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Tragedy in Juárez spurs economy in El Paso

Three twentysomethings sway on stage, belting out a spirited, if off-key, version of Abba's "Dancing Queen." A packed crowd sings along, sipping beer and cocktails as the lyrics scroll by on TV screens across the bar.

It's a Thursday night during Holy Week, and this El Paso karaoke bar, Il Cantö, is one of several new nightclubs and restaurants hopping with patrons from both sides of the Rio Grande. El Paso never used to be so hip; the nightlife in Juárez, just across the border, had always outshined that of its comparatively plain sister city. But as the savage drug war rages on there, both the fun and the business have fled — following the customers.

Juarenses don't go out at night. Tourists don't come at all. With the streets empty and their cash registers quiet, many restaurant, nightclub and small-business owners have moved to El Paso, bringing the sleepy city a vibrant new culture and an economic boost. In a tragic irony, a measure of El Paso's recent fortune results directly from the suffering of its sister city.

The economic jolt from Juárez refugees comes as El Paso reaps the payoff from years of planning and pleading for recognition. Some 24,000 new soldiers are moving to Fort Bliss, and a massive new medical complex is sprouting, along with billions in infrastructure to accommodate the unprecedented growth. "While the rest of the country is calling this the 'Great Recession,' we're calling it the 'recession that's making us great,'" says El Paso Mayor John Cook.

But experts warn that El Paso leaders rely on Juárez's demise at their own peril. Ultimately, as Juárez goes, so goes El Paso, they say. If the Mexican city's expansive maquila industry collapses, it could bury a significant portion of El Paso's newfound prosperity. "El Paso had better be looking at a potential resolution of the problems in Juárez," says Tony Payan, a political science professor at the University of Texas at El Paso, "because El Paso is dependent on Juárez — not the other way around."

Exodus

Since drug violence exploded in Juárez in 2008, at least 5,400 people have been killed in the city of 1.3 million, according to the most recent data available from the Chihuahua state attorney general's office in Mexico. It's nearly impossible to precisely count how many Juarenses have fled, or to know exactly why, because the bloodshed in Juárez has reached a crescendo almost simultaneously with the onset of a worldwide recession.

Estimates of the Juárez exodus range from about 100,000 to nearly a half-million. Outgoing Juárez Mayor Jose Reyes Ferriz says that as many as 20,000 homes in his city have been abandoned. In the once-bustling Pronaf district, "se vende" (for sale) signs hang from the eaves of shuttered boutiques, restaurants and nightclubs. The same for-sale signs hang from the barred windows of ritzy estates in the upscale Campestre neighborhood. Reyes Ferriz estimates that about 100,000 people have left Juárez. The ailing economy, he says, has driven away more of them than the slaughter. "I think when they get the opportunity to work, they'll probably be back," he says. Other estimates, from UTEP's Payan and a study from the Universidad Autónoma de Ciudad Juárez, put the exodus from Juárez at closer to 500,000 people — nearly 40 percent of the population.

Before the daily executions, Juárez was perhaps best known for its massive maquila industry. Factories that produce parts for American products ranging from televisions to cars to computers employ thousands of workers from both sides of the border. About 100,000 workers per year once migrated from southern parts of Mexico to Juárez for factory work, Reyes Ferriz says. Nearly two-thirds of Juárez residents, he says, were born someplace else. But when the international economy soured, so did the maquilas. In a city that once boasted almost no unemployment, Reyes Ferriz says, about 20 percent of Juarenses are out of work.

While some have fled north to seek safety and prosperity in America, many more have gone back to their homes in southern Mexico, Reyes Ferriz says. There, they can find support from the families they left behind.

Garden of eating

Before the bloodletting, food and entertainment provided another engine for the Juárez economy, in places frequented by Americans, including many El Pasoans — who considered Juárez just another neighborhood in their binational community. Now, the faces that remain in the Mercado and Pronaf districts are primarily those of Juarenses. And they can be seen only in daylight. 

But at 9 o'clock on a Thursday night in El Paso's Union Plaza, John Geske's new restaurant, The Garden, teems with young people sipping mojitos and margaritas and sharing colorful sushi rolls. The band plays a Sade cover as men in designer jeans and women in shiny tops tap out texts on smartphones. "We've gained so much momentum," Geske says, setting aside his beer to chat. Gone are the days when Geske, like so many El Pasoans, partied in Juárez. "It's like the wild, wild west over there," he says.

That's been good for business here. Saturdays at The Garden are slammed, as is lunch every day. Even with the increased traffic, though, Geske says restaurants and clubs in El Paso will never be able to replicate the nightlife in Juárez. Part of the allure was the service, bred from a system in which workers made only tips. Staff rushed to open doors and plop fresh drinks in front of customers before they had to ask, a luxury El Paso business owners could never afford to recreate.

But that hasn't slowed the blossoming of El Paso's nightlife. Upscale clubs and restaurants like Maria Chuchena, Aroma and Il Cantö, have moved from Juárez to El Paso. David Maese and his business partner closed their karaoke bar in Juárez and reopened Il Cantö near the UTEP campus last fall. The club plays almost exclusively Mexican music — catering to the many Juarenses who now come to El Paso to party because it's too scary to venture out at night at home. A few blocks away on Mesa Street is Aroma Restaurant, where Luis Martinez welcomes guests in the dark, candle-lit dining room. "Here in El Paso, especially for the restaurant business, it's good lately," he says. "Any kind of business in Juárez is difficult to operate now."

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Executive immigration

The economic boost transcends the party scene, says Richard Dayoub, CEO of the Greater El Paso Chamber of Commerce. He estimates that about 30,000 Juarenses have moved here. "They're lawyers, accountants; they're business owners who run their businesses by computer, by telephone, or both, and manage their operations from here for safety reasons," Dayoub says. Business owners can't go to work in Juárez without running the risk of getting kidnapped or shot. And it's not just the cartels. A secondary criminal element has sprouted in the chaos, kidnapping and carjacking with impunity while Mexican military and police are tied up fighting (or cooperating with) the cartels. "That has become more than a cottage industry," he says. "We're talking about a lot of people and a lot of money."

Cindy Ramos-Davidson, CEO of the El Paso Hispanic Chamber of Commerce, says she's seen about a 40-percent increase in clients from all over Mexico. "We're seeing a lot of family-owned companies that want to [move to the U.S.] for their families," she says. Ramos-Davidson estimates she's seen about 400 new small businesses, each bringing about five to 10 job opportunities, though its unclear whether the jobs are permanent. Many Mexican business owners, she says, are keeping their shops south of the river in hopes of returning when security and the economy there improve. "It's not like El Paso is going to be dependent on Mexican business," she says.

Meanwhile, El Paso enjoys an unprecedented growth spurt for reasons having nothing to do with the troubles to the south. Some 24,000 new soldiers, along with their families, are being stationed at the Army's Fort Bliss. The base was among the biggest winners in the nation after the 2005 Base Realignment and Closure Commission's decision to rearrange military forces around the world. The new troops will boost the base's economic impact on El Paso from $1.5 billion per year to more than $5 billion.

Another $1.5 billion in economic impact, and some 500 new jobs, are expected from the new four-year medical school, the Texas Tech University Paul L. Foster School of Medicine, where the first class of doctors started school last fall. The city won state investment for the project in 2007 after nearly a decade of pressuring state lawmakers.

Because of its relatively low unemployment and solid housing market, El Paso was ranked the 11th most recession-resilient city in America by the Brookings Institute last month. The new troops and their families, along with the Juárez refugees, Dayoub says, filled apartments to a 98-percent occupancy rate, and the city needs some 6,000 units to accommodate new residents. "Sadly, it's been good for El Paso at the expense of Mexico, and I mean that sincerely. I think it's tragic," Dayoub says. "It's destroying their economy, and, however inadvertent, however unintended, there's a positive benefit to El Paso's economy."

Intertwined fates

That benefit is hard to quantify, but most agree it represents a sizeable factor in a much larger expansion. "It's temporary, it's partial — and it's rather small compared to how El Paso would profit if Juárez ever recovered," says UTEP's Tony Payan. He worries that the violence will lead to a collapse of the maquilas in Juárez. The city has 300 manufacturing facilities that make parts and products, primarily for U.S. companies. Nearly a quarter of all trade between the U.S. and Mexico crosses through the El Paso/Juárez border ports, according to the El Paso Regional Economic Development Corporation. The maquilas employed more than 168,000 workers from both sides of the border in 2006. Since then, though, the facilities have laid off some 40,000 to 60,000 workers. "When that industry collapses, then El Paso is dragged down," Payan says.

But that's not likely to happen, says Alan Russell, president and CEO of Tecma Group, which has 4,000 employees in 20 maquilas in four Mexican cities, including Juárez. Job losses at the facilities, he says, have nothing to do with the Mexican drug war and everything to do with the U.S. economic downturn. Nearly one-third of the maquilas in Juárez produce parts for the U.S. automotive industry. "There's an old saying that when the U.S. gets a cold, Mexico gets the flu," Russell says. "But the U.S. got worse than a cold, so the economic impact in Mexico has just been horrific."

Maquila employees have not been the targets of cartel violence, Russell says. Unlike many small business owners, maquila owners don't live in Juárez, so they can't be easily followed and extorted. It helps, too, that the companies are primarily American-owned, making criminals wary of potential repercussions. What's more, the factories are restoring some of their workforce, now that the U.S. economy has started to recover. Russell hopes an economic upturn in Juárez will eventually help reduce the bloodshed. If more people have jobs and steady income, Russell says, fewer will turn to the drug trade. When that happens, Juarenses will return home, and they'll bring back with them that raucous nightlife, those famous restaurants and the cultural and economic benefits that have migrated across the border to El Paso. "Everything goes in cycles," he says.

This cycle, though, may take some time to run its course, says UTEP's Payan. As long as the cartels battle one another and the government to preserve their drug profits, and as long as the Mexican government proves powerless to stop them, the bloodshed will continue. "The city will have to be rebuilt from the ground up," he says, "and hopefully Juarenses have courage to rebuild it." 

This article originally appeared on GlobalPost.

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Ivan Pierre Aguirre/Texas Tribune

Border cities series

This is the first in a series examining life in three pairs of sister cities along the Texas-Mexico border and how residents on both sides of the line are affected by the bloody drug war.