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OO RUEHRG
DE RUEHBR #2420/01 3211715
ZNY SSSSS ZZH
O 171715Z NOV 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7386
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
INFO RUEHRG/AMCONSUL RECIFE 5874
RUEHSO/AMCONSUL SAO PAULO 8630
RUEHRI/AMCONSUL RIO DE JANEIRO 3350
RUEHBU/AMEMBASSY BUENOS AIRES 4421
RUEHAC/AMEMBASSY ASUNCION 5791
RUEHMN/AMEMBASSY MONTEVIDEO 6600
RHEFHLC/DEPT OF HOMELAND SECURITY  WASHINGTON DC
RHEHNSC/NSC WASHDC
RUEAWJA/DOJ WASHDC

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