Exercising Caution in the Tri-Border Region

The Tri-Border region — a long-time hotbed for drug smuggling, bootlegging, fraud and terrorist funding is evolving and looking to hang its shingle in a new home that’s more hostile to the West. Travelers beware.

This dangerous area of South America (the shared border of Argentina, Brazil and Paraguay) lies off the radar for most Americans. More concerned with the election cycle or illegal immigration, the average consumer would be hard-pressed to find the titular three borders on a map — let alone realize why he or she was scouring an atlas in the first place.

But, that consumer could just as likely own a knock-off of some supposedly American made product that slipped through the cracks of international commerce and passed to the U.S. through this remote region between Paraguay, Brazil and Argentina. According to a Pentagon report, the Tri-Border area is where “all the components of transnational lawlessness seem to converge.”

An exclusive report by Statfor, one of the world’s top private intelligence firms, stated that the Tri-Border was home to the biggest criminal economy in the Western Hemisphere. A side-effect of the region’s long-suffering financial history, the area toiled in a culture of fraud and corruption. A hot-zone for money laundering, trademark fraud, intellectual property crimes and counterfeiting, the Tri-Border also served as a distribution point for a seemingly endless supply of rip-off merchandise.

Because of popular sight-seeing attractions such as nearby Iguazu Falls, Brazil and Paraguay heavily promoted tourism during the 1970s. As a result, Brazil, Argentina and Paraguay entered into cross-border free trade agreements, loosening regulations and forming the Tri-Border into the third-largest free-tax commerce zone in the world. But, the same slackening of laws that made it legal to execute cross-border trade opened routes for the illegal activity unique to the Tri-Border.

The area became popular with criminals because the nearby Parana River leads to the port of Buenos Aires and the Atlantic Ocean, from where stolen or diverted shipments can be sent anywhere in the world.

So, whether manufactured locally or smuggled through seemingly non-existent customs via the Far East, cheap copies of electronics, toys, clothes, software and prescription drugs moved through the area. McCabe Associates, an international investigation firm that employs former members of the FBI, CIA, DEA and U.S. Customs, estimates the crooked trade took in as much as $12 billion per year.

The steady flow of illegal merchandise into the U.S. would be enough on its own to concern law enforcement. But, there’s another problem festering in the Tri-Border — a danger that put the South American trouble spot on every Western government’s list of worries.

Following the 1985 Lebanese Civil war, thousands of Arabs fled the Middle East and settled in the Tri-Border because of its booming job market. That number has grown to 25,000 in the years since, and many of these displaced Lebanese still claim loyalty to Hamas and Hezbollah. The region’s lucrative criminal trade means these groups’ loyalists can redirect millions of dollars back into Middle Eastern terrorism.

A State Department terrorism report explicitly identified the Tri-Border as a main source of financing for both Hezbollah and Hamas, even though it admits “there’s no confirmed information” either Hamas or Hezbollah has “an operational presence” on the ground.

But, those terrorist funding operations began taking hits in 2006. Up until that time, the regional governments denied the Tri-Border area had any link to international terrorism. According to an official statement by Rubens Barbosa, Brazil’s then-ambassador to the U.S., “No concrete evidence has been produced to prove the presence of terrorist organizations in the (Tri-Border) area. This has recently been confirmed by the executive secretary of the Inter-American Committee Against Terrorism (CICTE).”

However, the area’s growing economic influence expanded the potential threat and forced Brazil, Argentina and Paraguay into joining forces on an intelligence center aimed primarily at combating criminal and militant activity in their Tri-Border zone. U.S. law enforcement and intelligence operations were also closely involved, and America began deploying troops to Paraguay to train local security forces for a crackdown on Tri-Border operations. The FBI went so far as to open a field office in the area in 2007.

Add to that the U.S. State Department, CIA and other military intelligence organizations on the ground actively investigating the alleged terror funding, and the area’s criminal and terror-supporting operations declined significantly over the last two years.

Unfortunately, evidence suggests the Tri-Border threat, though weakened, transferred its flag to another region of South America where U.S. authorities will have little chance of reaching it — Venezuela.

According to Douglas Farah, a counterintelligence expert with Maryland-based IBI Consultants and author of the book Merchant of Death, the Tri-Border still operates a form of its bootleg, smuggling and drug running operations — but its terrorist connections hid under Venezuelan protection. The crackdown that disrupted illegal activities in the area had the unfortunate side effect of sending the remaining criminals further underground.

“The smuggling operations and money facilities have been dispersed from Ciudad del Este due to the busts a couple of years ago, making them harder to monitor and control,” Farah said. “And much of the activity of (the Tri-Border) can be done more comfortably and safely from Venezuela.”

“Terrorism aside, (The Tri-Border) is still widely viewed as a safe haven for bootleg items, smuggling and certainly transshipment of drugs to Europe — and increasingly to Africa.”

As an example of the Tri-Border’s wide-reaching corruption, Farah pointed to Guinea Bissau in Western Africa. The United Nations Security Council expressed concern that the small nation’s link to the Tri-Border’s drug trade would make Guinea Bissau a terrorism funding source. The council urged the country to continue pursuing drug traffickers, while strengthening its international and regional cooperation to fight the narcotics trade and organized crime.

Unfortunately, diplomatic bickering and denials by the Tri-Border host countries prevented UN intervention into the region. It took the joint action by the U.S. military to scatter the Tri-Border fraud terrorism funding.

So, while regional and U.S. forces were successfully breaking up the troubled areas contributions to global terror funding, a more convenient home for the allies of Iran, Hamas and Hezbollah was building shelters paid for with Venezuelan oil money. While U.S. authorities will continue monitoring the Tri-Border, the Venezuela operations seems out of reach for now.