Billions in 'Blood Money' Fuel Bloodshed In Juarez, Mexico

April 10, 2009— -- Juarez, Mexico is a city with a storied past. It is rich with character, from Spanish missionaries and Pancho Villa to bootleggers and musicians.

But over the past couple of years, drug wars have engulfed the city, and it has become one of the most dangerous cities in the Western Hemisphere.

Two giant drug cartels have been battling for control of Juarez, with its crucial strategic position just across the river from El Paso, Texas. The police are almost totally corrupt and ordinary citizens have been living in terror.

The ferocity and the savagery is appalling. There have been more than 2,000 murders over the past 14 months in Juarez, a city of roughly 1.5 million people. In a sign of sheer desperation, the Mexican government sent in the army six weeks ago.

Thousands of soldiers now patrol the streets.

"Nightline" joined one unit on their morning rounds. "Once you pass through security then you can do your job as journalists but first the security," a patrol officer told the crew.

Murders Begin to Decline

The troops have imposed a kind of martial law: They pull over any vehicle that looks remotely suspicious, respond to tips phoned in by brave citizens, and conduct constant surveillance from the sky.

This troop surge has stemmed the carnage in Juarez -- for now. Murders went from 200 a month in January and February to fewer than 50 in March.

But no one knows if it will last, and Juarez remains a place haunted by the killings.

"Three guys were killed here while playing pool," said a local journalist, who, like many in Juarez, wanted anonymity. "Several people who survived the killings were taken here to this hospital. And the killers came in. The men came here to kill the guys inside the hospital."

Former Hit Man: 'It Was My Life or Theirs'

This is a war that's gone on for years. There are literally thousands of combatants who are armed and dangerous. "[I killed] at least 15," said a man we will refer to as "Julio." He asked that his name be changed to preserve his anonymity. "It was my life or theirs."

Julio told "Nightline" he worked for the powerful Juarez cartel as a hitman, narco and smuggler for four years.

"I wanted to load my pocket with money so I could help my family. ... They give you 2,000 pesos for each person you kill."

Billions of dollars are what's fueling all the bloodshed in Juarez and across northern Mexico; Americans' insatiable demand for illegal drugs, and their willingness to pay. It's blood money.

A Mayor's Mission: 'We're Cleaning Up'

The mayor of Juarez, Jose Reyes Ferriz, is an honest man. He's also a man with a price on his head, who drug traffickers would love to see dead.

"We have an honest government now in the city," he said. "We're cleaning up our police department."

Reyes moves around his city under tight security. His visits to local schools or health care facilities are not widely publicized. A graduate of Notre Dame law school, he was determined to root out police corruption. In doing so, he got rid of nearly half the force.

The cartels fought back.

"And at the end of the year, last year, about 50 city officials had been killed," he said. "Fifty, the head of the jail department, friend of mine who was a very honest man was killed. Two heads of the police department, one operating director of the police department, even the killing went down to city judges."

And they came after him.

"The threats mainly come the same way they threaten the police department, on police patrol radios," he said.

That was when he called in the troops. But the battle continues on many fronts. The streets of Juarez may be quieter these days, but at the city morgue, the bodies are still piling up.

Julio said his years of killing for the cartel wrecked his life. "No, no going back," he said. "I was a very frightened man. I lost everything then. I lost my dignity. I had to kill, you know, even wanting to kill just to please my boss."

U.S. Officials on Cartel Payroll?

Also deeply disturbing, Julio claims to have had help smuggling drugs from corrupt U.S. government officials. He said the Mexican drug bosses have many U.S. officials on the payroll. They are known to the smugglers only by number, not by name. And they make sure they are on duty when they open the border for the smugglers.

FBI agent Keith Slotter said the vast majority of border officials are honest, but he admits corruption by the cartels is on the rise.

"For them to be successful, they have to be able to get across the border, and they are willing to pay a lot of money to 'grease' the skids," said Slotter.

While the FBI is on the case in the United States, in Mexico the justice system is broken. The vast majority of crimes in Mexico in 2008 went unsolved. So the war in Juarez goes on. The Mexican army has clamped down on the city, but for how long?

American gun sales keep the cartels armed. Ninety percent of the weapons seized in Mexico come from the United States. Meanwhile, millions of Americans just keep getting high, an irony that causes Mayor Reyes concern.

"When I read an article a few weeks ago about Michael Phelps using marijuana and not being prosecuted even though there was the evidence right there, I think wow, we are doing all this effort ... because the drug use is in the United States. The dead are in Mexico."