Mexico's President Felipe Calderon and his wife Margarita Zavala attend a ceremony outside the Casino Royale after a deadly assault, in Monterrey, Mexico, Friday Aug. 26, 2011. (Photo: Hans-Maximo Musielik / AP)

The central statistic of Mexico’s violent drug war – 40,000 gangland murders in the past five years – is repeated so often it almost fails to alarm us anymore. But what happened last Thursday, Aug. 25, in the northern business capital of Monterrey – 52 innocent people massacred after gangsters set fire to a casino, presumably in a drug-cartel extortion operation – left even President Felipe Calderón sounding distressed. So agitated, in fact, that drug-war analysts believe Calderón, in his speech the next day, signaled a change in philosophy and told the U.S. to think about legalizing drugs as a way of weakening vicious drug traffickers.

As Calderón often does during the lowest moments of the drug war – a conflict he intensified after taking office in 2006 by throwing his military at Mexico’s power drug mafias – he railed on Friday at the U.S. for its “insatiable” drug consumption and its refusal to ban the sale of assault weapons that too often get smuggled south of the border. But it was this part of his speech, which suggests Washington should pursue “market alternatives” in order to diminish the drug cartels’ $30 billion annual revenues, that has sparked speculation:

If [the Americans] are determined and resigned to consume drugs, then they should seek market alternatives in order to cancel the criminals’ stratospheric profits, or establish clear points of access [to drugs]. But this situation can’t go on.

The big question is whether “market alternatives” was Calderón code for drug legalization, at least the legalization of less harmful drugs like marijuana. Ethan Nadelmann, executive director of the non-profit Drug Policy Alliance in New York, which calls for drug-policy reforms like legalization in part to help reduce drug crime, thinks Calderón was “saying the L word without actually using it. He was clearly putting a toe in the drug-legalization water.” Calderón’s military strategy has largely failed, Nadelmann argues, “so after last week he’s looking around and he realizes he’s got to get the U.S. to do something different regarding long-term strategies.” In Mexico, respected political analyst Sergio Sarmiento, in his column Jaque Mate (Checkmate), also asserted that “market alternatives” was “a way of referring to legalization.”

See “Four Decades Later, It’s Time to Scrap the Dead-End Drug War”

Even though Mexico in 2009 decriminalized possession of small amounts of marijuana, the conservative Calderón has long opposed efforts like last year’s California ballot measure that would have legalized the sale and possession of small amounts of marijuana. (The measure failed.) But could the Monterrey casino massacre have been a breaking point that moved Calderón to at least be more open to legalization? If the U.S. refuses to reinstate its ban on assault weapons, he may reason, then perhaps it could help dry up the money the Mexican cartels use to buy those guns. And most drug-interdiction experts agree that if the U.S. were to legalize marijuana, it could deprive the cartels of up to half their “stratospheric” income.

Other factors could be persuading Calderón as well. One is the decidedly shifting attitude in Mexico, where Calderón’s two predecessors, former Presidents Ernesto Zedillo and Vicente Fox, have unequivocally come out for legalization. Another is this year’s conclusion by the Global Commission on Drug Policy, a group that includes former Latin American heads of state like Zedillo, that a half-century of conventional drug-war interdiction has failed. Yet another, Nadelmann notes, is that Calderón is a disciple of orthodox free-marketeers like Milton Friedman, who is also a legalization proponent.

So if Calderón, one of Washington’s staunchest drug-war allies, really is moving toward support for legalization, where does that leave the U.S.? To its credit, the Obama Administration has acknowledged the large role that gringo drug consumption and guns play in Mexico’s tragedy. But while President Obama said this year that legalization is “an entirely legitimate topic for debate,” his Office of National Drug Control Policy dismissed the Global Commission’s recommendation to legalize marijuana. Now, if even Calderón is doing an about-face, the Administration may find itself with more leeway – or feel more pressure – to at least explore the issue.

But even if the U.S. eventually does legalize marijuana, that wouldn’t absolve Mexico of its own obligation to create modern police and judicial institutions for once. Even if the gangsters suddenly found their drug income vanishing, Mexico’s rule-of-law vacuum would still encourage them to terrorize the country through other criminal activities like kidnapping and extortion. In his Friday speech, Calderón also went after his nation’s Congress for moving too slowly on the judicial reforms that are Mexico’s only real long-term escape from their narco-tragedy. With 15 months left in his term (under Mexican law he cannot run for another), Calderón is struggling to secure a more positive legacy – and that may well include a shift in thinking that Washington itself needs to consider.

See “Mourning Monterrey: Drug Mafias Darken Mexico’s ‘Lighthouse'”