A new report indicates that extortion demands in Monterrey’s downtown are causing businesses to shut down in large numbers, delivering an economic shock to one of Mexico’s largest cities, to accompany its ongoing security problems.
According to Excélsior, between 30 and 40 percent of the businesses located in the city’s central historic district have closed in the face of extortion demands amounting to 20 to 30 percent of business’ sales.
As one business-owner told reporters, “They know who the owner is and they know you and they tell you that you have three days to pay, and they come by to pick up the money weekly, and then they raise the price. The asked me for 7,000 [pesos, or roughly $600] and I can’t do it, I’m going to close, there’s no way I can get the money.”
As one of the wealthiest big cities in the country and the heartland of Mexico’s industrial north, Monterrey is home to some of the nation’s largest corporations, and is often described as its most economically vital center. The city of some 4 million had long enjoyed a reputation as one of the country’s best managed and safest metropolises, but Monterrey has suffered from the turf war between the Gulf Cartel and the Zetas which began in early 2010, with crime rates spiking as a result, and businesses, government officials, and ordinary citizens suffering the consequences.
The incursion of organized crime into the legitimate economy via extortion is not limited to Monterrey. Notimex reported in July 2010 that 80 percent of the businesses operating in Juarez had been forced to make an extortion payment. As a result of the demands and the general state of insecurity, 40 percent of the restaurants in the area had closed.
Extortion serves as both an alternative revenue source for gangs who are having trouble moving drugs across the border as well as a way to intimidate and impose their will on the local population. The Zetas and the Familia are most notorious for the practice, which has shot up dramatically in recent years as it has spread around the country. According to federal statistics, the number of extortion complaints leaped from 53 in 2003 to some 50,000 in 2008.
Much of the time, the extortionists are not the notorious gangs, but rather small-time local crooks pretending to be part of the big organizations, and taking advantage of the deteriorating security climate. For instance, last week police charged a man in the Mexico City suburb of Neza with passing himself off as a member of the Familia in attempt to extort local businesses. In May, federal authorities arrested a man in Merida whose extortion demands were based on his claim to be a member of the Zetas.
For the business-owner, distinguishing between the genuine member of an organized crime group and the poser is virtually an impossible task. In areas where the police are not trusted, this leaves extortion targets with just two choices, neither of which is very appealing: pay up or close up.
Crimes like extortion and kidnapping represent a more direct threat to the social fabric than trafficking drugs to the United States. The latter activity can, in theory, be carried out in peace, with little threat to the society at large and minimal violence. However, extortion necessarily preys not only on civilian victims, but typically on prosperous ones. In that sense, it acts as a disincentive on success. With businesses in Monterrey and elsewhere preferring to shut down rather to continue paying protection payments, extortion tamps down on the sort of commerce that is a fundamental part of a functioning society.