Analysis - Is bloody car bomb turning point in Mexico drug war?

By Julian Cardona

CIUDAD JUAREZ, Mexico (Reuters) - A deadly car bomb last week in this violent border city may mark a turning point in Mexico's bloody drug war as powerful smuggling cartels stage ever more bold and elaborate attacks.

President Felipe Calderon's government, struggling to contain gruesome drug violence, blamed the July 15 attack in Ciudad Juarez on one of the gangs battling police and each other for control of smuggling routes along the U.S. border.

The explosion suggests the cartels, which have typically used assault rifles and grenades to knock off rivals and go after police, are ready to use more elaborate tactics that may drag more ordinary Mexicans into the bloodshed.

"It's like an arms race," said Alberto Islas, a security analyst with Risk Evaluation in Mexico City. "Beheading people is no longer enough ... Organized crime is going to keep escalating."

Drug crime has already surged since the conservative Calderon declared war on drug cartels in late 2006. Mexicans are no longer surprised to hear regular reports of decapitated bodies dumped in ditches, corpses strung up from bridges or grenade attacks against police or army units.

Attacks along the border, including the March murder of a U.S. consulate worker and several mass slayings in drug rehab centres, have worried the U.S. government and heightened fears Mexico may lose control of drug strongholds.

But the recent car bomb, which killed four people when it tore through a major intersection in Ciudad Juarez, the famously violent border city, shocked many here.

The remotely detonated explosion drew comparisons with devastating attacks at the height of Colombia's drug war in the 1980s and early 90s, when cartels set off car bombs at banks and state buildings, assassinated top officials and even blew up an airliner in mid-flight, killing around 100 people.

'KNOCK AT OUR DOOR'

Others have suggested parallels with the improvised bombs that insurgents concoct in Iraq and Afghanistan.

"It's a loud knock at our door," a U.S. law enforcement source said on condition of anonymity, suggesting a rash of similar attacks could be crippling for Mexico, which sends about 80 percent of its exports to the United States.

"Can you imagine if a device like that blew up (near a border crossing)? It would shut down the port, the commerce."

The U.S. source said the remotely detonated explosive weighed at least 20 pounds (9 kg) and was made of commercial mining explosives enhanced for greater casualties.

After authorities were lured to the site by a wounded man dressed as a policeman and dumped on the street, the blast was detonated, killing a policeman, a doctor, a rescue worker and one other person.

Government officials are ruling out a wave of Colombian-style 'narcoterrorismo,' or drug terrorism. But others see escalating violence as a clear attempt to terrify locals and weaken Calderon's campaign against the cartels.

The murder last month of a popular gubernatorial candidate just days before regional elections also raised the stakes in the drug war and triggered a sell-off of the Mexican peso.

"I read a political purpose to the (car bomb) and that is to intimidate police forces and the government and try to dissuade them from fighting organized crime," said Tony Payan, an expert on drugs at the University of Texas-El Paso.

"This is truly an escalation that must send a clear message to the Mexican police -- that these guys are out to get them."

CLIMATE OF FEAR

In Ciudad Juarez, located just across the border from El Paso, Texas, the bomb deepened fears that bloodshed will begin to claim more lives of people unrelated to the drug trade.

Almost 6,000 people have been killed since Joaquin 'Shorty' Guzman, Mexico's most wanted criminal and head of the Sinaloa cartel, sent hitmen into the city in early 2008 to force the Juarez cartel, headed by archrival Vicente Carrillo, out of business.

Conservative estimates put annual revenues from Mexico's highly organized, savvy smuggling rackets at between $25 billion (16.2 billion pounds) and $40 billion, more than the country's 2009 oil export earnings.

One former police official in Ciudad Juarez sees a clear business motive behind the growing violence. "When you have a business, when do you invest in it? When you see conditions that are going to allow it to make money," he said.

The car bomb attack is bad news for Calderon. Struggling to turn Latin America's second biggest economy around after a crippling recession in 2009, the drug war has hurt his image and weakened his conservative National Action Party, which now faces an uphill battle as it seeks to hold on to the presidency in 2012 elections.

While the violence in Mexico makes daily headlines, the government says they paint an inaccurate picture and that the country's murder rate is still lower than Brazil's. Even as cartels here grow bolder, Mexico is still far from the chaos of Colombia two decades ago.

Still, the threat is real in Ciudad Juarez, where graffiti scrawled across a wall this week issues a clear threat: "If in 15 days we don't see those corrupt federal police arrested, we are going to fill a car with 100 kilos of C-4 (explosive)."

(Additional reporting by Robin Emmott in Monterrey, Caroline Stauffer in Mexico City and Tim Gaynor in Phoenix; Writing by Missy Ryan; Editing by Kieran Murray)