The Other Consequences of Fast and Furious

On the night of Dec. 14, 2010, U.S. Border Patrol agent Brian Terry was shot and killed while on patrol in an Arizona canyon near the U.S.-Mexico border. Two guns found at the scene were linked to an investigation being run by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) called "Operation Fast and Furious," sparking a congressional inquiry into the program and generating considerable criticism of the ATF and the Obama administration. Because of this criticism, in August 2011 ATF acting director Kenneth Melson was reassigned from his post and the U.S. attorney for Arizona was forced to resign.

Currently, the congressional inquiry is focused on U.S. Attorney General Eric Holder, who has been accused of misleading Congress about what he knew about Fast and Furious and when he learned it. The Obama administration has invoked executive privilege to block the release of some of the Department of Justice emails and memos sought by Congress pertaining to the operation. The controversy escalated June 28 when the U.S. House of Representatives voted to hold Holder in contempt of Congress for ignoring its subpoenas.

As all Second Amendment issues are political hot buttons, and with this being a presidential election year in the United States, the political wrangling over Fast and Furious is certain to increase in the coming months. The debate is also sure to become increasingly partisan and pointed. But, frankly, this political wrangling is not what we find to be the most interesting aspect of the operation's fallout. Rather, we are more interested in the way that criticism of Fast and Furious has altered law enforcement efforts to stem the flow of guns from the United States to Mexico and the way these changes will influence how Mexican cartels acquire weapons.

Law Enforcement Shifts

Several of these law enforcement changes already have been enacted. For example, the number of ATF inspectors has been increased due to additional funding for an inspection program through the U.S. Southwest Border Initiative. This means that there are more inspectors to audit the sales records of licensed gun dealers. In southern Arizona, for example, the number of inspectors was increased from three to eight. According to the ATF, these inspectors oversee the operations of some 430 federally licensed firearms dealers in six border counties.

These firearms dealers include gun store proprietors as well as independent dealers working the gun show circuit. The increase in ATF inspection staff and activity has sparked an outcry from gun show dealers who claim they are being unfairly harassed by inspectors. ATF sources have told Stratfor that they do not harass dealers, but that the staff increase has allowed the bureau to catch up on inspections it was not able to conduct in the past. The sources also said they believe that their increased presence at gun shows is scaring away cartel buyers, although, obviously, some gun show firearms are still finding their way into cartel hands.

Another procedural change occurred in August 2011, when the ATF began a new program in which licensed gun dealers in Texas, New Mexico, Arizona and California are required to report to the ATF bulk sales of certain types of rifles, namely semi-automatic rifles larger than .22 caliber with detachable magazines such as the semi-automatic AR-15 and AK-47 variants favored by the cartels. The new rule requires gun dealers to report people without federal firearms licenses who buy two or more of such rifles to the ATF within five working days. The rule has raised the ire of some Second Amendment activists, but the ATF notes that it has had a similar reporting regimen for multiple sales of handguns in place since 1975.

The attention that Fast and Furious attracted to the gun smuggling problem also has led to an increase in interdiction efforts by other U.S. federal, state and local law enforcement agencies, including Immigration and Customs Enforcement. Furthermore, weapons cases have reportedly been given increased prosecutorial priority by U.S. attorneys -- meaning they are now less likely to decline prosecution of a gun case than before the controversy emerged. This has led to increased pressure on lower-level violators such as straw purchasers -- people paid by arms traffickers to buy guns from dealers. Greed will ensure that people continue to work as straw purchasers, but considering the increased risk of prosecution and the new reporting requirements, straw purchasers and the traffickers who employ them will be more exposed. 

In May 2012, the ATF claimed that the reporting requirements have led to a decrease in large-volume sales of semi-automatic rifles (10 or more in a single purchase). The ATF also said that traffickers are adapting their weapons procurement methods to the new regulations.

Arms Smugglers Adapt

Despite their impact, the law enforcement and reporting changes cannot stem the tide of weapons entirely. In the same way that drug flows adapt to law enforcement interdiction efforts, weapons flows will also adjust. Previous federal investigations have shown that Mexican cartels have contacts in many different parts of the United States, including cities such as Chicago and Atlanta, far from the border. One way to bypass the increase in ATF inspections and the border state reporting requirements is to buy guns in states located farther from the border. Of course, this would require the weapons to be transported longer distances to get to Mexico, increasing transportation costs as well as exposure to interdiction efforts. A shift in the points of purchase would also almost certainly result in the expansion of the new reporting requirements to other states.

Although it will never be possible to completely cut off the flow of guns to Mexico from the United States, it can be reduced. This would force the cartels to search for new sources of weapons.

One significant emerging source of AR-15/M16 variants is something called an 80 percent lower receiver. (The lower receiver is the part of the AR-15/M16/M4 that carries a manufacturer's serial number. These 80 percent lower receivers do not have any serial numbers.) Under U.S. federal firearms law, the unfinished lower receiver is not considered a firearm and thus can be shipped anywhere and sold to anyone without a license. Once the remaining machining on the lower receiver is completed, one can build an AR-15, M16 or M4 carbine by purchasing the additional required parts -- such as the bolt assembly, trigger assembly and barrel -- which also are not considered firearms. Once the weapon is fully assembled, it is then considered a firearm and subject to federal firearms law. 

While the 80 percent lower receivers are intended for do-it-yourself gun enthusiasts, according to the ATF, these guns have also begun to show up in increasing numbers in Mexico.

Many if not most of the semi-automatic rifles purchased in the United States and smuggled into Mexico are converted to be capable of fully automatic fire by armorers working for various cartel groups. The same armorers are capable of finishing the machining on 80 percent lower receivers and assembling completed firearms from them. The finishing process is not difficult, and there are specialized jigs one can buy and instructional videos posted on the Internet to assist in the process. With experience, proper parts and equipment, a competent machinist can quickly and easily finish a lower receiver in an hour or less.

But acquiring 80 percent lower receivers is not the only alternative for cartels. As noted previously, the Mexican cartels obtain weapons from a variety of sources. The main reason they buy rifles and high-powered pistols from the United States is that such weapons are cheap and readily available. The United States is also nearby, so the guns do not have to be transported very far. Once in Mexico, such weapons can be sold to cartels or on the black market for three times their purchase price in the United States. This explains the difficulty of shutting down the flow of weapons between the two countries. The gun trade is almost as lucrative as the narcotics flowing north.

The premium prices Mexican cartels are paying for guns mean that even if the U.S.-Mexican border could somehow magically be sealed tomorrow, arms merchants from elsewhere would be able to fill the void. Indeed, there are some weapons that the cartels simply cannot buy from the United States due to a lack of availability. Such weapons include hand grenades, 40 mm grenades, M60 machine guns, rocket-propelled grenades and M-72 anti-tank rockets. Instead, the cartels buy such items from members of the Mexican military, militaries in countries such as Guatemala and El Salvador, or international arms dealers. The cartels would go to these same sources to replace the weapons unavailable in the United States due to increased arms interdiction efforts. South American groups such as the Revolutionary Armed Forces of Colombia and Peru's Shining Path have demonstrated that it is not difficult for groups to arm themselves via the black arms market in the Western Hemisphere. 

Rifles and other weapons are durable goods, and it is not unusual to find weapons in Mexico that were provided by the United States, the Soviets or the Cubans to various governments and insurgent groups during the Cold War. Weapons are also fungible, or easily substituted for each other. This means that an AK-47 rifle made in the Soviet Union in the 1950s could be replaced by a variant made in East Germany in the 1970s or in China or Romania today. Indeed, it is not uncommon to find assault rifles of various makes and ages in cartel possession. In videos published by groups such as the Cartel de Jalisco Nueva Generacion, gunmen armed with FN-FAL rifles have appeared alongside comrades armed with various models of AKs, M16s and M4s. A cartel gunman does not care where his rifle comes from.

In recent years, Mexican cartels have begun to forge close relationships with Chinese organized crime groups that are helping the cartels obtain precursor chemicals for the manufacture of methamphetamine and other synthetic drugs. These Chinese groups also are reportedly becoming increasingly important components of Mexican cartel money laundering efforts. Chinese criminal groups have close ties with the Chinese arms manufacturers, and it is possible that they could begin sending guns to their Mexican contacts with the other illicit cargo.

The Mexican cartels have also reportedly become progressively more involved in the transportation of cocaine to Europe via Africa -- a continent awash in black market assault rifles and other weapons. Some of the cocaine trafficked into Europe is handled by Balkan groups with access to large stockpiles of weapons in Eastern Europe. 

These various connections ensure that the Mexican cartels will continue to have access to assault rifles and other military ordnance for the foreseeable future, regardless of how much progress U.S. authorities make in their efforts to stem the flow of guns to Mexico.

Editor's Note: We now offer the daily Mexico Security Monitor, an additional custom intelligence service geared toward organizations with operations or interests in the region, designed to provide more detailed and in-depth coverage of the situation. To learn more about this new fee-based custom service, visit www.stratfor.com/msm.