This used to be a first-class city. Not anymore," said Carlos Camino, a 32-year-old systems engineer, as he waited to report the theft of his silver Mazda SUV.

His wife, Daniela, was driving their 4-year-old daughter, Karen, to daycare at 7 a.m. a few days ago. Two blocks from their house, thugs in two vehicles blocked her car's path. One approached, pistol at the ready, and bashed on her window.

"He shouted, 'Get out of the car! Get out!'" Camino said. His wife grabbed their daughter and fled, arriving home in sobs, just one of 70 or so car owners that day to lose their vehicles in Monterrey, which has seen a tenfold increase in car thefts in a little over a year.

The criminal squeeze on Monterrey has dimmed a beacon for development for all of Latin America. The city's tycoons, feted as heroes, have built global giants like CEMEX (cement), FEMSA (beverages), Vitro (glass), ALFA (petrochemicals), Gruma (cornmeal and tortillas) and Banorte (financial services).

Residents are more likely to brag of ties to Dallas or Houston than to the rest of Mexico. At over $17,000, per capita income here is nearly double Mexico's average.

But the rise of crime gangs has shaken civic activists' confidence, even as they try to put on a brave face.

"Some people say, 'If Monterrey falls, Mexico will fall, too.' We prefer not to put it that way," said Miguel B. Trevino, head of the Civic Council of Nuevo Leon Institutions, a coalition of local community groups.

Trevino struggled, though, to articulate how his metropolis would deal with the underworld metastasis gnawing through its streets.

"We want to believe that the city has touched bottom," Trevino said.

Monterrey's industrial growth dates to the U.S. Civil War, when businessmen sent goods to the Confederacy. Within a few generations, tycoons founded Mexico's leading private university and built a city of modern highways, office parks and industrial zones.

The global supply chain began to loop through Monterrey, barely two hours drive from the U.S. border, and the city set its sights on loftier goals. It built a cluster of aerospace industries and began providing medical services aimed at wealthy visitors from elsewhere.

As Monterrey bloomed, smugglers working border cities such as Matamoros, Reynosa and Nuevo Laredo sent their families to live here, where the reputation was far different from the lawlessness that ruled closer to the border.

But in early 2010, fissures between the Gulf Cartel and its enforcers, a band known as Los Zetas, led by former army commandos, broke into open warfare across northeast Mexico. For the past 18 months, the Zetas have inched into Monterrey, setting up roadblocks, extorting businesses and shooting at rivals on city streets.

Homicides in the surrounding state of Nuevo Leon have soared from 267 in 2009 and 828 in 2010 to 1,268 through Sept. 5 this year. The spike has drawn comparisons with Ciudad Juarez, a much smaller border city that is considered the most murderous place in the Americas, with around 1,471 murders so far this year.

The violence has forced Monterrey residents to make big changes in their lifestyles. Largely gone are rural outings along highways, where criminals now routinely set up roadblocks. The highway to Reynosa, across the border from McAllen, Texas, has seen traffic drop by 44 percent.

"I was invited to go water skiing last weekend at Presa de la Boca," said Tatiana Clouthier, a prominent civic activist, referring to a once-popular artificial mountain lake 20 miles from the city. She balked.

"My kids said, 'Are you sure nothing will happen to us along the road?'" she recalled. They declined the invitation.

Miriam Castillo, mother of 9-year-old Juanito, said elementary school teachers train students to dive under their desks at the sound of gunfire. It happened recently at his school. Asked what he did, Juanito looked at his feet and said, "Hit the floor."

Castillo and her children spoke outside the ruins of Casino Royale, a gambling hall that assailants doused with gasoline and set afire Aug. 25 in an extortion attempt. Most of the 52 victims were women, one of whom was pregnant.

Casino Royale is set amid BMW and Mercedes dealerships in a posh area of Monterrey. Some of the victims came from families of the city's upper crust.

The cold-blooded massacre stunned Mexico, and President Felipe Calderon called it "an aberrant act of terror." But events afterward only underscored how deeply the Zetas have penetrated the police and the political establishment.

A state police officer was arrested after prosecutors accused him of serving as a lookout for the Zetas assailants. And three videos emerged of the brother of Monterrey Mayor Fernando Larrazabal collecting wads of cash inside other casinos prior to the firebombing. The brother was arrested, and his lawyer's explanation that he was collecting debts for cheese he had sold the casinos is now a punch line.

Few laugh, however, at rampant extortion — from neighborhood shops to big factories and warehouses. Security costs have skyrocketed.

"Come over here," said the manager of a large auto parts distributorship, looking out a window toward a parking lot. "See the laser? If someone comes in, the alarm goes off."

Extortion threats have forced the company to close six retail outlets in Monterrey. Year-on-year business fell 18 percent in August, he said, speaking on condition of anonymity for fear of reprisal.

Another businessman, who fled Monterrey with his wife and children to the Houston area, recounted how he'd opened an upscale bar with his brother. One day, a group of Zetas arrived, and their leader introduced a man he said would work at the bar.

"This guy is working for us. You don't have to pay his salary. He's going to be selling drugs from here," the Zeta boss said, the businessman recounted, also under a request of anonymity.

Within days, he and his brother shut the bar, fearful of any further pressure.

Like others, the businessman now flies into Monterrey periodically to oversee his interests but leaves his family in safety in the United States. Monterrey businessmen exiled to Texas have turned a small civilian airfield north of Monterrey into a hive of activity.

"The demand for pilots has increased a lot," said Albert Castaneda, who takes passengers every day to Texas. "People who were not willing to spend money on a plane before, now they've decided to share in or buy a plane."

The exodus has hurt Monterrey while helping some areas of Texas.

"A lot of south Texas cities are coming here to attract business people," said Roy Lavcevic, an economist and member of Mexico's National Association of Independent Business Owners.

The bleeding of talent and capital worries the city's tycoons.

"These moments are a decisive test," Jose Antonio Fernandez Carbajal, chief executive of FEMSA, the huge beverage conglomerate, said in a speech last week in which he blasted the region's elected leaders for their "unsatisfactory" efforts.

Even as industrialists seek to salvage their metropolis, a few see darker days.

"It can get worse," said Jorge Lopez, an airplane broker.


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