Mexico’s corruption runs deeper than El Chapo

On Jan. 8, the drug kingpin Joaquín Guzmán Loera, better known as El Chapo, was captured by Mexican marines in the northern state of Sinaloa. He escaped from prison six months before, dealing a big blow to Mexican President Enrique Peña Nieto. After the escape, the president’s popularity took a huge hit at home, and other countries started questioning the capacity of Mexican institutions to enforce the rule of law.

Peña Nieto triumphantly celebrated El Chapo’s recapture on Twitter. However, it is far from clear that Guzmán’s capture will have a significant positive effect on the severely battered president.

El Chapo had been an elusive figure for the Mexican authorities. He first escaped from prison in 2001, concealed in a laundry cart. He then remained a fugitive for 13 years. In the meantime, he consolidated his drug empire, the Sinaloa cartel in western Mexico. He has always drawn the fascination of Mexicans, many of whom see him as a Robin Hood–like figure. In Sinaloa, he was known for his largesse toward the local population.

Conservative Presidents Vicente Fox and Felipe Calderón of the National Action Party, who ran the country from 2000 to 2012, reportedly hunted Guzmán. However, neither one was able to capture him. Conspiracy theories emerged pointing to a possible underground arrangement between the right-wing governments and El Chapo.

In 2012, Peña Nieto took office, restoring to power the left-leaning Institutional Revolutionary Party, which had run Mexico for nearly a century. In 2014, less than a year and a half into his presidency, he captured Guzmán. At the time, the government was enjoying a bonanza of international praise for its bold reform agenda, including an overhaul of the telecommunications sector and a major blow to the country’s most powerful union. Time magazine even ran a cover with a heroically framed Peña Nieto, reading “Saving Mexico.”

But the honeymoon didn’t last long. Later that year, 43 students from the Ayotzinapa Rural Teacher’s College went missing in southern Mexico. A few months later, a group of journalists uncovered a conflict-of-interest scandal involving the president’s wife, after which they lost their jobs. Then the oil-dependent economy started to suffer from lower energy prices. Finally, in July, El Chapo made the news again: He escaped from prison through an ingenious system of tunnels, like something out of Hollywood.

After the escape, international media started looking more critically at Peña Nieto, wondering how things had gone so wrong so fast. The consensus has been that Mexico’s core weakness lies in its institutions and its feeble rule of law.

Government officials have used Guzmán’s recapture to argue that the country’s institutions are strong and working. Mexico’s economy minister recently declared, “The capture of El Chapo generates optimism in the world toward Mexico, and this encourages foreign investment by signaling that in the country, the rule of law prevails.”

It might be too early to celebrate. Mexico still faces some fundamental problems. So far, no high-level official has been charged in connection with El Chapo’s escape from prison last summer; only midlevel officials have been convicted. Security experts have wondered how Guzmán’s operatives managed to carve tunnels undetected for months without having support from the highest levels of government.

Mexico’s Central Bank chairman said publicly last week, “The lack of security increases uncertainty, and this inhibits investment.” CEOs will hardly be impressed by El Chapo’s recapture. Businesses lose millions of dollars every year because of the country’s insecure environment, and managers deal every day with corrupt government officials.

It is no surprise that after Guzmán’s recapture, many have wondered when he will be extradited to the United States. Many Mexicans assume that he would face a tougher criminal procedure in the U.S. than he would at home. Mexican authorities also know that, and one wonders if it is in their best interest to extradite El Chapo.

The Sinaloa cartel has been able to thrive because of his direct connections to the local and federal governments. El Chapo’s success is the product of a corrupt political system. He knows too much about too many officials. If he is extradited to the U.S., he will likely share with U.S. authorities the names of those who made his success possible. This would be bad news for the Mexican political elite, a very tight-knit cohort. If he shares what he knows, he might just set off a domino effect that would cripple the careers of many aspiring politicians.

However, not extraditing El Chapo poses a different challenge to the government. After his recapture, he was taken back to the prison from which he escaped in July. A presidential campaign cycle will kick off next year, and if Guzmán escapes again, not only will it be a major blow for Peña Nieto, but it will also likely imperil his party.

The stakes for the Mexican government are major. The country is experiencing a slow-motion devaluation of its currency while a shortfall of oil dollars is tightening public finances. Drug-related violence in vast swaths of the country has not ebbed. The year had barely begun when a newly inaugurated mayor was killed south of Mexico City.

Unless Peña Nieto’s government can demonstrate real results on strengthening the rule of law, Mexicans will hardly believe its claims. The number of deaths from violence is at an all-time high. The shadow of insecurity is obscuring cities that were previously known as safe havens, including the capital.

Meanwhile, the honeymoon between the president and international investors is clearly over. As Peña Nieto enters the final stages of his presidency, he faces an uphill battle. While El Chapo’s capture might provide a momentary boost, investors are well aware of Mexico’s deep structural problems.

Peña Nieto might as well enjoy the small victory he scored. But arresting one drug lord is the easy part.