By Michael O'Boyle
LA TUNA, Mexico (Reuters) - In villages nestled amid the jagged mountains where captured Mexican kingpin Joaquin "Shorty" Guzman was born, the drug trade that dominates the local economy is already breeding the next generation of smugglers and gunslingers.
Guzman, arrested last weekend, started life in the village of La Tuna high in the sierra of Mexico's northwestern state of Sinaloa. Marijuana and the poppies used for opium have been grown here for decades, fueling the rise of successive dynasties of famous drug lords.
Youths armed with assault rifles zip down winding gravel roads on four-wheel motorbikes, patrolling Guzman's fiefdom.
The military engages in a continual search for fields of marijuana and poppies between the rocky slopes of the surrounding mountains.
"This is the cradle of drug trafficking. It's like a school," said Mario Valenzuela, mayor of the county seat of Badiraguato.
Among the tin-roof shacks that cling to the hillsides rise pink and orange mansions that Guzman built for his mother and grandmother. Perched on the mountain above is his own mansion, "El Cielo" (or "The Sky"), ringed by tall pine trees.
Guzman, known by his nickname "Chapo" (or "Shorty"), was arrested on Saturday when Mexican marines stormed a condominium in the beach resort of Mazatlan.
It was a major victory for the government in its long, brutal war on drug cartels, whose feuds have claimed more than 80,000 lives in the country since 2007.
The news shocked local residents, who think of Guzman as one of the most powerful people in Mexico, bathed in riches that for years allowed him to pay off police and politicians and even escape from prison in 2001.
For many of the youngsters growing up in the surrounding hillsides, Guzman is a role model and a hero, holding out hope for a life of power, women and wealth in a land where the only alternative for many is to toil in the fields or join the vast informal economy of street merchants.
"I am going to be the second most-wanted," a 15-year-old on a motorcycle joked to a group of his friends. For many youths, the call to "the life," as locals say, is irresistible.
Juan, 19, hangs out with his friends at a video game arcade in the center of Badiraguato, and admits he is drawn to the drug traffickers' lifestyle. Several of his friends sell drugs or help their parents raise marijuana or poppy flowers in the mountains.
"It's just a normal life," he said. Like many people across Sinaloa, he says he doubts that the man presented by Mexican authorities is really Guzman. "Everyone says it is not really him, for all the (plastic surgery) operations he has had."
WATER PARKS AND DAY CARES
While Guzman's feared Sinaloa Cartel fed the U.S. craving for illegal narcotics, it also hooked the economy of his home state on the southward flow of drug money.
"People are afraid that the economy could collapse," said Jorge Chavez, a lawyer and citizen representative on the state's security council of police and politicians. "I cannot say by how much, but the economy depends on this money."
In Mazatlan where Guzman was caught, the boardwalk is lined with hotels, restaurants and night clubs. Every few blocks sit boarded-up premises that locals say were fronts for drug gangs closed after police raids or bloody shootouts between rivals.
Miguel Vasquez, a taxi driver who gives tours of drug trafficker hot spots, estimates that more than half of the city's bars and nightclubs have links to organized crime.
The billions that Guzman's gang allegedly made by shipping north tons of cocaine, methamphetamine, marijuana and heroin is laundered in condominiums, gas stations, beauty parlors and even a day care center, according to the U.S. government.
Outside Culiacan, the water slides of the Cascabeles fun park rise above farmland and ranches. It is just one business signaled out last July by the U.S. Treasury Department as part of the money laundering operations of Guzman's cartel.
Grass lawns and palm trees line swimming pools, bungalows, and a go-kart track. A few gardeners and groundskeepers work in the hot sun preparing for the crowds of the coming Holy Week holiday. But not one admits to knowing who the alleged owner is.
BLACK MARKET DOLLARS
Inside Culiacan, the Lomas mall and apartment complex is another suspected cartel front: a run-down building filled with a lingerie store, a DHL outlet, a pizza parlor and knick-knack stores. The proprietor of one shop is unsurprised when shown a copy of the U.S. government report blacklisting his landlord.
"Here there are many people who all of a sudden have many businesses. Where does the money come from? The economy has a lot to do with this. We are a state that is dependent," he said.
Others downplay the influence of drugs in the economy in Sinaloa, which is also one of Mexico's top farming centers, exporting tomatoes, mangos, garbanzo beans and vegetables from modern agro-industrial complexes.
"We are Mexico's bread basket," said a 35-year-old consultant from Sinaloa, asking not to be named. "There are many decent people working for this."
Still, the state's $2 billion or so in annual agricultural output may struggle to compete with the flow of illicit cash. Mexican cartels are estimated to earn $25 billion to $40 billion from their global operations every year.
The cash spills into the streets of Culiacan. In the city center, young women in tight clothes and sunglasses sit under parasols, selling dollars for Mexican pesos at favorable rates to customers in shiny sports cars and trucks with tinted windows.
On Thursday, over a thousand mostly young people staged a protest march to demand Guzman's release, with signs saying "Free Chapo." Locals said they had never seen anything like it.
Luis Alvarez, 24, who sells sunglasses on the street joined the march. "Chapo serves the people, and the people love him."
According to Alvarez, Guzman's gang has kept other cartels out of Culiacan by punishing criminals who prey on the public. "Here there is no extortion, and no kidnapping," he said.
But others looked at the Chapo rally with disdain and said the supporters were bused in by gang members. "It's shameful," said a 20-year-old at a coffee shop. "They say they were paid."
Meanwhile the street buzzes with rumors. If Guzman really is gone, people fear that the notoriously violent Zetas gang, infamous for decapitations and mass executions, could move into the home turf of Mexico's drug-trafficking royalty.
In Culiacan's most famous graveyard sit the palatial tombs of dead drug smugglers. The size of small homes, the styles range from miniature castles to replicas of colonial mansions, to sleek, modern glass and marble structures, many with electricity, air conditioning, restrooms and even kitchens.
Valeria, a 20-year-old, sits drinking beer with some friends at the side of the modest tomb of her slain boyfriend, who died just over a year ago.
She is afraid of what comes next now that Guzman has been captured. "We're sad. He took care of us."
Around her, some two dozen masons build more extravagant tombs. One group works on a cement cupola two stories up. "They spread a lot of cash around," said Martin, 50, a builder. "Now that they caught him, the work is going to go away."
(Additional reporting by Julia Symmes Cobb and Adriana Barrera in Mexico City; Editing by Simon Gardner, Kieran Murray and Lisa Shumaker)