South America's Tri-Borders Region

Figure 1.

These days, not everyone who visits the leafy tropical splendor of the Iguazú Falls in southern Brazil is a tourist. For many visitors, the illicit trade in arms, consumer goods and contraband is more attractive than the stunning scenery. Just downstream from the famous waterfall, the cities of Foz do Iguazú, Puerto Iguazu and Ciudad del Este face each other across the confluence of the Paraná and Iguazú Rivers in the midst of what is known as the Tri-Border Area (TBA), a lawless jungle expanse that straddles the national boundaries of Brazil, Paraguay and Argentina.

Long a haven for black marketeers bringing cigarettes into Brazil and shoes into Argentina, the TBA is today an increasingly useful area for drug smugglers and nascent terrorist cells. Billions of dollars in laundered money, arms, drugs, counterfeit currency, falsified documents, and other contraband pass through the TBA annually. Ciudad del Este, with a population of only 300,000 people, boasts 55 banks, through which an estimated $6 billion per year--half of Paraguay's GDP--is laundered.

As the war against terrorism expands over the next decade, growing hotspots like the TBA will come under increasing international scrutiny. The TBA provides an environment in which terrorist cells can thrive: it provides sources of potential financing, access to illegal weapons and advanced technologies, and offers freedom of movement in a geographic area ideal for camouflage and concealment. It is no wonder that terrorist operatives from al Qaeda and Hezbollah met in the TBA in 2002 to plan attacks on U.S. and Israeli targets. While the Arab and Muslim communities living in Paraguay, Argentina and Brazil vehemently deny links to radical groups such as Hamas or Hezbollah, officials from the Argentine and U.S. governments believe local businesses channel funds to the Middle East to support terrorist activities.

In August and October 2004, the U.S. State Department invested a total of $2.5 million in programs designed to combat terrorist activities, including training programs for state institutions operating in the TBA. At about the same time, Brazil announced a major investment in its police infrastructure in Foz do Iguazú, including the development of an advanced police border station and the purchase of airplanes, cameras and radar systems to protect the Itaipu Hydroelectric dam and monitor the nearly 90 points of entry used for smuggling and drug running in the area.

Despite increased monitoring and policing, illicit activities continue to thrive in the TBA. In May 2004, the Argentine judiciary investigated the alleged import of three surface-to-air missiles through northern Argentina into the TBA. Although terrorist finance cells raising funds through drug smuggling and other illicit activities pose the primary threat in the region, money is not the only thing raising eyebrows.