Drug war spreads to Mexico's second city, Guadalajara

GUADALAJARA, Mexico (Reuters) - Cartel hitmen are murdering rivals and terrifying residents across Mexico's second city Guadalajara as it prepares to host the Pan American Games in a deepening of the country's drugs war.

Gunmen firing automatic weapons torched vehicles and blockaded roads in the once-peaceful city this month, the most brazen act so far and an echo of the violence ravaging Mexico's northern border.

Guadalajara is the capital of the western state of Jalisco, home to Mexico's mariachi music and tequila, and was for long spared the beheadings and drive-by shootings tainting other areas of the country.

But drug killings in Jalisco more than doubled last year to almost 600, with about half of them in Guadalajara.

The murders have continued into the New Year with hitmen dumping bodies in quiet residential neighborhoods, murdering rivals at traffic lights and in one case leaving nothing but a dead man's severed feet on a street corner. Extortions and kidnappings are also growing.

The violence has raised concerns about the city's ability to host thousands of athletes and tens of thousands of fans from across the Americas at the Pan American Games in October.

"Prepare for Jalisco to burn in flames. If you think this is over, you're wrong. It is just starting," read printed banners strung up in late January across Jalisco and signed by an alliance of three drug cartels fighting for the region.

A collapse in security in Jalisco, which generates almost 7 percent of gross domestic product, would put President Felipe Calderon under even more pressure as he struggles to reassure Mexicans and investors his drugs war strategy is working and that oil-producing Mexico is still a safe place to invest in.

Calderon, who deployed the army to fight the cartels in December 2006, has won praise from Washington for his tough stance on organized crime, and the military has captured and killed a string of top drug lords over the past year.

DRUGS WAR SPREADING

But more than 34,000 people have died across Mexico since the crackdown began, staining its image as the violence spreads beyond traditional border flashpoints such as Ciudad Juarez.

Drugs violence has already engulfed Monterrey, a similar size city to Guadalajara in terms of its economy and population, prompting some companies to freeze investment.

Grenade attacks, shootings and blockades are now a daily affair in Monterrey, which is Mexico's most modern city and was once seen as a beacon of order and prosperity.

Many in Guadalajara, famed for its mustachioed musicians in wide-brimmed sombreros and its top-flight soccer team, are particularly fearful after seeing how Monterrey has fared.

The U.S. consulate in Guadalajara warned on February 3 of "a marked escalation of criminal activity". It banned U.S. government officials from traveling after dark between the city and its main airport and urged U.S. visitors to follow suit.

"The cartels used narco blockades to show what they're capable of," said Guillermo Zepeda, a security expert at the Jesuit University of Guadalajara. "They are fighting street by street, over small debts and over territories."

The killing of Sinaloa drug boss Ignacio "Nacho" Coronel in Jalisco in July was hailed as a victory in the drugs war. But two gangs from neighboring Michoacan state, La Familia (The Family) and Milenio, have since teamed up with the Gulf cartel from northeastern Mexico to try to muscle in on the Sinaloans' turf and were behind last month's warnings on the banners.

LET THE GAMES BEGIN

Jalisco's state Governor Emilio Gonzalez is determined not to let the violence overshadow the Pan American Games in October, meant to be a showcase for Guadalajara and the Pacific beach resort of Puerto Vallarta.

Authorities hope the October 14-30 event will serve Guadalajara the way the 1992 Olympics made Spain's Barcelona a top tourist destination and boosted its international image.

Forty-two countries will compete in 36 sports ranging from basketball to fencing and swimming at the Pan American Games, which are held every four years.

For this year's competition, authorities are spending as much as $250 million on new stadiums, public transport and an athletes village that could later be used for housing.

They insist the preparations are going well.

"We don't have any problems linked to the security issue," Horacio de la Vega, head of marketing for the games, told reporters this month following the narco blockades.

State authorities say the drug murder rate in Jalisco at 8 deaths per 100,000 people remains well below the national average of 14 per 100,000. Gonzalez has announced plans to invest $85 million in cameras and technology to fight crime.

But many in Guadalajara are still very wary. A survey by local newspaper Mural last month found that 65 percent of residents see the violence scaring off visitors to the games and possibly prompting some athletes to avoid the event.

"I've stopped going out and I don't let my children go out either," said Julia Silva, a 38-year-old housewife. "I've got them at home doing puzzles."

(Additional reporting by Robert Campbell in Mexico City and Robin Emmott in Monterrey; writing by Robin Emmott; Editing by Kieran Murray)