* Obama administration could have Mexico plan this week
* Air Force general says Mexico is not losing drug war
* Senator: Some traffickers trained by US Special Forces
* US military aids border surveillance of cartel movements (Adds comments by DHS spokesman and Sen. Webb)
By David Morgan
WASHINGTON, March 17 (Reuters) - The U.S. government is working on an integrated plan to address Mexico’s escalating war with drug traffickers and could complete work on the initiative as early as this week, a top U.S. military official said on Tuesday.
Air Force Gen. Gene Renuart, who oversees U.S. military interests on both sides of the U.S.-Mexican border as the head of Northern Command, told the Senate that the plan would likely involve all agencies of government including law enforcement and the military.
Among the priorities are likely to be measures to deal with violence that spills over the U.S. border, the flow of small arms from the United States to Mexico, support for the Mexican military, tightening border security and the spreading presence of Mexican cartels in U.S. cities.
The military is already employing border security techniques mastered in the war zones of Iraq and Afghanistan, including unmanned aerial vehicles and technology capable of locating underground tunnels.
But an interagency government team, meeting this week at the Department of Homeland Security, is expected to produce a broad new initiative to confront a drug war that has killed thousands in Mexico and spilled over into U.S. cities such as Phoenix in a surge of kidnappings and other gang-related violence.
"This is a whole of government problem and I think the best response is an integrated approach and we’re working toward that aggressively," Renuart said at a hearing of the Senate Armed Services Committee.
"I think we’ll have good plans come out of this work this week," he said.
DHS spokesman Sean Smith said Homeland Security Secretary Jean Napolitano would soon make an announcement on new initiatives that the department would undertake, some with "other agencies."
Mexican President Felipe Calderon has sent tens of thousands of troops to fight powerful drug cartels as a way of eliminating corrupt ties between traffickers and local police.
Rising violence on both sides of the border has rattled U.S. officials, who have stepped up contacts with their Mexican counterparts in recent months.
"The Mexican government is taking aggressive action to win. They are building momentum. I would not say they are losing," Renuart said when asked if the Calderon government was winning or losing.
Navy Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, has suggested Washington give Mexico assistance in counterinsurgency tactics used against Islamist militants in Iraq and Afghanistan, including surveillance drones.
U.S. officials acknowledge that much of the violence is fueled by a stream of U.S. small arms moving into Mexico, while lamenting a rise in gang problems in the United States.
At a separate Tuesday hearing before a panel of the Senate Judiciary Committee, Democratic Senator Richard Durbin estimated that Mexican drug cartels are now present in at least 230 U.S. cities, compared to 50 cities in 2006.
"They are the new face of crime in the age of globalization," Durbin said.
Sen. Jim Webb, a Virginia Democrat on the armed services panel, sought to underscore the complexity of the problem by saying that some drug traffickers are former Mexican soldiers trained by U.S. Special Forces.
"They’re highly trained," he said. "Their tactics are very sophisticated."
Renuart said the Mexican military also faces a challenge in border cities like Juarez, near El Paso, Texas.
"They have been very effective when they’ve been in place," he said. "The challenge for the Mexican government is its sustainment of that effort because their military is not that large." He said the U.S. military is providing Mexico with assistance including tactics for raiding cartel operations and seizing weapons.
The military is also tracking cartel movements along the border with cameras, listening posts and aerial surveillance vehicles, including unmanned drones, and passing their findings on to U.S. law enforcement, he said. (Additional reporting by Tabassum Zakaria and Randall Mikkelsen, editing by Cynthia Osterman)