The Tri-Border Area of South America, at the crossroads of Argentina, Paraguay and Brazil, has for years been a hotspot for criminal activity. This ranges from drug and arms trafficking to transnational theft, fraud and money laundering. It’s also proved to be fertile ground for “narco-terrorism”, generating funds for militant organizations like Hezbollah chiefly through the illegal cocaine trade.
Hezbollah also has another side-racket in the Tri-Border Area: tobacco. The globally-sanctioned proxy of the Islamic Republic of Iran has based itself in Ciudad del Este, Paraguay: a city with a population of around 200,000. Terror cells from Hezbollah, Hamas, and Al-Qaeda have reportedly had a presence in Ciudad del Este since as early as 2002.
The president of the Brazilian Institute of Business Ethics (ETCO in Spanish), Edson Vismona, told a conference in 2018 that 48 percent of the smuggling into Brazil from Paraguay comes from the illegal cigarette trade, which causes losses to Brazil of 146.3 million reals (about US$30 million) a year. Paraguayan cigarettes are much cheaper in Brazil because of the tax difference: 16 percent in the former compared to 80 percent in the latter. Smuggling cigarettes between Paraguay and Brazil, Vismona said, could easily bring home a 200 percent profit per pack.
Hezbollah’s Interest in Tobacco Smuggling
In 2016, the US Drug Enforcement Administration (DEA) identified a hierarchical structure within Hezbollah in charge of drug trafficking in the Tri-Border Area. According to the DEA, it dated back to 2007, with the terrorist organization adding cocaine trafficking to its previous criminal repertoire of opium and hashish.
The organization more recently turned to Paraguay-to-Brazil cigarette trading to boost profits. Highly profitable and low-risk, cigarette smuggling allows Hezbollah to obtain money in a more straightforward way to finance both political and terrorist activities. Convictions for cigarette smuggling also carry much lighter prison sentences (typically two to five years) than the around 15 years a drug trafficker can be hit with.
By 2017, Emanuelle Ottolenghi, a member of the Foundation for the Defense of Democracy (FDD), was warning the United States Senate Foreign Relations Committee about the importance of this income stream to the militant group. She cited a 2016 report by the Israeli Ministry of Health, which indicated the illegal tobacco trade had become “a fundamental source of financing” for Hezbollah.
ETCO’s Edson Vismona had also said tobacco smuggling allowed Hezbollah to maintain good relations with other, larger criminal organization: “There is no criminal activity that unfolds alone.” And according to Ottolenghi, Hezbollah's regional partner in tobacco smuggling is none other than the First Capital Command (PCC), the biggest and most powerful criminal gang in Brazil, which controls almost all of the country’s drug trade.
Brazilian authorities believe links between Hezbollah and the PCC were first forged in 2006, initially for drug trafficking, and later branching out into tobacco. The Brazilian Federal Police have asserted Hezbollah helps the PCC obtain weapons and access international smuggling rings outside Latin America, and in exchange, receives PCC protection for inmates of Lebanese origin imprisoned in Brazil.
The 'Invincible' First Capital Command
The PCC has about 11,000 members and its two main areas of activity are Sao Paulo in Brazil and the Tri-Border area. It was formed in August 1993 by Brazilian prison inmates in the wake of the October 1992 massacre at São Paulo's Carandiru Penitentiary, in which Brazilian security forces killed more than 100 prisoners after a riot. The group quickly forged links with another prison gang, the Red Command (Comando Vermelho), adopting its motto "peace, justice, freedom" and advocating for revolutionary revolt against the capitalist system.
In 1999 the group carried out the biggest bank robbery in São Paulo's history, stealing $39m. Over the next decade, the PCC grew in strength and sophistication and in the early 2010s branched out into drug and arms trafficking operations in neighbouring countries like Bolivia and Paraguay. It established links with both Hezbollah and the Italian mafia and today, is regarded by many as almost invincible.
Illegal tobacco trafficking represents is an easy source of terror financing. At the same time, it creates a higher level of insecurity and instability in areas considered "critical points" for global security.