How to End Violence in Mexico and Investment Opportunities in the Country

Although the situation is getting better, it’s no secret Mexico has been plagued by violence that rivals some of the worst wars going on in the Middle East. It’s become normal to read or hear about several deaths in a single day. The losing war on drugs only became more prevalent when the federal government decided to fight the cartels head on. It’s a war funded by the demand for drugs in the United States and fought in large part with weapons that are sold and exported into Mexico illegally, even from the carelessness of our own government agencies through operations such as fast and furious.

Cities and entire countries all face their own challenges and while the situation in Mexico appears dire now there is hope to turn the country around. For those optimistic about Mexico’s future there are also investment opportunities if you’re willing to take on some risk. Mexico has for years attracted millions of tourists from around the world and also has a very strong industrial base. Once the country is able to take back control and significantly reduce organized crime it will be stronger than ever.

One event that took place a couple weeks ago, was Juarez Competitiva which was an effort by organizers to revitalize the city of Juarez which has been hit the hardest by crime. The reason Juarez has been stricken by so much violence is because local drug cartels have been defending this major drug corridor into the U.S. from rival gangs that want in on the profits. Juarez Competitiva however, highlighted all the positive things going on in Juarez and Mexico in general such as education, arts, culture and business development projects. There was also panels and speakers who shared their thoughts of how to improve the city. One of those speakers was New York City mayor, Rudy Giuliani who had a whole host of plans and ideas about how to turn the violent situation around. Giuliani and his consulting firm has been working with the Mexican government for years already about how to reduce the violence, but this time had the opportunity to lay out his ideas to a packed auditorium who listened intently to his advice.

In order to end the violence he said, first and foremost you need to have the political will from the top. This needs to be people who genuinely care to fix the situation because they love their city and country and want to see it flourish to its full potential. One reason Giuliani was so successful in turning around  New York City during his tenure as mayor was because he was genuinely interested in fixing the city he loved and grew up in. Mexico will also be successful in turning their fate around when people at the local, state and federal level run for office because they want to fix the situation and don’t have any self interests or ulterior motives.

Secondly Giuliani talked about the importance of tracking crime electronically as opposed to on paper. This allows law enforcement to keep track of what criminal activities are going on in what parts of the city and how to deal with each situation. He talked about how crucially important the CompStat system was in New York and how it helped the NYPD react to different crimes such as petty theft to cases of domestic violence and other types of crime.

Rebuilding a city is nearly impossible with a corrupt police force. Many of the police in Mexico are corrupt and accept bribes primarily because they are so underpaid. It’s impossible however to fire all of the corrupt police officers at once because then you have nobody to fight crime, so Giuliani proposed to rebuild the police force in a positive way. He emphasized on rewarding the good police officers and paying them more when they do a good job. Most police want to do the right thing for their city and when they have an incentive to do a good job they will take the opportunity. Slowly the police force will strengthen and once the city has enough good cops then you can fire or jail the bad ones.

He talked about the failed judicial system and its need to be reformed. Giuliani cites the conviction rate in Mexico as 2 – 3%, one of the lowest of any other country. This means that of all people arrested only 2 or 3% of people are actually found guilty. When a conviction rate is this low it can only mean one of two things, either the police are arresting the wrong people or the bad guys are being arrested and put right back onto the street. The conviction rate is likely this low because the prosecution is either fearful of handing down a heavy prison sentence to criminals that may threaten their lives or they are being bought to let the criminals free. In New York City the mayor appoints judges and Giuliani talked about how he would often get rid of those that he felt were soft or where handing down sentences that weren’t strong enough.

Lastly, he said you cant allow criminals to run their operations from jail. Police may successfully take out one of the gangs leaders but someone will simply take his place and crime will continue. Mexico needs a forfeiture law like in the United States, which allows the government to seize all assets when committing a crime. Only when the money is taken away can the organization really be killed.

Mexico will eventually succeed in ending the violence which has taken over the streets these past few years. Much of the reason violence is so prevalent is because of the bad economic situation. Most people don’t want to turn to violence, but when the only choice to make ends meet is through crime, most will do whatever is necessary to feed their families and cover the basic necessities. This is why concentrating resources on education and helping the unemployed find jobs may be a better way to fight crime.

Depending on how bullish you are on the Mexican economy and the country’s ability to end the violence, there are many investment opportunities particularly in cities that border the United States which have been hit the hardest by crime. When the level of crime got to be intolerable, Mexican citizens with the financial ability left the country in droves. Houses where sold for pennies on the dollar if not abandoned altogether. Restaurants, night clubs and hotels have all gone out of business. Real estate prices are dirt cheap because nobody wants to be surrounded by the violence these cities have suffered through.

The situation is slowly improving and depending on how fast it turns around it would certainly be worthwhile for many to buy up property in some of these war torn cities before everyone decides to go back and prices return to normal. An investment would only be worthwhile if you can turn a profit around fairly quickly and this entirely depends on how long it takes to significantly reduce the violence.

In Juarez alone their are limitless opportunities. For one there is a street, Avenida Juarez immediately when you walk over the U.S./Mexico border that used to be lined with restaurants and bars. Americans for years have crossed the bridge to party, drink and eat on this street, but most of the businesses on Ave Juarez have closed their doors. I can’t stop thinking to myself what an opportunity to buy up as much property as possible on this historic street and rent it out to local businesses.

My good friend in economic development, Ijtsuri Viveros has also frequently told me about housing opportunities near a university in the Southern part of Juarez, the Universidad Autonoma de Cd Juarez. She says the university is entirely isolated and students drive or take long bus rides everyday to go to school and that there are not even many businesses near the university that cater to the students. These are just a couple opportunities in a single city.

For investors willing to place a bet on Mexico it’s not only capital that is at stake, but with extortion, kidnappings and murder still ongoing it’s essential to have the ability to stay safe. Much is at risk, but when the situation improves those that invested would also have contributed to the improved quality of life in Mexico while making a nice financial return on their investment as well.

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