MEXICO CITY - Headless bodies in Tijuana, kidnapped children in Phoenix and shootouts on the streets of Vancouver: These are the unwanted byproducts of progress in the Mexican drug war.
While the headline-grabbing chaos creates the appearance of a drug trade escalating out of control, evidence suggests Mexico's cartels are increasingly desperate due to a cross-border crackdown and a shift in the cocaine market from the U.S. to Europe.
Those pressures are forcing Mexico's criminal networks, once accustomed to shipping drugs quietly and with impunity, to wage ever more violent battles over scraps and diversify into other criminal enterprises, including extortion and kidnapping for ransom on both sides of the U.S. border.
"This is not reflecting the power of these groups," Attorney General Eduardo Medina Mora told The Associated Press in an interview. "This is reflecting how they are melting down in terms of capabilities, how they are losing the ability to produce income."
As evidence of that pressure, the U.S. government says the amount of cocaine seized on U.S. soil dropped by 41 percent between early 2007 and mid-2008. Reduced supply is said to have raised street prices by nearly a third to about $125 a gram in the U.S. and lowered purity by more than 15 percent. Both the U.S. and Canadian governments are even seeing prolonged shortages of cocaine.
"The reason you see the escalation in violence is because U.S. and Mexican law enforcement are winning," Garrison Courtney, spokesman for the Drug Enforcement Administration, said Tuesday. "You are going to see the drug traffickers push back because we are breaking their back. It's reasonable to assume they are going to try to fight to stay relevant."
Mexican cartels are being cut out of the U.S. methamphetamine market as well, the U.S. and Mexican governments say, though smuggling of marijuana from Mexico has increased steadily since 2005 as demand increases.
The trouble for Mexico's illicit trade began on Sept. 11, 2001, when terrorist attacks in the United States prompted heightened security at the border. President Felipe Calderon upped the ante by directly confronting the cartels on his first day in office two years ago, sending 45,000 soldiers and federal police to battle the cartels across the country.
Improved cooperation with the U.S. since then led to the recent arrests of 755 Sinaloa cartel suspects in U.S. cities and towns as small as Stowe, Iowa. Mexican authorities, meanwhile, rooted out more than two dozen high-level government security officials, including Mexico's former drug czar, who were allegedly paid to protect the same gang, Mexico's most powerful.
The U.S. Embassy reported a record 85 extraditions from Mexico to the U.S. in 2008, contributing to a power vacuum that sparked an all-out war among the cartels as they battle for routes to the U.S. and control of Mexico's growing domestic drug market.
These successes, however, come with a brutal cost: skyrocketing violence in Mexico, with twice as many deaths last year and more than 1,000 people killed in the first eight weeks of this year; more than 560 kidnappings in Phoenix in 2007 and the first half of 2008, and more than two dozen shootings so far this year in Vancouver, British Columbia, where a shortage of cocaine from Mexico has pushed prices up from $23,300 to almost $39,000 a kilo.
The Mexican government estimates that 90 percent of those killed are linked to the drug trade, and many kidnappings in the U.S. are also drug related.
Mexico was just a token player in the cocaine trade some two decades ago, when the U.S. cracked down on the Caribbean routes for Colombian cocaine.
Suddenly, Mexican cartels that already trafficked marijuana and heroin controlled the main routes to the coveted U.S. cocaine market.
Today, 90 percent of all cocaine that ends up in the U.S. moves through Mexico, according to the U.S. State Department, and the gangs make an estimated $10 billion in annual profits.
But the U.S. market is being eclipsed by booming demand for cocaine in Europe, where users now pay twice the going U.S. rate, and Colombian gangs don't need Mexican middlemen when shipping across the Atlantic.
Mexican gangs have tried to develop their own routes into Europe, even forging ties to the Italian Mafia. But they have had limited success and Medina Mora predicts the Colombians will win out in the end.
"There is no sense to ship the product north, losing value, and then ship it to Europe, if it is possible to do it straight from South America to Europe," he said.
The Mexicans have also lost control of the vast U.S. meth market, the U.S. and Mexican governments say. In 2003, Mexico legally imported 235 metric tons of the key precursor chemical pseudoephedrine - about twice what was needed to supply its entire cold and allergy market.
But Mexico banned pseudoephedrine imports in 2007 after the spectacular discovery of $207 million in cash in a Chinese pharmaceutical businessman's Mexico City mansion. Medina Mora says Asian smugglers have responded by shipping such chemicals directly to the U.S., where small sales of legal medicine containing pseudoephedrine are another source of the drug.
While Mexican gangs may be on the defensive for the first time since their rise to power, they are far from dead.
A December report by the Justice Department says Mexican cartels already pose "the greatest organized crime threat to the United States," and the U.S. Joint Forces Command recently compared Mexico to Pakistan, saying both governments are at risk of "rapid and sudden collapse."
Many - even Calderon - believe the violence could get worse before it eases.
To make up for lost drug profits, the gangs are morphing into powerful organized crime syndicates that are terrorizing Mexicans through kidnapping and extortion, crimes that are spreading into the U.S.
Both Mexico and the U.S. are ramping up cooperation, using $400 million in new U.S. aid to further weed out corruption among Mexican security officials and better equip and train those that stay. The U.S. has also promised to crack down on the estimated 2,000 weapons smuggled into Mexico each day and then used in 95 percent of all killings here.
It's a fight both countries say they have no choice but to wage. If Mexico gave up, then "the next president of the republic would be a drug dealer," Mexican Economy Secretary Gerardo Ruiz Mateos predicted last month.
Calderon says he won't back down until Mexico's drug cartels are a problem local police can handle - and no longer a national security threat. His goal is to attain that by the time he leaves office in 2012, but he admits that may be too optimistic.
"Yes, we will win," he said, "and of course there will be many problems meanwhile."