Hezbollah, a powerful political and military organization based in Lebanon, operates a global network funded primarily by Iran, as well as lucrative revenue streams from South America and the Lebanese diaspora. Heavily armed and financed, Hezbollah’s mission centers on rejecting foreign interference in Lebanon and countering Western influence in the Islamic world, particularly opposing Israel’s existence. Their actions impact political stability, energy markets, and humanitarian aid across the Middle East, especially in Israel, Syria, and Yemen. Given Hezbollah’s potential to disrupt the region, it is in the U.S. and Israel’s interest to curb its funding, particularly by targeting its cocaine trafficking network in South America.
The Tri-Border Area (TBA), where Argentina, Brazil, and Paraguay converge, is a hotspot for transnational crime. The porous borders and weak law enforcement of the TBA encourage illicit activity, such as drug trafficking, movement of counterfeit goods, and money laundering. Argentina, Brazil, and Paraguay face weak institutional structures, high levels of corruption, and are cash-based economies which makes financial transactions difficult to monitor. As such, transnational criminal organizations and foreign terrorist groups have established themselves in the region as a means to finance themselves through various illicit activities.
Domestic organizations in the region, such as the Barakat Clan based in Ciudad del Este, Paraguay, operate through a combination of legal and illicit businesses. In order to circumvent the law enforcement agencies and partners in the region, these groups have invested heavily in legal businesses in which to operate and engage in trade-based money laundering, which includes over-and-under invoicing and falsifying trade documents. Examples include real estate and construction companies, duty-free shops, and retail stores. In an effort to reach the European markets, the Barakat Clan has partnered with terrorist organizations, such as Hezbollah, to facilitate the trade.
Hezbollah, a Lebanese Shiite political and terrorist organization, has deep ties to the region dating back to the 1990s. Argentina and Brazil host the largest portion of the Shiite Lebanese diaspora population, on which Hezbollah relies heavily. While Hezbollah does not directly engage in terrorist activity in the TBA, they use the region to finance their organization and terrorist plots in the Middle East. Hezbollah expert Emanuele Ottolenghi speculates that while it is largely believed that Hezbollah receives 30% of its operating budget from illicit activities, Ottolenghi argues that it is highly probable that this figure is an underrepresentation. In the past few years, Hezbollah has pushed into narcotics trafficking and smuggling, which provide a significant portion of its financial support for both its political and military activities. Hezbollah has a significant share in cocaine trafficking and distribution to Europe. It is likely that cocaine trafficking alone generates between $300-400 million annually. Furthermore, the Shiite Lebanese population serves to support the hawala network, which is an informal money transfer system that allows money to move between countries without leaving a paper trail. In general, Hezbollah partners with groups in South America who run legitimate retail and trade businesses to operate through and profit off of.
As the war between Hezbollah and Israel increases in severity, it is highly probable that Hezbollah will seek to increase funding to assist in humanitarian assistance for displaced Shiite Lebanese, restock weapons, and prepare for an extensive Israeli ground invasion. To finance these objectives, they may begin taking measures to ramp up illicit activity in the TBA region. This is of significant strategic concern for the US, as Hezbollah is an internationally recognized terrorist group operating in the Americas. Secondly, Hezbollah generates significant revenue from drug trafficking, but also from arms shipment and smuggling. There are activities the US is firmly against.
While disrupting Hezbollah’s financial presence in South America may not have immediate benefits in the short term, taking steady action against Hezbollah will pay off over the long term. It has been shown that force and assassination have historically not stopped Hezbollah from their political and military objectives. In 1992 after the death of Nasrallah’s predecessor Abbas al-Musawi, the Islamic Jihad Organization bombed the Israeli Embassy in Argentina. The group has been linked to Hezbollah and Argentina. Since these targeted killings have not historically stopped the organization, the U.S. should prepare for long-term engagement in the economic and financial markets to deny Hezbollah the opportunity to use the South American region as a hotspot for financial crime.
The United States should seek to leverage partnerships with Argentina, Brazil, and Paraguay’s law enforcement and intelligence agencies in the TBA region to gain insights into how Hezbollah may pivot or increase illicit activity within the region. This could include leveraging both Middle Eastern and South American experts to identify key individuals, organizations, and financial patterns that allow Hezbollah to operate in the region. The U.S. may be positioned to bring together multiple regional experts to identify and disrupt these financial crimes and illicit activities either at their origin, in the TBA, or at their destination, the Middle East, Africa, or Europe. Secondly, by working with regional partners the U.S. is able to draw upon tacit knowledge that otherwise would be difficult, expensive, or timely to obtain. This could include working with financial crime experts in the TBA who have familiarity with the partner organizations, such as the Barakat Clan.
The TBA provides protection for transnational criminal organizations and foreign terrorist organizations to engage in significant illicit activity with little oversight and surveillance. The porous borders allow for easy movement of goods, money, and individuals. By working to identify these the businesses and partnerships Hezbollah has cultivated in the Tri-Border Area, the United States is positioned to work with Argentina, Brazil, and Paraguay to cut off Hezbollah from one of its most lucrative means of financing itself. This in turn could help further U.S. interests in the Middle East by restricting Hezbollah’s means of arming itself.
Meredith Hutchens is currently pursuing her master’s in International Security at the Schar School of Policy and Government at George Mason University. She is also a network member at the Initiative for the Study of a Stable Peace. Her research interests include counterterrorism, intelligence, international relations, and conflict resolution with the goal of addressing today’s pressing security issues informed by economic analysis. Hutchens earned her B.S. in Economics and Mathematics with a concentration in Statistics from the College of Charleston where she was a Market Process Scholar at the Center for Public Choice and Market Process.
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