IN MONTERREY, MEXICO When American baseball executives were looking for a place to move the struggling Montreal Expos franchise five years ago, Mexican investors brought them here, to this booming metropolis two hours south of the Texas border.

The case for Monterrey was a strong one then. Business journals ranked the city as Latin America's safest, and hundreds of U.S. companies were setting up operations. Nothing would cement Monterrey's reputation as a world-class city like a Major League Baseball team.

"It would have been a source of pride for all of Mexico," said Roberto Magdaleno, general manager of the local club, the Sultans, as he looked out over his aging ballpark.

Instead, the Montreal Expos moved to Washington and became the Nationals. And the Zetas drug cartel moved to Monterrey and began dumping bodies.

As Mexico's wealthiest urban area, Monterrey is a symbol of the country's aspirations, with a well-educated workforce, leading universities, thousands of U.S. and other foreign business executives, and a per capita income twice the national average. But today the city is at the front of Mexican President Felipe Calderon's U.S.-backed drug war, and its future is clouded by lawlessness. As one top executive here said, "If Monterrey is lost, all is lost."

Until recently, the city's chic shopping plazas and shady streets filled with joggers seemed more like Houston than Ciudad Juarez, the gritty, low-wage manufacturing town along the Texas border that is being depopulated by eight homicides a day. But the same qualities that made Monterrey appealing to investors - good schools, exclusive neighborhoods, upscale restaurants - made it attractive to bosses of the Gulf cartel and its main rival, Los Zetas.

The two mafias are locked in vicious competition at a particularly inopportune time for Monterrey. With the U.S. economy rebounding and labor costs rising in China, the city is poised for another boom. But a surge in violence is putting the economy at risk.

"It could be devastating for Monterrey's international image," said Jesus Cantu, a professor at the Tecnologico de Monterrey, Mexico's top university.

Homicides in the city and the surrounding state of Nuevo Leon more than tripled last year, to 828, state prosecutors said, and January's tally of 144 killings was the highest on record.

Last month, the 60-year-old security chief of the local prison was snatched from his home, and his butchered remains turned up in a cardboard box. Ten days later, the corpse of the state's top intelligence official was found in a burned-out car, one of more than a dozen police officers slain this year. In the past week and a half, assailants have attacked five Monterrey area police stations with grenades and automatic weapons.

Motorists travel in fear of having their cars commandeered for impromptu roadblocks set up by grenade-throwing gangsters. Gunmen stormed a seafood restaurant in a middle-class neighborhood Feb. 16 and held patrons hostage, robbing and beating them, then stripping and sexually assaulting several women.

"The city has changed," said Carlos Miguel, a 42-year-old accountant shelling out $120 to buy his wife a 5,000-volt stun gun at a kiosk in a mall. "We don't go out at night anymore."