Notes from Ciudad del Este
I took a trip to the tri-border area and it was everything I expected and more.
About 15 minutes after I walked across the border from Brazil into Ciudad del Este, Paraguay, I was led into the back room of a mall about four blocks from the border where some guys tried to convince me to purchase a large quantity of Chinese made phones, tablets and “generic AirPods” that I could resell in Brazil for a profit. It was simultaneously surreal, stereotypical and a bit frightening.
I should back up. Good morning from Buenos Aires. I’m on vacation. My family and I spent a few nights in the area around Iguazú Falls and I’m in Argentina’s capital for most of Semana Santa. I’m checking in for an hour or two per day. Hxagon and the newsletter are running quite nicely in my absence thanks to Lucy, Greg, Jordi and Arianna.
Last Tuesday I took a vacation from my vacation so I could hop over to Ciudad del Este and see the border town. After two decades of reading about the smuggling and illicit finance going on in the tri-border area, it was time to walk across the border and wander over into “Hezbollah mall in Paraguay” to see the activity for myself.
I’d say I got the full experience. Upon walking across the border, I was almost immediately hit up by various businessmen trying to convince me to do big money deals with them moving products (mostly Chinese electronics) across the border. It was a bit of a shock, but I just rolled with what came my way and learned a lot about the electronics and other items being imported into Paraguay so they can be sold elsewhere. I saw an area I can only describe as a “cell phone chop shop” where electronics were being broken down and reassembled with soldering guns while batteries, screens, motherboards and other parts were being sold piece by piece. One stall on the street tried to sell me night-vision goggles that were placed above a switchblade, brass knuckles, and some very realistic looking “airsoft” rifles and handguns. There were plenty of stores and stalls where the economics of what they were selling made zero sense, suggesting some backroom deals must be the key to their success.
And yet, while I could describe all those really strange experiences, those events took up only a brief few moments of my time in the tri-border area and would leave out a lot that was totally normal and quite developed about the entire region. I saw parks, tourist zones, well built roads and infrastructure. Those first few blocks around the border crossing are wild, but get ten blocks in, and all sides of the border are decent middle class towns with schools, restaurants and normal businesses as well as some great tourism. People who have traveled to the area probably already know this, but I was surprised to find the stereotypes and worst stories felt quite represented in the immediate one kilometer border areas and then very much exaggerated when considering the wider three city region.
I’ve crossed a lot of borders in this hemisphere and the tri-border area is the most economically vibrant and dynamic area I’ve visited outside of the US-Mexico border. Comparisons with the El Paso-Juarez or San Diego-Tijuana region aren’t unwarranted. Yes, it has its shady side (so does the US-Mexico border) and I got to see it close up. But apart from that, I also saw the larger tri-border area as enormously consequential in terms of legitimate trade and tourism as well as gray market activities created by Argentina and Brazil’s protectionist economic policies.
The region is growing in terms of population and economic activity, new bridges will make trade flows even easier, and my sense from the brief visit is that the region is likely to boom in the coming few years. Details matter (do your due diligence!; especially in this area), but in a generic sense, I’d absolutely invest in the region in the coming five years and expect big returns. There is a lot of good news to be found here once you get past the initial shock of the border deal.
