The U.S. and Mexico have categorically rejected a recent report from the high-profile Global Commission on Drugs, which claims that the U.S.-led war on drugs is a colossal -- and costly -- failure.

The report -- signed by world leaders including former U.S. Secretary of State George Shultz and former NATO Secretary General Javier Solana -- argues that harsh drug policies have primarily resulted in the proliferation of organized crime, corruption, and mass criminalization, while failing to substantially reduce illegal drug use. It advocates addressing illegal drug use as a public health issue rather than a crime problem, with an emphasis on “legal regulation” and treatment over punishment.

Despite the panel’s big-name cachet, the U.S. and Mexico have indicated that they have no intention of abandoning their strategies for fighting the drug war, which has claimed more than 40,000 Mexican lives since December 2006. In a statement last week, the Obama administration claimed that the fight against illegal drugs is working.

And the White House is actually looking to increase funding for its war on drugs. The president’s 2012 budget asks for $26.2 billion for drug control, a 7.9% increase from 2011 that includes $1.7 billion to help Mexico fight the cartels.

Some border state politicians and policymakers argue that those funds don’t go far enough. They warn that if the U.S. doesn’t do more -- commit more National Guard troops, deploy more drones, build higher fences -- Mexico’s escalating drug violence will “spill over” the border. That argument conveniently ignores the more terrifying reality: Mexico's drug cartels are already here.

Mexico's powerful criminal organizations have extensive -- and deeply rooted -- networks across the U.S.. The cartels have already put tremendous strain on the US criminal justice system and law enforcement, and now threaten to jeopardize U.S. trade, compromise the integrity of our financial systems and destabilize our already-weak border.

The Mexican drug cartels are some of the most extensive and successful organized crime networks in history. They are sophisticated, transglobal criminal enterprises that control access to illegal supply routes across the Western Hemisphere. There is growing evidence that their influence is expanding; the cartels are reportedly making inroads in Europe, Africa, Australia and and South Asia. Mexico’s leading newspaper, El Universal, Mexico’s leading newspaper, reports that the cartels are now facilitating production and smuggling of Afghan heroin.

Cartel operations are not limited to the drug trade. Mexico’s organized crime gangs have diversified into other illegal enterprises, like human trafficking, kidnapping, extortion and movie and music piracy. PEMEX, Mexico’s state-run oil company, says the gangs stole 2.16 million barrels of fuel in 2010 alone.

Cartel activities extend to legitimate industries as well; in many cases, the gangs use the pathways of the global free trade system to smuggle drugs along with shipments of everything from tiles to Chinese-made toys. The Sinaloa Cartel even reportedly controls a huge share of Mexico’s avocado industry.

Overall, the Mexican cartels generate about $38 billion annually, according to U.S. government estimates. And that money isn’t crossing the border in a suitcase. The gangs launder the money through a network of international banks, using the global financial system like any other multinational corporation. Last year, Wachovia was found to have allowed $378.4 billion in laundered Sinaloa Cartel funds to pass through its accounts unchecked. The U.S. Justice Department is reportedly working on a case against HSBC bankers who allegedly laundered money for Mexico’s drug gangs.

So far, the U.S. has been virtually powerless to stop the proliferation of Mexico’s cartel networks, even as the organizations penetrate deeper into the country. Mexican drug trafficking organizations are now deeply embedded in cities across the U.S.

Unlike their Colombian predecessors, Mexican drug trafficking organizations outsource operations to established criminal groups, mainly Hispanic street and prison gangs like the El Salvadorean Mara Salvatrucha and the Mexican Mafia. As a result, the cartels' presence is ubiquitous in American inner cities and penitentiaries. The capos control this vast, decentralized network from Mexico, making it nearly impossible for U.S. law enforcement to break up the organizations.

Given the vast scope of Mexican cartel networks, the U.S. was, in many ways, right to dismiss the Global Commission on Drug Policy’s report as too narrow in its purview. The drug trade -- and the powerful criminal organizations that control it -- has become a national security problem, and needs to be dealt with as such.

But the report’s ultimate conclusion is correct: After four decades, it is clear that the drug war has failed. The U.S. needs a new approach that treats illegal drug trafficking and abuse not as a moral issue, but as a significant threat to domestic security and regional stability.