Jack Sweeney

     Since January, the U.S. Drug Enforcement Administration has doubled the size of its office in Paraguay's capital, Asuncion.
     U.S. Special Forces are training Paraguayan soldiers in anti-drug operations that closely resemble counterinsurgency operations, while hundreds of U.S. soldiers
recently spent four months in Paraguay on an official "training exercise" in an area heavily used by Colombian, Brazilian and Bolivian drug traffickers.
     The moves are part of a U.S. effort to expand its counterdrug, intelligence and military presence in Paraguay, an increasingly lawless state with a fragile economy,
wobbly democratic institutions and deeply ingrained corruption.
     But Washington will not be able to stop the spread of international criminal groups in Paraguay and may face increased attacks not only from criminal gangs, but
also from Arab extremists living in Paraguay, if the Israeli-Palestinian conflict escalates into all-out war. Paraguay has long been a home to Arabs linked to the
Hezbollah and Islamic Jihad militias.
     The goal of the Bush administration is to build an effective surveillance and interdiction fire wall across a major southern route in Paraguay that Colombian and
Bolivian drug traffickers use to export cocaine to the United States and Europe. But the U.S. effort comes as Paraguay's political institutions are increasingly at risk of
being overwhelmed by powerful international criminal organizations.
     Crime syndicates from Colombia, Brazil, China, Lebanon, Italy, Russia, Nigeria, Ivory Coast and Ghana are known to be operating in Paraguay. Many of these
groups are believed to be associated with corrupt Paraguayan business executives, politicians and military officers tied to the ruling party, according to U.S. law
enforcement and intelligence sources.
     Paraguay has been a democracy in theory since Gen. Alfredo Stroessner's 35-year military dictatorship was toppled in a 1989 coup led by then-army chief Gen.
Lino Oviedo. But the same political party that backed Gen. Stroessner, the Colorado Party, continues to rule Paraguay today.
     The past 12 years have been the longest period of civilian rule in Paraguay's 190-year history. But economic growth has not improved under democracy, and
political instability and corruption have intensified.
     Since 1989, there have been four failed coup attempts against Paraguay's civilian governments, including another led by Gen. Oviedo in 1996. He has been a
central protagonist in bloody internal power struggles within the Colorado Party that threaten the country's weak political institutions and that could trigger a fifth
military coup attempt at any time. He is now under house arrest in Brazil and is resisting efforts to extradite him to stand trial in the assassination of Vice President
Luis Maria Argana in 1998.
     Gen. Oviedo could likely expect more lenient treatment on his return to Paraguay if Vice President Julio Cesar Franco succeeds in forcing out unpopular and
ineffectual President Luis Gonzalez Macchi and installing himself as the country's leader.
     Mr. Franco was elected with the backing of Oviedo supporters in a breakaway faction of the Colorado Party.
     Meanwhile, Brazil's government is anxious to be rid of Gen. Oviedo because of his suspected involvement in drug trafficking and other organized criminal
enterprises, as well as his reported leadership of corrupt military officials.
     Over the past decade, Paraguay's entrance into the global economy has attracted international criminal syndicates and terrorist organizations that view the country
as a safe location from which to conduct illegal operations.
     As a result, Paraguay today is a strategic South American hub for international drug trafficking, arms smuggling, money laundering and counterfeiting, among other
crimes. Most of the crimes take place in Ciudad del Este, a lawless city of between 150,000 and 300,000 residents located at the confluence of Paraguay's borders
with Argentina and Brazil, in an area called the triple frontier. Ciudad del Este is also a regional center for drug trafficking and arms smuggling.
     The U.S. State Department estimates that Paraguay moves 10 metric tons of cocaine annually to Europe and the United States. Other estimates, however, range
up to 40 metric tons annually.
     Paraguay also produces some of the highest-grade marijuana on the continent and exports most of it to Brazil, which now ranks as the largest consumer market in
Latin America for cocaine, heroin, marijuana and so-called "club drugs" like Ecstasy.
     Criminal gangs in Paraguay also have ties to Colombia's largest rebel group. Paraguayan officials arrested a Colombian citizen in Ciudad del Este last year as he
tried to arrange a cocaine-for-weapons swap on behalf of the Revolutionary Armed Forces of Colombia (FARC). Links between crime syndicates in Ciudad del
Este and the FARC date from the mid-1990s at least, when Gen. Oviedo protected Brazilian drug trafficker Fernandinho Beira Mar, who was captured in southern
Colombia last April while accompanied by FARC rebels.
     In addition to the prevalence of international gangs, the Bush administration also has reason to be concerned about the longtime presence in Paraguay of Arabs
linked to Hezbollah and Islamic Jihad. Last year, Paraguayan officials arrested a Lebanese national in Ciudad del Este who was subsequently linked to a Hezbollah
cell believed to have bombed Israel's embassy and a Jewish community center in Argentina in 1992 and 1994.
     In April, the State Department warned that the governments of Paraguay, Brazil and Argentina are not capable of preventing Islamic terrorist actions that could
originate from Ciudad del Este. If the Israeli-Palestinian conflict escalates into all-out war, these groups could start attacks against Israeli and U.S. targets in South
America.
     The growing U.S. security presence in Paraguay may provide U.S. officials with more timely intelligence about drug trafficking, terrorist activities and other illegal
activity in that country. But it won't safeguard Paraguay's economy and political institutions from being hijacked by international crime syndicates.
     As Paraguay becomes increasingly lawless, organized criminal gangs and terrorists will find it easier to operate with impunity and will pose a growing threat to
regional stability.
     • Jack Sweeney is a senior analyst at STRATFOR, the global intelligence company. Its Web site is STRATFOR.com .

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