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Assessment on the Threat of the Drug Cartels for the Mexican Oil Industry

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Key Judgements

  • Fuel theft has exploded as a form of financing for the cartels and criminal gangs, which seek to diversify their sources of income to fight the pressure placed on them by the Mexican government.
  • It is highly probable that this criminal activity will increase over time and bring out old and new criminal groups, if the Government and Pemex do not find a solution to the problem in the short and medium term.
  • The economic damages that the theft of fuel creates to Pemex could break the oil company, whose oil production could be so seriously affected as to drastically increase imports from other countries, such as the United States, which would have a direct impact on the price of gasoline for the industry and the population.
  • Pemex workers are the great asset of cartels and criminals, because they have information about the passage of oil through refineries and pipelines, so the fight against internal corruption of the company must be central in the plan to stop the theft of fuel, while offering greater security to workers who receive threats from criminals.


Drug trafficking, kidnappings and assassinations are among the main security concerns in Mexico, but in the last decade there has been an unstoppable increase in a criminal act of lesser importance, but with a great economic impact, the theft of fuel, whose authors are called “huachicoleros”, and their actions have a serious impact on the activities of Petróleos Mexicanos (Pemex), which receives 52 billion dollars a year, and directly affects government revenues, given that the industry accounts for a fifth of these.


Since the beginning of the war against drug trafficking undertaken by former President Felipe Calderón and continued by the current president, Enrique Peña Nieto, the Mexican government’s strategy consisted of beheading the cartels to end the internal structure of these. While this strategy involved the destruction of the cartels, they were divided into much smaller criminal groups, with the same objectives, but with fewer resources and more competition. These criminal gangs, and the cartels still in existence, seek to diversify their sources of income in order to survive the attacks of the Government and not to depend excessively on drug trafficking; the whole population uses gasoline to run their cars, and in the day to day of society, oil is almost as important as water, it is a business with high profitability and relatively low risks, for this reason the oil industry was a clear target for criminals.


The demand of fuel from the cartels to diversify their sources of income has led to the number of clandestine intakes of fuel stolen directly from the Pemex pipelines increasing from 710 intakes in 2010, to 10 363 in 2017, a 868% increase in seven years, and 51% more than in 2016. The Mexican government estimates that the cartels earn 20 billion dollars from illegal traffic of fuel, and experts say that the cartels amass 20% of the national crude.

The business is much more profitable than drug trafficking because it hardly involves risk to criminals. This low risk lies in several factors, the main one is the vast oil pipeline network that Pemex has throughout the Mexican territory, some 57,000 kilometers that cross lands with different orography, which makes the protection of all this infrastructure very difficult. Secondly, the ease of selling the stolen fuel, given that it does not have to be exported across a border like drugs, but it is sold directly in carafes to the population, wholesale to large factories, or through gas stations that accept this illicit gasoline. And finally, the extensive information that criminals possess about oil movements in refineries and through oil pipelines, and knowledge for their extraction; information obtained through bribes or threats to Pemex workers, who often have no choice but to yield, since occasionally the local authorities are accomplices of the cartels.

Not all Mexican States suffer fuel thefts, some regions such as Baja California, Colima or Queretaro do not suffer these incidents; the states most affected by fuel theft are Guanajuato, with 1,852 intakes, followed by Puebla, with 1,443, Tamaulipas, with 1,100, Hidalgo, with 1,064, and Veracruz, with 1,012; followed very closely by the States of Jalisco, Sinaloa, Nuevo León, Tlaxcala and the State of Mexico. These states are the most affected because they have a large industrial fabric that demands fuel, which is transported through oil pipelines that run through these states; furthermore, in many of these territories the cartels have an important presence. In the case of Puebla, it should be noted that the so-called “red triangle” is located on its borders, an area where the Minatitlán-Mexico pipeline transports 40% of the national crude, which makes Puebla a priority for this type of criminals

The leading players of the theft of fuel vary according to the affected region. Remnants of the extinct Zetas perpetrate these robberies in the territories of Tamaulipas, Nuevo León, Tabasco, Puebla, Campeche and Veracruz; once one of the most dangerous criminal gangs in the world, they are currently seeking to survive the government’s effective plan to hunt them down, which has led them to steal fuel as a funding channel, since the Zetas have never been linked to drug trafficking, but with extortion and human trafficking. Remaining groups of the historic Gulf Cartel have also made use of this practice but are concentrated mainly in Tamaulipas and some areas of Nuevo Leon. In Guanajuato, the new Santa Rosa de Lima cartel has proclaimed itself as the main perpetrator of these robberies and threatens to blow up the presence of the Cartel Jalisco Nueva Generación (CJNG), which entirely dominates the robberies that occur in Jalisco. The Sinaloa Cartel, considered the most important cartel in the world, has also set itself the objective of diversifying its sources of income and dominates the intakes produced in the State of Sinaloa, being the architect of 13% of the intakes nationwide.

Both Pemex and the Mexican government have launched a series of measures to end this activity. Pemex will stop transporting gasoline in tankers, and will move to transport an untreated product that would hinder its use by the huachicoleros, on the other hand, the trucks will now be equipped with hidden GPS systems that will facilitate their recovery by security forces; legally, the penalty for fuel theft has been increased, which is now considered a serious crime punishable between 15 and 25 years in prison, at the same time that large fines amounting to 107,000 dollars are established. However, the most important measure is an agreement between Pemex and the Government to strengthen the surveillance of the national pipeline network with land and air patrols.


The theft of fuel is one of the most damaging criminal activities in Mexico, given that its consequences have repercussions in various areas.

Economically, the fuel losses have cost Pemex one billion dollars in 2017, to which we must add the cost of repairing the damages caused to the pipelines by the huachicoleros. This happens when Pemex is at its worst, given that in 2017 its refineries have only operated at 60% capacity for various reasons, which has reduced production to 1 948 000 barrels per day in 2017, 9.26% less than in 2016, the lowest figure since 1980. This situation could cause an economic collapse of the company, given that an increase in criminal activity would only result in more economic losses for Pemex, which loses income annually and has a huge debt that exceeds one hundred billion dollars in 2017.

In the political sphere, this new criminal activity could undermine the liberalization of the oil sector undertaken by Enrique Peña Nieto, which aims to attract foreign investment to modernize the obsolete Pemex extraction technologies, which despite investing more money every year, its investments are distant from the multi-million-dollar investments of giants like Exxon Mobil, which last March announced investments of 20 billion dollars on the coast of the Gulf of Mexico. The situation of insecurity is already driving away several companies and threatens to hinder government efforts to boost the sector and suppose a loss of up to four points of Mexican GDP.

Socially, the situation could cause a serious shortage problems for the population of one of the largest oil producing countries, as has been the case in some Mexican states in recent years, which would lead directly to an increase in oil imports, mainly from the United States, which would further increase the price of gasoline, which after the liberalization of the sector grew by 25%; this in turn would directly affect the theft of fuel, since the cartels and criminals sell gasoline at a cheaper price than the official, which would lead them to increase their market share, and this criminal activity, by an increase in demand for cheap gasoline.

Another aspect, barely considered, is the environmental one, given that the rupture of clandestine extraction valves produces oil leaks and even large explosions that affect the environment and entail large costs to offset some damages that are sometimes irreparable.

The benefits of fuel theft could further trigger criminal activity because of the cost-benefit ratio of the business. Therefore, the Mexican Government and Pemex must put an end to this criminal activity by increasing the safety of oil pipelines and tankers, to discourage criminals from stealing them. One of the most important aspects that the authorities must fight is the internal corruption of Pemex, given that none of the cartels would be able to carry out this activity if it were not for the valuable information stolen from the oil company’s workers, either through bribes or threats, along with the materials for extraction stolen from the company thanks to these workers.

Assessment of Lula da Silva’s Corruption Trial

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Key Judgements

  • The judicial process against Luiz Inácio Lula da Silva has divided society and threatens to create a social conflict that would affect society for decades and that would severely confront the Judicial Branch with the Executive and Legislative.
  • The Workers’ Party of Lula uses the process against the former president as a weapon against judges and opponents, as well as a tool to intensify social discontent and feed its voter base to the detriment of the democratic health of the country.
  • Lula’s return to the presidency of Brazil, or the rise to power of a hypothetical coalition of the left-wing parties, would threaten not only democracy and the independence of the Judiciary in Brazil, but would have consequences at the regional level as it would reorder the ideological arithmetic of the continent and Mercosur in favour of Latin American socialism that could serve Nicolás Maduro’s regime to survive international isolationism and perpetuate the socio-political crisis in Venezuela.


On January 24, 2018, the three magistrates of a Court of Porto Alegre confirmed the conviction of former President Luiz Inácio Lula da Silva for his involvement in the Lava Jato case, internationally known as the Petrobras case, and increased his sentence from nine to twelve years in prison. The most popular former president of Brazil tries to exhaust all possible resources before the courts to gain time and be able to stand for the general elections in October, in which he is leading the race according to the polls, and thus get rid of the penalties once he obtains immunity from the charge; a strategy that has been affected by the court’s order.


The Lava Jato case began with investigations into the irregular supply at various car wash stations, the accused showed suspicious links with the highest political and business elites in Brazil. It is then when the biggest case of corruption in the history of Brazil is uncovered, which consisted of money laundering in car wash stations and gas stations, and a network of bribes to the Brazilian political elites that took place since the government of former president Fernando Henrique Cardoso in 1997. The investigation reaches Lula in November 2015, when the head of the Workers’ Party (PT) in the Senate was arrested by the police and confessed the involvement of the former president in the case. In that moment begins a detailed investigation by the prosecution that leads to accusing the former president up to five times on various charges; but it was not until the sixth, in July of 2017, that the judge accused Lula of corruption and money laundering, charges that meant nine years in prison for Lula, and his disqualification from holding public office. A countdown begins for the former president, who sees the general elections of October 2018, and the immunity of the office of president, as the only formula to get rid of prison and undertakes an arduous legal battle to exhaust all possible resources and delay the execution of the sentence. On January 24, 2018, the court that reviewed his case at second instance, confirmed the guilt of Lula and increased the penalty from nine to twelve years in prison, which leaves the former president at the gates of the prison, being the appeal to the Supreme Federal Court his last way.


The case against former president Lula has deeply divided Brazilian society. Part of the population sees the process as a right action by the Justice against the biggest case of corruption in the history of Brazil, which inevitably has swept away the former president for having occurred during his terms, and for having personally profited by accepting a luxurious apartment on the Brazilian coast in exchange for political favours. But a large part of the population sees the case as an excess of the judiciary, which is an accomplice of a persecution promoted by political interests to erase Lula from the map; this part of the population, from humbler beginnings and left-wing sectors, see the seven years of Lula’s term as the best time in modern Brazil, and they have a point, Lula’s government coincided with the bonanza decade of the Brazilian economy and the former president barely had to make reforms to collect the fruits of that prosperity; moreover, during his government, social aid was increased and more than 30 million Brazilians were driven out of poverty. The former president, from a humble family, left school at the age of nine and started working at 14, knows the difficulties of the lower class and is therefore seen as the best defence by the working classes in Brazil; but for others he represents a common politician, who knows how to play politics without offending the establishment and who has used the stalest populism to maintain his quota of power and enrich himself.

In the PT they know of Lula’s popularity among the electorate and have encouraged social conflict to avoid the accusation of the former president and his entry into prison, given that he is the only current guarantor that would allow the PT to return to the Government of Brazil. In turn, the PT uses the process against Lula as a weapon against its political adversaries and, according to all the polls, it has served to attract a large part of the population to its cause. A recent poll shows that Lula is the favourite candidate to occupy the position of president with 34% of the votes, followed by the candidate of the right, Jair Bolsonaro, with 17%, the environmental leader, Marina Silva (9%), the governor of Sao Paulo, Gerardo Alckmin (6%), and the ex-governor of Ceará, Ciro Gomes (6%). However, if Lula were left out of the presidential race, Bolsonaro would get 21% of the votes, followed by Ciro Gomes (16%), Marina Silva (12%) and Gerardo Alckmin (8%).

Lula only has the option of taking his case to the Supreme Federal Court of Brazil (SFT) and hope the case will not be resolved before August 15, when he could register as a candidate for the electoral appointment, and his case would be under the jurisdiction of the Superior Electoral Tribunal (TSE) that has already announced that, with a condemnation by unanimity in the second instance as occurs in his case, they would discard his candidacy ipso facto, but would grant Lula a second appeal before the SFT whose resolution could in fact come even between the first and the second round of the presidential elections, which would further complicate the Brazilian political crisis.


There is a high probability that Lula cannot be elected president, and this is, to a large extent, the result of the reinforcement of the Judiciary during his mandates to prosecute corruption, which has resulted in an ironclad Justice, largely independent and resistant to political interests.

Although in public the PT continues to defend the candidacy of Lula, even ensuring that “an election without Lula would be a fraud”, internally the party’s executive admits being considering other names like the former mayor of Sao Paulo, Fernando Haddad, or the former governor of Bahia, Jacques Wagner. But the party will use Lula’s importance in the media to agitate the leftist electorate and unite the left-wing parties to snatch the government from Michel Temer. This alteration of the electorate could lead to greater confrontation and division among Brazilians, which could seriously damage social coexistence and mark Brazilian society for decades. President Temer himself has already warned the judges that it is preferable for Lula to stand for election and be defeated, than to prevent him from attending and facilitate a leftist bloc whose only mandate before his enraged voters is to undertake a systematic revenge against the judicial system and the opposition.

The consequences of a hypothetical return of Lula to the presidency of Brazil, or the arrival of a leftist bloc fuelled by the rejection towards the country’s justice for the imprisonment of the former president, would not only shake the coexistence in Brazil, but would have regional consequences. The return of the left to Brasilia would alter the liberal centre-right system that has been spreading in South America since Mauricio Macri won the elections in Argentina in 2015, and Temer held the position of president of Brazil in 2016, followed by the return of Sebastián Piñera to the Presidency of Chile. This would alter the ideological arithmetic of Mercosur, one of the largest common markets in the world, in favour of a socialist protectionism that would increase even more when Bolivia obtains the status of full member, something that would put at risk the role of Mercosur worldwide, risking free trade agreements that the bloc could sign, such as the one currently in negotiations with the European Union, and would entail an economic deceleration of the member countries. The regional consequences could even lead to a lifeline to the regime of Nicolás Maduro in Venezuela, as former President Lula was already very critical with the decision of Mercosur to suspend the Caribbean country, accusing the other countries of interfering in Venezuela’s internal affairs, a country with whose leaders has shown great affinity and friendship in the past, which could have a very negative impact on the Venezuelan socio-political crisis and further deteriorate the democratic quality of Venezuela. The Argentinian president has already stated during the World Economic Forum in Davos that he expects the economic reforms to be continued regardless of the president elected in Brazil, and that he commits himself to a strong Mercosur, since for years Mercosur was the most closed region of the world, and that did not benefit the citizens at all.

Fujimori Granted Pardon by President Kuczynski

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Former Peruvian President Alberto Fujimori was pardoned on 24th December 2017 by Peruvian President Kuczynski. In a statement released, Kuczynski stated that “A medical panel has determined Mr Fujimori has a progressive, degenerative and incurable disease and the jail conditions present a grave risk to his life and health”. On the 25th of December, protests erupted across the country in response to the pardoning. Protestors have called for an annulment of the pardoning and the immediate resignation of Kuczynski, with 4 people being detained after police and protestors clashed. As of the 9th of January, Kuczynski has had to replace over half of his 19 member cabinet after the pardoning of Fujimori triggered a wave of political resignations.

Fujimori, who was in power between 1990- 2000, left Peru in 2000 to attend a summit in Brunei, and travelled to Japan soon after where he stayed after faxing his resignation and remained there in self-imposed exile. In 2001, Peruvian congress authorised charges to be brought against Fujimori, after which Interpol put out a warrant for his arrest. Japan however was not amenable to the extradition of Fujimori. In November 2005, Fujimori landed in Chile, but was arrests just hours after his arrival. In September 2007, Fujimori was finally extradited to Peru and arrested. Peruvian congress lifted the immunity that comes with being a former leader to allow criminal charges and prosecution to be brought against him.

In 2007, Fujimori was sentenced to 6 years in jail on charges of ordering an illegal search and seizure. Fujimori then had further charges brought against him, and in April 2009 was convicted of human rights violations and sentenced to 25 years in prison for his role in killings and kidnappings by the Grupo Colina death squad during his government’s battle against leftist guerrillas in the 1990s. Just months later, Fujimori was sentence to a further 7 and a half years after admitting to giving $15 million to intelligence service chief Vladimiro Montesinos from the Peruvian treasury. A fourth charge of bribery was brought against him giving him an additional 6 year sentence. In total, Fujimori was given almost 45 years’ worth of sentences, however under Peruvian law would only serve the maximum term of 25 years for all of his crimes. At the time of his pardoning, Fujimori was only 12 years into his 25 year sentence.

The Inter-American Human Rights Court has held a public hearing on the legality of Peru’s humanitarian pardon. At the hearing, the victims’ families have testified against the pardoning. They hope to have Fujimori’s pardoning annulled and have argued the pardoning itself was ‘illegal’ and ‘arbitrary’. With protests continuing regarding the pardoning, it looks unlikely the matter will be resolved anytime soon.

Vessel Reported Missing in the Gulf of Guinea

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India’s minister of external affairs reported on Sunday 4 February that a vessel carrying 22 Indian crewmembers and 13,500 tonnes of gasoline is missing in the Gulf of Guinea after contact was lost in Benin on Friday 2 February. The latest incident, the second to take place this year, has sparked concerns for vessels transiting this region.

The Marine Express tanker, managed by Hong Kong-based Anglo-Eastern, was last seen in Benin’s waters at 3:30 AM GMT on Friday after which contact was lost, an Anglo-Eastern spokesman has disclosed. Anglo-Eastern has reported that the cause of the loss of communication was unknown and that a search was underway, conducted with the help of Nigerian and Beninese authorities. According to the spokesman, contact was lost with the vessel, which was at the Cotonou Anchorage in Benin, West Africa. India’s minister of external affairs Sushma Swaraj disclosed on Twitter that 22 Indian nationals were on board the vessel.

This latest incident comes after a company lost communication with its tanker on 10 January. The tanker had been anchored in Cotonou. According to the International Maritime Bureau (IMB), after a six-day search the tanker and crewmembers were found safely in Lagos after the tanker owner negotiated with the hijackers.

Maritime experts continue to warn that the Gulf of Guinea has become an increasing target for pirates who steal cargo and demand ransoms, even as piracy incidents have declined worldwide in recent years. While over the last decades piracy-related issues were focused off the coast of Eastern Africa, particularly in Somalia’s waters, in recent years the threat of piracy in the Gulf of Guinea have significantly increased. According to a January report compiled by the IMB, vessels transiting the Gulf of Guinea in 2017 were the target of a series of piracy-related incidents, with IMB highlighting that the waters off the coast of West Africa were a growing concern. According to figures released by the IMB, in 2017 there were ten incidents of kidnap that involved 65 crewmembers, with the incidents being reported in or around Nigerian waters. Globally, sixteen vessels were reported being fired upon last year, seven of which occurred in waters in the Gulf of Guinea.

Human trafficking in Southeast Asia

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If someone is following the news, not a single day passes without a report on some kidnappings or human trafficking. This is extremely true if one looks at East and Southeast Asia. According to the United Nations’ Office on Drugs and Crime (UNODC) 2016 report, the share of the detected victims of human trafficking is increasing every year. Half of the victims are women and nearly one third of the victims are children.

In the case of Southeast Asia, more than half of the victims are trafficked for sexual exploitation. 7800 victims were detected between 2012 and 2014. 60% of these victims were trafficked for sexual exploitation. In a recent Indian government report the number of reported human trafficking cases were more than 8000. The Freedom Project, an Indian anti-slavery charity says, the trend reflected by the data is pretty accurate, although it does not include the unreported cases, which means much more people fall victim of human trafficking. Most of the victims are forced to work in their country of origin, or they are smuggled to neighbouring countries. Longer flows are destined to wealthier regional countries like Japan or Australia. Terrorist groups, like ISIS or the Taliban, are also highly interested in human trafficking.

The second biggest reason for trafficking people is forced labour. Those trafficked for labour usually work in the fishing industry, such as in Thailand, Cambodia and Indonesia. It usually means working for more than 16 hours a day without any compensation.

Between 2012-2014 nearly 5000 offenders were prosecuted for trafficking.

There are many forms of fight against human trafficking. The cabin and ground crew of two Malaysian airlines will be taught to spot possible victims. The crew will be trained to ask specific questions and look for signs of body language. The International Air Transport Association (IATA) will launch its human trafficking awareness campaign in 2018. Guidelines train crew members to look for indicators of human trafficking. Key indicators include passengers not in control of their own travel documents, acting nervous or frightened and being inconsistent about their destinations. In Bangladesh, police forces held a conference to heighten the awareness and sensitivity of Police Personnel in December 2017. Cambodia and India are both source, transit and destination countries for human trafficking. Both countries use modern technologies to help low-skilled workers to find local jobs, avoid traffickers and fake recruiters. In Cambodia, Bong Pheak, a free recruitment service offers an application which provides workers access to more than 500 registered and checked employers. In India, there are mobile applications matching women with domestic employers, bypassing fraudulent intermediaries.

All the victims become traumatised because of what they have gone through, been forced to do and because of all the suffering. Agencies and local organisations realised that some of the countries’ health and medical services are not prepared to help reintegrate people experiencing such mental and physical problems. In northern Vietnam, local social organisations are providing shelter and aid for human trafficking victims with the help of previous victims.