IQUIQUE, Chile — The Bush administration has designated this windswept resort town and free-trade zone on Chile’s northern Pacific coast as a terrorist hot spot, second in South America only to the notorious tri-border region where Argentina, Brazil and Paraguay meet.
Indeed, American and regional officials say, Iquique — pronounced “ee-KEE-kay” — a booming free-trade zone created 30 years ago in what was once a sleepy fishing village, may be poised to compete with the tri-border area as a center of terrorism financing and support.
“Iquique is definitely a place we are looking into because there is a lot of money going in and out and some strange guys moving there,” an American official told the Forward on the condition of anonymity.
The tri-border area, with its 30,000-strong Arab community and reputation for smuggling and money-laundering, has been monitored closely by intelligence agencies during the last decade, especially following the September 11 terrorist attacks. The stepped-up law enforcement has contributed to the exodus of terrorism suspects to Chile.
Among them is a group of Paraguayan citizens of Lebanese descent suspected of links to the Shiite group Hezbollah who have set up shop here in recent years after fleeing the heavily monitored tri-border zone.
More specifically, those men are suspected of collecting — sometimes coercively — and sending proceeds from the region to Hezbollah in Lebanon.
Washington has insisted on the need to dry up the financial sources of Islamic terrorism. And while the dispute with Saudi Arabia about Islamic charities and their possible links to Al Qaeda has grabbed headlines, the administration has also been pushing South American countries to crack down on the millions of dollars leaving the continent to Middle
Eastern terrorist groups, primarily Hezbollah and, to a lesser degree, Hamas.
Besides the tri-border area and Iquique, free-trade zones such as Maicao in Colombia, Isla Margarita in Venezuela and Colon in Panama — which have a similar mix of unregulated businesses and an Arab presence — have come under American scrutiny.
The concern in Iquique was prompted by a 35-year-old Paraguayan man of Lebanese descent named Assad Ahmed Barakat. He has lived for years in the tri-border area, becoming in recent years one of it most prominent businessmen until he was arrested by the Brazilian authorities last summer at the request of the Paraguayans.
Earlier this month, Brazil extradited Barakat to Paraguay, where he faces charges of tax evasion, illicit association and criminal incitement.
Because Paraguay, like most of its neighbors, does not have a law defining terrorism financing as a crime, he was not charged with terrorist activities. Still, Paraguay and the United States believe Barakat is in fact the regional head of Hezbollah.
Barakat has admitted to being a Hezbollah sympathizer and sending money to the group but denies being its regional leader.
Alarm bells started ringing in Santiago and Washington in late July 2001, when Barakat, one year before his arrest, made a four-day trip to Iquique to set up businesses with Paraguayan-Lebanese associates in the free-trade zone.
Taking advantage of the new climate created by the September 11 attacks, Chilean Interior Minister José Miguel Insulza publicly announced in November 2001 the launching of an investigation into suspicious activities in Iquique.
In addition, the Forward has learned, state prosecutors specializing in money laundering opened a parallel, secret investigation of several companies linked to Paraguayan-Lebanese in Iquique.
“Barakat was the detonator, no question,” a Chilean official said.
The investigative judge in charge of the public case, Jaime Chamorro, told the Forward in an interview here that the investigation was now in a secret phase. He added that while Barakat was a key feature, the investigation was not limited to him and his associates.
Chamorro explained that when he came to Iquique, Barakat participated in the creation of three companies. His biggest stake was in Barakat Import & Export. He also took between 1% and 2% stake in Saleh Trading and Saltex.
However, probably because of the Chilean reaction, Barakat Import & Export never operated and Saleh Trading only operated until April 2002. Today, only Saltex still exists.
Many security officials in the region, however, say the Chilean investigation has been more convenient than thorough. They point to American interest in the case — Chamorro has been assisted by the FBI, even traveling to Washington in September — and a relative lack of evidence against Barakat in questioning the real objectives of the investigation.
“There is very little against Barakat, they are just trying to please the gringos and sending a message to these guys: ‘stay away,’” a regional intelligence source said.
A Chilean official acknowledged that “there were people from the tri-border who wanted to come to Iquique and who decided not to come when we opened the case. So you could say that this is also a way to protect ourselves.”
A knowledgeable judicial source said Chamorro did not make much headway. He has indeed not charged or arrested anyone in more than a year, although some 15 people were interrogated and then released.
Moreover, the parallel investigation conducted by state prosecutors has found little evidence of a financial trail between Lebanese-controlled companies and the tri-border area or the Middle East.
Chamorro countered that he was working “diligently and without discarding any hypotheses.”
And judicial sources said that there were some troubling points they were looking into.
For example, a source close to the investigations said, a company called Frankfurt Import and Export, controlled by Paraguayan-Lebanese individuals in Iquique, was sending substantial quantities of used clothes to neighboring Peru, and sometimes to New York, Angola and Syria.
Another company under scrutiny is Guarani Import & Export, which investigators believe could be involved in cigarette-smuggling between Iquique and the tri-border area.
In addition, Paraguayan intelligence sources believe Khalil Saleh, the founder of the now closed Saleh Trading company, was in charge of money collection for Barakat in Iquique.
A Chilean judicial source told the Forward that when Saleh tried to send money from Iquique to Lebanon, the Chilean central bank intervened to bar the transfer following an American recommendation. Saleh did not try again.
“We believe they had a plan that fell through after Barakat was publicly denounced,” the source said.
One of the main reasons for the quick Chilean reaction is that the police have been on the lookout for some time.
According to a secret 2002 Chilean police report obtained by the Forward, the authorities began worrying about the arrival of Paraguayan Shiites of Lebanese descent as early as the mid-1990s.
During 1994 and 1995, according to the police report, Youssef Hassan Abdallah, the sheik of one of the tri-border area’s main mosques and a key Hezbollah sympathizer, visited Chile several times and met with Lebanese businessmen in Iquique. His visits to Iquique came as Argentinean investigators focused on the tri-border area as a base of operations for the 1994 bombing of the AMIA Jewish communal center in Buenos Aires.
Abdallah’s objective was to support the creation of an Islamic center in Santiago and establish a new operative center for his activities, according to the report.
The Chilean police report contends that starting in 1997 a major migration movement started from the tri-border area to Iquique, especially by Paraguayans of Lebanese descent.
As a result, the police decided to launch the top secret “Operation Iquique” to monitor their movements, meetings, places of residence and bank accounts.
The operation singled out nine companies and 22 individuals — all of Lebanese descent — including Barakat, whose four-day trip to Iquique in July 2001 was closely tracked.
“There is a relationship, on a financial standpoint, between Hezbollah, the tri-border area and Iquique, through the use of front import and export companies to cover money transfers without justification,” the police report concluded.
One recent development worrying the authorities, a Chilean source told the Forward, is that during the last six months, some 40 people have been coming each week to Iquique from Lebanon, staying only two or three days.
“They could be money couriers,” the source said.
While no Al Qaeda presence in Chile or in the region has been established, the Chilean authorities have also been looking into another recent immigration movement, this one from the lawless Pakistani-Afghan border. Investigators are focusing on individuals of Pakistani origin running businesses in Iquique and with alleged links to Islamic groups operating on the Pakistani-Afghan border, including Al Qaeda.
Investigators: Hezbollah Finds Haven in Angola
IQUIQUE, Chile — Regional investigators have found that several of the key figures of Hezbollah who operated in the tri-border area of Argentina, Brazil and Paraguay during the mid-1990s have found a new haven in Angola. The oil-rich southern African country, barely recovering from a deadly civil war and with a reputation of rabid corruption, has welcomed several known South American Hezbollah figures in recent years, according to Paraguayan intelligence.
“There are now Hezbollah cells in Angola, with the main people of Hezbollah in 1992-1995 in the [tri-border] region at the time of the Argentine bombings,” a Paraguayan intelligence source told the Forward. “We don’t really know why they decided to go to Angola.”
A typical example is Ali Hassan Abdallah — known as “Alito,” or Little Ali — who is suspected of having been a financial chief for Hezbollah in the tri-border area between 1992 and 2000. After being charged by Paraguay because of his links to Ahmed Assad Barakat, a Paraguayan man of Lebanese descent who faces charges of tax evasion, illicit association and criminal incitement, Alito fled to Brazil and set up a travel agency.
But when the Brazilian authorities started pressuring him, he moved to the free-zone of Isla Margarita in Venezuela, where he obtained a visa to Angola thanks to another Hezbollah sympathizer who had already obtained visas for several other Hezbollah fugitives from the tri-border area.