Old Friends, Narcos, and Piña Coladas

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• How the Sinaloa Cartel Is Rewiring Costa Rica

• Latin America and Europe: A Necessary Alliance, But Not Without Conditions

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Best,

The GCaM Team

While global headlines fixate on Mexico’s spiraling cartel warfare, a quieter and more insidious transformation has taken root further south.

• The fight against organized crime has largely bypassed the critical chokepoints that sustain hemispheric drug flows—none more illustrative than Central America. Once-shadowy routes have matured into sophisticated, multi-modal supply chains.

• At the heart of this reconfiguration lies Costa Rica: long celebrated as a bastion of democratic stability, the country now emerges as a key logistical node in the architecture of global drug trafficking.

Panorama. The confession of Ovidio Guzmán López —son of Joaquín “El Chapo” Guzmán— before a U.S. federal court on July 11, 2025, has redrawn the strategic map of the narcotics trade.

• Between 2014 and 2023, following his father’s imprisonment, Guzmán and his brothers reshaped the Sinaloa Cartel into the world’s foremost fentanyl exporter. His testimony, delivered under a cooperation agreement, revealed both the cartel’s internal fracture—now driving a new wave of violence in Mexico— and the unravelling of its transnational logistics network.

• Guzmán, known as “El Ratón,” admitted to overseeing massive flows of cocaine, heroin, fentanyl, and methamphetamines into the U.S. These operations, he confirmed, relied on a sprawling infrastructure that extended deep into South and Central America.

• According to his plea, no Central American country remained untouched. The isthmus was systematically repurposed as a corridor linking South American production hubs to North American markets. Costa Rica, in particular, functioned as an operations base: a site for receiving precursor chemicals, stockpiling shipments, and deploying narcotics via aircraft, maritime vessels, and overland transport.

Why It Matters. Once perceived as a passive waypoint, Costa Rica has morphed into a critical consolidation and redistribution platform—with far-reaching consequences for its internal stability.

• U.S. State Department data shows that between 2020 and 2022, Costa Rica became the principal transshipment point for cocaine bound for the U.S. and Europe. The country’s seizures reached over 27 metric tons in 2024, while homicides remained at elevated levels—880 in 2024, down marginally from 903 in 2023—with violence concentrated in strategic port cities like Limón.

• Among the most explosive revelations is the prosecution of former Supreme Court magistrate and security minister Celso Gamboa, now facing extradition to the U.S. for allegedly facilitating international drug shipments and receiving bribes of up to USD 500,000 per load.

• Cartels have embedded themselves within legitimate export industries, concealing narcotics in shipments of pineapple pulp, cassava flour, and frozen goods en route to Europe and North America—blurring the line between licit commerce and illicit trafficking.

Between the Lines. The fall of Gamboa—a former symbol of institutional rectitude—has shaken the foundations of Costa Rica’s political establishment.

• The U.S. Department of Justice has identified him as a key regional facilitator for both the Sinaloa Cartel and Colombia’s Clan del Golfo, orchestrating operations along both Caribbean and Pacific routes.

• His is the first case to proceed under Costa Rica’s 2025 constitutional amendment permitting the extradition of nationals—a milestone reflecting growing U.S. scrutiny of the region’s political-criminal nexus.

• Ties to former intelligence services and port officials underscore the extent to which organized crime has infiltrated state institutions once thought resilient. The depth of collusion exposed suggests that additional indictments are imminent.

What’s Next. The exposure of Costa Rica as a core logistical hub marks more than a shift in drug–trafficking routes; it signals a turning point in the country’s international image—from democratic outlier to strategic conduit.

• Its geography—linking Colombian supply zones to U.S. demand centers—ensures Costa Rica’s continued value to traffickers, even amid heightened enforcement.

• Surging violence and entrenched trafficking networks are beginning to erode foundational economic pillars. Tourism, which accounted for 8.2% of GDP in 2024, declined sharply following travel advisory downgrades by the U.S. and Canada, with arrivals falling 13.8% between September 2024 and March 2025. Foreign investment in infrastructure and logistics also risks deceleration under the weight of rising risk premiums.

• Without systemic reform, Costa Rica risks cementing its role as a hemispheric warehouse for organized crime. With sprawling coastlines, strategic ports, and permissive financial channels, the country now finds itself on a knife’s edge — with President Rodrigo Chaves at the center of an unfolding crisis.

Europe finds itself at a turning point. The renewed Trump presidency has rattled old certainties, and both in matters of defense and trade, the facts are increasingly clear: the United States is no longer the reliable partner it once was.

Meanwhile, China continues to expand its reach across the “Global South” through infrastructure and no-strings-attached loans—an approach that disregards democratic sovereignty and bears little resemblance to Europe’s foundational values. For 21st-century Europe, those values—rule of law, democratic governance, and human rights—are not optional.

With the European People’s Party (EPP) now leading the European Parliament, Brussels has a unique opportunity: to forge a new geopolitical axis with Latin America. Not as a donor-recipient relationship, but as a partnership rooted in natural resources, human capital, and business ventures aligned with the principles of free markets, democracy, and legal certainty.

There are three strategic areas in which Guatemala—and the broader region—could become a valuable ally to the continent:

1. Mining and energy: Europe urgently needs critical minerals for its energy transition—an imperative made even more pressing by the continent’s dependence on Russian gas and Germany’s ideological rejection of nuclear energy. But any engagement in Latin America must be underpinned by strong institutional guarantees. With agreements that promote real—rather than symbolic—sustainability and investor protection, Europe and Latin America can simultaneously add value to regional exports and secure essential supplies. Latin America, with its resource base, young workforce, and innovative entrepreneurs, is well-positioned to become a first-rate strategic partner. In turn, Europe can provide capital, technology, and institutional support.

Culturally, religiously, and historically, Europe and Latin America share deep ties. But the realignment underway reveals a troubling shift: a transatlantic ally that increasingly treats its partners not as equals, but as subordinates. It is time for Latin America—fragmented and diverse as it may be—to reclaim the common flag of Hispanidad that unites it with Spain—or Iberidad, if Portugal is included. It’s a reminder that Europe and Latin America are natural allies.

But above all, this must be a relationship between partners, not colonies. Europe needs it—and Latin America must answer the call.

2. Sustainable agribusiness: Europe’s zealous pursuit of zero-emissions targets has resulted in regulatory barriers that hinder development across the Global South. Instead of imposing rigid environmental doctrines, Brussels should engage directly with local producers through certifications and fairer trade terms. This would expand Europe’s agricultural portfolio while fostering meaningful development in Latin America.

3. Technology and education: Strengthening cooperation in education—from digital infrastructure to university exchanges—can lay the foundation for more competitive economies and regional tech hubs. Here, Europe holds a key advantage over China: its model is one of intellectual collaboration, not state control.

A Partnership—with Conditions

Unlike the often transactional nature of Latin America’s relationship with the U.S., Europe must recognize some non-negotiables if it seeks to build trust:

First, it must put an end to the funding of disruptive NGOs. European resources have, in some instances, been funneled to organizations that cloak themselves in the language of human rights while supporting protest movements, roadblocks, land invasions, and even the sabotage of strategic infrastructure. These activities have derailed legitimate investments and created instability. Brussels must establish stricter financing criteria and enforce rigorous oversight to prevent its funds from fueling unrest or empowering unaccountable elites.

Second, any future alliance must be grounded in the rule of law—not in paternalism. Governance, transparency, and fiscal discipline should be the baseline for cooperation, with support directed toward building strong institutions, not perpetuating clientelist networks. True partnership demands respect for sovereignty and a shared commitment to institutional maturity.

Lastly, Europe must resist the urge to impose ideological blueprints that were crafted for vastly different contexts. The continent should recognize that developing nations need to replicate the growth strategies that once lifted Europe itself—not the regulatory constraints it now imposes as a post-industrial bloc. Understanding the particular challenges and opportunities of Latin America is essential.

If pursued with intelligence and respect, this strategic realignment could yield a democratic, pragmatic, and mutually beneficial alliance—resilient enough to face Trump’s volatility, transparent enough to contrast China’s authoritarian courtship, and anchored in shared values, aligned interests, and a common vision for the future.

What We’re Watching 🔎 . . .

Trump Threatens 30% Tariffs on Mexico [link]

Americas Quarterly

Donald Trump has announced the imposition of 30% tariffs on Mexican imports starting August 1, as a punitive measure over what he deems insufficient efforts to combat fentanyl trafficking and illegal migration.

While products compliant with USMCA regulations may be exempt, the move threatens to raise costs, disrupt critical supply chains, and weaken North American economic integration—particularly as Canada also faces potential retaliatory tariffs.

Although politically expedient for Trump, the use of tariffs as a pressure tactic erodes investor confidence and predictability, while further fueling inflation, now projected at 2.7%. As President Claudia Sheinbaum seeks a negotiated solution before the deadline, it is worth underscoring that addressing the fentanyl crisis requires bilateral cooperation—not trade coercion. In a climate of mounting uncertainty and declining regional trust in Washington, this strategy may ultimately undercut U.S. influence in favor of China.

Javier Milei’s risky bet on a potent peso [link]

Michael Stott, Financial Times

President Javier Milei has embraced a high-stakes strategy by strengthening the Argentine peso in a bid to curb inflation—the central objective of his administration. While inflation has fallen to its lowest level in five years, it remains high at an annual rate of 43%. The peso’s appreciation has triggered a surge in imports, straining small businesses and pushing unemployment to its highest level in four years.

At the same time, millions of Argentines are taking advantage of the stronger currency to travel abroad, worsening a current account deficit projected to reach USD 8 billion by the third quarter. Milei also faces a hostile Congress pushing for increased social spending, putting fiscal stability at risk. The lack of political consensus and limited foreign reserves further complicate Argentina’s ability to meet IMF commitments and deter much-needed investment—just as the country approaches a critical legislative election that could define the future of Milei’s reform agenda.