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Members of the Mexican Navy stand guard beside seven tons of cocaine siezed earlier this month in Mexico's escalating efforts against drug cartels.

MEXICO CITY — Mexican President Felipe Calderon has issued a series of ultimatums in the past few days to tell drug cartels he’s not backing down from a fight, and to prepare the public for an increasingly bloody battle.

Casualties from Mexico’s war on drugs already have been mounting, and the bloodshed has prompted waves of concern in Washington and elsewhere. “Mexico right now has issues of violence that are a different degree and level than we’ve ever seen before,” Homeland Security Secretary Janet Napolitano told Congress this week, saying it has become one of her top priorities.

Worries about Mexico are starting to affect investors’ perception of the country, too. On Friday, the peso hit a record low, breaking through the psychologically important 15 per dollar barrier, closing at 15.23. Though the principal reason is concern over the effect of the U.S. economic downturn, violence “has definitely raised Mexico’s profile in a negative fashion with investors,” says Gray Newman, chief economist for Latin America with Morgan Stanley.

In unusually bellicose language for a Mexican president, Mr. Calderon is making clear he plans to ramp the fight up further. “It’s either the narcos, or the state,” he said in an interview published on Friday by Mexican newspaper El Universal.

Since taking power in late 2006, the conservative politician has sent more than 40,000 army troops to several Mexican states to confront increasingly brazen and violent drug-trafficking gangs. So far, turf wars between rival cartels have grown bloodier, claiming an estimated 6,290 lives last year. So far this year, more than 1,000 people have died, officials say.

Mexican officials say that the rising violence is a sign that pressure from the government is forcing the cartels to battle each other for turf. And they stress that Mr. Calderon is the first president to tackle the issue head on after his predecessors let the problem slowly build.

“Taking on the cartels is parenting a child having a tantrum. When you start disciplining the child, the tantrum increases at first. But if you stay firm, it eventually works,” Mexican Interior Minister Fernando Gomez Mont said in an interview.

Mr. Gomez Mont said Mexico is taking important steps such as forcing law-enforcement agencies from different levels of government to share information, but needs to sharply raise spending on security-related issues.

The violence could get worse before it gets better. Drug cartels are adopting guerrilla-style tactics, ambushing security forces and assassinating high-level security officials and others. They are also smuggling entire arsenals of weapons from the U.S.

“Eighteen months ago we saw a spike in .50-caliber machine guns heading south,” says William D. Newell, special agent in charge of the Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives station in Arizona. “Six months ago we started seeing grenades. That’s a serious escalation of violence.”

Some agents fear more dramatic attacks such as car bombs are next. A memo distributed by the ATF’s Bomb Data Center, circulating among U.S. law-enforcement agencies, reports that this month a gang of gunmen, presumably linked to narcotics groups, stormed a mining site in the Mexican state of Durango and made off with over 250 pounds of explosives.

Marisella Molinar was killed while driving her boss, a target of cartels, across the border into El Paso, Texas.

JUAREZ, Mexico (CNN) — Jose Molinar knew something wasn’t right. He hadn’t heard from his wife for a few hours, which was not sitting well with him.

Marisella Molinar worked as a secretary for a top prosecutor in Juarez, Mexico, Jesus Huerta Yedra.

She was employed in the office for more than 10 years and though she lived across the border in El Paso, Texas, with her husband, she drove about 20 minutes over the Juarez-El Paso border every day to the job she loved.  The growing violence over rival drug cartels had concerned the couple, but Mexico was a part of their lives and they were sure the violence stayed between rival drug gangs, who were fighting over a lucrative drug route into the United States.

Without fail, Marisella Molinar would call her husband every day when she arrived to work, went out for lunch and when she was leaving the office.

But on December 3, 2008, by around 5:30 p.m., Jose Molinar still hadn’t heard from his wife. He called the office in Mexico and was told she was giving her boss a ride over the border so he could do some Christmas shopping. Jose Molinar turned on his television, and his life changed forever.

“As soon as the image came up, I saw her truck,” said Molinar, who was watching the news out of Juarez, “and I knew what happened right then and there.”

Marisella Molinar was in the wrong place at the wrong time. Her passenger, Jesus Huerta Yedra, was a target of the cartels that day. As Molinar’s car was about a mile away from the border crossing back to the United States, gunmen walked up to her car and fired 85 rounds from an AK-47 into their intended target. One shot hit Marisella Molinar, a mother of two and proud grandmother, in the chest, killing her instantly.

“She wasn’t involved, she didn’t have anything to do with this!” said Jose Molinar in a recent interview with CNN. “She was the guy’s secretary and she was giving him a ride to meet his wife here in El Paso who was Christmas shopping.”

But instead of making it home to help her husband hang Christmas lights, Marisella Molinar became yet another victim in the drug war taking place just steps from the U.S. border.

The violence generated by the war of the drug cartels for control of drug routes translated last year into some 6,000 killings. More than 1,600 of them occurred in Juarez, three times more than the most murderous city in the United States. This year, in two months, the body count in Juarez is 400.

Mexican military and police in riot gear now patrol the once popular streets of Juarez. Gone are the Americans shopping, dining and partying. The bars and restaurants are shuttered — many closed for good. Americans don’t come here anymore.

In March 2008, the Mexican military joined with Mexican states and local law enforcement in the fight against drug cartels in border cities. Mexican President Felipe Calderon has waged a war against business as usual with the cartels who controlled drug routes through Mexico and into the United States. The fallout has led rival drug gangs to launch all-out war not only with the military, but also with each other, because the once-established drug routes are now up for grabs.

The violence has been the worst in Juarez, where cartels have killed police officers, forced the chief of police to resign and threatened public officials.

“They started killing police officers, and not when they were doing police work, but when they were coming out of their homes and getting into their cars to go to the police station,” said Juarez Mayor Jose Reyes Ferriz, whose own family has recently received death threats.

At the city’s only morgue, bodies are piling up. The mayor said there are far too many dead for the small facility to handle. The majority of the dead are unidentified members of the cartels. Just last week, the mayor said, 50 corpses were buried in mass graves because no one claimed the bodies.

Officials from both sides of the border said the drug war may go on for years. Beheadings, bodies riddled with gunfire and blood-stained streets will continue daily, they said.

They added that the appetite for illegal drugs is too great in the United States, and the drug routes are too lucrative for the battles to end.

“It’s not going to be won quickly,” said Enrique Torres, a spokesman for the Mexican government, adding that the Mexican president is committed to fighting the cartels. “He can’t talk about a time frame in this type of situation. We know the monster is big, but we don’t have an idea of how big it is.”