Overview
On August 19, 2019, Paraguay’s government announced it was designating Hezbollah a terrorist organization. At the same time, ISIS and al-Qaeda were also designated as international terrorist organizations. According to Paraguay’s minister of the interior, that will allow financial enforcement institutions to intensify and coordinate their efforts to combat the threats posed by those organizations. The ministry of the interior noted the need for enforcement, especially in the Tri-Border Area (TBA), where the borders of Paraguay, Argentina and Brazil meet. It is a center for the smuggling and organized crime in which Hezbollah is involved.
– Paraguay is the second Latin American country to designate Hezbollah a terrorist organization (joining Argentina, which made the same designation on July 18, 2019), freezing the organization’s assets.[1] Thus Paraguay joins Western countries, including the United States, Canada and Britain, which have designated the entire organization as a terrorist organization (France and the EU have outlawed only Hezbollah’s military wing).
– Apparently Paraguay’s declaration was the result of its desire to present an image that would attract international economic activity and investment. According to a study by Emanuele Ottolenghi, “part of the reason Hezbollah’s illicit finance networks operate in the Tri-Border Area is that Paraguay lacks transparency. Information about corporate ownership is virtually inaccessible, while the practice of beneficial ownership—enjoying the benefits without appearing on the company records—is widespread. Corruption is rampant, even by Latin American standards; the country’s political class is beset with conflicts of interest; and the judicial system remains prone to corruption and nepotism” (Emanuele Ottolenghi, foreignpolicy.com, February 14, 2019). However, in recent years Paraguay has begun taking action against Hezbollah, as seen by its issuing an arrest warrant for Ass’ad Ahmad Barakat (September 22, 2018), one of the heads of the Lebanese-Shi’ite Barakat clan, involved in financial activities for Hezbollah in Latin America (See Appendix Three).
– Several newspaper articles raised the possibility that after the Paraguayan designation of Hezbollah as a terrorist organization Brazil might be the next Latin American to follow suit (Bloomberg.com, August 19, 2019). Reportedly Brazil’s President Bolsonaro met with Donald Trump, who told him he expected Brazil to cooperate in the war on terrorism against Hezbollah, Hamas and other organizations. However, Brazilian senior officials are concerned about future relations with Iran in the wake of the announcement. Internal constraints also exist affecting Brazil’s considerations, including the absence of a clear definition of what terrorism is (i24news, August 20, 2019).
Appendices:
Appendix One: Reactions in Lebanon to Paraguay’s announcement
Appendix Two: Hezbollah activity in Paraguay
Appendix Three: Restricting the activities of the Barakat clan
Appendix Four: Hezbollah’s activities in Latin America
Appendix Five: ITIC publications about the activities of Iran and Hezbollah in Argentina and Latin America
Appendix One
Reactions in Lebanon to Paraguay’s announcement
So far Hezbollah has not commented on Paraguay’s declaration. The Hezbollah-affiliated Lebanese newspaper al-Akhbar published an article by Ali Farhat entitled “Demonizing Hezbollah in Latin America: the Lebanese community in Washington’s crosshairs.” It reported on the meeting held in Buenos Aires last month by Mike Pompeo, the American secretary of state, and representatives from Brazil, Argentina and Paraguay. They discussed Hezbollah’s presence in the TBA and American’s demand to designate it as a terrorist organization. According to Farahat, Pompeo disregarded claims by the representatives from Paraguay and Brazil who stated that taking such a step would harm their countries’ political and economic interests. Pompeo responded by threatening that not taking the desired action would damage their relations with the United States (al-Akhbar, August 21, 2019)
Ali Farhat analyzed the possible influence the designation will have on Paraguay, where the Arab-Muslim communities have great economic influence. Taking such a step, he claimed, was liable to have a negative influence on economic activities in the country and might raise concerns among investors. Along with Paraguay’s declaration, Farhat’s sources claimed that practical measures were being devised to increase pressure on the Islamic communities, harm their unique character, and possibly even lead to the arrest of businessmen and the freezing of their assets. The same “source” expressed concern over measures that might be taken against Islamic educational and religious institutions (al-Akhbar, August 21, 2019).
In addition, Hezbollah supporter Hamza Muhi al-Din, who lives in Amiens, France, posted a notice to his Facebook page ridiculing Paraguay’s decision, saying that “All that is necessary now is for the South Pole to be added to the list.” The responses to his comment also disparaged the decision (“I can’t even find [Paraguay] on the map”); the motives behind it ( “Apparently they were given an order to exert pressure on Lebanese businessmen [in Paraguay], and tomorrow they will say they are funding Hezbollah because most of them are Shi’ites”); and its results (“Shi’ite businessmen in Paraguay are active in the economy, [Paraguay] will put pressure [on itself] if [it] imposes sanctions on them”) (Hamza Muhi al-Din’s Facebook page, August 21, 2019).
Appendix Two
Hezbollah activity in Paraguay
Paraguay’s population is slightly smaller than seven million. According to recent statistics there are about a thousand Muslims, or 0.02% of the population. Most of them are immigrants from Syria, Lebanon or the Palestinian territories. Most of the Muslim population lives in Asunción (Wikipedia).
On the other hand, according to other sources, the number of Muslims in Paraguay is far greater, and most of them are concentrated in Cuidad del Este, in the TBA of Paraguay, Argentina and Brazil. The population of Cuidad del Este and nearby Foz do Iguaçu in Argentina numbers between 20,000 and 30,000. The TBA has one of the most important concentration of Arabs in Latin America. Most of them are of Lebanese origin and most are Shi’ite. The area has no laws and there is no supervision of movement from one country to another. The Arab population in the TBA has its own schools and clubs which are difficult for foreigners to penetrate. That provides a haven for Arab-speaking terrorists and/or crime organizations to operate.
The TBA is the site of extensive money laundering and crime, and is also a focal point for Hezbollah’s activity. According to Emanuele Ottolenghi, “The U.S. Department of Justice last year designated Hezbollah, a Lebanese political party and militant group, as a transnational criminal organization, thanks to its long-standing and well-documented partnership with Latin American drug cartels. A focal point of Hezbollah operations in the Western Hemisphere is the Tri-Border Area of Argentina, Brazil, and Paraguay, a sanctuary for all sorts of organized crime. Numerous terrorism financing, money laundering, and drug trafficking cases in U.S. courts involve Hezbollah-aligned Lebanese nationals who operate there.” (Emanuele Ottolenghi, Foreign Policy, February 14, 2019).
According to Ottolenghi, “The Trump administration, unlike its predecessors, has given Paraguay due attention. The first Latin America trip by a senior U.S. official after Trump’s election was to Paraguay…U.S. Treasury officials also visited Paraguay last month to deliver a clear message: Those who finance terrorism and launder money for organized crime will bear a heavy price. Paraguay needs to do its part. Despite a stated desire to work with the United States, Paraguay’s leaders have since sought to downplay the threat of Hezbollah’s presence in their country. The foreign minister, Luis Castiglioni, expressed doubts and publicly asked for evidence. The intelligence minister echoed his denial, suggesting the main challenge is tax evasion, not money laundering. The interior minister downplayed the issue. Even the Supreme Court’s president weighed in, saying he had no evidence that Hezbollah was financing terrorism” (Emanuele Ottolenghi, Foreign Policy, February 14, 2019). Eventually Paraguay did designate Hezbollah as a terrorist organization, thereby improving its ability to deal with the terrorism and crime within its borders.
Appendix Three
Restricting the activities of the Barakat clan
The Barakat clan is one of the prominent Lebanese Shi’ite clans involved in Hezbollah’s financial activities is Latin America. Its members live in the TBA, where they raise money for Hezbollah. Ass’ad Ahmad Barakat one of the clan’s heads, and the Americans claim he is Hezbollah’s representative in the TBA. Ass’ad Ahmad Barakat immigrated to Paraguay from Lebanon in the middle of the 1980s and shortly thereafter opened a number of businesses in Cuidad del Este through which he laundered funds for Hezbollah. He also had businesses in Lebanon, Chile and the United States. Some of the funds collected for Hezbollah in the TBA were obtained by pressuring Lebanese shopkeepers to pay a quota to the group under threat of putting their family members on a “Hezbollah blacklist.” He customarily sent large sums of money to Lebanon for Hezbollah. Sometimes he brought the funds to Lebanon himself, traveling on a Paraguayan passport (counterextremism.com).
Paraguay’s first step in restricting the activities of Hezbollah supporters was to indict Ass’ad Ahmad Barakat in December 2001. He was charged with illegal corporate activities, not preventing crime and tax evasion. According to the federal police in Brazil, after release from a Paraguayan prison in 2009 he moved to Brazil. The Paraguayan police chief said that according to documents they found, over the years Barakat transferred about $50 million to Hezbollah (counterextremism.com). The federal police in Brazil also reported that after his release he continued his activities in Argentina, Brazil and Chile (BBC News, September 22, 2018). The Argentine authorities also took action against the Barakat Clan, and on July 13, 2018 the Argentine Financial Information Unit froze the assets of 14 Lebanese members of the Barakat clan and others living in the TBA.
– Ass’ad Barakat was designated a terrorist operative by the American Treasury Department on January 10, 2004. Two of his businesses were also designated Hezbollah supporters (counterextremism,com). The Treasury Department described him as an “international terrorist” and put his name on the list of TBA operatives who helped fund Hezbollah. According to Adam Szubin, head of the Treasury Department’s Office of Foreign Assets, the Barakat network in the TBA was a source of significant funding for Hezbollah in Lebanon (BBC News, September 22, 2019).
– The WordWorldPost, which published an article about the activities of Hezbollah and al-Qaeda in South America, reported that when the Paraguayan authorities raided a store owned by Assad Barakat for the first time they found a letter from Hezbollah confirming the receipt of $3,535,149 from Barakat in 2000. It also reported that the Treasury Department estimated that Barakat’s network transferred between $15 million and $150 million a year to Hezbollah through illegal activities (wordworldpost.com, December 20, 2018).
– On September 22, 2018, Assad Ahmed Barakat was arrested by the Brazilian police in Foz do Iguaçu after a Paraguayan court issued an international arrest warrant for him (Dialogo, October 4, 2018). The office of the Brazilian attorney general said they intended to extradite Barakat to Paraguay but no date was mentioned. The Paraguayan attorney general said they had information that in order to prevent being extradited Barakat had asked for refugee status in Brazil after he was informed of the Paraguayan arrest warrant (Times of Israel, September 21, 2018).
Reactions in Lebanon and the Arab world to the arrest of Ass’ad Barakat
– Several Lebanese media reported on Barakat’s arrest in Brazil in September 2018 and on his ties to Hezbollah:
– The Janoulbia website posted an article entitled “Who is Ass’ad Ahmad Barakat, accused of funding Hezbollah?” According to the website, he is Lebanese, a Paraguayan citizen since 1989. However, he was stripped of his citizenship in 2003 by the Paraguayan supreme court. In April 2017 he illegally acquired a Paraguayan passport, for which an arrest warrant was issued. In 2004 he was accused by the American Treasury Department of acting as Hezbollah’s bursar and at the time the United States froze his bank assets. The same year the Treasury Department imposed sanctions on him for conducting criminal activities in the TBA. In 2006 the sanctions were broadened to include two of his brothers, Hizma and Hatem. In 2003 Ahmad Barakat was arrested in Brazil and extradited to Paraguay on charges of tax evasion. In 2013 his brother Hizma was arrested in Brazil on charges of fraud.
– The Saraya News website reported that for a long time Barakat was responsible for Hezbollah’s funds and was an aide to the organization’s financial director. The Barakat clan network included 14 Lebanese living and working in Brazil and Paraguay who were involved in smuggling, counterfeiting money and forging documents, fraud, drug smuggling arms dealing, money laundering and funding terrorism. All are Hezbollah financial enterprises. According to the Brazilian authorities at the time of Barakat’s arrest, he was a partner in two companies in Foz do Iguaçu, and his brother Hizma was a partner in one of them. Hizma was also a partner in five other companies.
– The al-Arabiya network reported his arrest, saying that the Paraguayan security agencies had concluded he was the principal funder of the Hezbollah terrorist attack on the AMIA building in Buenos Aires in 1994, which killed 85 people and wounded more than 300.
– The al-Hal website posted an article about Hezbollah’s funding, stating that for his illegal activities, Barakat used a warehouse belonging to Barakat Import and Export in the Galeria Page commercial center in the Paraguayan city of Ciudad del Este (al-Hal, June 22, 2019).
Appendix Four
Hezbollah’s activities in Latin America
Overview
Hezbollah carries out terrorist, subversive and criminal activities in Latin America (including drug dealing, counterfeiting funds and arms dealing). Those illegal activities gave birth to two deadly terrorist attacks in Argentina, carried out by Hezbollah and orchestrated by Iran: the suicide bombing attack targeting the Israeli embassy in Buenos Aires (1992) and the suicide bombing attack targeting the Jewish Community Center (AMIA) building (1994). In addition, Hezbollah’s criminal activities in Latin America promote two objectives: the creation of an independent source of funds for Hezbollah in Lebanon (to supplement what the organization receives from Iran) and funding the routine activities of subversive and terrorist networks. In addition, Hezbollah is supported by the drug cartels and organized crime, which improve its terrorist-subversive capabilities in Argentina and the rest of Latin America.
– Hezbollah has always considered Latin America as fertile ground for its extensive criminal activities. One of the reasons is the easy accessibility of the Shi’ite Lebanese population living in various Latin America countries and Hezbollah’s close ties with the local drug cartels. Hezbollah’s control of the “crime industry” in Lebanon, mainly in the Beqa’a Valley, is another advantage for Hezbollah, allowing it to combine its criminal capabilities in Lebanon with those in Latin America and other countries around the globe.
– The two most deadly terrorist attacks carried out by Iran and Hezbollah in Latin America were the two showcase suicide bombing attacks in Argentina in the 1990s. They were ordered by Iran and carried out with the help of the terrorist infrastructure built by Iran and Hezbollah in Argentina and other Latin America countries. That made it possible for the attacks to be carried out within a relatively short time span (only two years between them) and with what both Iran and Hezbollah regarded as great success.
Argentina
– On July 18, 2019, Argentina designated Hezbollah as a terrorist organization. The announcement came two days after Argentine President Mauricio Macri issued a list of terrorist organizations, institutions and operatives, enabling the Argentina’s authorities to punish them. The announcement was made on July 18, 2019, the 25th anniversary of the bombing of the Jewish Community Center (the AMIA building) in Buenos Aires, when important American officials, led by Secretary of State Mike Pompeo, were visiting Argentina.
– In another the announcement the Argentine Financial Information Unit ordered the freezing of Hezbollah’s assets. “…Hezbollah continues to represent a current threat to security and the integrity of the economic and financial order of the Argentine Republic,” the unit said in a statement (Reuters, July 18, 2019). The declaration gives the Argentine government better tools to deal with Hezbollah’s terrorist, criminal and subversive activities in Argentina and Latin America.
Hezbollah in the Tri-Border Area (TBA)
– Since the TBA was declared a free trade area in the 1950s, it has become a center for smuggling and organized criminal activity. The concentration of the Shi’ite Muslim population, whose origins are in Lebanon, is, for Hezbollah and Iran, a convenient reservoir from which to recruit local operatives to form subversive and terrorist networks. The criminal activities carried out in the TBA in cooperation with the activities of the drug cartels and local criminal organizations are a source of revenue for Hezbollah. The profits are either sent to Lebanon or used for local activities.
– In June 2016, it was reported that the American administration had established a mechanism for controlling Hezbollah’s financial activities in the United States, South America and Africa. The activities included drug smuggling, money laundering and trading in stolen American vehicles and other merchandise (al-Nashra, June 29, 2016). On July 13, 2018, Argentina’s Financial Information Unit froze the assets of 14 Lebanese nationals living in the TBA, all members of the Barakat clan, who belonged to a criminal organization with ties to Hezbollah. Information about them was collected by the Argentines in collaboration with the United States.
Appendix Five
ITIC publications about the activities of Iran and Hezbollah in Argentina and Latin America
– July 30, 2019: “Argentina designates Hezbollah as a terrorist organization and freezes all its assets, joining other countries, led by the United States. That gives the Argentine government better tools to deal with Hezbollah’s activities in Argentina and Latin America”.
– August 12, 2018: “Emanuele Ottolenghi: Hezbollah’s Tri-Border Area terror finance comes under fire at last”.
– January 22, 2015: “The Cover-Up of Iran’s Responsibility for Terrorist Attacks on Argentine Soil: Alberto Nisman, Federal Prosecutor Who Accused Argentina’s President of Conspiring to Sabotage Inquiry Linking Bombings at Israeli Embassy and the AMIA Building to Iran, Found Dead”.
– February 18, 2013: “Argentina and Iran have agreed to hold a joint investigation of the terrorist attack on the Jewish Community Center (AMIA) building in Buenos Aires in 1994. They have done so even though the formal investigation conducted by the Argentinian authorities clearly indicated Iran and Hezbollah’s culpability”.
– November 29, 2012: “Hezbollah: Portrait of a Terrorist Organization, Pages 91-97.
– April 18, 2012: Latin America as an Arena for Iran and Hezbollah’s Terrorist, Subversive and Criminal Activities”.
– August 30, 2009: “Ahmad Vahidi, wanted by Interpol for participation in the 1994 terrorist attack in Buenos Aires, is the new designated defense minister of Iran (still unratified by the Parliament). His nomination signals the increasing strength of the Revolutionary Guards and Ahmadinejad’s intention to continue defying the West and subverting the Middle East”.
– August 26, 2009: “Ahmad Vahidi, wanted by Interpol for participation in the 1994 terrorist attack in Buenos Aires, is the new designated defense minister of Iran (still unratified by the Parliament). His nomination signals the increasing strength of the Revolutionary Guards and Ahmadinejad’s intention to continue defying the West and subverting the Middle East”.
– April 19, 2009: “Iran increases its political and economic presence in Latin America, defying the United States and attempting to undermine American hegemony. It also foments radical Shi’ite Islamization and exports Iran’s revolutionary ideology, using Hezbollah to establish intelligence, terrorism and crime networks, liable to be exploited against the United States and Israel”.
– November 14, 2007: “Iran as a terrorism-sponsoring state: Interpol rejected Iran’s appeal and issued international arrest warrants for five senior Iranians (and one senior Hezbollah operative) who were involved in bombing the Jewish Community Center in Argentina (AMIA) in Buenos Aires in 1994”.
– March 27, 2007: “Following an appeal from the Argentinean Attorney General, Interpol issued international extradition warrants for five senior Iranians and one senior Hezbollah operative. The charge was involvement in the suicide bombing attack of the Jewish community center building (AMIA) in Argentina in 1994”.
– November 12, 2006: “Argentina accuses Iran of responsibility for the Hezbollah terrorist attack which destroyed Jewish Community Center in Buenos Aires, 1994. The Argentinean Attorney General’s office announced it had found Iran responsible for the terrorist attack and an Argentinean judge issued arrest warrants for seven senior Iranians and one senior Hezbollah member”.
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