Guatemala’s government has just declared a “state of siege” to deal with the growing power of Mexican-based drug cartels in its territory. Indeed, officials argue that one northern province has been “overrun” by the traffickers.

It is yet another indicator that the aggressive drug war that Washington and Mexico City have embraced is having perverse effects. The developments in Guatemala, along with the rising death toll in Mexico itself (now topping thirty thousand since President Felipe Calderón declared war on the drug cartels in December 2006), overwhelm the much-touted successes, such as the recent killing of Nazario Moreno González, the charismatic leader of the violent La Familia gang.

There is already evidence that Mexico’s drug-related corruption and violence is seeping northward into the United States. But that plague is spreading even more rapidly into Mexico’s small Central American neighbors.

That shift raises the interesting question of whether it is an unintended or intended consequence of President Calderón’s crackdown on the cartels. Wall Street Journal columnist Mary O’Grady and other experts suspect that such an outcome may be the real motive—or at least one of the key motives—underlying his strategy. According to O’Grady, “Mexico seeks to raise the cost of trafficking so that the flows go elsewhere.” And, one might add, so that at least some of the violence accompanying the drug trade also goes elsewhere.

There is little question that, whether intended or not, Calderón’s antidrug offensive is causing the cartels to become much more active in places outside of Mexico, especially in Central America. After investigating developments in Mexico’s southern neighbors, Washington Post reporters William Booth and Nick Miroff conclude that the drug cartel violence quickly spilling south into Central America “is threatening to destabilize fragile countries already rife with crime and corruption.” Other experts reach similar conclusions. David Gaddis, chief of operations for the Drug Enforcement Administration, contends that the Mexican organizations are moving into countries “where they feel, quite frankly, more comfortable” than they do in Mexico.

There is ample evidence to back up such pessimistic assessments. El Salvador’s murder rate, already one of the higher ones in the world, jumped another 37 percent in 2009. That increase was due almost entirely to increased fighting among drug-trafficking organizations. El Salvador’s defense minister, David Munguía Payés, states bluntly: “The more pressure there is in Mexico, the more the drug cartels will come to Central America looking for a safe haven.” In September, Salvadoran police discovered $9 million in cash buried in oil drums on a ranch. $9 million is a sizable sum—especially in a country as poor as El Salvador.

Furthermore, the turf fights that have so plagued Mexico are now being played out with much greater frequency and ferocity in Central America. And the same gruesome trophies, especially severed heads, are now showing up with greater frequency as well. Rival cartels are establishing a strong presence in several Central American countries. The Zetas, arguably Mexico’s most ruthless and violent drug faction (composed of rogue military special forces personnel that the United States helped train), have reportedly set up recruitment and training camps in Guatemala. Several trafficking organizations have created bases of operation in both Guatemala and Honduras to facilitate drug shipments northward by sea and air.

Corruption, a long-standing problem in Central American states as it is in Mexico, is reaching new heights as the cartels consolidate their beachheads. Since late 2008, four high-level figures, including two national police chiefs and a former president have been arrested and warrants are out for two former interior ministers who are now fugitives.

Central American political leaders are alarmed at the growing presence of the Mexican cartels in their countries, and they are pressing Washington for greater assistance. Costa Rican President Laura Chinchilla wants the United States to offer an antidrug-aid program specifically for Central America. That region is already included in the multiyear, multibillion-dollar Mérida Initiative that President George W. Bush launched in 2007. But most of that aid has gone to Mexico, not Central America. “We don’t want to be seen as an appendix of the Mérida Initiative,” President Chinchilla stated. “We want a plan for Central America.”

But even most supporters of the Mérida Initiative concede that the plan’s beneficial impact on Mexico has been meager, at best. It is not clear why Chinchilla and other Central American leaders assume that the results of a similar aid program would be better in their region. Her call sounds more like a cry of desperation than a well-considered strategy.

The sense of desperation is understandable, though. The potential destabilizing impact that the cartels could have in Central America is even worse than the potential in Mexico. Despite its many—and rising—problems, Mexico has had more than eight decades of political stability. Central America’s history is exactly the opposite, with numerous rebellions, military coups, bloody civil wars and societal upheavals.

It was only a little more than two decades ago that the Reagan administration feared that the entire region could be aflame with revolutionary convulsions. Indeed, that fear was the driving force that caused Washington to support a series of brutal dictatorships in Guatemala, undermine the left-wing Sandinista government in Nicaragua, and strongly back El Salvador’s beleaguered government against a radical insurgency. Central America was at or near the top of Washington’s national-security agenda. The relative calm in the region since the early 1990s has caused that memory of earlier turmoil to fade. But if the Mexican cartels deepen their presence in Central America, that precarious equilibrium could come to an end, and do so with stunning speed.

In addition to the much weaker political institutions in Central America compared to Mexico, those smaller countries lack Mexico’s other institutional bulwarks. Both the overall economies and the business communities are not nearly as strong. Other nongovernmental organizations, the foundation of vibrant civil societies, are far less numerous and influential. The law-enforcement agencies are even more corrupt and ineffectual than their Mexican counterparts. While the failed-state scenario is increasing with respect to Mexico, it is still unlikely. But the cartels have a much greater ability to produce that result—or at least create a full-blown narcostate—in any or all of the Central American countries.

It is not certain whether Felipe Calderón anticipated that possible outcome as a consequence of his own war against the cartels. But he certainly should have recognized that danger. At best, Calderón’s strategy is inadvertently creating alarming problems for Mexico’s small neighbors. At worst, he did anticipate that development, but chose to adopt a cynical “beggar thy neighbor” strategy in the hope of deflecting at least a portion of Mexico’s drug war problems southward. Either way, the spreading corruption and violence in Central America is creating an alarming situation.

The Obama administration needs to conduct an immediate review of Washington’s antidrug strategy, including the Mérida Initiative, south of the border. Clearly, the current approach is merely causing the problem of drug violence and corruption to metastasize.