More than 3,500 people have been killed in Mexico in warfare that has raged since President Felipe Calderon began deploying 40,000 army troops nearly two years ago to crack down on the most powerful drug networks.
Despite the intensifying bloodshed, Walters praised Calderon's efforts.
Ultimately, he said, the drug lords will face a stark choice: "They surrender, or they die."
Walters reiterated Washington's intention to begin releasing parts of a $400-million package of aid and training under the so-called Merida Initiative approved by Congress in June.
Just in case you were wondering where your tax dollars are going.
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