While much of Mexico is safe and there are many beautiful places there, happy tourists or expats are not making the news there, violence is.  We are somewhat fortunate that Panama has escaped most of the drug wars and we have a country that has zero tolerance for smugglers and users.  It appears not so in Mexico and that is the biggest problem.

This in from the Los Angeles Times.

The violence spawned by organized crime now dominates the mind-set of Mexico’s wealthiest and third-largest city. Many of those who can leave do.

Javier Guzman, a 25-year-old industrial engineer, eased his SUV toward the curb on a recent Sunday as a masked state police officer in the middle of the road signaled him to pull over.

Guzman rolled down his window, greeting the officer with a “buenas tardes.”

“Do you live here? Where are you coming from?” the officer asked.

“I live here, this car is mine,” Guzman replied. He had nothing to hide, yet began coughing nervously.

The officer, dressed in black, from combat boots to ski mask, circled the vehicle. A long automatic assault rifle dangled at his side. After a few more questions, he let Guzman drive on.

Such checkpoints are now part of daily life in Monterrey, a metropolitan region of more than 4 million,Mexico‘swealthiest and third-largest city. The brief anxiety that these encounters produce in people is probably the least of residents’ worries.

Monterrey, the sleek capital of Nuevo Leon state, is said to be in danger of “falling” to organized crime.

The city is beset by shootouts, armed robberies and “mass panic” incidents over any sign of danger.

More than 400 people have been killed in the state so far this year, compared with 315 in the same period of 2011, one local news report said. Extortion by cartels or petty criminals is believed to be widespread. And, according to a leaked U.S. diplomatic cable from 2009, “all of the region’s police forces are controlled by organized crime.”

A culture of fear is evident. A shootout near a mall last month forced panicked shoppers to remain inside stores in confusion, a now-familiar scene in the city. In 2010, five people died during a stampede at a concert in the suburb of Guadalupe after shots were heard.

All of this is leading to what some call an exodus from Monterrey, a brain drain that includes businesspeople, artists and young professionals. Most are said to be moving to Mexico City or to nearby Texas.

Guzman, a native of the southern state of Oaxaca, plans to return home this year. Despite a good job with a U.S.-based company, he said, the security situation is forcing him to reconsider his long-term goals involving life in Nuevo Leon.

He moved here in 2006 to enroll at the Monterrey Institute of Technology, one of Mexico’s most prestigious universities. The high concentration of top industrial companies in the region nearly guaranteed rich job prospects after graduation, making Monterrey more attractive at the time than crowded Mexico City.

“My parents didn’t want me to go to Mexico City because Mexico City was considered crazy and insecure,” he said. “And now, it’s more insecure here.”

Jose Juan Cervantes, a researcher at the Nuevo Leon state university, said efforts by private or public census workers to figure out exactly how many people have left the region have been stymied because residents hesitate to give out information on their whereabouts, and insecurity on roads outside the city prevents investigators from visiting towns that are said to be nearly empty.

“We know people are leaving to the U.S. or other parts of Mexico that are calmer, and not just businesspeople, people of the middle class. But … we don’t have a solid number,” Cervantes said. “We don’t know yet because it’s a line of investigation that we are not really exploiting for the same reason — the war” with the drug cartels.

Monterrey is scarred by the conflict.

Bullet holes mark the green exterior walls of the Cafe Iguana, a music venue in the once-vibrant Barrio Antiguo neighborhood near downtown. Four people were killed in an attack there in May.

The Casino Royale, where 52 people died when suspected drug traffickers set it afire in August, still stands. It is a ghostly structure where mourners were seen recently placing flowers in memory of the victims.

Diana Figueroa, 23, a Monterrey native who studies international relations at the Institute of Technology and also works with the local chapter of Amnesty International, said regios, as locals are nicknamed, are often hesitant to protest the violence or corruption in the city.

“You invite people to a demonstration or something, and they say, ‘I don’t have time’ or ‘I think I help out more by doing my job well,'” she said.

Observers say some regions that presumably have pacts with criminal groups are kept “safe,” but other areas seemingly live under an unofficial curfew, in fear of kidnappings and attacks on women.

Monterrey “is a good place to live and to study,” said Guzman, the industrial engineer, of the adopted city he will soon leave. But “there was more security [before]…. I don’t know. I think now it’s evolving.”

And more violence has threatened the business climate with a recent report that just came out this week

Insecurity shut down 160,000 Mexico firms in 2011

(AFP) – 20 hours ago

MEXICO CITY — Insecurity created by organized crime in Mexico forced the closure of more than 160,000 companies in 2011 alone, according to the country’s employers confederation Coparmex.

The warning, late Tuesday, came amid raging gangland-style violence across swaths of the country which is blamed for some 50,000 deaths since 2006.

“Organized crime is deteriorating competitiveness… discouraging national and foreign investment, (and) causing the closure of formal businesses. In 2011 alone more than 160,000 companies stopped operating in the country,” according to an online statement from Coparmex President Alberto Espinosa.

Companies were also being forced to pay higher insurance premiums, of up to 30 percent in badly-hit northern areas near the US border, Espinosa said.

“Insecurity in Mexico is reaching levels not seen in decades,” he added, lamenting that business leaders and families were leaving the country to seek security elsewhere.

Espinosa called for a revision of the anti-crime strategy of the government of President Felipe Calderon, which includes the deployment of tens of thousands of soldiers and been accompanied by a striking rise in violence in some areas.

He also criticized impunity seen in “98 percent” of crimes.

Just three months before general elections, the employers’ leader called for a new strategy and “clear promises” from the main presidential candidates. Calderon is constitutionally barred from standing for a second term.