By Robin Emmott
MONTERREY, Mexico (Reuters) - Drug gangs fighting over Mexico's richest city have launched a wave of attacks against police and rivals since New Year's Eve, crushing hopes of a drop in violence and alarming business leaders.
Firing automatic weapons and grenade launchers, brazen hitmen in Monterrey have killed at least 10 police officers and shot up police stations, attacked a prison, killed bystanders, and threatened local journalists in a burst of violence across the city that was once known as one of Latin America's safest.
In a sign that a two-month period of relative calm has ended in the city that has close U.S. business ties, drug gangs hung the half-naked body of a woman from a bridge on December 31, the most gruesome act since 51 bodies were found in a mass grave just outside the city last July.
"We're on alert, we're ready for these kind of criminal attacks against the authorities," Nuevo Leon state Governor Rodrigo Medina, the top regional official, told reporters this week. "We have to be ready for a difficult scenario."
The jump in violence in Monterrey, where annual income per person is double Mexico's average at $17,000, is a major worry for President Felipe Calderon as foreign companies question the safety of doing business in the area.
A U.S. executive was abducted, beaten and robbed of his armoured car in Monterrey last week, U.S. security consultancy Stratfor said, although police declined to comment.
Home to global cement maker Cemex, top Latin American drinks company Femsa and foreign factories including General Electric and Whirlpool Corp, the region generates 8 percent of Mexico's gross domestic product.
Monterrey's slide into violence is one of the most dramatic developments in Calderon's war. The city and the surrounding state of Nuevo Leon reported 610 drug killings in 2010, by far the worst ever for the region, although national security spokesman Alejandro Poire said on Monday that violence was systematically falling because of government efforts.
More than 30,000 people have died in drug violence across Mexico since Calderon sent the army to fight the cartels in December 2006. The government says the bloodshed is a sign the gangs are weakening, but business leaders and rights groups worry the strategy has backfired, sparking an endless stream of revenge killings that is spilling across the country.
EXODUS
Lauded by then-U.S. President George W. Bush in 2002 as a model for poor countries, Monterrey is seeing business and tourism suffer while some investors are freezing investment.
Some wealthy residents have fled to cities such as Houston, and while no exact figures are available, demand for so-called U.S. immigrant investor visas, which require Mexicans to make up to $1 million investments in the United States, are surging.
"We are talking about an exodus," said Jose Cornide, a private wealth advisor who helps applicants with the process.
No big foreign companies have pulled out of Nuevo Leon because of the violence, but some executives are holding back on investments and companies are spending 5 percent of cash flow on security, a cost that was nonexistent a few years ago.
Monterrey, a city of around 4 million people some 140 miles (225 kms) from the border with Texas, is prized by drug gangs as a money laundering centre, as a strategic hub for narcotics distribution and for its kidnapping rackets. With its sleek highways, posh restaurants and private universities, it is a place for drug capos and their families to live unnoticed.
An alliance of drug cartels wants to flush out the Zetas gang, led by former elite soldiers who switched sides to join organized crime in the 1990s, and argues this would end the violence.
"People of Nuevo Leon, good, hard-working people, help us. We want a real peace without the Zetas," read a message distributed across Monterrey this week and signed "The New Federation."
That federation is a grouping of the Gulf cartel from northeastern Mexico, La Familia (The Family) from western Mexico, and the Sinaloa cartel, run by Mexico's most wanted man Joaquin "Shorty" Guzman, U.S. and Mexican officials say.
A string of arrests of local gang members appeared to contain Monterrey's growing violence in October and November -- until gunmen detonated a car with explosives outside a police station just outside the city in mid-December.
"A lot of the battle is about extortions, the high standard of living in San Pedro," said a U.S. official, referring to San Pedro Garza Garcia within Monterrey's metropolitan area that is one of the wealthiest enclaves in Latin America. "It's about who owns the town and can say 'this is our city.'"
(Additional reporting by Gabriela Lopez in Monterrey and Michael O'Boyle in Mexico City; Editing by Vicki Allen)
