Throughout Mexico, business extortion has crippled entrepreneurship and stifled economic growth for years but has often been overlooked. Recent reports by think tank México Evalúa have provided crucial context for understanding the effects and nuances of this crime in Baja California.
Business extortion generally involves the perpetrator using the threat of violence or force to extract money from a targeted business or businesses. While extortion throughout Mexico has impacted large multinational corporations ranging from Coca-Cola to one of the largest global dairy producers, Grupo Lala, it is aspiring entrepreneurs and their small- and medium-sized businesses that are hit hardest by this crime. From street vendors to corner store owners, micro-entrepreneurs comprise 97% of the Mexican economy, and are, unfortunately, the main victims of this crime, with 85% of extortion incidents affecting microbusiness. For the business owners that capitulate to the threat of extortionists the financial burden can bankrupt them, and for others that refuse to pay, the consequences can be far more severe.
Since 2021, Mexican think tank and CIPE partner, México Evalúa has been investigating business extortion in the Mexican border state of Baja California. This state is part of a megaregion known as CaliBaja, which includes Baja California, Mexico and many counties in San Diego and Imperial Valley in California. This broadly defined area has an annual GDP of 250 billion dollars and is a quintessential part of US and Mexican commercial relations. The economic importance of this transnational community signifies that the consequences of business extortion are particularly harmful both to Mexico as well as the United States. México Evalúa’s report serves as a critical first step towards addressing the scarcity of information on business extortion. The report outlines three key challenges to combatting this issue: low reporting rates, lack of trust in state and local armed forces and government institutions, and heterogeneity in the modus operandi of this crime.
While the remnants of extortion are felt across the country, there is little information on the true impact of this crime. Fear of discussing experiences of extortion has consigned information to a handful of anonymous interviews and survey results. The widespread effects of this “criminal tax” are often overlooked by law enforcement while the absence of data has created significant impediments to identifying and developing solutions to extortion in Baja California. Additionally, victims must produce detailed evidence to formally report extortion against their business, which, coupled with the risk of physical harm and the fact that reports often don’t lead to a quick and effective police response is enough to prevent many from speaking out. These mechanisms reinforce the silence that is emblematic of business extortion and cast doubt on the accuracy of official statistics on the pervasiveness of this crime in Tijuana.
The erosion of confidence in local officials and government institutions is another important aspect of Baja California’s security landscape. While the role of local law enforcement is to uphold public security in the communities it serves, México Evalúa’s research reveals that this is not the case in Baja California. Only 10% of respondents view state police as “very effective” in their role and only 9% perceive local police to be “very effective.” 91% of respondents stated that their neighborhood has at least one form of public authority, but individuals in Baja California do not feel a greater sense of security despite the widespread presence of security officials. The study also goes on to show that in some cases, the presence of these authorities has led to greater unease. Distrust of public authorities is a prominent feature of the security landscape in Baja California and drastically impacts the likelihood of citizens to report and collaborate with officials on solutions to business extortion. To overcome these challenges and ultimately develop sustainable solutions to Baja California’s insecurity challenges, it is imperative that channels are established to promote dialogue and inclusive decision-making between key actors from civil society, the private sector, and security officials.
México Evalúa’s report also sheds light on the ways in which business extortion typically manifests itself. From the actors committing these crimes to the method by which it is carried out, business extortion can appear radically different depending on the case. In México Evalúa’s study, this “criminal tax” is categorized into two main variations, extortion and “cobro de piso.” The two types are distinguished by the frequency of interactions between the perpetrator and the victim, and the relationship between both parties.
Extortion commonly involves a single or infrequent threat, while “cobro de piso” is defined by México Evalúa as “entailing a long-term relationship, in which the victim and the perpetrator are intertwined and establish a daily interaction.” The former is typically a random occurrence, where the perpetrator is often not linked with organized crime but commits the crime when an opportunity arises. On the other hand, “cobro de piso” occurs through an established relationship that impacts the day-to-day life of the victim. This analysis brings greater attention to the nuances of this complex crime and is a critical step in identifying tailored and effective solutions to business extortion.
It is only through rare testimonies that the world gets a glimpse of the realities of business extortion. For this reason, the work of CIPE’s partner México Evalúa has been essential for shining a light on this pressing threat to security and economic growth in Baja California. The results of México Evalúa’s research and findings present an opportunity to move a step closer towards meaningful change through business-sector and civil-society led solutions that actively combat business extortion. The report details the nature of this crime in the economically vital and geographically important state of Baja California, while also providing an important view into the mechanisms that allow this crime to continue with near-total impunity.
México Evalúa is currently working with CIPE on its latest project to expand its network in CaliBaja to build trust and break through the silence surrounding extortion – a crime that has claimed the businesses and even lives of aspiring entrepreneurs. The findings from México Evalúa’s ongoing conversations with key stakeholders and field research are included in its latest report on the nature of business extortion in Tijuana, available here.