COBAN, Guatemala (Reuters) - Guatemala extended military operations on Tuesday to sweep out Mexican drug cartels from a lawless northern state where well-armed traffickers often outgun government troops.

Soldiers patrol the streets of Coban, in the state of Alta Verapaz January 12, 2011. Hundreds of Guatemalan troops poured into the remote state of Alta Verapaz last month to attack traffickers in a surprise move by President Alvaro Colom to remobilize the army known for massacring civilians during Guatemala's 1960-1996 civil war. Picture taken January 12, 2011 REUTERS/Doriam Morales

Hundreds of troops poured into the remote state of Alta Verapaz last month to attack traffickers, a surprise move by President Alvaro Colom to remobilize the army known for massacring civilians during Guatemala’s 1960-1996 civil war.

The ‘state of siege’ declared by the president was set to end this week, but on Tuesday Colom extended the decree, which limits freedoms of movement and assembly, for another 30 days as soldiers seek to reclaim the streets of small towns that are being terrorized by Mexico’s feared Zetas drug gang.

“The state of siege is beginning to accomplish its objective: to recover governance in Alta Verapaz,” Colom said.

As Mexico’s escalating drug war spills over into Central America, Guatemala is struggling to block powerful cartels from destabilizing areas of the country, a poor but democratic U.S. trading partner and a major coffee and sugar exporter.

“Organized crime is not just infiltrating us, it pains me to say it but drug traffickers have us cornered,” Colom told Congress last week. “Just the weapons seized in Alta Verapaz are more than those of some army brigades.”

Before Colom ordered the military operation, the Zetas were operating with impunity in Guatemala, undermining Mexico’s battle against drug cartels. Officials worry Central America’s weak governments do not have the capacity to contain the spreading threat of cartels in the region.

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The United States is pumping $1.4 billion into the region to help governments attack drug gangs, but most of the funds are earmarked for Mexico. There, turf wars between gangs and attacks on cartels by the government have killed more than 34,000 people in the four years since President Felipe Calderon launched his own military-backed war on cartels. Less than a fifth of U.S. funds go to Central America and the Caribbean.

Patrolling in Alta Verapaz with armored cars, Guatemalan soldiers have found tortured bodies, luxury cars, assault weapons and an air strip used by drug gangs in the mountainous, coffee-growing state north of the Guatemalan capital.

They also arrested at least 22 men accused of working for the Zetas, who officials say are operating in three-quarters of Guatemala’s territory, a smuggling corridor for South American cocaine. Criminals have long collaborated with Mexican gangs but over the past few years the cartels have begun to move in more permanently, extorting businesses and corrupting locals.

LATENT THREAT

The army says it made important progress in Alta Verapaz, after dozens of drug-related killings late last year. “But there’s still a latent threat,” Colonel Marco Tulio Vasquez, head of anti-drug operations in Alta Verapaz, told Reuters in the town of Coban.

Guatemala’s army remains weak and underfunded, limiting its ability to echo Mexico in its crackdown against drug gangs.

Peace accords in 1996 that ended 36 years of fighting between leftist rebels and government forces ordered the army be slashed in size, dwindling from a 50,000-strong force to just 17,000 soldiers today. Dozens of military bases, including one in Alta Verapaz, were closed.

Soldiers earn as little as $150 a month and are hired on a temporary basis. High salaries offered by the drug cartels often convince troops to switch sides. The Zetas, originally formed by Mexican army deserters, have been known to recruit elite Guatemalan troops known as Kaibils who are trained in jungle warfare and infamous for brutal civil-war era abuses.

The army is more trusted than Guatemala’s notoriously corrupt police, but many people are highly suspicious of men in uniform, as the military struggles to shake its dark past.

Nearly a quarter of a million people, mostly native Mayans, died during the civil war, and a U.N.-backed Truth Commission report found the army committed 85 percent of the killings.

“The army still provokes bad memories,” said Carmen Rosa de Leon, a human rights leader in Guatemala City.