Home inFocus Global Hotspots (Winter 2018) Venezuela: Narco-State Meets Iran-Backed Terror

Venezuela: Narco-State Meets Iran-Backed Terror

Emanuele Ottolenghi and John Hannah Winter 2018
Iran’s President Hassan Rouhani with Venezuelan President Nicolás Maduro. (Photo: Mohammad Berno / Iranian President’s Office)

As if the political and economic chaos wracking Venezuela wasn’t worrying enough, a couple of recent stories underscore the potential national security threat brewing there. First, last February’s designation of Venezuela’s vice president, Tareck El Aissami, as a drug kingpin by the U.S. Department of Treasury. Second, a CNN investigative report revealing that Venezuela’s embassy in Iraq was allegedly selling Venezuelan passports and identity documents to Middle Eastern nationals. The CNN report doubled down on revelations that the Venezuelan embassy in Syria had engaged in similar activities in 2013, when a key Hezbollah liaison in Venezuela, the Treasury-sanctioned and FBI-wanted Ghazi Atef Nassereddine, was the deputy ambassador in Damascus. If true, such reckless action would almost certainly facilitate the entry of Islamist militants to Latin America. Put all this together and what do you get? A rabidly anti-American failed state that is aggressively incubating the convergence of narco-trafficking and jihadism in America’s own backyard.

Venezuela’s links to the drug trade are deep and well documented. In 2009, for example, the U.S. Department of Treasury sanctioned Venezuelan national, Walid Makled Garcia, under the Kingpin Act for drug trafficking. Makled was eventually arrested in Colombia and extradited to Venezuela, where he stood trial. According to the February 2017 Treasury designation of Vice President El Aissami, Makled’s cocaine shipments enjoyed the protection of the vice president, who received payments from Makled in exchange for facilitating the shipments. These included shipments to the United States. During his trial, Makled claimed to have bribed and worked with the highest echelons of the Venezuelan state to keep his cocaine business running smoothly.

Subsequent cases showed that Venezuelan collusion with the cartels reaches the highest levels of the state.  Two nephews of President Nicolas Maduro were arrested in Haiti and convicted on drug trafficking charges by a federal jury in Manhattan in November 2016. General Néstor Luis Reverol Torres – Venezuela’s current minister of interior and justice, and former head of its national anti-narcotics agency – was indicted in the United States last August on cocaine trafficking charges, along with a former captain in Venezuela’s National Guard. The list of officials implicated in narco-trafficking also includes a former minister of interior and justice, two senior intelligence officers who later became governors, and now Vice President El Aissami.

The country’s economy is a seemingly endless downward spiral, yet the regime retains control. That’s partly because of the collusion of officials at the highest levels of power with drug cartels, whose limitless financial resources keep Maduro and his cronies afloat.

The implications for Washington are extremely damaging and not simply in terms of the drugs and violence flowing across the southern border. In El Aissami’s case, five of the 13 entities sanctioned were Miami-based LLC’s. Their illicit activity compromises the integrity of the U.S. financial system.

Of no less concern is Venezuela’s long history of collaboration with Iran, including sanctions evasion, terror finance, and ideological subversion. During the presidencies of Hugo Chávez and Mahmoud Ahmadinejad, Caracas was a key facilitator of Tehran’s sanctions-busting efforts. The two regimes established business ventures and financial institutions in Venezuela, which they used to launder Iranian money, procure technology, and bribe senior Venezuelan officials.

Cooperation did not stop at banking and business. Caracas also helped Tehran promote virulent anti-Americanism across Latin America. Indeed, Venezuela has increasingly become a center for Iran’s revolutionary agitation in the Western Hemisphere.

In 2004, Tehran established the Centro de Intercambio Cultural Iran LatinoAmerica, or CICIL, in Caracas. CICIL is run by Islam Oriente, a foundation based in the Iranian religious center of Qom and headed by Mohsen Rabbani – the Iranian cleric implicated in the 1994 bombing of the Jewish cultural center in Buenos Aires that killed 85 people. Rabbani’s emissaries use Venezuela as a forward operating base for their Latin American activities, which include exporting the Iranian revolution, radicalizing local Muslims, helping Hezbollah consolidate its foothold among Western Hemisphere Lebanese communities, and linking to social and political movements that share Iran’s anti-American agenda. Iran’s missionary work in Latin America has often been downplayed as either innocuous or ineffective. Yet recent revelations about the 1994 AMIA bombing in Buenos Aires have exposed a collusion between Argentina’s former president, Kristina Fernandez de Kirchner and the Iranian regime to cover up Tehran’s and Hezbollah’s role in the terror attack. Iran’s Argentina-based intermediaries all have links to Rabbani’s missionary network. Some of them have been arrested, while the former president, as of this writing, is facing an arrest warrant for her role in the alleged cover-up.

Less understood is the Venezuelan nexus between organized crime and Iran’s radical Islamic network, especially its most dangerous terrorist proxy, Hezbollah. Hezbollah has used South America as a base for its terror-finance networks for decades, laundering money on behalf of criminal organizations and using the profits to finance its quest for power in Lebanon, military adventurism in Syria, and terrorism overseas. In turn, its criminal activities benefit the Venezuelan regime.

A case in point is the February 2017 discovery by Paraguayan law enforcement agencies of 25 tons of Venezuelan currency hidden in cloth sacks and stashed in the home of a weapons merchant in the frontier town of Salto del Guaira, on the Paraguay-Brazil border. Two of the suspects have criminal records for arms smuggling. The money, mostly in 100 Bolivars notes, had been rendered worthless by hyperinflation. Venezuela suddenly announced it was withdrawing the bills from circulation in December 2016, causing a run on the banks (their cutoff date was since repeatedly extended). Even before they ceased being legal tender, the bills were only worth a few U.S. cents apiece, but had one redeeming quality: they are made with the same quality paper produced by the U.S. supplier to the U.S. Bureau of Engraving and Printing and are therefore a favored choice for counterfeiting U.S. currency. If turned into $100 bills, the useless Bolivars would suddenly have been worth 2 billion dollars.

Early reports indicated that the money was destined to be traded on the black market in Ciudad Del Este, a Paraguayan frontier town in the Tri-Border Area (TBA) of Argentina, Brazil, and Paraguay, and the home of U.S. designated Hezbollah counterfeiters. It is also possible that the money would first go through Bolivia’s money houses, which still exchange Bolivars at Venezuela’s fictitious official rate. Even if that were the case, Bolivian money changers would seek to make a profit from the worthless currency – and the easiest way to do that is if the cash would eventually be sold to local counterfeiters.

Suspicions of a narco-Hezbollah connection were also confirmed by local sources. In communications with one of the authors, local intelligence officials confirmed that Hezbollah operatives in the area have been seeking Bolivars for months. They also see a link between those arrested and another local Hezbollah operative.

It remains to be seen if these connections will be confirmed. But it’s clear to see why Iran, Hezbollah, and Venezuela would all benefit from such a scheme. Suffering from a self-inflicted economic disaster, Venezuela is running out of foreign currency reserves. Turning worthless currency into greenbacks helps address that problem. Hezbollah gets a hefty commission for the job and gains political leverage in Venezuela in exchange for its help. Iran, as the key facilitator of the Venezuela-Hezbollah connection, favors the injection of billions of counterfeit greenbacks into the global economy because such a step is damaging to the U.S. financial system. The sanctioning of a Quds Force network producing counterfeited currency to fuel the Yemen civil war shows that in this area, as in many other illicit activities, Iran unscrupulously engages in rogue behavior to promote its proxies and tend to their financial needs.

The Bolivars seizure – one of many in the area since 2015 – illustrates the potential repercussions of paying insufficient attention to the boiling crisis in Venezuela. The country is a failed narco-state run by a clique of greedy anti-American ideologues in cahoots with Islamic radicals beholden to Iran, the world’s foremost state sponsor of terror. As long as the Maduro regime governs in Caracas, the crisis that is consuming Venezuela will further strengthen Washington’s enemies in the Western Hemisphere. Developing a coherent strategy to address this deadly convergence of threats should continue to be a high priority for U.S. policymakers.

Emanuele Ottolenghi, Ph.D., is a Senior Fellow and John Hannah is Senior Counselor at the Foundation for Defense of Democracies. A version of this article appeared in Foreign Policy Magazine.