The openness with which they operate _ in Miguel Aleman and countless other towns across Mexico _ reflects the drug cartels' grip on this nation of nearly 100 million people, and the power they have gained as the top supplier for Americans' $65 billion illegal drug habit.

Mexico's drug gangs have been highly successful in the past two decades, gradually replacing Colombian gangs in the United States to control the profitable distribution of cocaine from coast-to-coast. Colombia remains the world's largest producer, but Larry Holifield, the DEA's director for Mexico and Central America, told The Associated Press that Mexican cartels are now the most powerful in the world.

In 2003, Mexican traffickers supplied 77 percent of the cocaine that entered the United States. Last year, it was 92 percent, Anthony Placido, the top DEA intelligence official, told a congressional panel in June. The other 8 percent moved through the Caribbean.

Mexican gangs also dominate the growing methamphetamine trade, producing 53 percent of the drugs on the market in "super-labs" in Mexico as the U.S. tightens its laws. Much of the rest is made in clandestine labs in California, also run by Mexicans, U.S. officials say.

And as has been the case for nearly 100 years, Mexico is the biggest marijuana supplier to the U.S. and produces nearly half the heroin consumed north of the border, behind only Colombia.

The drug trade permeates life in Mexico. In Miguel Aleman, drug traffickers boost the local economy and rule with a combination of fear and awe, threatening or bribing anyone who dares to try to stop them.

In this city of 35,000 across from Roma, Texas, hit men are easily identified by their bulletproof pickup trucks and sport utility vehicles.

The traffickers have lookouts at every entrance to the city and informants on bicycles looking for anyone suspicious, townspeople say. They will photograph newcomers, including reporters, and question strangers.

The traffickers "speed through the street, drive against traffic and run red lights. But here, no one says anything to them," said a businessman who requested anonymity for fear of reprisals. "Here, they are the law."

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The Mexican rise to power is rooted in the U.S. crackdown on drug trafficking through the Caribbean in the 1980s, which pushed Colombians to use Central America and Mexico as a major transshipment point.

Colombians began paying their Mexican counterparts in cocaine, rather than cash, reducing the need to launder money. That gave Mexican gangs an opening to begin taking over distribution in the United States.

Colombian gangs, facing tough extradition laws at home and stiff penalties in the United States, have largely gone into hiding in Colombia, focusing on production rather than distribution.

In the United States, Mexicans have long controlled distribution in the West and Midwest. But they are also moving into the East Coast, controlling cocaine movement from New York City's lucrative market to other eastern cities, the DEA said in a report this year.

Colombians and Caribbean gangs still mostly control street sales in the region, however, and are responsible for the drug trade in Miami, according to the U.N. 2005 World Drug Report.

Guatemala has become a crucial stopover for Colombian cocaine, its shores the destination for most of the so-called "go-fasts" _ boats that move the bulk of cocaine north. From Guatemala, the drugs are smuggled into Mexico and moved overland to the U.S.-Mexico border.

As Guatemala's importance grows, drug gangs there have begun trying to form a cartel to control all of Central America, Guatemala's top drug investigator, Adan Castillo, told AP.

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Most Mexican drug gangs are led by former farmers or police officers from the Pacific Coast state of Sinaloa, an agricultural area where trafficking in illicit substances dates back to Prohibition.

The country's two top drug gangs are the Juarez Cartel, based in Ciudad Juarez, across from El Paso, Texas, and the Gulf Cartel, based in Matamoros, across from Brownsville, Texas.

Gaining ground is Joaquin "El Chapo" Guzman, an alleged ally of the Juarez cartel who escaped from a maximum-security prison in 2001 and has been warring for control of smuggling routes along the U.S-Mexico border.

Once mortal enemies, Gulf Cartel leader Osiel Cardenas and his Tijuana counterpart, Benjamin Arellano Felix, have united in jail, hoping to keep both ends of the border under their control, said Jose Luis Santiago Vasconcelos, Mexico's top anti-narcotics prosecutor.

"Groups like the one led by El Chapo Guzman are trying to position themselves and, as they fight for drugs and territory and also kill out of personal vengeance, that creates a greater wave of violence ... that seems like a snowball getting bigger and bigger," Vasconcelos told AP.

After taking office in 2000, Mexican President Vicente Fox launched a crackdown, netting several kingpins, including Arellano Felix and Cardenas.

But the arrests have done nothing to slow the flow north, with seizures in 2004 increasing 25 percent over 2003. Last year, Mexico seized 27.5 tons of cocaine, and another 24.7 tons were confiscated entering the United States, mainly through Texas, the DEA intelligence official Placido told U.S. lawmakers.

The U.S. government estimates that Americans spend $65 billion a year on drugs _ some $20 billion more than on alcohol.

Mexican traffickers' profits have allowed them to buy off hundreds of law enforcement officials here, including the head of Mexico's anti-drug agency, Gen. Jesus Gutierrez Rebollo, fired in 1997 and now jailed.

They also often provide the only steady, high-paying jobs in rural Mexico, and buy popularity by helping renovate a church or outfit youth soccer leagues with uniforms.

A Miguel Aleman street vendor says they often tip him $10 for a $1 purchase. "As long as you don't bother them, they won't mess with you," he said, refusing to give his name for fear of reprisals.

Life isn't always peaceful, however. Recent arrests have sparked a turf battle that forced Mexico to send soldiers and federal agents to many key cities along the 1,900-mile border.

The worst violence this year has been in Nuevo Laredo, 100 miles east of Miguel Aleman. More than 150 people have died, including a new police chief, gunned down eight hours after taking office in June.

Mexican and U.S. officials say the nation's top drug lords are battling for highly prized smuggling routes in Nuevo Laredo, the busiest commercial border crossing for U.S.-bound Mexican goods. Drugs are often hidden in tractor-trailers driving north.

While Nuevo Laredo is awash in federal agents and soldiers, there are rarely any in Miguel Aleman, 100 miles south along the Texas border. Its hit men travel along the border defending their turf and carrying out contract killings, hiding only when the occasional caravan of soldiers drives through town, residents say.

The growing influence and violence of Mexican gangs worries the United States.

In August, U.S. Ambassador to Mexico Tony Garza briefly closed the U.S. consulate in Nuevo Laredo _ in part, he said, to punish Mexico for failing to stop violence in the border town. He later apologized for his remark.

The U.S. federal government said in October it was sending 1,000 more security officials to help about 9,690 agents already protecting the border.

Also in October, U.S. Attorney General Alberto Gonzalez said he planned to send a special team of federal agents to Texas to combat the worsening border violence. The same day, Texas Gov. Rick Perry promised $9.7 million for frontier security.

The biggest hurdle, both U.S. and Mexican officials acknowledge, is corruption.

"Practically all of the cartels have their biggest leaders behind bars and, nevertheless, they are all still in business," Daniel Cabeza de Vaca, Mexico's federal attorney general, told reporters in September.

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Soon after taking office in 2000, President Fox reorganized the Attorney General's office and tried to make the Federal Agency of Investigation, Mexico's equivalent of the FBI, more professional.

But Cabeza de Vaca told a Mexican Senate Commission in August that the agency, one of the few trustworthy law enforcement bodies in Mexico, had been corrupted.

In neighboring Guatemala meanwhile, the arrest in September of three former members of an elite counterinsurgency group raised fears the Gulf Cartel may be trying to recruit them to its infamous hit team, the Zetas, led by deserters from an elite Mexican army unit. The Zetas use Miguel Aleman as a base, residents say.

The counterinsurgency group was notoriously brutal during Nicaragua's civil war. Its three veterans and four other people were arrested near Mexico's border with Guatemala carrying six large-caliber rifles and 1,600 rounds of ammunition.

Vasconcelos, Mexico's top anti-narcotics prosecutor, said the Zetas needed the Guatemalans because so many of its members had been arrested or killed.

The Mexican government is trying to turn things around, but even Fox admits there's more to do.

On Sept. 21, Public Security Minister Martin Huerta, one of Fox's best friends, was flying to a news conference to announce new measures to clean up prisons when his helicopter crashed, killing him and eight others.

Officials have said the crash was an accident, but rumors of drug involvement persist.

U.S. officials privately grumble that Mexico, unlike Colombia, has failed to extradite major drug lords to the United States, where most would face long terms in high-security prisons.

Mexico argues the drug leaders must face justice here first. But attempts by Fox to clean up the justice system _ Mexico's most corrupt branch of government _ have stalled in a hostile Congress.

In Miguel Aleman, only 70 police patrol the streets and simply don't have the manpower to put up a fight against heavily armed opponents, city spokesman Ricardo Rodriguez said.

"Our job is to prevent crime, not to investigate drug trafficking. That's the federal government's responsibility," Rodriguez said.

He brushed aside claims that hit men with automatic weapons openly travel about.

"If they carry weapons or not, it is difficult for us to say," he said. "It's not like we have X-rays to see through their cars or clothes."

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Associated Press writers Sergio de Leon in Guatemala City and Abe Levy in San Antonio contributed to this report.

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NEXT: Part II - Speedboats become drug traffickers' tool of choice.