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Los Zetas was formed in 1997 as the enforcement arm of the Gulf drug-trafficking organization based in Tamaulipas state in northeast Mexico. Osiel Cárdenas Guillén, who was competing for leadership of the organization, recruited about 30 members and former members of Mexico's Special Forces (GAFE), led by Lieutenant Arturo Guzmán Decenas. It is often claimed that some of these defectors had been trained by the United States. After Decenas was killed and his deputy captured, Heriberto Lazcano (also known as El Lazco or Z3) took over the leadership of the group.

After Cárdenas was arrested in 2003, Los Zetas became more directly involved in the drug business. In 2005 and 2006, the paramilitary force also played a major role in beating back the attempt by the Sinaloa organization to wrest control from Gulf in Nuevo Laredo, a key city for warehousing cocaine and moving it into the United States. In the process, Los Zetas developed a reputation for violence and brutality.

Indeed, Los Zetas broadened its role beyond protection and enforcement, extending its activities to people smuggling, kidnapping, extortion, and arms trafficking. In 2009, human rights and church groups claimed that the Zetas dominated both human trafficking and migrant kidnapping from Tabasco in the south to the border city of Reynosa in Tamaulipas. The same year reports surfaced that the Zetas had corrupted officials at Pemex, Mexico's national oil company, and had stolen between $70 million and $90 million worth of oil and fuel.

The paramilitary group also distanced itself from its employer, emerging as an independent entity that Samuel Logan termed the Zetas Organization. This transformation was linked in part to the death or arrest of most of the original members: in response, the group began to recruit more widely and, among others, brought in former Guatemalan Special Forces known as the Kaibiles. In 2005, reports suggested that the Kaibiles were assisting the Zetas with training new members. The Zetas also encouraged the emergence of a new trafficking organization, La Familia Michoacan, although this organization subsequently tried to expel Los Zetas from the state.

The size of Los Zetas remains uncertain, with estimates ranging from several dozen to several thousand. The uncertainty stems partly from the overlap between the Zetas and the Gulf trafficking organization, partly from the fact that the Zetas typically operate in small cells, and partly from the very fact of the Zetas brand name, which has become a byword for intimidation and encouraged a rash of imitators. Nevertheless, there is some evidence that the organization is larger and more extensive than often suspected. Since 2006, for example, the Zeta presence in the states of San Luis Potosi and Zacatecas has become very blatant, with members intimidating police and politicians and extorting a wide range of businesses. A clue to the size and scope of Los Zetas was found in the arrest in Monterrey in October 2009 of a highranking Zeta member in possession of envelopes containing bank deposit receipts for more than 4,000 people from all parts of Mexico. The operational capacity of Los Zetas is also impressive. In March 2010, when Army units clashed with about 40 Zetas in Nueva Leon, other Zetas blocked 31 roads in the Monterrey area. The Zetas organization also has a significant presence in Guatemala, where it has used corrupt policemen as informants.

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