Mexico's 'hearts and minds' battle to loosen organized crime's grip

By Lizbeth Diaz

SANTA ROSA DE LIMA, Mexico (Reuters) - Burned-out autos littered empty streets this week in the town where Mexican President Andres Manuel Lopez Obrador unleashed a first major push to take control of territory absorbed by organized crime during years of mounting violence.

The central town of Santa Rosa de Lima, a few miles east of Salamanca, home to one of the nation's main oil refineries, is close to a center of the nation's auto industry.

It is also a microcosm of the lawlessness permeating swathes of Mexico where cartels have for years replaced the state as benefactors, providing jobs and handouts in return for residents' loyalty.

Lopez Obrador said he was winning the battle for hearts and minds against a gang of fuel thieves in Santa Rosa.

“If you need work because of a lack of job opportunities, if you need welfare support, you can depend on us,” he said. “We're the ones who offer you this,” he told reporters earlier in the week.

But in the grimy settlement of some 2,800 people where authorities say the eponymous Santa Rosa de Lima gang paid residents to obstruct marines and federal police with blockades and burning vehicles and by informing on their movements, some were less certain the government had the upper hand.

“It's very hard for people to change,” said Pedro Mendez, 52, who sells household goods in the town, where heavily armed police patrolled and government helicopters circled overhead. The bad guys know how to get to them and that there are people who'll take money to do their bidding."

Others accused security forces of damaging private property and breaking car windows in the raids, while denying they were in cahoots with the gangs. Lopez Obrador said on Thursday there have been no deaths in the clashes.

Guanajuato's governor, Diego Sinhue, estimated that around 300 people helped set fire to vehicles, although he defended the town against its infamy as a crime hotbed.

The effort to capture gang leader Jose Antonio Yepez, known as “El Marro,” or “The Mallet,” and blamed for stealing vast quantities of fuel from the Salamanca refinery, is also a test of the government's ability to end organized crime's growing threat to legitimate businesses and ordinary citizens.

Yepez has so far evaded detention, though federal forces arrested his sister-in-law, alleged to be his finance chief, along with six others, a security official said. Authorities said they raided his sprawling house near the town, whose grounds, as seen in photos by Mexican media, include a half-Olympic-sized pool, palm trees and a tiger statue.

Fuel theft costing billions of dollars a year, along with dwindling output, has weighed heavily on state oil firm Pemex, threatening to damage the government's creditworthiness.

This week, ratings agency Moody's warned that increasing insecurity, robbery and travel warnings hurt Mexican companies' top lines."

Santa Rosa lies in Guanajuato state, part of the country's industrial heartland that was long peaceful and is a major magnet for carmakers such as Volkswagen, General Motors and Toyota, but it suffered a doubling of murders last year, making it one of the most violent regions, official data shows.

Eduardo Solis, head of Mexico's automotive industry lobby, said on Wednesday the situation in Guanajuato was threatening business and had the look of a crisis."

Security has sharply deteriorated in the gangland struggle to control fuel rackets, and at 2,609 last year, murders in Guanajuato were over 10 times higher than a decade earlier, official data show.

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Lopez Obrador's determination to reassert the government as the main provider of services in anarchic regions is an early hallmark of his presidency, which began on Dec. 1. He targeted fuel theft soon after taking office, turning off oil pipelines and risking a public backlash as lines began to form outside gas stations.

Days after the country's most famous gangster, Joaquin “El Chapo” Guzman, was convicted in a U.S. court, Lopez Obrador became the first president in decades to visit his home town, cutting the ribbon on a road project.

His rising popularity in opinion polls suggest Mexicans back the efforts so far.

Hundreds of police and armed forces arrived in Santa Rosa on Sunday to restore order.

By Wednesday, the president was saying Santa Rosa had begun to reject the gang's largesse, which locals said they heard included payments of 1,000 pesos ($52) or more. The burning blockades and protests vanished on Wednesday.

Among evidence authorities have found in raids was a wage envelope stamped with what appeared to be a symbol of a mallet, reading: Relatives should go out to protest when required."

Though reluctant to speak of fuel theft, several residents said they had seen El Marro and that the town was peaceful until “outsiders” began to arrive a few years ago.

“I'm afraid to go out. If I leave the house something could happen to me because I can see the government's angry,” said Estela Mendoza, a 44-year-old grandmother, speaking through a hatch in the door of the modest house she shares with her family and which she said she had not left since Sunday.