Army feeble as murders surge in Mexico drug war city

* Ciudad Juarez drug killings surge again after respite

* Presence of 10,000 troops fails to curb violence

CIUDAD JUAREZ, Mexico, July 8 (Reuters) - A massive army surge has failed to calm raging drug gang violence in Ciudad Juarez, a Mexican city on the U.S. border that is at the heart of President Felipe Calderon's drug war.

An influx of 10,000 troops and federal police in March brought temporary calm, but three months later drug murders have resumed and are overtaking 2008 levels, according to police and media tallies.

Calderon, whose party lost heavily in mid-term weekend elections, is under extra pressure to deliver on security as Mexico's slumping economy hits his popularity.

In Ciudad Juarez, corrupt police still openly work openly for gangs despite ubiquitous army patrols. And local newspapers constantly show images of bullet-ridden vehicles and bleeding bodies on busy streets.

After a few quiet weeks, the city's death tally from cartel violence has risen to 900 this year, compared with 800 in the first six months of 2008.

In one recent case, a man who phoned a drug hotline to report suspicious goings-on near his home disappeared and was found tortured into a coma in an SUV that crashed into a tree.

The battered body had a note with it reading: "This is what happens to those who ring 060." The man died of his injuries.

The failed army operation in Mexico's most bloody city is a blow to Calderon, who has made crushing drug violence the centerpiece of his presidency.

"They have increased and it's been very marked. We can't hide that," General Jose de Jesus Espitia, the top military commander in the surrounding state of Chihuahua, told Reuters.

"We are seeing a spike and I really don't have a concrete explanation for why," he said.


The government hailed an initial 70 percent drop in killings after Calderon sent 7,500 troops and 2,500 federal police to Ciudad Juarez, a desert city just across the border from El Paso, Texas.

The city had seen 1,600 drug murders last year and is a symbol of a conflict that has killed 12,300 people nationwide since Calderon took office in December 2006. [ID:nN23520374]

But without imposing nightly curfews, soldiers cannot watch over an entire city of 1.6 million people.

Murders in Ciudad Juarez reached up to a dozen a day in June, from traffickers being shot in their cars to crooked police being tortured to death in rival cartel safe houses.

With over 235,000 manufacturing jobs and 70 Fortune 500 companies in the Ciudad Juarez-El Paso area, investors and Washington officials had hoped to see a quick victory in the Mexican city and a domino effect across the country.

Slow progress on weeding out corrupt police and stopping the flow of smuggled U.S. guns are hindering the military.

Washington has pledged to crack down on arms smuggling, but corrupt Mexican customs officials are plentiful and AK-47s and U.S. gun shops are within easy reach.

"Troops will only have a short-term impact as long as the government does not do more to reduce cartels' access to weapons, confiscate their drug money at the border and clean up the police," said Alberto Islas, a security consultant whose clients include foreign bank and retail investors in Mexico.

Top drug lord Joaquin "Shorty" Guzman from the Pacific state of Sinaloa, is in a fight to the death with rivals from the Gulf of Mexico for road and rail routes that carry Mexico's $40 billion-a-year drug trade into the United States.

Drug gang ranks are being bolstered by jobless Mexicans fired from factories hit by the recession.

Tired of the mayhem, city residents have been holding street protests.

"What good are 10,000 soldiers and federal police if we don't have any security at all, if we are too afraid even to go to the corner shop?" asked shop assistant Luisa Rivera. (Writing and additional reporting by Robin Emmott; Editing by Alan Elsner and Catherine Bremer)