How does arms dealing work

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Sara Carter , The Blaze. Sign up for notifications from Insider! Stay up to date with what you want to know. Loading Something is loading. Asked about the role of U. As a nineteenth-century historian I can attest to that fact.

With the possible exception of Haiti, Mexico has had a longer and more destabilizing relationship with American guns than any country in the world. Before I get to that history, let me say something about how the buyers in this story acquired the weapons that they used to pursue their political projects. One method was to pay outright with gold or silver, or with bills, cotton, horses, and sometimes slaves.

Others, particularly governing elites and well-connected purchasers looking to buy in bulk, paid with bonds, with loans, or with vaguer kinds of promises about what they would do once they took power.

Finally, a warning. But I promise I am not making any of this up. This was a longer, bloodier, far more destructive war than the American Revolution. It lasted from until Among many other places in what had been New Spain and what was going to become the independent republic of Mexico, the war had devastating consequences for the underpopulated province of Texas.

Mexican insurgents struggled to capture seaports and therefore understood that their best chance of arming the insurgency was to acquire a border with the United States. So there was fierce fighting over the land border between Texas and Louisiana.

Crown officials, not wanting to see this happen, invested significant resources in stopping that project, causing Texas to be torn to pieces during those ten years. Its already small population was cut almost in half and its animal wealth, which was really the main economic enterprise in Texas at the time, all but collapsed.

Now the reason this is an important story to share, first of all, is just as a measure of the antiquity of the U. But, more importantly, the story is relevant because the devastation in Texas from to prompts the new independent republic, once Mexico achieves independence in , to make a very critical decision.

It decides that in order to hold onto this territory it has to populate it, and that the most efficient way to do that is to invite Anglo-American settlers from the United States into Texas. Mass-producing arms domestically was too complex and expensive, so that was not an option—certainly not in the short term and not even by the early twentieth century.

It was just too difficult, partly because the technological horizon in the nineteenth century was racing forward too quickly for Mexico to ever catch up. Broke and exhausted from its long war for independence, Mexico lacked the cash necessary to buy new arms on the open market from one of the major global producers at the time. This was supposed to be the beginning of a prolonged arms campaign that would gradually build up state capacity over the coming decades.

But the Mexican government would not secure another arms deal this large for the rest of the century. Just three years after making the deal with these London banks, Mexico defaults on its payments.

Mexico would in fact spend the next sixty years in sovereign default, more or less barred from international capital markets and in a very unstable condition. In the thirty-five years between and , Mexico had fifty-three separate governments operating under four different constitutional systems.

So just an absolute churn of political turmoil. The inadequacy of that arsenal was tested in the mids in Texas. Here we get back to those Texans I was talking about a moment ago. Over the previous fifteen years, the Anglo-American colonists and African slaves Mexico had invited into Texas arrived in greater numbers than Mexico had anticipated and in far greater numbers than Mexico even wanted.

Indeed, in , in a panic, Mexico criminalizes further immigration from the United States into Mexico. In , the colonists rebel against the central government. Now, rebellions had happened in Mexico before. Other larger, more powerful states had rebelled against the central government and in each case the central government had handily put down the rebellion. So why did the Texans think that they could do better? So why did Texas think it could succeed? Well, Texas had two advantages that Zacatecas did not.

It shared a land border with the United States, and it had an increasingly precious booty future, namely, cotton land. The Texan authorities pursued desperate land for arms deals.

The most consequential were deals made in New Orleans by Texas agents who had been authorized to offer up to one and a quarter million acres of prime cotton land in exchange for war material.

To defeat the Mexican army in , the Texans relied on the arms, ammunition, and even some men from Louisiana. While this was unfolding, arms trafficking was helping to produce yet another catastrophe in northern Mexico.

For complex reasons, the uneasy peace that Mexico had enjoyed with the Comanches, Apaches, Kiowas, Navajos, and other native peoples collapses in the s. Armed with guns and ammunition obtained from other native people who themselves had obtained them from American agents or American merchants, mounted indigenous warriors began launching raiding campaigns across the whole of northern Mexico. Over the next decade these campaigns claimed thousands of Mexican and native lives, depopulated vast swaths of northern Mexico, and wrecked the ranching economy that was the mainstay for the entire north of the country.

Raiders paid for their guns with stolen mules, stolen horses, and Mexican captives. They were able to traverse nine Mexican states because almost always they were far better armed than the Mexicans they encountered.

These were empty promises. They had some cannons of various calibers, most of which dated from the colonial period. The fact that this arsenal was unequal to the national task became agonizingly clear in when the United States invaded Mexico and provoked the Mexican-American War. After every successful battle the far better armed U. After his victory at the Battle of Cerro Gordo, for example, General Winfield Scott determined that the four thousand muskets seized from the conquered Mexican army that day were all far too substandard for his men to use.

So he had the muskets destroyed. The United States insisted that Mexico surrender more than half of its national territory as a precondition for ending the war.

Here is the great cataclysm of nineteenth-century Mexican history. In , at the conclusion of the Mexican-American War, Mexico was not only less than half the size it had been when it achieved independence, but it was internally fractured, it was groaning under vast internal and international debts, and it was as gun-poor as it had ever been in its postcolonial history. But this state of affairs was not going to last very long. Just several years after its war with the United States, Mexico plunged into a destructive civil war between liberals and conservatives known as the War of Reform.

In early , only months after the War of Reform comes to an end, Mexico was once again invaded by a powerful foreign enemy. Now, the one good thing about being driven out of your country and being forced into Texas is that you are in close proximity to a lot of guns. The agents found very prominent buyers. It included J. These investors provided the money and the material necessary to equip the liberal reconquest of Mexico. The bond holders, in New York City primarily, hatched a multitude of business schemes in Mexico over the following months.

And I think this was in fact the purpose of scooping up all of these discounted Mexican bonds to begin with. Mexico had absolutely earned its reputation for financial insolvency.

The idea that these savvy, extremely powerful capitalists would buy these bonds expecting prompt repayment was absurd. They bought these bonds because they knew that doing so would give them leverage over things that they regarded as far more important and promising in Mexico.

This included things such as land deals, mining concessions, commercial privileges, and above all by the mids and early s, railroad contracts, where the real money was. He did not have the means to pay back these bonds, not in the time scale that the creditors demanded, and he certainly had no intention of handing U. He also rejected a bilateral trade agreement that had been seen by these creditors as their last best hope of ever getting their money back.

He would control the country for about thirty-three years. Coups were nothing new in Mexico by this time, but the direct and the decisive influence of American capital in toppling an elected government abroad: that was novel. His rule was marked by rapid development, savage inequality, and foreign ownership of broad swaths of the economy. He cooperated with the United States to do something that governments, Mexican governments in particular, had failed to do for decades: conquer the Comanches, the Apaches, the Yaquis, and other powerful native people who had defied state power for so long.

These conquests paved the way for unprecedented economic investment in the borderlands. In other words, his very success helped lay the groundwork for his eventual overthrow. With native people conquered, merchants in Texas, New Mexico, Arizona, and California now had the capital, the connections, and the transportation infrastructure necessary to channel war material from its production sites in eastern North America, including Connecticut and upstate New York, to borderland buyers in virtually unlimited quantities.

Moreover, the proliferation of huge mining, ranching, and agricultural enterprises south of the border, almost all of them American owned, gave revolutionaries like Pancho Villa abundant targets from whom to extort or plunder cash, crops, and cattle—things that could be traded for war material just north of the border.

Even today the most recognizable icon of the Mexican Revolution is a fighting man or woman dressed in American-made ammunition. Throughout the s, American arms and ammunition poured into Mexico in unprecedented quantities. For enterprising merchants in the Southwest it was the great bonanza of their lifetimes. They supplied all comers with war material of every description.

The firm once sold the federales one thousand kilometers of barbed wire and then immediately turned around and offered their rivals, the constitutionalists, all the wire cutters that they had in stock.

Arms trafficking attracted citizens of prominence as well as merchants. Well, in addition to being president of the Webb County School Board, he was also the county sheriff. He later received a presidential pardon for his violation of U. The Mexican Revolution was an incredible business opportunity for arms dealers across the borderlands.

When it finally grinds to a halt around , it left absolute wreckage in its wake. More than one million people died because of war-related casualties in that decade. Gun violence, of course, continues at lower levels in Mexico when the war ends. But it has once again become a massive crisis over the past several years. We are living in a time when U. Let me close with a few words about how this nineteenth-century scourge has returned to afflict Mexico in the twenty-first century.

The violence that is affecting so much of Mexico really starts in The pressure that the Mexican state brought to bear sparked an intense and vicious competition between cartels for territory and for transportation routes into the United States.

Gun violence soared across much of the country despite the fact that it is legally very difficult to purchase firearms in Mexico. In the entire country there is a single store where civilians may purchase firearms, and the army decides who can and cannot shop there. Nonetheless, guns are not difficult to acquire in Mexico. The large majority of them are smuggled in from the United States. The contracting officers he dealt with told him that there was a secret agenda involved in the deal.

The Pentagon, they said, was worried that a Democrat would be elected president in and cut the funding for the war — or worse, pull U. My main motivator was making money, just like it was for General Dynamics.

Nobody goes into the arms business for altruistic purposes. He scoured FedBizOpps for even more contracts and landed a private deal to import Lithuanian ammo, determined to turn AEY into a multibillion-dollar company. To cope with the increased business, AEY leased space in a larger and more expensive office building in Miami Beach. The company hired an office manager and two young secretaries they found on Craigslist.

Diveroli brought in two more friends from the synagogue, including a guy fluent in Russian, to help fulfill the contracts. We had suppliers in Hungary and Bulgaria and other countries.

I had finally arranged all the overflight permits. We were cash positive. Packouz had yet to be paid a cent, but he was convinced he was about to be seriously rich. Anticipating the big payday, he ditched his beater Mazda for a brand-new Audi A4. He moved from his tiny efficiency apartment to a nice one-bedroom overlooking the pool at the Flamingo in fashionable South Beach. Diveroli soon followed, taking a two-bedroom in the central tower. It was convenient for both — their drug dealer, Raoul, lived in the complex.

There was drinking, dancing, people making out in the Jacuzzi — sometimes more than just making out. Outside my balcony there was always at least a few women sunbathing topless. People at parties would ask us what we did for a living. The girls were models or cosmetologists. The guys were stockbrokers and lawyers. We would say we were international arms dealers. It was wild. We felt like we were on top of the world.

In the evenings, Packouz and Diveroli would get high and go to the American Range and Gun Shop — the only range near Miami that would let them fire off the Uzis and MP5s that Diveroli was licensed to own. We loved it. Shooting an automatic machine gun feels powerful. T he biggest piece of the Afghan contract, in terms of sheer quantity, was ammunition for AKs. Packouz had received excellent quotes from suppliers in Hungary and the Czech Republic.

The move made sense. David Petraeus. It was perfectly legal, but it had the stench of double-dealing. Evdin would then resell the rounds to AEY.

There was only one snag: When Diveroli bid on the contract, he had miscalculated the cost of shipping, failing to anticipate the rising cost of fuel. So Diveroli dispatched another friend from their synagogue, Alex Podrizki, to the capital city of Tirana to oversee the details of fulfilling the deal.

Despite the hands-on approach, signs of trouble emerged immediately. When Podrizki went to look at a cache of ammunition in one bunker, it was apparent that the Albanians had a haphazard attitude about safety; they used an ax to open crates containing live rounds and lit cigarettes in a room filled with gunpowder.

The ammunition itself, though decades old, seemed to be in working order, but the rounds were stored in rusty cans and stacked on rotting wooden pallets — not the protocol normally used for such dangerous materiel. Podrizki called Packouz in Miami. There was not only an embargo against selling weapons manufactured in China: The Afghan contract specifically stipulated that Chinese ammo was not permitted.

There was precedent for such an argument: Only the year before, the Army had been delighted with Chinese ammo that AEY had shipped from Albania. Given the deadline on the contract, there was no time to find another supplier. Any delay would risk losing the entire contract. So the two friends chose a third option.

There was even a term of art for it: circumvention. Packouz e-mailed Podrizki in Albania and instructed him to have the rounds repackaged to get rid of any Chinese markings. It was time to circumvent. Alone in a strange city, Podrizki improvised. He picked up a phone book and found a cardboard-box manufacturer named Kosta Trebicka.

The two men met at a bar near the Sky Tower in the center of town. He told Podrizki that he could supply cardboard boxes strong enough to hold the ammunition, as well as the labor to transfer the rounds to new pallets.

A week later, Podrizki called to ask if Trebicka could hire enough men to repack million rounds of ammunition by taking them out of metal sardine cans and placing them in cardboard boxes.

Trebicka thought the request exceedingly odd. Why go to all that trouble? Podrizki fibbed, saying it was to lighten the load and save money on air freight. As he worked at the warehouse, however, Trebicka grew even more suspicious. Concerned that something nefarious was happening, he called the U. Embassy and met with the economic attache. Over coffee at a cafe called Chocolate, Trebicka confided that the ammunition was covered in Chinese markings.

Was that a problem? Not at all, the U. The embassy had been trying to find the money to pay for demolishing the ammunition, so sending the rounds to Afghanistan would actually do them a favor. AEY appeared to be in the clear. But greed got the better of Diveroli. In a phone call from Miami, he asked Trebicka to use his contacts in the Albanian government to find out how much Thomet was paying the Albanians for the ammunition.

AEY was giving the Swiss arms broker just over four cents per round and reselling them to the Pentagon for 10 cents. But Diveroli suspected that Thomet was ripping him off. He turned out to be right. A few days later, Trebicka reported that Thomet was paying the Albanians only two cents per round — meaning that he was charging AEY double the asking price, just for serving as a broker. Diveroli was enraged. He asked Trebicka to meet with his Albanian connections and find a way to cut Thomet out of the deal entirely.

Trebicka was happy to help. The Albanians, he thought, would be glad to deal with AEY directly. After all, by doing an end run around Thomet, there would be more money for everyone else. What Trebicka had failed to grasp was that Thomet was paying a kickback to the Albanians from the large margin he was making on the deal. Getting rid of Thomet was impossible, because that was how the Albanians were being paid off the books.

Trebicka was stuck with the tab for the workers he had hired to repackage the rounds, along with a warehouse full of useless cardboard boxes he had printed to hold the ammo. Furious at being frozen out, he called Diveroli and secretly recorded the conversation, threatening to tell the CIA what he knew about the deal.

Diveroli suggested that Trebicka try bribing Ylli Pinari, the head of the Albanian arms-exporting agency that was supplying the ammunition.

Kiss him. Send one of your girls to fuck him. Maybe we can play on his fears. Or give him a little money, something in his pocket. When Trebicka complained about being muscled out of the deal, Diveroli said there was nothing he could do about it.

There were too many thugs involved on the Albanian end of the deal, and it was just too dangerous. It got too big. The animals just got too out of control. W ith things up in the air in Albania, Packouz was starting to feel the pressure.

He was stressed out, working around the clock, negotiating multimillion-dollar purchases and arranging for transportation. It felt like AEY was under siege from all directions. So when the cargo plane had finally taken off from Hungary on its way to Kabul loaded with 5 million rounds of ammunition, Packouz had breathed a sigh of relief.

Then the plane had been abruptly seized in Kyrgyzstan — and Packouz had been forced to swing into action once more, working the phones for weeks to get the ammo released. Fortunately, AEY had friends in high places. When Packouz contacted the U. Under pressure from top U. Your fate depended on political machinations behind the scenes. With the plane released and the Albanian supply line secured, Packouz and Diveroli thought they finally had everything under control.

Cargo planes filled with ammunition were taking off from airports across Eastern Europe. The military officials receiving the ammo in Kabul had to know it was Chinese: Every round is stamped with the place of manufacture, as any soldier knows. But the shipments were routinely approved, and there were no complaints from the Afghans about the quality of the rounds. The ammo worked, and that was all that mattered.

Diveroli was rich. Packouz was going to be rich. They had it made. The exhausted Packouz no longer had to work 18 hours a day to track down suppliers. He started coming in late and knocking off early. Diveroli, who owed him commission but had yet to cut a check to his partner, started to argue with him about his hours.

There was real money in the bank — millions and millions. He was about to be forced to pay me a huge chunk of change. That was how he put it. Not like I had earned the money. One day, Diveroli finally made his move. He wanted to renegotiate the deal. Packouz knew he was in a bad bargaining position. The money coming in from the Army went directly to AEY. Packouz had no written contract with Diveroli, only an oral agreement.

The handshake deal they had made was worth just that — a handshake. In an effort to protect his interests, Packouz demanded a meeting with lawyers present. Before the session, the two friends had a quick exchange.

Then he played his trump card. We can find a settlement. A deal was struck, with Packouz agreeing to a fraction of the commission he had been promised. He figured he had something more precious than money: He knew how to work FedBizOpps. Everyone has got to lie sometimes. I t turned out that Packouz had bigger things to worry about. Winning the Afghan contract had earned AEY powerful enemies in the industry. The allegation was false, but it had apparently triggered a criminal investigation by the Pentagon.

The raid led agents directly to the e-mails about the Chinese markings on the ammunition from Albania, and the conspiracy to repackage it. We were so stupid. But there were the names and dates.