The Equation for Disaster: Terror in the TBA?

Author: Joshua T. Hoffman

Map with the Tri-Border Area Highlighted
Map with the Tri-Border Area Highlighted

The Tri-Border Area (TBA), enclosed by Puerto Iguazu, Argentina; Ciudad del Este, Paraguay; and Foz do Iguacu, Brazil, is recognized throughout the world as the “largest illicit economy in the Western Hemisphere.”1 Encompassing a relentless cycle of corruption, chaos, and commerce, the TBA has developed a myriad of conditions allowing for the emergence of a safe haven for terrorist fund-raising and collaboration. Weak governance and widespread poverty combine with a geographical backdrop that frames an environment highly conducive to illicit activities. This analysis examines the environment of the TBA and concludes that in spite of enhanced intelligence, stronger regional cooperation, and small-scale law enforcement success, the TBA still holds the potential to threaten United States security.

The Friendship Bridge, a structure that joins the Brazilian city of Foz do Iguaçu and the Paraguayan city of Ciudad del Este (two of the key components comprising the TBA), features the slogan, “You Are the Strong Ones, Not the Drugs.”2 The billboard stretches across highway BR-277, the main artery connecting the cities. With more than 40,000 individuals traversing the bridge each day, border checks and payload inspections by authorities are heavily constricted.3 Officials stationed on the bridge must rely on flashlights to review passports during the night, checking just one in twenty prospective drivers.4

“We’re not in a position to wage a battle against this kind of enterprise,” comments Maria Adelaida, a Paraguayan Federal Agent. “The criminals are on the vanguard of technology, and we don’t even have access to the Internet in our offices. If we have cell phones, it’s because we buy them with our own money.”5 The “enterprise” is comprised of arms and drug trafficking, counterfeiting and piracy, and money laundering from revenue of all drugs, funds that have been remitted to the Middle East to support the terrorist nexus.

“It’s filthy and disgusting,” writes the Chief of Brazil’s Federal Highway Police. “Everything there is illegal;” as for the men in charge of monitoring the Paraguayan border, “they do what they do, and we do what we do.”6 The relative ease with which money is laundered, contraband is smuggled, and disenfranchised cultures are swayed, undermines law enforcement and democratic governance. Those who travel to the region are no longer in search of the natural wonder of the Iguaçu Falls; instead they seek easy access to criminal opportunities, unrestricted movement, and the seemingly constant concealment of illicit goods, which accumulates an estimated $12 billion in Ciudad del Este annually.7

Boasting the world’s third largest tax-free commodity market, just after Hong Kong and Miami, the sacoleiros (or “bag people”) have shaped Ciudad del Este into a sanctuary for merchandise. Spurred by the utilization of energy and tourist potentials from the Falls, Brazil and Paraguay sought to promote regional trade by establishing a free-trade zone during the 1970s. The results have been astonishing – and not just in the area of licit trade: with 55 different banks and foreign exchange shops catering to a population of 300,000, narcotics’ trafficking alone has managed to generate an estimated cash flow equivalent to 50 percent of Paraguay’s gross domestic product ($8.1 billion).8 Thousands make the trek over the Panana River each day, filled to the brim with Hollywood movies and hit CDs – many of which are counterfeit and on which they pay no taxes. On many occasions, merchants cross the border nearly a dozen times each day, as law enforcement looks the other way.

Weak Governance

Corruption is entrenched within the governance structures of the TBA, flowing from the Federal offices, to the streets of the frontier. Politicians routinely foster illicit activities by their unwillingness to address the gap between their governments’ physical capacity to regulate the market and the political will to impose the law. In addition, distrust between military and law enforcement officials impede collaboration. Without a legal infrastructure to provide public services and counter transnational threats, criminal organizations take shape as the most functional form of local authority, pledging security and financial support in a chaotic environment. Transparency International, a worldwide organization instituted to fight corruption on all levels, ranked Paraguay 154 out of 180 nations examined in its annual Corruption Perception Index. Argentina ranked 106 while, Brazil ranked 75. Both the low ranking of Paraguay and the disparity in rankings, encourages jurisdictional arbitrage.9

The pervasiveness of corruption has established an enabling environment that flows from the top down in the region. The United States, particularly concerned over fundraising efforts by Hezbollah and the Sunni Muslim Palestinian group, Hamas, joined the countries of the TBA in an initiative known as the “3+1 Group.” By strengthening coordination, building inter-agency connections, and improving the flow of information, officials hope to slow the expansion of cross-border crime and impede potential terrorist fundraising opportunities.10 The group continues to serve as an open forum for counterterrorism cooperation. Moreover, there have been some striking successes, most notably the conviction of Assad Ahmad Barakat, a Lebanese merchant and criminal who sent his illicit profits to the Middle East to support terrorist organizations and activities. In addition, a personal assistant of Barakat, and well-known weapons expert of Hezbollah, Sobhi Mahmoud Fayad, was captured.11

Widespread Poverty

Poverty and violence fuel resentment among inhabitants of the TBA. With economic systems compromised by bribery and extortion, many individuals have lost faith in an honest future. Warranted frustrations over the failure of democratic initiatives to deliver goods and services push citizens to compete for monetary rewards from criminal organizations and terrorist networks, which offer the best prospect of financial security.

The Economic Commission for Latin America (ECLA) has compiled studies affirming that South and Central America possess the “world’s most egregious inequalities in income distribution, with the richest 10 percent accounting for 35 percent of total earnings.”12 Nearly 45 percent of the Latin American population lives below the poverty line. Furthermore, a legacy of the colonial power once prevalent in South America has hindered the government’s ability to build successful democratic institutions that deliver sound economic opportunities.

Geographical Setting

Contributing to criminal and terrorist fund-raising opportunities is the absence of dependable border controls. The ineffective border check system, fashioned to promote tourism in the region, remains infamously lax, promoting the free trade area of the Ciudad del Este. With contrasting conditions of desert sand and seething rainforests, criminals thrive in seclusion. Lacking necessary resources and organization, law enforcement simply cannot cope with the labyrinth of unmarked roads and territory. Together, the Friendship Bridge and the Tancredo Neves Bridge which preserves the link between Argentina and Brazil, represent an infamous piece of the geographic puzzle.

Middle East Diaspora

The TBA boasts a population just under 700,000, featuring sixty-five nationalities, including Chinese, Lebanese, and Russian.13 The growing subset of Middle Eastern immigrants has been estimated somewhere between 30,000 and 60,000.14 Moreover, the rapid spread of Islam is gaining recognition in a region where Christianity has dominated for centuries. This expansion of Islamic faith is filling mosques throughout Ciudad del Este, raising the attention of officials outside the borders of Argentina.

The TBA first learned of sleeper cells through headlines in 1994, as the bombing of the Argentina-Israeli Community Center (AMIA) in Buenos Aires was traced to a militant organization operating out of the region. Moreover, Islamic fundamentalists who find refuge in the TBA have been reportedly linked to a crime syndicate in Argentina, which provided valuable assistance for the AMIA bombings. The “Local Connection” (LC), which emerged at the turn of the century, is composed of politicians and former soldiers of the Argentine Army who specialize in the smuggling of illegal arms throughout South America.15

More recent concerns in the aftermath of September 11, 2001, have provoked denials of terrorist connections with this movement. Joaquim Mesquita, the chief of the Brazilian Federal Police, challenged claims that the TBA was a safe haven for terrorists. He acknowledged, “we have a marijuana problem, and cigarette smuggling,” but no “concrete evidence that this is a terrorist region.”16 Similarly, Geraldo Pereira, Foz do Iguacu’s chief of police dismissed such allegations as “folklore.”17 Nonetheless, a report produced by the Federal Research Division for the Central Intelligence Agency’s Crime and Narcotics Center, concluded that the TBA has served as a haven for “fundraising, recruiting, and plotting” of terrorist initiatives.18

Organized Crime Campaigns

One of the strongest components behind illicit activity of the region, the radical Lebanese Shi’ite movement known as Hezbollah, has been pursuing an agenda of racketeering, money laundering, and terrorism financing since 1982. Many of the Arabs who participate in the movement are of Lebanese origin and chose to vacate the country during the fifteen-year civil war.19 Hezbollah has funneled money from the region to Middle East extremists, who used the funds to finance propaganda operations and training camps. Members of the Arab community within the TBA have divulged their regular practice of submitting funds to Hezbollah, including a local man of the Ciudad del Este, who commented that, “Shiite Muslim mosques had ‘an obligation to finance it Hezbollah.”’20 Through these diaspora communities, Hezbollah has been able to raise millions of dollars each year, and transfer the funds through one of the largest financial networks in Latin America.21 “We are proud to defend Hamas and Hezbollah. We are not trying to hide it. They are fighters in the path of God, and you can call them whatever you like,” notes Iranian Parliament Speaker, Ali Larjani, in response to Tehran’s involvement with terrorist organizations in the Western hemisphere.22

A prominent and influential member of the organization, Assad Ahmad Barakat, “specially designated a global terrorist” by the United States Department of the Treasury, was responsible for maintaining “a major financial artery to Hezbollah” from the TBA region.23 Detained by Brazilian officials at the request of Paraguay during the summer of 2002 for tax evasion and criminal association, and extradited to Paraguay in 2003, Barakat was released from prison in 2009.24 In 2007, however, Paraguay had cancelled his citizenship – along with that of Sobhi Mahmoud who had served as a financial agent for Hezbollah – his current whereabouts are uncertain.25

The Revolutionary Armed Forces of Colombia (FARC) have also positioned a stronghold in the TBA, trafficking cocaine in exchange for arms with organizations from Brazil, Colombia, and Russia. Though information about the operations of FARC in the area is limited, it has been confirmed that one of three key sites has developed in the city of Guaria, just north of Foz do Iguaçu.26

Conclusion

The onset of globalization throughout the southeast region of South America has brought a transformation across all borders. As long as fiscal challenges remain severe, and access to illegal goods extensive, the formidable marriage of drugs and terrorist financing in the region will flourish. Those who are economically marginalized will exploit all means necessary to survive, whether through transnational crime syndicates or the support of a sleeper, logistic or fund-raising terrorist cell. By strengthening existing governmental infrastructures and building regional cooperation, the countries of the TBA can only hope to mitigate the expansion of corruption and illicit activities.

In the aftermath of 9/11, South American nations heavily condemned the terrorist attacks and subsequently moved towards increased regional cooperation in intelligence and law enforcement. However, without fundamental improvements in governance and economic conditions, the region will remain attractive for terrorist supporters and fund-raisers, all the while containing the perfect environment for operational cells.

  1. Brown, Rachel. The Tri-Border Area: a profile of the largest illicit economy in the Western Hemisphere. Task Force on Financial Integrity and Economic Development, June 15, 2009. http://www.financialtaskforce.org/2009/06/15/the-tri-border-area-a-profile-of-the-largest-illicit-economy-in-the-western-hemisphere/.
  2. Goldberg, Jeffrey. “In the Party of God.” The New Yorker, October 2002, 37-43.
  3. Hudson, Rex. Terrorist and Organized Crime Groups n the Tri-Border Area (TBA) of South America. Federal Research Division, July 2003. http://www.fas.org/irp/cia/product/frd0703.pdf.
  4. Reel, Monte. “Paraguayan Smuggling Crossroads Scrutinized,” The Washington Post, August 3, 2006. http://www.washingtonpost.com/wp-dyn/content/article/2006/08/02/AR2006080201729.html.
  5. Ibid.
  6. Wishart, Eric. Intelligence Networks and the Tri Border Area of South America: The Dilemma of Efficiency Versus Oversight. Washington: Storming Media, 2002.
  7. Fisher, Andrew and Trish Regan. In Paraguay, Piracy Bleeds U.S. Profits, Aids Terrorists. http://www.cnbc.com/id/21082897//.
  8. Federal Research Division. A South American Frontier: The Tri-border Region, 2006. Washington: Library of Congress.
  9. Transparency International. Corruption Perceptions Index 2009. http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table.
  10. State Department’s Bureau of International Information Programs. “U.S. Committed to Hemispheric Counterterrorism Cooperation,” January 29, 2004. http://www.america.gov/st/washfile-english/2004/January/20040129173326ASrelliM0.1266901.html.
  11. U.S. Department of Treasury. “Treasury Designates Islamic Extremist, Two Companies Supporting Hizballah in Tri-Border Area,” June 10, 2004. http://www.treas.gov/press/releases/js1720.htm.
  12. Epstein, Jack. “General Seeks Boost for Latin American Armies, Jack Epstein.” San Francisco Chronicle, April 30, 2004.
  13. Berti, Benedetta. Reassessing the Transnational Terrorism-Criminal Link in South America’s Tri-Border Area. The Jamestown Foundation, September 22, 2008. http://www.jamestown.org/programs/gta/single/?tx_ttnews%5Btt_news%5D=5172&tx_ttnews%5BbackPid%5D=167&no_cache=1.
  14. Mendel, William. “Paraguay’s Ciudad del Este and the New Centers of Gravity,” Military Review, Mar.-Apr. 2002. http://www.offnews.info/downloads/CdadDelEste.pdf.
  15. Hudson, Terrorist and Organized Crime.
  16. Johnson, Chalmers. Nemesis: The Last Days of the American Republic. Metropolitan Books; 1st edition, p. 167.
  17. Chu, Henry. “Suspicions Gather Where 3 Nations Converge,” Los Angeles Times, December 21, 2004. http://articles.latimes.com/2004/dec/21/world/fg-border21.
  18. Goldberg, “In the Party of God,” 40.
  19. Henry, Samanthat. “Hostage During Lebanon’s Civil War,” The Washington Post, January 28, 2009. http://www.washingtonpost.com/wp-dyn/content/article/2009/01/27/AR2009012703161.html.
  20. Gato, Pablo. “Hezbollah builds a Western base,” MSNBC, May 9, 2007. http://www.msnbc.msn.com/id/17874369/page/2/.
  21. Farah, Douglas. Hezbollah’s External Support Network in West Africa and Latin America. International Assessment and Strategy Center, August 4th, 2006. http://www.strategycenter.net/research/pubID.118/pub_detail.asp.
  22. Montreal Institute for Genocide and Human Rights Studies. Iran Domestic Media May 21 – May 30 2009. http://migs.concordia.ca/MM_iran_may2009.htm.
  23. U.S. Department of the Treasury. Treasury Targets Hizballah Fundraising Network in the Triple Frontier of Argentina, Brazil, and Paraguay. December 6, 2006. http://www.treasury.gov/press/releases/hp190.htm.
  24. Anti-Defamation League, “Hezbollah Around the World,” http://www.adl.org/main_Terrorism/hezbollah_overview.htm.
  25. La Nacion. “Court Cancels Citizenship of Imprisoned Arab Businessmen,” June 17, 2007.
  26. Hudson, Terrorist and Organized Crime.