Throughout history, terrorist groups have adapted their techniques and tactics to achieve desired goals. These terrorist organizations have complemented traditional terrorist methodologies with evolving infrastructures, operations, and economic activity borrowed from the criminal world. Practitioners have slowly acknowledged the organized crime and terror crossover, first identified by academics, in the real-world operations. Though academics and operational experts have yet to agree on a clear definition to the emerging crime-terror nexus, Tamara Makarenko’s amended crime-terror continuum model presents an opportunity to draw more insight from an emerging milieu of the two enterprises. Drawing from compiled research over the last 20 years and interviews from first-hand accounts, this paper highlights criminal and terrorism overlaps and discusses the potential for future crime-terror nexuses.
Introduction
The 9/11 terrorist attacks brought a new age to the world. The common perception of terrorist being freedom fighters in distant lands or obscure groups with radical ideologies quickly transformed into an everyday reality. Society became transfixed on the idea of impending attacks not on a battlefield but at home front. Terrorism had officially set up shop in the minds of the average citizen and successfully altered the perception of safety. But, while terrorists operate worldwide, their methodologies continue to adapt both on and off the battlefield.
In order to stay ahead of law enforcement and intergovernmental counterterrorism organizations, terrorist groups rely on evolution. This adaptability manifests most clearly when terrorist groups adopt tactics, techniques, and procedures from outside sources. Criminal organizations provide a detailed blueprint for terrorists to follow in terms of economic activity and operations. Likewise, international criminal organizations do not hesitate to borrow from terrorist methodologies. This overlap has created much discussion amongst practitioners and academics in both fields. While many claim there is a true nexus between crime and terror, others dismiss the notion as purely instances of mutual benefit. This paper looks to analyze the current crime-terror nexus model through real world situations. Highlighting convergence and diverging points between the two provides opportunities to counter future crime-terror operations on the local, national, and global levels.
Current Model
Overlaps between criminal enterprises and terrorist organizations have been evident for years, but lacked a cohesive methodology to observe trends. Following the 9/11 attacks, Tamara Makarenko developed a model to track and label the alarming rise in cooperation between terrorist groups and criminal enterprises. The continuum focused on determining how and where both criminal and terrorists groups fell on a sliding scale. The ends of the scale represented each groups’ tactics, motivations, and end goals dedicated solely to their respected enterprise. In the middle of the scale was a theorized “black hole” scenario. Here, a group transcends a singular identity and evolves into an organization that embodies both crime and terror, but simultaneously maintains their original mission objectives. Between the two ends and the nexus center lie areas of various degrees of cooperation, alliances, and relationships between the two individual groups.
While this model provided a basis for research for over a decade, researchers identified shortcomings within the model. Makarenko’s original model revolved around organizations transitioning completely from one label to the other, but issues arose in the blurred areas in between each label. However, as the dark underbelly of terrorism and crime continued to evolve, so did Makarenko’s continuum. Mararenko reorganized her model to identify three distinct focus areas: a group’s operational convergence, the organizational convergence, and finally the potential for identity evolution. With the adapted continuum model, researchers are able to track how an enterprise from either group evolves their tactics and motivations to fit with their overall goals and in doing so adopt a milieu of both groups.
Operational
One-off agreements
History has seen many one-off agreements between terrorism and crime. These single contracts arise when one entity does not have the means to fulfill mission requirements or when a long-term agreement between criminals and terrorists is not feasible. One historical example is the relationship between the Pablo Escobar’s drug cartel and the terrorist group, FARC (Revolutionary Armed Forces of Colombia). Escobar created many enemies during his rise to power in the Colombian drug trade, including many prominent Colombian politicians. To protect his empire, Escobar needed this opponents removed from their decision making roles or eliminated all together. But, Escobar could not jeopardize his standing and support from the general Colombian populace by being directly associated with any assassination plots. Instead, he contracted the terrorist, guerilla group to conduct the attacks and then immediately denied any connection to the terrorist group. This one-time agreement is a classic example of criminal and terrorism crossover. Often criminals look to employ terrorists to conduct similar operations in exchange for money, guns, or drugs which in turn funds the terrorist agenda. Both sides benefit from the arrangement, and then immediately severe ties until similar opportunities present themselves.
Alliances
In terms of operations, the second type of relationship between crime and terror is one of mutually beneficial alliances. Alliances arise when both enterprises establish an agreement where each contribute tactics, personnel, or capabilities for an extended period of time to ensure mutual success. Alliances often involve financial operations. Criminal enterprises develop and control the means to undertake monetary accruement, and terrorist organizations rely on these organizations to make money. Specific examples of alliances will be discussed further in the financial convergence section.
On the surface, alliances between terrorism and criminal organizations seems to be a logical, forgone conclusion. In alliances, each individual group relies on the other to act with both entities in mind. To accomplish this type of relationship, trust and cooperation are crucial. But, complications between the two illegal operations arise primarily because crime, particularly financial, is a zero sum game. Because of this scenario, anything a terrorist group benefits from is a loss for the crime enterprise. While members of a terrorist group can unite under a singular ideology, criminals operate with only profit as a concern. So for a criminal group form an alliance with a terrorist group, the benefits have to outweigh the costs, which seldom occurs.
Along with a potential loss in profits, the growing stigma against terrorism in society has a negative effect on criminal organizations. Many of these groups have developed connections in government, law enforcement and business. By partnering with terrorists, criminals receive increased exposure from law enforcement and governments which jeopardizes profits. This unwanted scrutiny also significantly lowers the possibility the two groups working together.
Organizational
Hybrids
In situations where alliances or one-off agreements are not feasible or could potentially result in a negative outcome, groups look to adopt the methodology or tactics of other groups for their own use. This hybrid organization draws from both organizations to achieve their overall goals. For instance, a group might share ideological or financial motivations while employing fear or violence to control political influence.
An example of this hybrid situation is the criminal organization, D-Company. The group was originally formed as a criminal syndicate in India composed of Hindu and Muslim criminals who committed crimes for monetary gain. The criminal group profited from money laundering, smuggling, and illegal contraband. But, as the discourse between Muslims and Hindus grew in India, the leader of the criminal enterprise sought to protect his fellow Muslims from persecution by the Hindu-dominated government. The result was the 1993 Bombay Bombings, D-Company’s first steps toward being a terrorist organization. While the group continues its criminal agenda today, much of its profits go towards fighting the Indian government and the supposed Hindu persecutions against the Muslim community.
On the other side, the terrorist group Tamil Tigers shifted from their terrorist origins to include a profit focus enterprise. Originally formed in an effort to create an independent state of Tamil Eelam in the north and east of Sri Lanka for Tamil people, the group has moved away from their original ideology as greed and money dominate many of their operations today. Similarly, the Provisional Irish Republican Army (PIRA) followed the transformation from idealistic foundations to more monetary accumulation goals. The group originated in the early 1900’s to seek freedom from England. Following their independence, Ireland was split between the Protestant north and the Catholic south. Unhappy with the separation and the lack of representation in the national government, the Catholic south fought using terrorist tactics against the government for decades. Following the negotiations with the Irish National Government, the leaders of the IRA called for ended of attacks, but a criminal element continued to be active. Groups in Northern Ireland continue to hide behind the PIRA as they continued to use crimes for profit.
“Black Hole” situations
The ultimate situation of crime and terror emerges in a “black hole” scenario. At this point, a group adopts tactics and motivations from both crime and terror to form a singular entity. To attain this nexus, there are three criteria that must be met. First, it must occur in a failed state or region. Here, the government or law enforcement must not be present or operates at an ineffective level against a terror or criminal group. In these regions, both groups thrive on the state chaos and ongoing conflicts with little law enforcement interruption. Next, the group must use both terror and criminal tactics simultaneously. Finally, the group must maintain the original goal or ideology before the hybridization occurs.
The current situation in Afghanistan and the Taliban operations in the region provide the blueprint of a “black-hole” situation. Afghanistan is a failed state where the central government maintains little power, leaving tribal governments to their own governance. The region provides breeding and operational grounds for both terrorist and crime groups. Next, the Taliban utilizes fear and violence to achieve their ultimate goals of regional control while employing criminal activities such as the drug trade for financial gain. Finally, the group still operates under the original ideology of nationwide Sharia Law; hence they are unified towards one goal. Other examples of groups potentially operating in black hole scenarios include Al Qaeda and the FARC but neither follows all three criteria. The possibility of additional “black hole” scenarios creates a potentially dangerous situation in the future. Prevention is clearly more feasible than elimination once the scenario takes hold.
Potential for Identity Evolution
The final situation addressed in Makarenko’s crime-terror continuum is the conceptual idea of evolutionary transformation. At this point, one group completely renounces their ideologies or goals in exchange for ones on the opposite side of the spectrum. This would occur if a terrorist group renounces their political motivations and adopted a for-profit agenda. Similarly, a criminal group could fall into this category if the leaders dissolve their criminal operations in exchange for a solely political priority. At this time, there is no evidence of either group venturing into this territory, so the idea of evolutionary transformation is largely hypothesized.
Convergence Points
Before the 9/11 attacks, crime and terror were approached as separate entities with minimum crossover. The two were viewed by academics and practitioners as operating their own spheres of influence and conducted operations with personal agendas in mind. The 9/11 attacks brought down this façade and exposed a significant correlation between criminal organizations and terrorist groups on a multitude of fronts. The two enterprises openly conducted financial operations through alliances and one-off contracts, utilized similar recruiting techniques and networks, and regularly employed similar organizational structures.
Financial Operations
When identifying a particular group as either a criminal enterprise or a terrorist group, one of the simplest methodologies is to analyze the tactics employed and the overall desired end state. Each group utilizes a separate agenda in order to achieve their goals, but one of the fundamental similarities between the two groups is financial methodology. For a criminal organization, the ultimate goal primarily is financial profits. Regardless of how it is accomplished the end state for a criminal is to make money and ensure their enterprise is protected to continue garnering a cash flow. Criminals do not hesitate to use any and all possibilities to make money. Similarly, terrorist groups utilize the same criminal activities to fund their operations. Terrorists can preach their doctrine or ideology to any who will listen, but money is ultimately required to attain their end goals. Below are a number of criminal activities where the operational crossover between criminal enterprises and terrorist groups is evident.
Smuggling
Smuggling is one of the most profitable and efficient ways for criminals to make money. Illegally transporting products across borders to sell at profit while avoiding taxes and fees is globally recognized and a low-risk/high-reward crime. Criminals utilize loose border control and corrupt law enforcement to transport any number of products across international borders.
In South America, illegal logging and timber smuggling results in billions in lost income for national governments as transnational criminal organizations facilitate the flow of illegal timber across borders. One region which falls victim to illegal timber operations is South America. In Paraguay, nature reserves fall victim to illegal logging operations that eventually end with the timber being smuggled to Brazil for sale worldwide. Individuals in the region with financial ties to terrorist groups capitalize on the lucrative lumber trade. According to a 2017 report from Insight Crime estimating the profitability of transnational crime, illegal logging is the most profitable natural resource crime and worth between $52 and $157 billion annually. Profits from the illicit operations make their way back to both terrorist groups in the Middle East and criminal organizations in Asia.
Trafficking in persons has quickly become one of the most lucrative and widespread criminal endeavors. Human trafficking trails only drug smuggling as the most profitable means of illegal crime in the world. The movement of humans takes two forms that are readily exploited by crime and terrorist groups. Forcible kidnapping and sale is labeled as human trafficking while an arranged agreement between a person and smuggling enterprise is considered human smuggling. The reasons behind trafficking in humans then fall into various categories. The first is forced servitude in return for debt forgiveness or for profit. The next is as sex slaves. This form of human trafficking is prominent in the United States. Both terrorist and criminal groups partake in these enterprises for profit smuggle individuals across borders with the aid of criminal enterprises.
Across the Mexican-United States border, criminal groups control the illegal flow of all merchandise through established smuggling channels. Using these drug and arms smuggling routes, criminal groups smuggle people across borders in exchange for money. U.S. House Committee on Homeland Security reports that the typical illegal alien pays between $1,200 and $2,500 to be taken across the border. While the Sinaloa cartel and the Gulf cartel battle over the billion-dollar drug trade between Mexico and the United States, both utilize smuggling routes to transport people into the United States. These drug cartels also smuggle non-Mexican aliens into the United States, often charging between $45,000 and $60,000 per person. Though documentation is limited, these other-than-Mexican aliens smuggled into the United States by criminal groups could potentially have links to terrorism..
Counterfeiting
Every year, billions of dollars are lost to product counterfeiting and intellectual property loss. While there is significant monetary loss, investigation into these crimes is minimal due to difficulty of attribution. Product counterfeiting is a lucrative business for criminals due to the low cost, low risk, low exposure, and high payoff. These enticing factors bring terrorist involvement into the counterfeiting business. However, many terrorist groups do not actually run these types of operations; instead, they rely on individual criminals to fund their groups through donations. This is clearly evident in South America as counterfeit merchandise from China is imported to cities such as Ciudad Del Este, Paraguay and Foz do Iguacu, Brazil to be sold at significant discount.
Trade Diversion
Trade diversion involves diverting items from a low-price to high-price market to profit from different tax rates and exchange rate policies for either international trade or different priced markets within the same country. Cigarette smuggling is one of the most profitable practices for both crime enterprises and terrorist organizations. As early as the 1930’s crime organizations such as the Mafia have been using contraband cigarettes and illicit trading methods to circumvent many national and international laws. These operations created the fundamental blueprint used today by terrorists and criminals.
Over the past 30 years, many international law enforcement agencies have struggled to fully investigate this type of illicit trading due to the difficulty in tracking products in the spider web of illegal trade. But, in the 1990’s, Canadian authorities spearheaded an investigation of a major international organization implicit in illegal trade diversion. The investigation brought to light an illegal operation involving the US tobacco company, RJ Reynolds, and multiple countries. The company utilized illegal cigarette sales in Iraq to turn a substantial profit for all players involved, including the PKK in Turkey and freelancing businessmen in Iraq. The American company used 7 different countries to circumnavigate federal embargo laws on Iraq to turn upwards of 6 billion cigarettes to Iraq. One of the major determining reasons this occurred was due to the failed state of Iraq. The lack of governmental enforcement allowed the smuggling and illegal sale of contraband in the country by both terrorists and criminal organizations.
The second case of material support to a terrorist organization occurred in the 1990’s by Lebanese immigrants in the US illegally selling cigarettes and sending profits back to Hezbollah. After coming to America illegally due to immigration shortfalls, the Hezbollah network established an illegal cigarette trade between North Carolina and Michigan. Cigarettes would be bulk purchased in North Carolina and then illegally sold at profit in Michigan; taking advantage of the low taxes in NC and the high taxes in MI. Profits from this operation funded other illicit practices, including drug and gun running by the Hezbollah terrorist organization.
Drugs
Following the 9/11 crackdowns by law enforcement, terrorist networks have decentralized into smaller cells. In these networks, many terrorists turn to crime to fund day-to-day operations. One of the most lucrative is drug peddling. Terrorist networks funded by drug sales and petty crime conducted many attacks in Europe over the last 20 years. The low cost to complete operations such as the Madrid bombings and the 2015 Paris attacks lead many authorities to investigate petty crimes as the financial backing for these groups.
One of the clearest connections between criminal organizations and terrorist groups is the production, sale, and distribution of drugs. Along with these crimes, Hezbollah has historically been associated with the Colombian Drug trade, and in particular with the FARC. Operation Titan in 2008 revealed significant Hezbollah ties to drug and money facilitator, Cheky Harb, and the FARC. But, even as the FARC involvement in the cocaine trade fades, criminal gangs continue to provide connections for Hezbollah in the cocaine business. This connection was highlighted again with the prosecution of Ayman Joumaa, a Canadian-Lebanese businessman, who moved millions of dollars in drug money between Colombian drug gangs, Mexican Los Zetas, and Hezbollah. The Canadian-Lebanese Bank also provided a front and illegitimate means for Hezbollah to make and launder their drug money. The bank acted as a hub of an international drug money laundering operation with connections to legal businesses in Canada and the United States. Following the indictment brought against it in regards to terrorist material support, Hezbollah turned to exchange houses around the world to launder their money.
Gun-running
Between the fall of the USSR and weapons supplied by US agencies to many Middle Eastern groups during the 1980’s, there were an estimated 11 million unlicensed firearms in Pakistan. The influx of arms created an illegal market that provided monetary means for groups to continue their ideological fights in the Middle East. Because of the high demand, gun running has become a profitable venture for many crime and terrorist groups. Using established drug smuggling routes, guns cross many porous borders between Pakistan, Afghanistan, and India. The arms give many criminal and terrorist groups the physical force to expand and influence local governments and regions. These illegal guns have been used in bank robberies, kidnappings, and attacks on government buildings and members in Pakistan and Afghanistan.
One criminal group in particular supplies millions of dollars worth of guns to terrorist and criminal organizations alike. The Indian based D-company crime syndicate supplies weapons to any group that is paying, regardless of their motivations. The lack of government regulation coupled with governmental corruption in Pakistan creates a situation for crime and terrorist groups to exploit. As long as there continues to be a lack of federal or law enforcement intervention, small arms trafficking will continue to be rampant in the region for terrorist and criminal groups to exploit.
Fraud and Money Laundering
Criminal activities provide ample means of cash flow for criminal and terrorist groups alike. But, once the money is made, the issue of moving profits from one country to another creates logistical shortfalls. It is here that innovation and globalization allow these illegal groups to navigate global financial systems. Terrorists and criminals turn to corrupt financial institutions such as the Canadian-Lebanese Bank to launder billions of dollars. But, it does not stop with international banking institutions. For instance, corrupt government officials in Venezuela have created shell companies through the state oil company to launder money worldwide for terrorist and criminal groups. In a two-year period, nearly $2 billion was laundered. These corrupt governments present illegal groups an avenue to clean their ill-earned gains with minimum interference from international and federal agencies.
Organizational Structure
After 9/11, the swift retribution by America and its allies forced both terrorist groups to rethink their traditional hierarchy structure. Criminal organizations historically have employed a structural methodology that minimized exposure at the highest leadership levels while disseminating risk amongst the entire network. The Italian Mafias laid the foundations of this structural organization during the 20th century. The Mafia bosses would keep a distinct separation between leadership and crimes being committed by placing lieutenants in charge of different crime syndicates. The mob would also isolate different criminal activities to minimize the risk of the entire enterprise being exposed by law enforcement.
Terrorist groups quickly adopted the flattened, horizontal network with cells spread around the world to replace the top-down structure. To minimize the threat of exposure on both ends, individual cells have minimum contact with the overall group leadership. The disengagement from the top down pushes many cells to turn to crime in order to fund their operations and followers. While leaders still maintain the overall mission goals for the group, the individual cells operate the day to day business of funding and recruitment. These are both reflected in the increase of petty crimes, white-collar crimes, and smuggling operations. As more terrorist groups are pressured from law enforcement, the traditional hierarchies follow the trend of decentralization, resulting in increases of individual cells.
Recruiting
Outside of financial operations and organizational structure, commonalities between crime and terror groups occur in recruiting. Since the disruption of traditional terrorist hierarchy following the crackdown by international agencies, terrorist groups rely on isolated cells to recruit new followers. The cells depend on radical recruiters to fill the ranks of their terrorist network. At this low level, terrorist groups use money and the incentive of group affiliation to draw petty criminals to their ranks. The cognitive closure and self-worth gained through this gang-mentality draws many criminals to extremism. These past criminals carry skills and character traits that produce effective radical terrorists. They have access to weapons, methods to make money, or knowledge of networks that can produce falsified documents which are necessary in most terrorist attacks. Past criminals are also viable terrorists candidates based on having no aversion to using violence or breaking the law.
Following the death of Pablo Escobar and the downfall of his drug empire, there was a power void as different groups fought for control of the Colombian drug trade. Amidst the violence, one group quickly rose to gain a substantial piece of the drug market. The FARC took over the large drug farms in Colombia’s farming country and looked to large cities such as Medellin as a means to distribute their product due to the developed rail transportation system already in place. To ensure the logistical side of their enterprise was protected in the city, the communist terrorist group recruited local gang members through promises of stable income and protection. Young males were targeted by FARC recruiters and employed in the fight against the national government. Though many people had no ambition to join the far-left movement, the allure of a stable income and protection from the gang turf wars were enough to draw many to the terrorist organization.
Outside of low-level criminals, the prison system provides a vast criminal network and hotbed for terrorist recruitment. Radical Imams recruited three terrorists involved in the 2015 Paris attacks while in prison. Prison provides recruiters a plethora of possible recruits who are looking for a means of income and acceptance once released. Terrorist ideology also provides criminals opportunities to “transcend” their checkered pasts through gaining a semblance of cognitive closure and group acceptance. The promise of absolving past sins and legitimizing misdeeds allows many criminals to find solace in terrorist ideology.
Prisons and the underbellies of society are prime locations where radical recruiters sway criminals to join their cause. This crossover between the two groups continues to grow and must be taken into account as a viable crossover between crime and terror.
Differences in Ideologies
While the pursuit of financial gains creates opportunistic situations for a terrorist and criminal crossover, one of the most detracting arguments for a crime-terror nexus is the differing fundamental ideologies or end goals for each group. Crime is an enterprise focused on greed and influencing others in order to gain more wealth and influence. Any use of fear or violence is directly attributed to ensuring their criminal enterprise continues to produce profits.
Bruce Hoffman defines terrorism as the use of violence or the threat of violence in pursuit of, or in service of, a political aim. Hoffman’s definition of traditional terrorism breaks it down into 5 different points for achieving overall goals: 1) The use of violence and threat of fear, 2) targeting noncombatants, 3) violence for political motivation, 4) involve non-state actors, and 5) psychological impact outside of just immediate attack. Terrorist organizations rely on these tactics to achieve their idealistic goals. While financial backing is essential to enact their ideology, money is not the desired end state for terrorist groups. An analysis of the Hezbollah terrorist group and Los Zetas criminal enterprise provides a clear basis on how the two types of groups can operate in similar fields, but maintain fundamental differences in their end goals.
The state sponsored terrorist group, Hezbollah, demonstrates how a terrorism could subvert a national government and gain political power. These actions are routinely financed through illicit business practices to include drug production and sales all around the world. Hezbollah focuses on regional goals of fighting Israel and gaining political power in the Lebanon by using global operations. This was evident during the 1990’s in South America. A terrorist cell operating in the Tri-border region of Paraguay, Argentina, and Brazil donated an explosive in the Israeli embassy in Argentina in retaliation to the Israeli oppression of Shi’a Muslims in the Middle East. The operation is a clear demonstration of terrorist tactics to fulfill a political agenda. The illicit activities in the Tri-border region solely funded the logistical and operational requirements of the bombings.
Los Zetas in Mexico emerged in the late 1990’s and gained prominence in the Mexican drug trade through use of sadistic fear tactics and control of drugs from Mexico to the US. The Zetas focused on maintaining their power in the drug trade, with little desire for any political prominence. Mexican criminal organizations use bombings, violent communication, and attacks against politicians to ensure their drug trade is unaffected. On the surface, these tactics look to fit into the defined terrorism framework, but they fall short due to the end goal ideology. Many of the bombings were not directed at noncombatants, but rather at rival drug gangs or to instigate police investigations away from their own gang. The violent communication focused on warning locals and police to steer clear of their drug production and trade. Finally, the gang targeted politicians not to affect change in government policy, but instead to stop any interference politicians might have with their drug profits. While the violence in Mexico continues to spread, causing significant detriment to the Mexican government and the people, labeling the gangs as “terrorists” has the possibility to create issues in the counter agenda. Though these gangs do not hesitate to use terrorist tactics, they are not traditional terrorist groups. As long as the gangs’ primary focus is their profits rather than political change, they need to be classified as criminal enterprises.
Case Study: Criminal Practices and Terrorism in the Tri-Border Area
Terrorism will always exist as an issue both domestically and internationally for the United States. The threat of a kinetic attack against the United States or its allies forces investigations worldwide, but one of the most prominent areas for terrorist and criminal activity goes virtually unchecked. The Tri-Border region of Paraguay, Brazil, and Argentina presents a very real threat in terms of terrorist ties to rampant criminal activity.
The region’s current contraband, smuggling, and drug trade can credit their existence to construction of the Itapúa Dam between Argentina and Paraguay and the Friendship Bridge between Paraguay and Brazil in the 1960’s. The waterways created by the damn established easier transportation methods for trade. ALong with the ability to ship goods by boat, the Paraguayan dictator at the time, Alfredo Stroessner Matiauda, declared Ciudad Del Este as a free trade zone. With the booming economy, foreigners quickly migrated to the region. The region’s population consists of 700,000 inhabitants; among them there are 15,000–20,000 Arabs, mostly of Lebanese origin. Today, the porous borders and corrupt law enforcement contributes directly to the illegal financial operations occurring in the region.
Each year, the Tri-Border Area accounts for upwards of $40 billion in profit from illegal trading and crime. Contraband electronics, tobacco smuggling, and drug trade make up the majority of the crimes committed daily in the region. The Arab community in the region has been estimated to control 100% of the counterfeit electronics market in the region. The black market capital gained in this region is so significant, the IMF has taken interest in curbing the ill-gotten gains that reach the global market.
Profits from these criminal enterprises are laundered in a complex system of local exchange houses and shady banks in all three countries. Money is physically smuggled across the tri-border to reach banks that are willing to transfer funds overseas at a fee. Once laundered, money is distributed worldwide, with a large portion reaching the mobs in Asia and terrorist groups in the Middle East. While many Latin Americans partake in the trade, there is a large contingent of Middle Easterners living in the region with familial and social ties in the Middle East. It has been speculated that both Hamas and Hezbollah have agents in the region making money to fund the organizations and their goals.
Not only is there an international presence from the Middle East, known terrorist groups such as the Colombian FARC actively engage in the drug trade with local mafias and other radical groups. It has been speculated that the abduction and murder of the Paraguayan president’s daughter in 2003 by the radical Paraguayan group, Patria Libre, had connections to the FARC. As long as there is minimum law enforcement presence in the region and rampant corruption, the region will continue to be a criminal, and possible terrorist, cash source.
But, while the presence of these agents is worrisome, it is difficult to collect evidence to prove that the funds transferred to the Middle East are used to fund terrorist actions. Furthermore, even though material support to terrorism is punishable in the United States, other countries recognize groups such as Hezbollah as a legitimate political group instead of a terrorist organization. Brazil and Paraguay adamantly deny terrorist activity within the borders connected to the Middle East and both view the funds transferred to Hezbollah from this region as legitimate. Lack of evidence and the limited cooperation with the local and national governments in the region make it difficult to track and identify potential terrorist links in the region.
For decades there has been speculated links to terrorism in the region, but the weak local governments, police corruption, and the social history in the region, limit response. Even in the chance that evidence could link financial terrorism with the region, any investigation undertaken, whether it is by US officials or international community, is met with animosity and difficulty. Too many high-ranking government officials in all three countries profit from the illicit trade in the region to take any recourse seriously. Paraguay’s incumbent president, Horatio Cortes, is the owner of the largest cigarette producer in the region, Tabacalera del Este. While the Paraguayan president claims he pays the necessary taxes on cigarette production, the taxes paid for local consumption exceeds consumption by a factor of twenty. In actuality, nearly 95% of the cigarettes produced in Paraguay are being smuggled into Argentina and Brazil, which have much higher tobacco consumption taxes than Paraguay. But, while it appears the president to corrupt and exploiting tax diversion, Cortes is able to keep enough distance between him and the actual illegal activity to ever legally be connected to the smuggling. Simply put, there is too much money being made by individuals in power for any political incentive to be initiated for recourse.
Unfortunately, problems in the region do not end with government officials. Speaking to a Paraguayan businessman with ties in the government, the situation is exacerbated by the people in the region. In the majority of citizens’ opinion, whatever happens in the tri-border region is simply accepted as long as the violence does not spill over into everyday life. This dynamic between citizens living with crime and terrorist groups creates a carefully balanced truce between the civilians, governments, and the two groups. As long as the citizens maintain their desired lifestyle, criminals do not impede in everyday life, and the government makes a veiled attempt at countering the criminal issue, nothing will change. The people in the region do not see the criminal and terrorist problems as an existential threat, hence they allow the government to turn a blind eye or exploit the activity in the tri-border region. With this attitude from the citizens in the region and the government’s emphasizing economic prosperity over security issues, the future looks woefully bleak for any substantial change.