Paraguay's Ciudad del Este and the New Centers of Gravity
By Mr. William W. Mendel, FMSO
 |
This article appeared in Military Review March-April 2002 |
By Mr. William W. Mendel, FMSO
|
This article appeared in Military Review March-April 2002 |
Paraguay -- landlocked, poor, a long way from everywhere and seldom appearing in the drama of international events, is nevertheless emblematic of our global security challenge. It is a place having suffered crippling wars, where governance has always been a challenge, and where smuggling and criminal organizing is a tradition. Long disregarded by the intelligence and diplomatic services of the great powers, it is now a place where international crimes like money laundering, gun-running, drug trafficking, migration fraud, and terror-planning recombine and metastasize. In an age of great sovereign competitors we paid attention to nations in accordance with their development -- their ability to mobilize as a nation and make war as a nation. Now we are entering a new middle age of uncivilized behavior in which we must focus on the lost geographies--the fertile ground for piracy and terror. Ciudad del Este, a boom town on Paraguay's eastern border facing Brazil and Argentina, is an appropriate target of our new concerns. Regional security scholars have aptly called it a nest of spies and thieves.
Local security specialists assert that Ciudad del Este is not just a den of low-tech criminality, but also a haven for international money laundering, with much of the money coming from the Middle East. It is a town of a quarter million inhabitants and an international trading center where the admixture of terrorists, drug runners and pin-striped bankers trespasses on the sovereignty and safety of democratic countries and their citizens - and thereby represents a threat to the United States and the region. There are other examples of zones of ungovernability in the Americas that provide cover for terrorist groups (such as the Switzerland-size area that Colombia granted as an official safe haven to a group on the State Department's list of terrorist organizations), but in Paraguay's Ciudad del Este all the components of transnational lawlessness seem to converge.
Lawlessness in Ciudad del Este was engendered by the turbulent political environment of the country as a whole. Paraguay has suffered three coup attempts in the past five years. Popular army chief, Lino Oviedo who mounted a short-lived coup in 1998, was sentenced to 10 years in prison, then ran for the Presidency later the same year. While General Oviedo was declared an illegal candidate by the Supreme Court, his running mate, Raul Cubas Grau, was elected to the presidency and quickly pardoned General Oviedo. Cubas Grau resigned under pressure after the assassination of the Vice-president in March1999, leaving the presidency to Luis Angel Gonzáles Macchi who was next in line as Senate President. Adding to the political turbulence, González Macchi fired 18 generals and over 100 other officers who had supported Oviedo. After a May 2000 coup attempt Gonzáles Macchi got rid of another 13 officers. Meanwhile the party of Oviedo-supported Vice-president, Julio Cesar Franco, maneuvered for the impeachment of President González Macchi. The political tumult has done little to engender social and economic progress in Paraguay, and only the influence of Brazil and Argentina has keep the democratic government afloat.1 Needless to say, the government in Asuncion has been afforded little time to concentrate on improving the rule of law in Ciudad del Este.
According to Paraguayan police, about 70 percent of the 600,000 vehicles on the road in Paraguay are from illegitimate origins. Open markets provided by MERCOSUR membership facilitate importing stolen cars from Argentina, Brazil and Uruguay.2 Brazilian police complain that Paraguayan criminals are trading stolen cars for drugs, which are then exported to Europe and the United States. Recently, President Luis Gonzales Macchi was exposed in the press as owning a stolen BMW. His wife was then reported in the press of having a stolen Mercedes, both cars apparently claiming the same title document, which belonged to a Toyota. When fingered by INTERPOL inspector Peter Yunk, this former Miss Paraguay denounced the inspector as "ungentlemanly" for having implicated the country's Primera Dama. Understandably, Paraguay did not attend the American hemisphere forum on auto theft held in Bogota, Colombia in October 2001.3 One has to wonder whether or not the government in Asuncion can muster the will to improve the rule of law in Ciudad del Este.
Perhaps as much has 85% of Paraguay's rural population lives at or below the poverty level. About 56 percent of Paraguayans live in urban areas, particularly capitol city Asuncion which accounts for ten percent of the country's population. Agriculture provides 27 percent of the country's gross domestic product, but this sector has proven vulnerable to economic conditions in neighboring countries. Paraguay's gross domestic product (GDP) has remained essentially flat since 1996 and inflation has lingered around the 10 percent mark.4 Paraguay's participation in MERCOSUR since 1991 opened the land-locked country to opportunities in foreign markets. Paraguay's economic potential is strengthened geographically by its access via the Paraná River to Buenos Aires, Montevideo, and the Atlantic Ocean. Brazil created a free port on the Brazilian Atlantic coast at Paranaguá and developed a road linking the port to Paraguay. The project included the Bridge of Friendship, which now spans the Paraná River between Ciudad del Este and Foz do Iguaçu. The bridge carries over 40,000 travelers every day. The valuable economic opening increased the economic importance, legal and illegal, of the Tri Border area. One result of the various economic factors has been an increase in the urban population, mostly poor, of Ciudad del Este. In the last five years, the population of Ciudad del Este and the surrounding Paraguayan state of Alto Paraná has increased by fifty percent.
The population in the Tri-Border area is concentrated in three interacting border cities. Ciudad del Este is the largest city with a population of 240,000. Across the Bridge of Friendship in Brazil, the city of Foz do Iguaçu (population 190,000) thrives on tourism and provides secure neighborhoods for foreign nationals who commute to Ciudad del Este from Brazil. Argentina's Puerto Iguazú (28,100) is isolated from Ciudad del Este by the Paraná River, but has access to Brazil across the Iguazu River at the Tancredo Neves International Bridge. The Arab community of immigrants that represents a slice of the urban population in the Tri-Border area (mainly Ciudad del Este and Foz do Iguaçu) is estimated to be nearly 30,000 strong.5
In Ciudad de Este, the absence of government controls allows smugglers and money launderers to leverage a disparity in levels of law enforcement, import regulations, exchange rates, and tax rates between Paraguay and its neighbors. European-bound illicit drugs (cocaine and marijuana) pass through Foz do Iguaçu for transshipment eastward to Puerto Paranaguá on Brazil's Atlantic coast. Argentina's aggressive border controls and law enforcement, and the impressive Iguazu Waterfalls, have helped to nurture a growing international tourism industry in the Argentine state of Misiones. But Argentina's high tax rate and expensive peso (pegged to the US dollar) has made the smuggling of cigarettes a profitable, low risk enterprise. Night flights of cigarettes from Paraguay to Argentina bring sizeable profits with little risk. A $1 pack of cigarettes in Paraguay gets $2.50 in Argentina. In the Tri-Border area, re-exportation means smuggling electronic goods, cameras, liquor, and weapons (often carrying falsified branding) to cities in Argentina and Brazil.6 Even agricultural products are involved, such as soy beans and chickens. Since Brazil and Argentina are magnets for the marijuana grown in Paraguay, most of the illicit drug trafficking in the Tri-Border area involves pot, but cocaine from Bolivia and Peru is sometimes seized at Tri-Border checkpoints. Investment money flows from the Middle East, apparently because profits can be made quickly on illegal merchandise, including purloined intellectual property.
There is also a significant traffic in documents, especially for Arab, Asian and other migrants who come to live in Paraguay for months or years, then move on to Argentina or Brazil to upgrade their documents and eventually migrate into North America.7 It is interesting to note that over the past three years, thirty percent of the false immigration documents seized at the Argentine Iguazu checkpoint were carried by Chinese who were presumed to be heading to Buenos Aires. A large Chinese community has developed in Ciudad del Este alongside the established Arab population, adding to the international mix.8 In September 2001, the Paraguayan Consul in Miami was arrested for allegedly selling over 300 passports, visas and shipping documents since June of 1999. The Consul allegedly sold 16 passports to terrorist suspects from Egypt, Syria and Lebanon who were planning to move to Ciudad del Este.9
Illegal weapons merchandising provides another trading advantage for Paraguay. Brazilian guns produced by Taurus and Rossi companies are re-exported from Paraguay back into Brazil with no documentation and with great profit to gun runners. Brazilian investigative news sources assess that most of the Brazilian weapons exported to Paraguay end up in Brazil, but there is a significant flow of weapons into Argentina as well. On the Argentine side of the Tancredo Neves International Bridge at Puerto Iguazú, the number of judicial actions taken in cases involving firearms and explosives jumped from 1 in 1999 to 51 in 2000. These are cases considered serious enough, and well enough supported by evidence, to be processed successfully through the Argentine courts. Preliminary numbers for the first half of 2001 indicates that gun smuggling continues apace. In contrast to the increase in gunrunning, passage of individuals through the Iguazu border checkpoint dropped from 3,413,876 in 1999 to 1,396,733 in 2000 and continued on a similar pace in 2001. Total vehicle passages dropped from 350,751 to 242,669 with the pace seeming to slow more in 2001. While no one conclusion can be drawn, the dramatic rise in weapons smuggling against a dramatic decrease in total cross-border movement at least raises questions. Interestingly, actionable drug cases from border arrests at Iguazu (almost all marijuana) have diminished in the past three years as most drugs are moving from Paraguay into Brazil or into Argentina far south of the Tri-Border area at Posadas and elsewhere.10
As part of an intention to better control commerce and the large transient international population, a 'Tripartite Command of the Tri-Border" was constituted by the three countries in 1996 as a multi-agency, tri-nation police cooperative. Paraguay is represented by the Paraguayan National Police. Argentina is represented by its Gendarmería Nacional (Border Patrol), Prefectura Naval (Coastguard) and Federal Police units, as well as representatives from the state intelligence secretariat, the Argentine Consul's Office in Foz do Iguaçu, the National Aeronautical Police, and the Misiones Provincial Police. Brazilian units include the Brazilian Federal Police, Mountain Infantry Battalion # 34, the State Intelligence Department plus the Brazilian Consul's Office in Ciudad del Este. In 1998 the tri-national program was augmented with a security agreement among the three countries to intensify their fight against terrorism, smuggling, money laundering and drug trafficking.11 The countries agreed to develop a joint criminal data base (now operational in Argentina), and cooperate with banks and financial institutions to stop money laundering. So far, the Tri-Border cooperative effort has not been effective in bringing international crime to heel. Uneven participation and enforcement has failed to counteract the conditions conducive to smuggling, money laundering and the entire gamut of international crimes.
Border control of criminal activity is certainly possible, as evidenced by Argentina's discipline of the Iguazu tourist area in Misiones Province. Argentina took action there by establishing a defense in depth to interdict smugglers as they move southward down the Misiones corridor between Paraguay and Brazil toward Buenos Aries. Seven battalions of the Gendarmería Nacional's Region II are deployed at section outposts along the frontier and on north-south National Routes 12 and 14. Twenty-nine sections (with 20 to 50 officers) are assigned a zone of responsibility of about 200 km along the frontier. Seven more sections along Route 14 in the center of Misiones are at internal checkpoints.12 At the spearhead in Puerto Iguazú is Squadron 13. It has a jurisdiction of approximately 2, 400 square kilometers with 50 kilometers of border facing Paraguay and about 200 kilometers facing Brazil. Prefectura Naval (Coastguard) units maintain control points on the Paraná and Uruguay rivers. As a result, smugglers have found market access easier via land routes in Brazil or through the Argentine border town of Posadas about three hundred kilometers south of the Tri-Border area.
Some of the control success in Argentina's Misiones state has to be attributed to terrain. The steep basalt cliffs of the Iguazu River that create the spectacular falls are not as conducive to contraband traffic as are the gentler reaches of the Paraná. Once inside Misiones and Argentine territory, every traveler is faced with limited choices of movement south, most of the zone being covered by difficult jungle, forest or swamp. The going is rough, the routes are limited, and better smuggling choices exist. Nevertheless, discipline in Argentina is maintained without vast resources and with considerable success. This is partly due the fact that the Misiones area around Iguazu is thinly populated by a homogeneous society on good terms with regional authorities. Gendarmería officers say that intruders are spotted and reported quickly here.
Ciudad del Este provides the kind of uncontrolled environment that can sustain criminal organizations-and terrorists. The bombings of the Israeli Embassy (1992) and the Argentine-Israeli Community Center (1994) in Buenos Aires cast a spotlight on the Arab community in Ciudad del Este that it has since been unable to avoid. In 2000, INTERPOL investigations linked a Paraguayan businessman to the Community Center bombing. Patterns of Global Terrorism 2000 reports that in February, Ali Khalil Mehri, a Lebanese businessman having financial links to Hizballah, was arrested for aiding a criminal enterprise involved in distributing CDs espousing Hizballah's extremist ideals. He subsequently escaped from Paraguay before trial. Then in November 2000, Salah Abdul Karim Yassine, a Palestinian who allegedly threatened to bomb the US and Israeli Embassies in Asuncion was arrested and charged with possession of false documents and entering the country illegally. (The Ciudad del Este linkage to Colombia is important too. A guns-for-cocaine connection between Paraguayan gunrunners and the Colombian terrorist group FARC was uncovered and one FARC operative was arrested. 13 )
In October 2001 Paraguayan police alleged that an Arab businessman living in Foz do Iguaçu was sending funds to the Hizballah terrorist group, but Brazilian authorities decided not to arrest him.14 Arab businessmen send large amounts of money abroad to purchase goods for import, and because much of Paraguay's export business is underground, the situation leaves the Arab community suspect for financially supporting Arab terrorist groups-but without clear proof. Though it may be unwise to assume that all black-market thieves are terrorists too, police authorities believe that the amount of money from smuggling and money laundering going out of Paraguay to overseas banks is far in excess of any presumptive business activity. It suggests to local police officials that some in the Arab community are supporting radical terrorism with the spoils of illegal trade.
Indeed, the US State Department clearly advises that there are individuals and organizations with ties to extremist groups operating in Ciudad de Este and along the Tri-Border area between Paraguay, Brazil and Argentina.15 Brazilian Judge Walter Fanganiello Maierovich, former National Drug Enforcement Secretary and now with the Giovanni Falconi Brazilian Criminal Sciences Institute is more direct. He reports that Usama bin Ladin is in the process of setting up an Al-Qaida unit near Ciudad del Este under the cover of the Arab community there. Bin Ladin's connections with Russian and Chinese Mafias and with the Chechen "supermarket" for arms will enable him to sell weapons to the Colombian FARC terrorist and to bandits in Brazil. With Al-Qaida using Islamic religious entities as a front for the base, "its goal would be to train guerillas and serve as a hiding place for Islamic refugees."16
To achieve some control, ten member countries of the OAS InterAmerican Committee Against Terrorism participated in exercises in the Tri-Border area in order to highlight solidarity against extremist activities. US, Argentine and other experts are also providing the training to Paraguayan anti-terrorist police and military personnel. The objective is to "maintain a presence in the area and to be able to raid homes of persons suspected of being involved in financing terrorism or of radicalized members of Islam residing in the Tri-Border area." 17
The interest seems to be having some results. On September 21, sixteen terrorism suspects from Lebanon, Palestine and Brazil were arrested in Ciudad del Este for various charges of having false documents and being in Paraguay illegally.18 On 3 October two Lebanese citizens, Hassam Saleh and Saleh Fayad, were arrested as Hizballah suspects and held on charges of piracy of commerce and having false documents-including a passport issued by the Paraguayan Consulate in Panama. Police alleged that they were helping to fund terrorist groups and that the two were sending $50,000 a month to "organizations like Hizbollah."19 They were found working in a Ciudad del Este store owned by Foz do Iguaçu resident Assad Baracat who was being sought by antiterrorist agents.20
On the Brazil side, the Federal Police discovered a group of suspects operating a half dozen clandestine telephone exchanges. This was uncovered when the police identified an account with almost $30,000 dollars worth of phone calls from Pakistan, Egypt, Sudan, Saudi Arabia, and the United States. The account had been placed under a false name, and all the calls had been made during the months of June, July and August. In early September, the occupiers of the house identified with the account escaped. All this could be entirely coincidental since contraband and falsification of every kind goes on in the Tri-Border, but the case is obviously attractive.21 We will have to wait a bit to determine if the investigations and arrests reflect good faith efficiency on the part of Paraguayan lawmen, or if it is just a 'Round up the usual suspects' reaction to placate the immediate outrage of September 11.
If we believe that the best defense against terrorism is a good offense, then perhaps the Ciudad del Este Tri-Border area deserves some active presence. The defense of our homeland requires improved intelligence collection and perhaps, when warranted, direct action in places where terrorists enjoy free reign. At a recent meeting of the OAS International Committee on Terrorism, US State Department Counter-terrorism Coordinator Francis Taylor announced that the United States will use all the elements of national power against terrorists groups in the Tri-Border area (and in Colombia) -including the use of military force.22 The smugglers' haven at Ciudad del Este could find itself toward the top of the target list.
Since the September 2001 attack on the World Trade Center by Arab terrorists, the locus of US counteraction has been South West Asia and the Middle East. The stunning attack met a prompt response in those regions, but, as the U.S. leadership asserted early in the course of events, the American and worldwide effort to counter terrorism will be protracted, encompassing all regions of the globe-including areas out of the mainstream.
U.S. security strategists are now open to more carefully scrutinizing peripheral geographies, and to respecting the dangers that may emanate from them. These are the centers of gravity of the new threat. It is, however, regional states whose strategic interests are most immediately implicated. The social and political anomalies associated with the Taliban government in Afghanistan were felt most strongly in Pakistan, a long-time U.S. ally. After Afghanistan fell under the American military loupe, Pakistan's security and stability was directly stressed. While the characterization of governance, and the degree of organized criminality is much different in South America, it is similarly true that the states of the Southern Cone are negatively affected by the indiscipline of their Paraguayan neighbor. Not only have they suffered more than the U.S., they are in a far better position to gain intelligence and mount appropriate legal and physical responses. It may be through cooperation with these states that the best U.S. strategy proceeds if the Paraguayan government proves unable to meet the challenge.
1. "Background Notes: Paraguay," U.S. Department
of State (Washington: April 2001), Internet, http://www.state.gov/r/pa/bgn/index.cfm?docid=1841,
accessed 26 October 2001. For a "Security Assessment," see Jane's
Sentinel, South America, August 2001-January 2002, (Alexandria, VA: Jane's Information
Group Limited, August 2001), 440-78.
2. Howard Wiarda and Harvey F. Kline, Latin American Politics and Development
(Boulder, CO: Westview Press, 1996) 300. Brazil has also strengthened its influence
over Paraguay via the Itapú Treaty that provided for a joint hydroelectric
dam across the Paraná River.
3. Hugo Olazar, "El regreso de los autos "truchos," Clarin.com
Periodismo en Internet, 16 June 2001, Internet http://ar.clarin.com/diario/2001?06?16/i?04001.htm,
accessed 22 October 2001. Also, "Colombia to host forum on car theft prevention,"
EFE News [Spain], 19 October 2001 Internet, http://www.prairienet.org/clm/clmnews_files/011019EFE02.html,
accessed 23 October 2001.
4. "Paraguay Country Brief," The World Bank Group, Internet, www.worldbank.org,
accessed 17 October 2001.
5. Paraguay had a large influx of Lebanese and other Mid-east nationals about
60 years ago, and it formally accepts a small number of "naturalized"
citizens from Arab countries each year (114 Lebanese were naturalized in 1999),
but this does not account for the transient population of Arab and Asian people
who blend into the scene to stay for a while. See, "Resoluciones Sobre
Cartas de Naturalización Dictadas Por Año A Según Nacionalidad,
Periodo 1995-1999," Anuario Estadístico 1999, Dirección General
de Estadística, Encuestas and Censos, Paraguay, Internet, http://www.dgeec.gov.py/Publicaciones/Anuarios/Anua99/ANUA99.htm,
accessed 19 October 2001.
6. "Information Briefing," Gendarmería
Nacional Principal Staff, 12 September 2001, Edifício Centinela, Buenos
Aires, Argentina.
7. Ibid.
8. Comandante Principal, interview by author, 13 September 2001, Escuadrón
13, Gendarmería Nacional, Iguazú, Argentina.
9. Bill Rogers, "Arabs Accuse Paraguay Police of Extortion," Voice
of America (VOA.com), Internet, www.voanews.com, accessed 18 October 2001. Also,
Larry Rohter, "Terrorists Are Sought in Latin Smugglers' Haven," New
York Times, 27 September 2001, Internet, www.nytimes.com, accessed 18 October
2001.
10. Gendarmería Nacional, Escuadrón 13 'Iguazú': Estadísticas
del Funcionamiento del Escuadrón 13 'Iguazú.' (Puerto de Iguazú,
Argentina: Gendarmería Nacional, September, 2001).
11. Ibid. Also, "Argentina, Paraguay and Brazil Sign Border Agreement,"
Press Summary, 27 March 1998, International Policy Institute for Counter-Terrorism,
Interdisciplinary Center Herzlia, Internet, www.ict.org.il, accessed 22 October
2001.
12. Emilio Jorge Sacchitella, Comandante General, Gendarmería Nacional,
Commander Region II, interview by author, 12 September 2001, Edifício
Centinela, Buenos Aires, Argentina.
13. "Latin America Overview," Patterns of Global Terrorism 2000, US
Department of State, Internet, http://usinfo.state.gov/regional/ar/terror2000.htm,
accessed 19 October 2001.
14. "Daily Interview Barakat, No Arrest Warrant in Brazil," Asuncion
ABC Color, 13 October 2001, Internet, FBIS LAP20011015000029, http://199.221.15.211,
accessed 23 October 2001.
15. "Consular Information Sheet," US Department of State, 15 February
2001, Internet, http://travel.state.gov/paraguay.html, accessed 4 October 2001.
16. Germano Oliveira, "Brazil's Former Drug Czar: Bin-Ladin Establishing
Al-Qa'idah Cell on Tri-Border," Rio de Janeiro O Globo, 19 September 2001,
FBIS LAP20010919000051, Internet, http://199.221.15.211 accessed 22 October
2001.
17. Carlos Martini and Paz Vera, "Anti-Terrorist Exercises Scheduled in
Ciudad del Este," Noticiero 13 First Edition, Asuncion Channel 13 Television,
15 October 2001, FBIS LAP20011015000055, Internet, http://199.221.15.211, accessed
16 October 2001.
18. "Immigration fraud suspects held," Reuters, 25 September 2001
as posted on CNN.com, Internet, www.cnn.com, accessed 18 October 2001. Also
"Border Witchhunt Targets Arabs," from Hoy 24 September 2001 as reprinted
in "Weekly News Update on the Americas," Nicaragua Solidarity Network
of Greater New York, Internet, http://www.americas.org/news/nir/20010930_borderwichhunt,
accessed 18 October 2001.
19. "Paraguay delves into 'Arab funding link,'" Region Law & Diplomacy,
Latin American Weekly Report, WR-01-40, (9 October 2001): 470.
20. Carlos Martini, "Two Hizballah Suspects Arrested in Ciudad del Este,"
Asuncion Channel 13 Television, 3 October 2001, FBIS LAP20011003000060, Internet,
http://199.221.15.211, accessed 16 October 2001.
21. Eleonora Gosman, "Washington está 'muy preocupado' por los extremistas
de la Triple Frontera," Clarin.com Periodismo en Internet, Internet, http://www.clarin.com.ar/diario/2001-10-16/i-04001.htm,
accessed 19 October 2001
22. "Bush No Descarta Usar las Fuerza En Triple Frontera Y En Colombia,"
Reuters, AFP, EFE, ANSA reports compiled by Ambitoweb, 19 October 2001, Internet,
http://www.ambitoweb.com/diario/noticiahs.asp, accessed 24 October 2001.