BRAZIL - NEED FOR A STRATEGY ON THE TBA TERROR FINANCE

S E C R E T SECTION 01 OF 02 BRASILIA 002420

SIPDIS

SIPDIS
NOFORN

TREASURY FOR TFI - HEFFERNAN
TREASURY FOR FINCEN - SHOWELL
DHS FOR ICE - D.THOMPSON
STATE FOR S/CT - NOYES
STATE FOR WHA - D. MCCARTHY/C.CROFT
STATE FOR EB/ESC - DAS SIMONS AND JEAN CLARK

E.O. 12958: DECL:12/17/2026
TAGS: KTFN EFIN PTER SNAR ETTC PREL BR
SUBJECT: BRAZIL - NEED FOR A STRATEGY ON THE TBA TERROR FINANCE
DESIGNATION PACKAGE

REF: 11/15 Jean Clark Email

BRASILIA 00002420 001.2 OF 002


Classified by Charge d'Affaires Phillip T. Chicola, Reasons 1.4
(B) and (D).


1. (U) This is a message for Treasury Assistant Secretary
Patrick O'Reilly from Charge Phillip Chicola.


2. (S/NF) Summary and Comment: Embassy understands that
Treasury and other Washington agencies are moving forward with
plans to designate on November 21, 2006 several individuals who
operate in the Tri-Border Area (TBA),including several
Brazilian citizens/residents, as terrorist financiers for their
support for Hezbollah. While post supports inclusion of the
specific names proposed, which are well known to agencies
represented at post, Embassy Brasilia recommends that the date
for the designation be postponed in order to implement a
strategy for obtaining Brazilian cooperation in disrupting these
terrorism finance networks. As the Brazilian government on the
policy-making level has repeatedly questioned the evidence of
terror financing in the TBA, and has made multiple requests that
we share our evidence of such with them, the GoB would react
poorly (and most likely would decline to move forward with any
asset freezes) if the USG were to publicly designate Brazilian
individuals/entities without having first informed it.
Moreover, Post believes that the disruption of these terror
finance networks would be best accomplished by pursuing
cooperation first through law-enforcement channels. End Summary
and Comment.


3. (S/NF) Our difference of views with the GoB policy-level over
the possibility of terror finance in the TBA is well known. The
GoB repeatedly has challenged the USG to share its evidence of
terror finance in the TBA, and has only reluctantly allowed
reference to the possibility of such activities into official
statements, such as the communique issued annually by the
3-plus-one regional counterterrorism forum. While these
information requests may in fact only be a bluff or rhetorical
debating point, by sharing our evidence -- at a minimum with our
vetted units in the intelligence service and perhaps the police
as well -- we either will obtain their cooperation, or call
their bluff. By not sharing our information we will alienate
the decision-makers whose actions are required to freeze any
Brazilians assets belonging to these individuals will not
cooperate in that effort. By contrast, if we have shared our
case with the GoB and they decline to take action, we put them
on the defensive and would be better able to focus private and
public debate on the bigger issues here, such as Brazil's
failure to acknowledge Hezbollah as a terrorist organization.


4. (S/NF) Other factors also argue for delaying the designation.
Designating without coordinating with the Brazilians would have
the potential to poison the next meeting of the 3-plus-one
group, currently scheduled for December 3-4 in Buenos Aires.
Moreover, as this is the first time we would be designating
Brazilian citizens, it is worth making the attempt to get it
right (the original Barakat case is not quite a precedent as he
already was extradited to Paraguay on tax evasion charges when
the USG designated him). Finally, designating these individuals
without first obtaining Brazilian cooperation in identifying and
freezing assets would leave the door wide open to asset flight,
particularly since these individuals would not be subject to
designation by the United Nations.


5. (S/NF) Regardless of how and when we ultimately approach the
GoB policy level, Post recommends that the USG pursue a strategy
that seeks to disrupt these individuals' networks through
law-enforcement channels first. Law enforcement agencies at
post have strong working level relationships with their
Brazilian counterparts, many of whom are more willing to be
forward leaning in cooperating with the USG than the policy
level is. Post believes it would be possible to use these
strong relationships to effect investigations and seizures of
these individuals' assets were the USG to provide through law

BRASILIA 00002420 002.2 OF 002


enforcement channels information on their criminal or illicit
dealings incident to terror finance (i.e money laundering,
contraband, drug dealing, evading foreign exchange transaction
reporting requirements etc.). This strategy makes sense given
that there are Brazil-based financing networks that ought to be
disrupted, that there is evidence of criminal activity incident
to the terror finance activity and that the GoB policy level may
prove unresponsive to the level of evidence of terror finance
that we may be limited to sharing. In this strategy,
designation would come well after the apprehension and
disrupting of these individuals' activities.


6. (S/NF) Post is ready to engage the Brazilians on this in a
way that optimizes the chances of success in disrupting these
individuals' activities.

CHICOLA