Investment on Hold

The death of Cavazos, a father of three who was taken from his home on Sunday night, is the first attack on a public official by suspected cartels in Nuevo Leon, a manufacturing hub once seen as a model for other developing nations.

Security forces found the body of a slain mayor on Wednesday near Mexico's richest city, days after he was abducted by hitmen in the latest attack on a public official from increasingly bold drug cartels.

Drug violence has surged in Monterrey, where per capita income is double Mexico's average, since a dispute between the powerful Gulf cartel and the Zetas, a brutal spinoff group, turned into all-out war since the start of this year.

That turf war is also terrorizing neighboring Tamaulipas state, where hitmen killed a candidate for governor in June, the highest level political killing in Mexico in 16 years.

Violence in Nuevo Leon is still well below the dramatic levels of border cities like Ciudad Juarez, but the violence in Monterrey is a challenge for Calderon as foreign companies begin to question the safety of doing business in Latin America's second-largest economy.

"Insecurity in Monterrey is now spinning out of control and is a clear threat to investment. The city is losing its leadership," said political analyst Jose Luis Garcia at the University of Monterrey. "Politicians ... aren't prepared to pay the price and confront the problems."

Local business leader Juan Ernesto Sandoval warned this week that a nascent economic recovery in Nuevo Leon, after Mexico's punishing downturn last year, was under threat.

"There are investment projects that are being frozen," he said, pointing to a decision from one retail chain to put construction of stores and creation of 1,000 new jobs in Monterrey on hold.