Mexico finds itself in an unenviable position. The economy is ailing, tourism is down and swine flu is in the air. If that wasn’t bad enough, a recent report issued by the US Joint Operating Command describes the nation, alongside Pakistan, as facing a real danger of ‘rapid and sudden collapse’.

The report roots the cause of Mexico’s instability with a wave of cartel-associated violence, whose ripple effect is destabilizing the whole of Mexican society. The nation now stands precipitously close to some sort of breakdown. Some might argue that point has arrived already.

‘Civil war’ as defined by the research group Correlates of War – one of the world’s leading authorities and aggregators of conflict data – is a conflict where more than ‘1,000’ battle deaths are recorded each. In the past three years alone more than 10,000 victims – among them, police officers, narco-traffickers, military personnel, and innocent civilians – have been recorded in Mexico. (Though, as in any civil conflict, the real toll is likely to be much higher that the official count).

But, it is the circumstances in which these murders have taken place that causes particular revulsion amongst a public already scarred by years of state-led and societal brutality. Stories of the abduction, rape and murder of hundreds of women (at the hands, many suggest, of the police) in Ciudad Juarez, or the massacre of indigenous Indians in rural Chiapas, or the sudden and mysterious disappearance of unionized teachers in Oaxaca state, pale in comparison with the scale of drug related horrors now facing the country.

The choreographed spectacles of horror, which fill the media headlines on an almost daily basis, are being performed precisely to elicit maximum widespread horror. The objective is to spread fear and paralysis throughout society and amongst rival cartels so as to allow the narco-traffickers to get on with their business of earning.

In the run up to Christmas, as people were thronging to the malls for their festive shopping, eight severed heads in plastic bags were left strategically nearby to a large mall in Chilpancingo, in the state of Guerrero. In February of this year another three heads were left in an icebox in Ciudad Juarez, close by to the US-Mexican border. More recently Tijuana Police detained a man known as ‘El Pozolero’ (or, the soupmaker), whose moniker derived not from his culinary skills but his ability to dispose of bodies – 300, according to some estimates – on behalf of the cartel killing machines by dissolving them in acid.

Such is the power now wielded by the Mexican drug cartels, they are beginning to eclipse their Colombian counterparts in power and ferocity. Indeed, the crackdown on drug cultivation in Colombia has done much to cement this as narcos find an easier life to be had in Mexico.

President Felipe Calderon has deployed some 45,000 troops onto the streets to try and restore order and to challenge the rising authority of the cartels. But soldiers often find themselves pitted against an enemy equally well armed and disciplined. Los Zetas, for example, who now offers their services to the Gulf Cartel, are a bunch of disaffected crack military troops who found they could earn a more financially rewarding career by abandoning their posts and crossing over to work as narco-trafficking ‘heavies’.

The US Government, keen to manage the contagion south of its border, is offering all the political and financial backing it can offer. A collaboration between the two nations, enshrined in the Merida Initiative, has set aside $1.4bn of US tax payer money to be spent on surveillance, criminal justice reform, witness protection programs and military hardware. Meanwhile the US is doing much to seal its southern border against narco-infiltration by deploying a further 100 DEA and FBI agents to its southern border states.

But this support is not without its detractors, many of whom point to the failed Plan Colombia initiative. This was an equally comprehensive program to help the Colombian Government rid itself of the destructive influence of narcotic cultivation, production and trafficking. But in Plan Colombia and now with the Merida Initiative there was one key ingredient missing, arguably the most important component: a concerted effort to reduce demand in the US.

This, the Rand Corporation, an influential Washington-based think tank, identified as by far the most cost-effective solution to dealing with problems of drug violence and drug addiction across the Americas. Take a treatment-based, healthcare-led attitude to addiction in the US and the forces of supply will correspondingly ebb away, they argued. Foreign territory operations, on the other hand, such as those undertaken in Plan Colombia and now forming a mainstay of the Merida agreement they ranked 23rd in terms of cost effectiveness.

So, it seems that so long as treatment and prevention within the US remains outside of the dictates of the Merida Initiative, the US and Mexico will continue along in a bizarre folly analogous to a doctor who administers medicine to cure a patient at the same time as ensuring all the conditions for their continued illness remain present.

In spite of this, there does exist small glimmers of hope. Reports are increasingly being commissioned and conversations being tabled by the US state legislatures and foreign state governments that open up the idea of a move towards decriminalization, or even outright legalization of narcotics.

Decriminalizing or legalizing cannabis, which for now seems the most socially and politically palatable topic to discuss, would alone make a huge impact on the finances of the cartels who rely on it more than any other drug for their income, the US Drug Enforcement Agency report.

Encouragingly, the Californian Executive is now giving serious thought to the advantages of legalizing cannabis for recreational use (medicinal use has already been signed into state law). Likewise, on 29th March of this year, a pair of bills seeking to tax and regulate the Cannabis industry were introduced into the Massachusetts Legislature.

President Obama has signaled his interest in the topic. Mexico was the first country he paid a visit to and high on the agenda was the spiraling problem of narco-violence and what fresh approaches might be considered to deal with it. Obama’s newly appointed drug czar, Gil Kerlikowske, has likewise expressed a deep dislike and mistrust of the term ‘War on Drugs’ and a wish to place a more health-centered spin on the debate.

For its part the Mexican Congress, which sought to pass a bill to legalise the possession of small amounts of Cannabis back in 2006 (the move was ultimately blocked by conservative President Vicente Fox – under pressure, as it happens, from the Bush administration) has now once again put forward the motion. This time no obstruction has been put down by the Obama Government.

All this is good news for Mexico and the US. But, before a more evidence-based and less politically-motivated public discourse can cut through the sabre-rattling rhetoric of present, there remain key obstacles to overcome.

Firstly, perhaps unsurprisingly, the eruption of violence in Mexico is leading to a hardening of attitudes towards all drugs and drug users across society and its institutions. Human Rights Watch has reported episodes of police violence against drug users trying to access needle swap clinics. This must be counteracted with a forceful government-led media narrative to argue the benefits of coopting rather than waging futile war against the narcotics industry.

Corruption meanwhile, always a thorn in the side of progress in Mexico, is at its worst where the underpaid state authorities rub shoulders with the rich and powerful narcos. The longer that Calderon’s 45,000 troops remain deployed on the streets, the higher risk grows of infiltration on both sides. The danger is that more state forces might be tempted to follow the example of Los Zetas and leave their posts to find more gainful employment with the narcos, whilst the narcos will of course seek to use their financial power to bribe their way into the inner circles of the state apparatus.

A meaningful solution to the myriad problems of drugs and drug violence undoubtedly lies in robust and honest exchange between the US and Mexico, but central to this must be integrity and honest self-appraisal. ‘Whatever action Mexico takes is likely to have little impact on the violence without changes in US drugs policies’, writes Isaac Campos Costero of San Diego’s Centre for US-Mexican Studies. Meanwhile, only the Mexican Government can exert the necessary control over its own corrupt institutions to ensure that the money flowing from the US government can be spent wisely and effectively. Until then the outlook appears bleak.