Extremist groups are receiving money from Lebanese refugees in the tri-border region where Argentina, Brazil, and Paraguay converge.
Paraguay’s Ciudad del Este may seem a long way from the turmoil of the Middle East, but terrorism experts and the U.S. government say financial transactions in that city and elsewhere in the region remain a source of financing for extremist Middle Eastern groups, especially Lebanon’s Hezbollah and the Palestinian Hamas.
In fact, Galería Page, one of Ciudad del Este’s biggest shopping centers, is owned by Muhammad Yusif Abdallah, a senior Hezbollah leader. A U.S. Treasury Department statement says that he reportedly pays a percentage of his income to Hezbollah “based on profits he receives from Galería Page.” The report goes on to assert that “Abdallah has also been involved in the import of contraband electronics, passport falsification, credit card fraud, and trafficking counterfeit U.S. dollars.”
The issue is not new to the area. Latin America has for years attracted Lebanese refugees fleeing violence at home, and the tri-border region where Argentina, Brazil, and Paraguay converge has become one of the largest magnets for this new Lebanese diaspora.
The United States began focusing on the potential terrorist financing issue in the tri-border region after 9-11. The U.S. Treasury has demanded action from Brazil and Paraguay to halt the action of what it says are terrorist financiers but with little effect.
Islamist terrorist groups continue to collect millions of dollars every year from the region, according to estimates from the intelligence analysts at Miami-based U.S. Southern Command, the U.S. Department of Defense group responsible for all U.S. military activities in Central and South America. But it is hard to put a figure on the amounts of money involved, says one analyst who spoke on condition of anonymity.
Echoing a phrase used by former Defense Secretary Donald Rumsfeld in another context, the analyst says, “The problem in coming up with figures is that we don’t even know what we don’t know. We don’t know how much goes out in suitcases with couriers or through informal money exchange networks.”
There have been a few cases where the authorities got a glimpse of the activity. “In a couple of cases, Paraguayan [investigators] found receipts associated with Hezbollah for $20 million over five years,” the analyst says.
Ciudad del Este, a South American hub for counterfeiting, drug smuggling, and money laundering, is also a key money center for terrorist financing. Other terrorist financial centers include the city of Maicao in Colombia, Venezuela’s Margarita Island, and the Colón Free Trade Zone at the mouth of the Panama Canal.
Adm. Jim Stavridis, head of Southern Command, raised the issue in a publication issued by the New York-based Americas Society in November. He stated that Hezbollah “appears to be the most prominent group active in the region, and while much of their activity is currently linked to revenue generation, there are indications of an operational presence and the potential for attacks.”
One reason Hezbollah has flourished in the region is the indifference and foot-dragging by local authorities, says Matt Levitt, director of the Stein Program on Terrorism, Intelligence, and Policy at the Washington Institute for Near East Policy. “Brazil denies that illegal terrorist activities are being conducted,” he notes.
Part of the disagreement centers on how one defines a terrorist group. Brazil “does not regard groups like Hezbollah or Hamas as terrorist organizations,” explains Levitt. Much of the legal foundation needed to successfully combat international terrorism is already in place in Brazil, but the Brazilian government “has not demonstrated the will to confront the problem.”
A Brazilian diplomat angrily rejects the notion that his government is complacent about terrorism. “The tri-border zone is a place where various illicit activities take place, like counterfeiting and smuggling, and we’ve been making efforts for a long time to fight these crimes,” he says.
But this does not mean the region is a hotbed of terrorist activism, according to the diplomat, who asked not to be named. “Local people send money to Lebanon to support family members and to back schools and humanitarian organizations, which may be run by Hezbollah,” he says. In Brazil’s view, this type of activity is not synonymous with supporting terrorist groups or activities.
As proof of their willingness to act against terrorism, the diplomat notes that six years ago, Argentina, Brazil, and Paraguay set up a working group with the United States to exchange information about crime and terrorist activities in the region. But the United States has never presented the group with any actionable information about terrorist financing, he asserts.
The National Defense University’s Institute for National Strategic Studies agrees with the Southern Command’s assessment of the problem, says Col. John Cope, senior fellow and the group’s Americas team leader.
Yet Cope, who once worked at Southern Command, says that he has some sympathy for Brazil’s views, because it’s not easy to prove the link between money sent, perhaps in good faith for humanitarian purposes, and the financing of terrorist acts. But, he adds, the reality is that “money is fungible.” Thus, even if South America’s exiled Lebanese were sending money home to support orphanages, hospitals, and schools, their cash goes to Hezbollah’s general fund, which also finances its military wing.
The main reason Latin American governments have not moved against Hezbollah is that—except for Argentina—they have been spared Middle Eastern-influenced violence, so they are not motivated by any sense of risk at home, says Cope. South America’s favelas and barrios are a world away from the battlegrounds of the Middle East, and the South American governments are focused on their own urgent problems, such as corruption, drug wars, and gangs.