Bloomberg News

Mexico Can Win Drug War Colombia’s Way: Shannon O’Neil

June 17, 2011

(Corrects 10th paragraph with correct name of Sonora state.)

June 17 (Bloomberg) -- In 2002, strife-torn Colombia took a bold step that paved the way for vastly improved public safety. Now Mexico is struggling to subdue drug wars that have killed almost 40,000 people during President Felipe Calderon’s tenure. It’s time to try the Colombian remedy.

Part of Colombia’s success can be traced to Plan Colombia, the multibillion-dollar U.S. assistance package. That plan concentrated on beefing up military capacity, professionalizing the police and reforming Colombia’s judicial system. The desperately needed money and strategy helped pull Colombia back from the brink of chaos.

Just as important -- and much less heralded -- is a transformation within Colombia. The country’s privileged rallied together, not just to demand better security but also to shoulder responsibility. In 2002, newly inaugurated President Alvaro Uribe and Colombia’s elites negotiated a wealth tax. In the decade since, the tax has raised nearly a billion dollars annually for security. It also changed the nature of the fight, throwing the establishment’s weight behind the government in the battle for public safety. More than foreign security aid, this is what Mexico needs today: an investment by Mexico’s elites in the safety and well-being of all its citizens.

Colombia’s initial security tax applied a 1.2 percent fee on assets of the richest 1 percent of the country’s population: those with assets greater than $100,000. Since 2002, the tax has been extended and modified. Its contributions amount to about 0.4 percent of Colombia’s gross domestic product.

Greater Transparency

The security tax helped strengthen the Colombian state in many ways. The money let the government reassert its monopoly on force, diminishing the strength of left-wing terrorist organizations and private paramilitary security groups alike. The tax also brought greater transparency and accountability, as Colombia’s security forces were required to provide annual, publicly available reports on how money is spent and programs evaluated.

This model’s success has spread to the local level as well. In Medellin, municipal taxes now far outpace those of other cities. Local businesses are willing to pay, because the levies sustain a remarkable transformation. Medellin, once one of the most violent places on the planet, is now Colombia’s top exporter, with textiles leading the way. Although crime problems aren’t fully resolved, Medellin has become a vibrant center for education and the arts.

As Mexican and U.S. officials struggle to combat rising violence, Mexico’s elite needs to step up to the plate. A similar tax -- say 1 percent of assets for the wealthiest 1 percentile of the population -- would bring in $3 billion a year. That would amount to roughly one-third of Mexico’s total annual security spending.

Mexico’s Youth

The money could support programs that are needed to improve Mexico’s security, notably continuing to build up and professionalize law enforcement and justice systems, while providing Mexico’s youth with realistic alternatives to a life of crime.

Unfortunately, Mexico has yet to embrace this approach. Its normal tax intake, which by some estimates is as low as 10 percent of GDP, ranks among the lowest in the Western hemisphere. By contrast, Brazil is at 30 percent, Chile is at 18 percent and many European countries exceed 40 percent. If anything, Mexico’s elites, in the face of violence, have gone the other way in their thinking. After a recent murder of a prominent business executive in the northern state of Coahuila, members of the local chamber of commerce threatened to stop paying taxes.

Thwarting Violence

For Mexico to overcome its security challenges, the elite’s strategy of staying on the sidelines must change. Building higher walls, bullet-proofing cars and hiring private security aren’t long-term solutions. This approach’s failing can be seen as violence spreads from border cities to the industrial giant of Monterrey, and from the border states of Chihuahua and Sonora to their neighbors in Tamaulipas, Nuevo Leon and Coahuila. Even Mexico’s well-off can no longer protect themselves unilaterally.

Domestic responsibility and action -- not just foreign aid -- turned the tide in Colombia, and could do the same in Mexico. President Calderon’s war must become Mexico’s, shouldered by all its citizens and led by its elite.

(Shannon O’Neil is the Douglas Dillon Fellow for Latin America Studies at the Council on Foreign Relations. She publishes a blog, latintelligence.com. The opinions expressed are her own.)

For more Bloomberg View op-eds.

--Editors: George Anders, Lisa Beyer

Click on “Send Comment” in the sidebar display to send a letter to the editor.

To contact the writer of this column: Shannon O’Neil at soneil@cfr.org.

To contact the editor responsible for this column: George Anders ganders1@bloomberg.net.


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