Mexico Archives - Zeihan on Geopolitics

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In this episode of Borderland, Vince sits down with renowned geopolitical strategist Peter Zeihan to dive into the complex realities of immigration, U.S. policy, and Mexico’s uncertain future.

Peter breaks down what both the left and right get wrong about America’s immigration debate, and offer his perspective on the models that could reshape U.S. policy. He also takes a hard look at Mexico’s new president and the growing threat driven by cartels.

He is also the New York Times bestselling author of The Accidental Superpower, The Absent Superpower, Disunited Nations, and The End of the World Is Just the Beginning.

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If You Think Mexico’s New Government Is a Problem, Wait Until You See Its Solutions

Mexican President Claudia Sheinbaum raising hand behind a podium

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Mexico’s newly elected president, Claudia Sheinbaum, is settling into her new digs. Despite her qualifications and experience, will her leadership actually look all that different from former President Andrés Manuel López Obrador (AMLO)?

While AMLO may have been popular, his policies and ideological governance will mark him as one Mexico’s worst leaders. Since Sheinbaum and AMLO are closely aligned, I’m not so sure we should expect anything different from the new president.

To make matters worse, the judiciary system has been weakened thanks to AMLO’s reform merging the National Guard into the military. So, Mexico’s political system is – let’s call it – fluttering.

We also need to touch on the geographic and economic challenges facing Mexico. AMLO attempted to redistribute wealth to help benefit the poor, but the country’s situation hasn’t improved…especially with the rise of the violent cartels. Sheinbaum has her work cut out for her, but let’s wait and see if she decides to follow AMLO’s policies or lead a bit more pragmatically.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are free and we will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey everyone. Peter Zeihan here. Coming to you from a very damp North Carolina. Today we’re going to talk about changes going on in Mexico. Claudia Shane Bond is the president elect. She took office on October 1st, which is Tuesday. Tuesday? Yeah. You’re seeing this Wednesday? She is of the people who have run for office in North America in recent years, probably the most qualified.

Unlike, Justin Trudeau. She wasn’t a kindergarten teacher. She actually was a mayor of Mexico City. No less. And unlike Trump, she wasn’t a marketer. She had a real boy job. And unlike, folks like Harris or Biden or Obama, she wasn’t a senator. She was actually responsible for people and getting the trains to run on time. So in terms of expertise and managerial skills, she’s clearly the top of the heap.

The question is whether or not she’s going to show any independence. The outgoing president’s, Andres Manuel Lopez Obrador is going to go down in history as one of the worst leaders in Mexico, despite the fact that he’s leaving on relatively a popular point. He was an ideologue who wanted to punish most of the other factions that are responsible for policymaking in Mexico.

And in doing so, he dismantled a lot of the country’s institutions. In fact, in his last couple months in office, he basically gutted the judiciary. So if you’re an American, imagine that your most popular hated presidential candidate wins, and then he or she goes through and changes the way the judges are appointed. So instead of going through Congress, it just goes through party caucuses like that person’s party caucuses.

Some version of that is basically what Mexico has now, which is going to make it very difficult for the country to recover and have any sort of judicial independence in any sort of multi-party system. The question now, of course, is whether Shane is going to be part of the problem or part of the solution. And considering that she considers herself Lopez Obrador’s protege, I can’t say that the prognosis is particularly good here.

We also have another reform that has just been pushed through, the lower house of Congress just approved the folding in of the National Guard into the military writ large. It’s already passed, the upper house or is it the upper house? Just passed it. Anyway, it’s already passed both houses of Congress and now goes to the states where they need 17 states to ratify it.

And considering that Lopez Obrador’s and Shane Bonds party controls 20 of the state legislatures, that should be a pretty straightforward process that then comes back to Mexico City and the president formally stamps, it becomes law. Now, why does that matter? Well, the National Guard was set up a few years ago because the military was so horrendously corrupt and Mexico City needed a new semi military operation that could fight the cartels.

Now it’s just getting folded back in in order to guarantee central control by the president. So we’re looking at the tools of violence of the state being consolidated under one party, and we’re looking at the judiciary being consolidated into one party and using elections. That one party has already dominated most of the political conversations of the country.

Now, this was done without a coup. This was done through the ballot box. One of the downsides of the Mexican economic model is it’s grossly in equal. And because the country’s so difficult to manage, because it’s so difficult to build, it’s a mountainous issue. Most of the country is mountainous in the north. It’s desert, mountainous in the south, it’s jungle mountainous, and in the middle it’s just mountainous.

And so you get a lot of oligarchs who basically take control of their local cities. And this is how it’s been since independence back in the 1800s. And so Lopez Obrador, to his credit, sees this to the degree as a problem. And he wants to wrest power away from these local oligarchs, or could be used, if you want to use the Spanish term and give power to the people.

And so instead of having the most economically unequal state in the world, which is how Mexico was when he came in, he’s been redistributing, resources from the states to the federal government. Then the federal government has been giving them primarily to the poor. And that has one of the reasons, primary reason why Lopez Obrador, despite, wrecking the country, is leaving on a high point, because you have a lot of people who’ve never read and would speak for them.

The challenge moving forward is we’re now looking at a situation where the security situation in Mexico is going to degrade massively. We’ve got a civil war going on among the Sinaloa cartel, which used to be the most powerful one in the country, and we have now. Security in the country is the responsibility of the military, which is corrupt.

And for the last five years, Lopez Obrador has refused to move against the drug cartels. So they’ve basically taken over many, many aspects of everyday life, including in the Mexico City Central region as well. So Shane Bond has her work cut out for her, and we will find out whether this relatively pragmatic governor is going to be able to ditch the ideology and rule like a normal person, or whether she’s going to make it even worse.

The Civil War of the Sinaloa Cartel

The Sinaloa Cartel, once the dominant organized crime group in Mexico, is turning on itself. This is just another notch along the downward spiral of the Sinaloa Cartel since the arrest of El Chapo years back.

The most recent fighting started after “El Mayo”, a top cartel figure, was betrayed by one of El Chapo’s son and arrested in the US. This newly vacated position caused a power struggle and each of the cartel’s factions is hoping to grab control. The fighting is currently the worst in the Sinaloa state, but is expected to spread throughout Mexico and even spill into the US.

As the fighting ramps up and chaos ensues, we can expect to see disruptions to the distribution network and perhaps the worst news for those who love the white powder…higher prices.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey everybody, Peter Zeihan here. It is the 22nd of September here in Colorado. Well, I guess not just in Colorado. Anyway, the news today is coming out of Sinaloa state in northern Mexico, where there have been at least 100 murders and a whole bunch of abductions as the Sinaloa Cartel is basically devolving into civil war.

Now, the Sinaloa Cartel is rather unique among organized crime groups in that it’s not simply about power or money. It’s run as a business. There was a guy by the name of El Chapo who used to run the place, and he essentially brought together all his chapter leads to compare best practices and figure out how they could run drugs to the United States with less friction and disruption to local law enforcement and local populations.

The concept was pretty straightforward: “Don’t shit where you sleep.” The goal was to maintain good relations with the people where they operated, so they wouldn’t turn on the cartel or go to the government for help. This strategy allowed Sinaloa to become the largest organized crime group in Mexico by far.

However, they were so successful that the United States made El Chapo public enemy number one. Eventually, the U.S. was able to capture and extradite him. He’s now serving multiple life sentences in the American prison system, where he’ll never see the light of day again.

That left his organization in the hands of others who aren’t as competent as he was. El Chapo was, without a doubt, a murderous thug, but he was a murderous thug with a business degree and some managerial skills. Since his capture, the factions he used to control have started to go their own way.

Things really started to unravel back in July, when Ismael Zambada, also known as El Mayo, who used to be the accountant and has taken over most of the operations, was lured to Texas by one of El Chapo’s sons. The second he landed, American law enforcement arrested him. It appears that El Chapo’s son betrayed El Mayo and turned him over to the authorities.

Now, El Chapo has more than one son, and each of them controls a faction of the organization. With El Mayo out of the picture, they’re now fighting among themselves for his share of the cartel.

Cartels aren’t monolithic, especially in a place like Mexico where internal transportation is difficult. The cartel is made up of several dozen groups, mostly locally defined, where local chapters might even use different names, have different organizational structures, and only give lip service to the central leadership. It’s like Canadian politics, but with a lot less politeness.

As long as there’s a strong leader who’s skilled with words and has a firm hand, this system can work and hold together. But when the leader is in prison, his deputy is in prison, and his kids are fighting over what’s left, things fall apart quickly.

Now we’re seeing the largest organized crime group in Mexico break down, and Sinaloa, the heart of the organization, is where the splits are occurring. Over the next few weeks, we can expect to see this violence expand, not just beyond Sinaloa into the rest of Mexico, but also north of the border.

El Chapo’s business-minded approach didn’t just make Sinaloa the largest drug-running group in Mexico—it made them the largest organized crime group on the planet, including in the United States. As the leadership fights among themselves, we’ll see similar breakdowns in their local distribution and retail operations, especially in the U.S., where many of their operations are carried out by local gangs.

This will likely lead to higher drug prices due to distribution disruptions and more violence as the organization fractures at the regional and local levels. Whether that’s good or bad, I’m not sure.

The Mexican Cartels Are Double-Dipping in the Guacamole

*This video was recorded during my backpacking trip through Yosemite in the end of July.

Unless you want to start buying your guacamole in dime bags, the US better start looking for some new avocado “dealers”. Yes, we’re talking about the cartels’ involvement in the avocado supply chains in Mexico.

Mexican cartels like Jalisco New Generation and La Nueva Familia Michoacán (which is allied with the Sinaloa cartel), are heavily involved in avocado production through protection rackets. While these cartels have different strategies, the bottom line is that any cartel involvement is dangerous to the sustainability of avocado exports.

As the cartels’ presence worsens, the US better start looking elsewhere for their avocados.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey, everybody. Welcome to my favorite new party pad on Middleburg Lake in Yosemite National Park, right alongside the Pacific Coast Trail. For the people who actually have to follow the trail. Anyhow, I figured it would be a great time to talk about the geopolitics of everyone’s favorite party. Favorite guacamole? We’re having a problem with avocados. It seems that the Mexican cartels are starting to run protection rackets.

It’s worse than it sounds. There are two groups doing most of the work and inhibiting production. The first, one of the new generation cartels, if you remember from previous works, are, well, there’s some bad characters. Their leader is a guy by the name of El Chapo who basically believes that the first thing any self-respecting cartel should do is go into town, walk right into the police office in broad daylight, and kill a few people.

As a result, this violence-first approach doesn’t make it very easy for someone to ally with them, but it does make everybody pretty scared of them. And the growers of avocados have had to form self-protection forces in an attempt to fend them off.

The second group is—let’s see if I get this name right—Lander Weaver Familia Michoacán. The new Michoacán family. Michoacán is the state where most of the avocados in Mexico come from.

Anyway, they are a relatively new arrival, but they are definitely allied with the Sinaloa cartel. Who are the primary competitors? To help this new generation nationally, the deciding factor about the Sinaloa alliance is significantly different. It’s not that they’re any less violent; they just use violence as a means to an end rather than as an end in itself. As a result, they have a real fondness for going out and diversifying their operations, basically trying to get into anything that allows them to launder money and agriculture, especially things that are shipped in raw form to the United States, like avocados.

Fits the bill. So you’ve basically got a group that’s hyper-violent and just looking for cash versus a group that is a little bit more selective with their violence. They’re the nicest mass murderers and drug runners you could ever meet. But they prefer a more corporate approach that is more, what’s the word I’m looking for?

Corrosive to the economy. And these are the two choices that the locals have to deal with. Ergo, the self-protection forces. Anyway, you should not expect this to get better anytime soon. In fact, you should expect it to get worse. You can make the argument that a few years ago, Americans had the opportunity to quit cocaine and destroy the cartels.

But now that they’ve diversified into really any sort of illegal operations, especially if it’s cash-heavy, it’s probably too late for that. I mean, don’t get me wrong; you should still not take cocaine. That’s at least half of their revenues. But we’re now in a situation where something like 10% to 15% of the tequila in Mexico is paying protection money to one of the cartels.

The biggest thing I can underline here is that while I’ve mentioned the two big alliances—remember La Familia—there are a lot of local cartels now that are part of these broad umbrellas. And because of that, we now have local groups doing shakedowns of everyone and everything for everything. And because of that, it is probably time to start looking to North Carolina for your avocados, which definitely means you’re not going to be getting them all year round.

They don’t travel well. I don’t have any here.

US Border Crossings: Is Mexico the Solution?

It’s time that we discuss the situation at the US – Mexico border. What’s going on and how is it all going to shake out?

Over 2 million people crossed the border illegally last year. Crossings appear to have been decreasing over the past six months thanks to executive orders by President Biden (although, they were first part of a Republican proposal). While these crossings might be happening via Mexico, the majority of those entering the US illegally are not Mexican.

These migrants are coming from Central American countries like Honduras and Nicaragua, as well as countries like India, Russia and China. While some of these people used to enter legally, policy changes have forced them to cross via more illicit means. Physical barriers can only do so much in preventing these crossings, so it may be time to explore political solutions.

Since most of these migrants are entering through Mexico, that should be the first line of defense. Discussions between Mexican President Andrés Manuel López Obrador (Amlo) and President Biden have led to positive trends in managing border crossings. However, this issue is constantly evolving and will require much more than a big wall and soft handshakes to sort out.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey everybody, Peter Zeihan here, coming to you from hot and smoky Colorado, where we’re finally getting some much, much, much needed rain to put out the forest fires that are way, way, way too close. Anyway, I’m back for a couple of days, so I want to give you an update on what’s going on at the border.

Now, as we all know, over 2 million people crossed illegally last year. Whether that’s good, bad, or indifferent depends on your politics. From a rule of law point of view, it’s questionable at best. Politically, it’s untenable. But economically, if it hadn’t happened, we’d probably have 10% inflation because of labor shortages. So, pick your poison—what problem do you want to embrace, and which one do you want to work against?

Now that we’re into August, there are two big things going on. First of all, the number of apprehensions at the border has been steadily dropping for the last six months. This is largely due to a package of executive orders that Joe Biden enacted a few months ago. These include summary expulsions and much stricter rules on asylum. These measures were part of a Republican-sponsored project earlier this year to remake the border. The Democrats were forced into it, but then Donald Trump thought this would be a victory for Biden, so he told his allies in Congress to scuttle the deal. In response, Biden went ahead and imposed the Republican ultimatum as a series of executive orders. I don’t want to say it’s working—it’s too soon to know for sure—but tensions at the border have dropped by roughly a third during this time. We’re well below the high levels of detentions and crossings from last year, and preliminary data for July and August suggests that trend is continuing.

The second thing is that folks from beyond Central America are now making up a larger and growing group of those crossing the U.S. border. Remember, the majority of people crossing were from the failed or nearly failed states of Honduras, Nicaragua, and El Salvador. But now, there’s a significant number coming from other places, especially India, Russia, and China. These are people who used to come to the United States legally, but due to the lack of immigration reform through the Obama, Trump, and now Biden years, most legal pathways for immigrants have been closed. So now, people are just coming illegally, which means different tools are being used to regulate the flow.

Specifically, Biden has had a series of deep conversations with his counterpart in Mexico, President López Obrador (AMLO). Behind the scenes, they’ve quietly cut a deal where Mexico acts as the first line of defense. This makes it more difficult for people from those failed states to travel north. Once they get to the northern border, they’re put on buses and shipped back to the southern border. Secondly, Mexico is no longer accepting third-party visas for would-be immigrants coming from places like China. It used to be that you could fly from China to Mexico City and then come up, but not anymore. Now, they’ve been flying to places like Ecuador and trying to connect through to Mexico, but that doesn’t work anymore either. So, they’re trying to go through Bolivia or Africa, but now the Mexicans are saying unless you have a year-long multi-entry visa for all the countries on your trip, we’re just going to ship you back. This means all the countries where they used to start, like Korea, Japan, Vietnam, or Russia, are now having to take deportees on flights from Mexico City.

None of this would have been possible without having a conversation with AMLO. And AMLO is a difficult guy to have a conversation with—just ask Donald Trump. He banged his head against the Mexican administration for a couple of years early in AMLO’s reign. It hasn’t been any easier for Joe Biden, but after a fashion, we have the beginnings of a deal.

Will it work? For the moment, things are trending in a positive direction if you want to keep the border closed. But keep in mind, this border is 2,000 miles long. Even if the United States were to deploy its entire military to the border, that’s only enough people for one dude every 50 feet, assuming no one ever takes a break or sleeps. So, there has to be a political angle to any sort of border management. Simply building a wall won’t work because, as we found out in the early years of the Trump administration, if you can quadruple your income by using a ladder, well, you’re going to use the ladder. The wall hasn’t done much to inhibit people from crossing illegally.

However, a political deal, like the one we saw between Trump and AMLO and now between Biden and AMLO, which turns all of Mexico into a kind of a wall—that works a lot better.

Alright, that’s it for me. Take care.

A Crack in the North American Drug War

An image depicting cocaine in lines, a card credit, and bill rolled up

I’m back home from Yosemite on a brief intermission to my summer backpacking trips, and wanted to issue an update on the Mexican Cartels. Specifically, we’re talking about the arrest of Sinaloa leader, El Mayo.

El Mayo is one of the heavy hitters in the Sinaloa cartel, known for being the logistics and money guy under El Chapo. This past week, he was mislead by one of El Chapo’s sons to enter the US, where he was immediately arrested.

This shakes things up for the Sinaloa cartel, but what will the fallout be? Well, you can expect lots of violence as different factions compete in this newly developed vacuum. I wouldn’t expect any lags to your drug supply though, but don’t get too excited, as this gives the US more insight to ultimately dismantling the cartel’s operations domestically. If I was the shot caller, I probably would have gone after the leader of the Jalisco New Generation cartel – El Mencho – but hey, I’m not complaining.

Oh yeah, if you we’re hoping for an update on the US political situation…nothing has really changed in my book. Just a different name on the ticket.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey, everybody. Peter Zeihan here, coming to you from smoky Colorado. We’re definitely in the depths of fire season here; in fact, there’s a forest fire about five miles that way. No stress. Anyway, I’ve been gone backpacking for a couple of weeks, and I’m about to disappear again, so I figured I’d take this opportunity to update you on what has gone down while I’ve been out.

I’m sure lots and lots and lots of you have a long, long list of things you want me to update you on, but there’s really only one thing that I saw that happened that really requires giving you guys the lowdown. That happened in Texas and Mexico last week when a guy by the name of Ismael Zambada, also known as El Mayo, the titular head of the Sinaloa drug trafficking coalition in Mexico, got on a plane, flew to Texas under false pretenses, and was promptly arrested.

Quick background: the Sinaloa cartel is not simply the most powerful drug trafficking organization in Mexico; it’s the most powerful one here in the United States. In fact, it’s the largest organized crime group in the world. The reason it got into that position is because of its previous leader, a guy by the name of El Chapo Guzmán.

El Chapo ran the cartel like an American or Korean conglomerate. The idea was that they were all on the same side—don’t shoot at each other, don’t engage in petty larceny, things that would anger the population. Instead, they branched out into affiliated industries on the side—not just cocaine, but also marijuana, heroin, maybe a little bit of light kidnapping and human trafficking, and even local government, transport, agriculture, and tourism. Anything you could launder money with. He ran it as an institution, which kept the violence rate within his organization relatively low and minimized clashes with local governments. This allowed him to take the Sinaloa cartel to dizzying heights.

The United States named him public enemy number one, and eventually, in a series of operations, we got him. Then he escaped, and we got him again. Now he’s serving a life sentence in some dark hole in the United States. His successor is El Mayo, recently arrested. El Mayo is best known as El Chapo’s accountant. He knows where all the bodies are buried, how the institutions run, who the key players are, where the money flows, and how it’s laundered. So, big win. It’s also noteworthy how he was captured—not a DEA or FBI operation, but a setup by one of the other leaders of the Sinaloa cartel, one of El Chapo’s four sons, who tricked him into getting on the plane to the U.S. under the pretense of looking at an investment property.

El Mayo turned himself in immediately and is basically going through a plea bargain, leaving him with nowhere to turn because the evidence against him is overwhelming, and now there’s another insider involved.

The question is, what kind of operational impact will this have on the Sinaloa cartel? The cartel fractured into several dozen pieces after El Chapo’s fall, with El Mayo controlling the largest chunk. The second, third, fourth, and fifth largest chunks are controlled by those close to him, one of whom just turned him in. We already have another key player in custody in the United States, so two of the four are down, and three of the five kingpins are down.

In the short term, this means a lot of bloodshed in Mexico as these factions, without their leader, splinter and other factions try to grab pieces. Local crime groups in these areas will also try to seize opportunities. Mexico is already coming out of a three-year period that’s the most violent in the country’s history, and this situation isn’t likely to improve that.

However, now that the U.S. has some idea of where the money is flowing and the routes used, we can start dismantling the Sinaloa apparatus within the United States. Don’t expect this to have a huge or immediate impact on the flow of narcotics into the U.S. That is driven by two things: one, Americans really like their cocaine, and two, because cocaine is very expensive per unit of weight in bulk, it’s easy to smuggle. There will always be groups in Mexico and the U.S. willing to push that stuff through, but it just won’t be at the institutional level of the Sinaloa cartel.

If you wanted to make a bigger impact, the target would have been a guy named El Mencho, leader of the counter-group to Sinaloa in Mexico, known as the Jalisco New Generation Cartel. Unlike El Chapo or El Mayo, El Mencho runs his organization as a one-man show and a crime boss, ruling by fear and violence, which is the point of his operation. He just happens to make money on the side selling drugs. Removing him would likely lead to a significant impact on the cocaine flow in the midterm, but it wouldn’t end it. As long as Americans want their coke, this will continue.

But I don’t want to take away from the victory here. The bookkeeper has been brought in, and that will absolutely have significant impacts.

Now, about that other topic you want me to talk about, Biden’s withdrawal from the race. It really doesn’t change things. I made the call two years ago on how this election is going to go, and I don’t see any reason to adjust that now. I made some minor adjustments a few weeks ago during the presidential debate, which showcased the mental incompetence of both candidates. But I would just add one thing: a lot of Americans, roughly 20 to 25% of voters and the vast majority of America’s true independents, have been saying for months that they want someone else to choose from. They don’t want to choose between two people they’ve had to choose from before. Independents are fickle voters; they hate voting for the same person a second time. Well, with Biden out and Harris in, they no longer have to. So what was likely to be a lopsided contest in favor of the Democrats already is now likely to be a rout for the Republicans, unless Vice President Harris absolutely messes things up in some way in the next few months. And that doesn’t seem to be her style.

Okay, that’s all I’ve got. Take care.

Is Mexico’s New President Just a Puppet for AMLO?

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Join Peter Zeihan for a webinar TODAY at 12:00 PM EST on a topic that is near and dear to the hearts of the Zeihan on Geopolitics team: geopolitical risk. This webinar will feature Peter’s reasonable-fear list, focused on issues that in his opinion have the most potential to impact market outcomes.

The most recent Mexican elections have resulted in the victory of Mexico’s first female -and- Jewish leader, Claudia Sheinbaum. She will be succeeding current populist President AMLO, but how much change will this actually bring?

President López Obrador has a bit of a Robin Hood complex, spreading wealth to the poor and neglecting security concerns. These financial transfers gained him favor with the people, but he did this with no regard for sustainability. In addition, while he was spending all his time people pleasing, the cartels were able to seize control of large parts of Mexico.

But won’t all this change when Claudia Sheinbaum steps into office? Well, AMLO and Sheinbaum are close allies, and it would appear that AMLO will be sitting behind the scenes playing puppet-master. So, her ability to address these concerns will all depend on how much string AMLO gives her…

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey, everyone. Peter Zeihan here. Coming to you from Vegas, where I had to get up early because it’s going to be 180 billion degrees today. Anyway, we’re going to talk about the Mexican elections. We’ve had a sweep by, the ruling Morena party. Claudia Sheinbaum, who is a woman and who is Jewish, will be the first woman of the first Jew to rule Mexico.

There’s a long lame duck period. So it’s gonna be a few months before she’s officially in charge. But I think it’s best for us to get ahead of this. You have an idea of what is coming? she’s taken over from a guy by the name of Amlo who is a populist. He likes to call himself a leftist.

He’s really not. He’s really just kind of, Well, a really arrogant thug. Think of him as kind of combining the worst attributes of Justin Trudeau and Donald Trump. there are two sides to animal, one of which which is broadly positive but is broadly negative. First, the positive, the way that Mexico has developed, a lot of people have been left behind has a very high rate of poverty.

It’s one of the most unequal economically countries in the world. And he wrote, the poor people to electoral victory with his election machine, and he’s ruled with them in mind. It’s basically that huge amounts of financial transfers from the state to the poor, purchasing loyalty. Certainly. but he hasn’t done it in a way that makes it self-sustainable.

He’s been spending more and more and more money and has not really built out the development possibilities for the places of the country that are poor. So if the money were to stop for any reason, we basically go back to where we were pre Amlo so, you know, maybe an A for effort or at least an A for intentions, but it hasn’t really worked out very well.

the other part, which is negative, it has been a disaster. That’s been his complete ignoring of any sort of security issues as being security issues, just denying that they exist. And this has allowed the cartels to seize huge swaths of Mexican system. in essence, there’s four Mexicos in the north. The northern states have integrated with Texas, primarily in the United States, were less agree as part of NAFTA, and have done very well economically and have solved a lot of the societal issues that have plagued the rest of Mexico for the entirety of the history of the Republic.

Then in the center, you’ve got the area around Mexico City, which is about half the population, which is this kind of sprawling megalopolis, which has all the pros and all of the cons of such a region. down in the South, you’ve got the poorer areas that are not linked into either the industrial heartland of the South or the American like section of the North.

and then you’ve got the countryside, which is not like me. You would think of the countryside in the United States. Mexico in the south is jungle, Mexico in the north is, desert. All of it is pretty mountainous. So you don’t have a really dense population in the hinterlands, just a speckling of small communities. Well, aimless choice to ignore the cartels.

And indoor. The security situation has allowed the cartels to largely take over in the South, where the state was weakest. And in the countryside, where the state was already nonexistent. So you’re talking upwards of a quarter of the territory of Mexico is now not ruled by Mexico. It’s ruled by the cartels. they levy taxes in the form of extortion payments.

They provide protection rackets. They’ve branched out of the drug industry and gotten into agriculture and tourism and property, taking over local government. in this most recent batch of elections. And dozens of political candidates were shot while they were running for office because the cartel thought that they couldn’t control them. they basically have set up a parallel governing system that the Mexican government has not challenged.

And in the best of circumstances. And these are not those rooting up that sort of alternate system is going to be very difficult, very violent, very time consuming, and very expensive. Which brings us to the new leader, Sheinbaum. she has a better record than Amlo with admitting that security issues are security issues, and she’s actually been reasonably competent in running Mexico City, where she was mayor, in terms of beefing up security.

the problem is, she’s not just part of the band. She’s a cult leader. when it comes to Amlo, she she really is a believer in his cause. And Amlo has made it very clear that he has no intention of stepping back from power. He intends to rule indirectly through her, something that she seems to be broadly okay with.

So continuing the transfers of funds to the poor and makes a certain amount of sense, especially if you can bring her more scientific acumen into the process in order to actually build out long term potential for these people to earn money for themselves. but on the security issue, it’s a question of how forceful will Amlo be in making what he wants to happen happen?

Will he be a quiet ruler behind the scenes? Or he’s going to just treat her like a puppet? We’re not going to know that for the better part of a year. but the danger is very, very clear. Amlo is one of those leaders who has definitely left the country in a worse position than when he took it over, and he is now seeking to use unofficial means to continue his rule.

That’s not great.

North Capital Forum: Crazy Little Thing Called Geopolitics

In October of 2023, I sat down with Enrique Perret, Managing Director of the U.S.-Mexico Foundation (USMF) & President and Founder, North Capital Forum (NCF). We discussed the opportunities and challenges that lie ahead for North America.

Through a geopolitical lens, we examine North America’s strategic positioning in the evolving global landscape, with a keen eye towards energy and tech. We’ll also discuss the current economic and political situations to help inform key stakeholders and decision makers in this region.

If you’d like to learn more about the U.S. – Mexico Foundation or their North Capital Forum, I encourage you to click the link below…

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

What Role Do the Cartels Play in US – Mexico Trade?

As industries like manufacturing ramp up between Mexico and the US, how will the Sinaloa and Jalisco New Generation cartels factor into that equation?

These two cartels operate very differently. The Sinaloa treat their operation like a business, and violence is a means to an end. Jalisco New Generation treats violence and fear as an essential part of their operation.

Despite their violent tendencies, the cartels (1) are uninterested in the complexities of manufacturing, (2) lack the necessary skills to disrupt that sector (from the participant side of things, anyway), and (3) would rather target “easy to manipulate” businesses.

So far, issues caused by the cartels have been relatively manageable. The real risk lies in the power struggle between these two cartels and how that could reshape perspectives on US-Mexico trade.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey everybody. Good morning from a chilly colorado. A lot of you have written in with some questions about what’s going on with the cartels. And that’s something we haven’t talked about a little bit. The big issues are that there’s two cartels to really follow. The first is the Sinaloa. That’s the the one that thinks of drug smuggling as a business.

And so, as a general rule, is not willing to shoot people who are among its consumers. And so they don’t think there should be violence in places where their businesses are critical. So they don’t want to shoot people in Mexican cities or certainly not on the north side of the border if they can help it. It’s not that they’re nice.

It’s not that they’re kind of it’s not that they’re murderous thugs. They are all of those evil. They just see violence as a tool rather than an end. And on the other end of the spectrum, you’ve got political new generation who has the opposite view. When they move into a town, the first thing they do is shoot the police chief and anyone who looks interesting because their whole idea is if everyone’s scared of you, then they’ll either work for you or get out of your way.

Two different theories, both very violent. One is more applied in that violence. So that’s kind of the background I’ve been going on and on and on and on and on about how Mexico is going to be an integral part of the American manufacturing and trading system moving forward for decades, if not over a century. That hasn’t changed. The question is, to what degree do the cartels complicate that picture?

Not as much as you might think. The cartels are into things that fit one of two categories. One are small, have high value, are easy to fit into a backpack and smuggle. Obviously, narcotics fall into that category. Methamphetamines falls into that category or they want industries that they can push a lot of cash through in order to launder it.

And that takes something into things like real estate or avocados, where there’s a very clear business on the other end that is integrated into the broader system. So those are kind of the two types of businesses they go for. Anything else gets a little complicated for them because it’s not their skill set. And when it comes to interfering with trade, it doesn’t really work.

So if they were to go into, say, a manufacturing facility in Nogales and try to take over, it’s not like they would know how to operate it. They would be just a protection racket, and that would mean they’d have to be there presently all the time. Assuming that Mexican law enforcement couldn’t deal with it, I think they could.

Then the American investors in that factory would probably lose interest in the whole thing would shut down. So there’s no profit center there. They could raid things that were going in and out of the facility. But manufacturing in Mexico, as a rule, deals with intermediate manufacturers. So you’re not dealing with a lot of finished cars or even finished carburetors.

You’re dealing with things like spark plugs and casings and seat linings. And, you know, if you get a semi full of seat lines and bolts, you know, that’s not exactly something that’s easy to dispose of. You then have to find the next step in the manufacturing chain that wants it, and that requires a degree of logistics that they don’t have a degree of understanding of the industry, that they don’t command and contacts that are completely unrelated to what they do currently.

The biggest risk that I see to the trading relationship is the fight between these two big cartels. Sinaloa is the number one organized crime group in the United States. How that’s going to generation is rapidly growing to be the number one within Mexico. And at the moment, Sinaloa and some other smaller cartels control all the plazas going into the United States for the smuggling of the drugs.

Politico is challenging those other cartels, especially Sinaloa, for control of each and every one of them. And if they do succeed in commanding a plaza and they do pour into our side of North America and bring their business model with them, then Americans are going to be thinking about Mexico and trade in a very different way. Now, that hasn’t happened yet.

They’ve been trying to get into this country for three years now, and organizationally they’re just not nearly as competent as the Sinaloa. Even after their leader, El Chapo, was arrested, extradited and says it’s a prison forever, it’s just a very different mindset. But if you’re going to worry about something in the trade relationship, I think that’s the number one concern.

So far, it’s proven manageable. So far, the culture clash, if you will, is working for us, but that would still be the dangerous spot. All right. I mean, go inside. It’s cold out here, but.

Why The US Needs Mexico: Replacing Chinese Manufacturing

If you’re an American considering picking up a new language and have narrowed it down to Chinese or Spanish – it should be a no-brainer. As China slips into utter collapse, our southern neighbors will pick up the slack and “hola” will get you much farther than “nǐ hǎo”.

As the US pulls manufacturing from China, we’ll look to Mexico City to fill that void. This region not only holds over half of Mexico’s population but also represents the largest untapped workforce globally. So, the workforce is there, but we’re still missing a couple of pieces of the puzzle.

A massive industrial buildout will have to happen for this transition to work – and quick, too. I’m talking about new rail and border infrastructure, beefing up the I-35 corridor and improving connections within the US manufacturing industry.

If the US and Mexico can execute this buildout within the next five years, finding an alternative to Chinese manufacturing will be much easier. However, if the two amigos don’t get aggressive soon, we might have to throw a couple more languages into the curriculum.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Hey everybody. Peter Zeihan here coming to you from Mexico City. And for those of you back in the States, this is a town you’re going to all have to get used to get to know very well, because it’s the solution to a lot of the upcoming problems. Now, for those of you guys who have been following me for a while, you know that I have been very concerned that the Chinese system is breaking, the demographic situation is terminal.

The government itself seems to be incapable of making decisions now. And Chairman Xi is basically purge the entire system of anyone with a positive IQ. Which means that all of the manufacturing industrial base that exists in China is something going to have to get by without very, very soon. The question is whether that’s one year from now, four years from now or ten years from now, but certainly no more than that, which means if we still want stuff, we’re going have to make it differently.

And that’s where Mexico comes in. Now, a lot of folks point to the nexus between Texas and northern Mexico as being a very successful model. And I agree. Over the last 35 years, the industrial plant that’s built up there has made itself all by itself the third or fourth largest on the planet next to China ink, of course, and the German system in Europe.

But that is not probably something that we can pull off. Again, I mean, yes, there are ways to improve that with infrastructure, with labor, with capital. Tech. I agree with all of that. We should do all of that. But the bottom line is that Texas has run out of people and it has now had to recruit from the rest of the United States just to expand its footprint from where it is now.

And Northern Mexico has run out of people because they’re all already working in that Texas Mexico synergy. And it’s great and it’s wonderful and it’s not done, but it can’t double or triple. And that’s exactly the scale of what we need to do. The solution is to integrate the rest of the United States with the rest of Mexico, specifically the Greater Mexico City region, which is home to over half of Mexico’s population.

And it’s the largest untapped workforce in the world at the moment. That means massively expanding the infrastructure that connects the two countries. Today, about 80% of the traffic and manufacturing between Texas and northern Mexico is by truck, which is among the least efficient ways that you can move things. But it does allow for a lot of small connections with small and medium sized enterprises on both sides of the border, contributing to very complicated supply chains, particularly in automotive.

We need to think bigger. We need a better transport system to take things at bulk so there’s not necessarily less integration between the various stuffs on both sides of the border. But the value add can really explode because we can do things at scale. And for that, we need rail. We need a rail system that connects areas beyond the Texas Triangle to the Mexico City core.

Right now, there’s only one multimodal rail system at all that comes south from the border, as far south as the very edge of the Mexico City complex. We need to expand that system by at least a factor of four in the not too distant future. In addition to expanding the border infrastructure, in addition to expanding America’s I-35 corridor, in addition to expanding the Texas Triangle’s connections to the rest of the manufacturing zones in the United States.

If we pull this off in the next five years, we’re going to be in great shape. And if we don’t, well, then we’re going to have to figure out what sort of stuff we don’t actually want. No pressure.

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