Zetas, originally established as an enforcement wing of the narco-trafficking Gulf Cartel, but now a paramilitary militia in its own right

"Although they wore ski masks, everyone knew who they were with their machineguns and uniforms," said Gabriela. This brazen display of strength was carried out by the Zetas, originally established as an enforcement wing of the narco-trafficking Gulf Cartel, but now a paramilitary militia in its own right, highly trained in combat and probably the most powerful drug-trafficking organisation in the world.

The cartel was founded in the 1970s but emerged in its modern form in the mid-1980s, led by Juan García Abrego (now in a Colorado jail) and thereafter Osiel Cárdenas Guillén, who founded the Zetas and who is now awaiting trial in Houston, Texas. The Zetas are now led by Heriberto Lazcano – "El Lazco" or "Z3" – wanted in both Mexico and the US. It is Lazcano and the Zetas who control the cartel's drug operations and exercise the savagery with which its power is enforced and its terrain expanded. Estimated by US intelligence to number about 4,000, its soldiers were recruited from the Mexican army's special forces units, some reportedly trained in the US, though this has never been proved. What has been proved time and time again is their deadly cogency. The cartel is the only one against which the Mexican president, Felipe Calderón, has thrown his army's full might. So far, thanks to the Zetas, the cartel is winning.

After two years of Calderón's military offensive against the cartels, and 20 years since their "federation" fell apart and they began fighting one another, no one can predict an outcome, but one partial result is clear: the cartel and the Zetas have held their terrain and are broadening it, despite the high-profile arrests of key members of the group such as Jaime González Durán, alias "El Hummer". A spokesman for Calderón, Alejandra de Soto, told the Observer that "the army is proud of what it has achieved in Tamaulipas" – where the Zetas are based – "there is relative peace in the area. It has been brought under control".

The crucial point about the "relative peace" in areas held by the Zetas is that it is a peace whereby the cartel controls every facet of life, is uncontested by its rivals and presides over an omnipresent reign of terror.

It is also punctuated by firefights and the brutal murders of police commanders who do not co-operate. Last week more than 20 men were arrested for the murder of the police commander of García, near Monterrey. A retired army general, Juan Arturo Esparza, was ambushed with a fusillade of fire and killed, said a message cited in the Houston Chronicle, for "disappointing the letter Z". Most of those arrested were police officers. Meanwhile, hundreds of officers dutifully turned out last week for the funeral of the state police commander in Veracruz, Casto Acevedo, reportedly killed by the Zetas for refusing to co-operate with them. His torso and mutilated limbs were stacked on a mattress and his severed head left nearby.

Zeta territory is markedly different from the notoriously violent Ciudad Juárez, where the cartel pyramids have collapsed and criminal anarchy prevails. There, newspapers can report the nightly atrocities. In Zeta country, killing is less common and daily life appears normal – but it is governed by fear.

Moreover, the Zetas are expanding. Determined to control a corridor of their own through Central America to the cocaine production fields of Colombia, Peru and Venezuela, the Zetas have fought for and won control of most of the Gulf coast – as shown by recent massacres in Veracruz and Cancún, where they murdered an army general – and are fighting an all-out guerrilla war against the Sinaloa Cartel's cocaine farms in Guatemala. They are contesting a rival cartel, La Familia of Michoacán, for lucrative markets of Mexico City's endless suburbs. In a reported alliance with a cartel called the Beltrán-Leyva brothers, they are fighting for smuggling routes into Arizona.

Crucially, the Zetas hold their terrain absolutely and its location in north-eastern Mexico affords access to Houston, which the FBI, briefing the Observer last week, called "the hub city" for alliances with local gangs – the old "Texas Syndicate" and loose-knit "Tango Blast".

Of all Mexico's cartels, the Zetas are the most internationally connected, allied to their counterparts in the Italian syndicates, the 'Ndrangheta of Calabria, with ambitions in the European and African markets.

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