MEXICO CITY, May 24 (Reuters) - The chief of Mexico's war on drug gangs said Washington should concentrate on halting the flow of arms to Mexican drug cartels rather than haggle over how much aid to give Mexico's anti-smuggling operation.

Reacting to a vote by U.S. lawmakers to trim an aid package for the drug war, Mexico's deputy attorney general, Jose Luis Santiago Vasconcelos, said an alternative would be to keep the cash in the United States and use it to curb illegal arms trafficking across the border.

"Some of us were talking, remarking that, well, this (sum of money) is all very well, but why don't we tell the Americans they could spend it on their (border security forces) to stop the flow of arms to Mexico," Santiago Vasconcelos said in remarks on local radio distributed by his office on Saturday.

Santiago Vasconcelos, the point man in Mexico's crackdown on drug smuggling gangs, said 97 percent of the weapons used by Mexican drug gangs came from the United States.

He said Mexico would evaluate whether to accept any U.S. offer of funds and under what conditions.

Mexico is spending $7 billion of its own money to fund its 18-month-old crackdown on the powerful and violent cartels that smuggle Colombian cocaine north to U.S. consumers.

U.S. President George W. Bush had offered to add $1.4 billion in three tranches to pay for surveillance equipment and speedy aircraft, but his opponents in Congress have haggled over the amount and asked that human rights conditions be attached.

The U.S. House of Representatives this month cut the first tranche of the so-called Merida Initiative, named after the Mexican city where it was conceived, to $400 million from $500 million, and the Senate Appropriations Committee put forward a figure of $350 million.

Mexican President Felipe Calderon has made the war on drug cartels the centerpiece of his presidency, deploying some 25,000 troops and federal police across the country, but the operation has sparked considerable bloodshed.

Turf wars between rival cartels and battles with the army have killed 1,380 people this year, nearly 50 percent more than the same period last year, according to the attorney general's office. (Reporting by Catherine Bremer; Editing by Peter Cooney)

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