The heightened risk that Puerto Rico will become a new base for Mexican cartels

Puerto Rico’s wrecked infrastructure and dysfunctional finances and politics make it a target for Mexico’s drug trafficking organizations (“narcotraficantes” or “narcos”) looking to diversify their transport channels to North America.

And if the narcos succeed, they will put the RICO into Puerto Rico.

Hurricane Maria hit Puerto Rico on Sept. 20, 2017. Its 100 mile-per-hour winds and heavy rainfall and flooding destroyed the island’s power grid, leaving all 3.4 million residents without electricity, and wiped out 80 percent of the territory’s crop value. Communications were cut off as most of the cellphone, landline, and Internet service was lost. Highways and bridges suffered extensive damage, hampering the distribution of relief supplies. The territory’s Governor estimates storm damage at $90 billion.

{mosads}Some members of the island’s political class didn’t respond with distinction. The mayor of San Juan spent her time in front of news cameras instead of at disaster recovery meetings, and other mayors hoarded relief supplies for their political supporters. One engineering firm providing pro bono assistance refuses to work with local officials.

An isolated location with low-grade infrastructure, high unemployment (10 percent before Hurricane Maria), a long coastline and venal public officials are attractive to the narcos as the situation resembles the ungoverned spaces in familiar places such as the Mexican province of Sinaloa.

In August 2107, “Junior Cápsula,” the most powerful narco in Puerto Rico and the Dominican Republic was sentenced to 30 years in prison. With Junior off the board, and the region’s trafficking volume surging (it tripled between 2009 and 2014), and the economy prostrate, the region faces a leadership vacuum when its public institutions are vulnerable to corruption. Into it may step organizations with cash and experienced people to compete or cooperate with the local traffickers.

The Caribbean was the prime drugs pathway to North America when Colombia’s Medellin and Cali cartels controlled the cocaine trade, but is not now favored by the Mexican cartels which prefer to go through, under, and over the Southwest border of the U.S. Now, the combination of local economic necessity and good transport facilities may earn the territory a second look from the cartels.

The government-owned Puerto Rico Ports Authority is responsible for developing, operating, and overseeing nine seaports and 10 airports (there are 16 airports total). Most of the seaports are located near airports, a feature that appeals to any transporter, licit or illicit. The airports range from small private fields to the international airport servicing the capital city, San Juan, the main entrepot for flights to North America. Passengers and cargo arriving in the U.S. are proven vector for smuggling, and cargo ships and containers to the U.S. get less screening. The port of San Juan has eight passenger piers, with accommodation for twelve ships, and eight cargo piers which handle containers and bulk cargo.

Before Hurricane Maria, Puerto Rico was best known for its $73 billion debt, an unfunded pension liability of $49 billion, and a dismal bond rating. How did that happen?

There’s a lot of blame to go around: weak local governance, corrupt politicians, the phasing out of federal tax credits that helped channel investment to the island, the inability of Puerto Rico to restructure its debt in bankruptcy court, and the island’s tax-exempt bond status, for starters.

The Puerto Rico Ports Authority earns revenue and lease income, but auditors have found numerous weaknesses in its financial management system putting funds and property at risk for theft or diversion. A sharp drop in revenue from airports and seaports as commerce and tourism slow may lead to layoffs, forcing redundant staff into the arms of the narcos, who will offer plata o plomo. If some facilities are forced to close, that’s no problem for the narcos: a closed airport that meets Federal Aviation Administration standards is better than any of the thousands of clandestine airfields used to launch their wares to North America.

Puerto Rico’s banks are part of the U.S. banking system and will be vulnerable to exploitation for money laundering as money spent on reconstruction provides cover for narcotics proceeds. Once the money is in the U.S. system it can be exported with minimal interference.

The narcos have options. They can build or bolster a relationship with the existing Puerto Rican traffickers, and cement it with their own “reconstruction assistance.” Ships and aircraft that deliver reconstruction material to the island can return large drug shipments to the mainland. Corrupt airport employees have been useful since the late 1990s and may be again despite recent arrests. Accommodating politicos can provide early warning of criminal investigations and impede efforts to make the system less opaque, and transport employees under financial pressure may cooperate with traffickers.

The 10 percent of Americans who regularly use illicit drugs probably won’t stop, so neither will the narcos. 

James D. Durso (@James_Durso) is the managing director at consultancy firm Corsair LLC. He was a professional staff member at the 2005 Defense Base Closure and Realignment Commission and the Commission on Wartime Contracting in Iraq and Afghanistan, and served as a U.S. Navy officer for 20 years specializing in logistics and security assistance. His overseas military postings were in Kuwait and Saudi Arabia, and he served in Iraq as a civilian transport advisor with the Coalition Provisional Authority. He served afloat as supply officer of the submarine USS SKATE (SSN 578).