an, which left him seriously injured and his 31-year-old driver dead. And the inevitable question arises: Is it too late to save Nuevo Laredo?

''You look around here and nothing seems real anymore,'' said Mari Moreno, whose sons live in Texas. ``You do your best to get through the day, but you know this city will never be normal again.''

More than three years after warring drug cartels launched a battle for Nuevo Laredo and its smuggling routes into Texas, senior U.S. law-enforcement officials say the Gulf cartel and its enforcers, the Zetas, have established significant control over the beleaguered city.

BUSINESS DISLOCATION

In the past year, 700 small- and medium-size businesses shut down in Nuevo Laredo, and about 40 of the city's top business leaders have set up shop across the border in Laredo, Texas, according to the Mexican city's Downtown Merchant and Business Association, headed by Jacobo Suneson, owner of Marti's, a legendary shopping place.

Nuevo Laredo is a city under siege, with no police chief 11 months after the last one quit, citing stress. His predecessor had been gunned down within hours of taking the job.

The drug traffickers have threatened local reporters, warning them away from coverage of their activities. They have broken cameras being used to shoot video at crime scenes.

Some residents have begun to use walkie-talkies rather than cellphones in an attempt to avoid the heavy surveillance that law-enforcement officials say the cartel places on routine movements and communication.

U.S. officials say there is evidence that the Zetas are steadily pushing their influence westward toward Monterrey, a center of Mexican industry, cementing their network of human intelligence in the border states of Nuevo León and Tamaulipas. Those states are gateways for smuggling drugs into Texas and on to cities such as Chicago, New York and Miami.

To finance their criminal activities, the traffickers are kidnapping both Mexicans and Americans in rising numbers, a U.S. official said, and have earned themselves a new nickname: narco secuestradores, or narco kidnappers.

''They operate on fear,'' said a U.S. law-enforcement official, speaking on the condition of anonymity, adding that the Gulf cartel has gained the upper hand in the region over the competing Sinaloa cartel, led by Joaquín ''El Chapo'' Guzmán.

''They're simply more disciplined, have better intelligence, better training, and proven to be far more effective at recruiting than Chapo's army,'' the official said.

GROWTH OF CARTELS

A congressional report issued this year by the subcommittee on investigations of the Committee on Homeland Security said that ``the Texas-Mexico border has been experiencing an alarming rise in the level of criminal cartel activity.''

The report added that ``these criminal organizations and networks are highly sophisticated and organized, operating with military style weapons and technology, utilizing counter surveillance techniques and acting aggressively against both law enforcement and competitors.''

On Sunday, under the orders of President Felipe Calderón, an estimated 3,300 troops were deployed to the two states to restore order.

Calderón, who came into office Dec. 1, quickly sent a strong signal when he deployed troops to his home state of Michoacán and to Tijuana to fight drug traffickers. In all, federal troops and police have now been sent to eight of the country's 31 states.

The task remains daunting. This week, an assistant state prosecutor for the state of Durango, Hugo Resendiz Martínez, was fired for allegedly passing sensitive criminal information to the Sinaloa cartel. He has been detained and is also under investigation in connection with killings, the attorney general's office said.

Hours after the troops arrived in Nuevo Laredo, Horacio Garza, a federal congressman and two-time mayor of the city, was shot as he and his driver headed toward the airport Monday evening. The driver was killed. Garza received bullet wounds to the neck, shoulder and leg.

No clear motive for the attack has been established, but over the weekend, Garza met with families whose relatives have disappeared in recent years from both sides of the border. Garza vowed to take the crime files of those who have disappeared and prepare a report for Calderón and press him for action on behalf of the victims' families.

In 3 ½ years of intense cartel violence, more than 600 people reportedly have been killed in Nuevo Laredo.

Hundreds of Mexicans have been kidnapped or have disappeared from the area in recent years. At least 63 Americans have been kidnapped, according to Laredo's Missing, an organization set up by family members to pressure authorities on both sides of the border to find their loved ones. Many of the Americans were later released, but at least 20 remain missing.