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Editor’s Note: The following report is excerpted from Joseph Farah’s G2 Bulletin, the premium online newsletter published by the founder of WND. Subscriptions are $99 a year or, for monthly trials, just $9.95 per month for credit card users, and provide instant access for the complete reports.

WASHINGTON – Mexican president Felipe Calderon has lost the war against drug cartels for control of his nation, and the candidates for next July’s presidential election have all but surrendered to the drug lords already, creating a failed state on the U.S. border and undermining national security, analysts have said in a report from Joseph Farah’s G2 Bulletin.

“Relative peace and calm could set in during the second half of 2012 in Mexico, but if it does it will only represent the fruits of defeat rather than victory,” according to the open source intelligence group Langley Intelligence Network, or LIGNET, which is made up of former Central Intelligence Agency analysts and officials.

As far back as 2009, the Pentagon had warned in a report that Mexico was perilously close to become a failed state. Since then, conditions have only grown worse.

Its murderously violent drug wars have spilled over into U.S. towns and cities along the U.S. southern border, and that has raised U.S. national security concerns.

With U.S. help, Calderon had taken on the drug cartels which have exercised de facto control over Mexico for years.

Calderon had ordered the Mexican army to fight the cartels and replace local police authorities who had been intimidated into inaction and were being bribed, allowing the cartels, in effect, to become the governing power in areas like Ciudad Juarez.

Now, the violence has spread to the interior of the country and to such areas as Veracruz in Veracruz state, Monterrey in Nuevo Leon state, Matamoros in Tamaulipas state and Durango in Durango state.

Despite efforts to stop the cartels, killings have greatly risen. Documents released recently by the Mexican government reveal that killings have increased 11 percent during the first nine months of 2011 to 12,903. compared to 11,583 a year earlier.

In what has become a war to determine which cartel family will take control, the casualties largely have been former cartel members. The total number of people killed is estimated to be some 47,515. The Vietnam War cost 58,000 lives.

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