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CE Contraband

We’re used to hearing about how drugs, guns and money wash through a particularly lawless slice of South America dubbed the “Tri-border region,” which is basically where Brazil, Paraguay and Argentina meet.

Now we can add a new category of illicit goods flowing through the region — consumer electronics, according to Marcelo Ballve, writing in World Politics Review.

Lately, though, many Brazilian smugglers have gone high-tech. The high cost and small size of items like memory cards and digital cameras means relatively low risk and lucrative returns. For this new breed of smugglers,Paraguayis a treasure trove of cheap, digital cargo that can be sold to Brazilian middlemen and shopkeepers for high profits. The retailers, in turn, benefit by skirting the stiff import taxesBrazil’s government imposes on technology and electronics.

If you think it would be nice not to have to worry about “margin pressure” — think again. Here’s the experience of one, er, reseller:

He often makes the run from Rio to the Paraguayan border city Ciudad del Este twice a week, where he arranges purchases and finds middlemen to smuggle the goods intoBrazil. Once the contraband makes it across the border, he then transports it to the cities. According to Machado, with $5,000 inU.S.currency to buy digital cameras, he can pull in as much as $2,000 profit in one trip.

But this time he wasn’t so lucky. At a meeting on the Brazilian side of the border, his go-between, one among thousands who make their livings in the cross-border underworld, gave him the unwelcome news that his $8,000 order of digital cameras had not made it across. Machado said that could mean anything: confiscation, theft, or a double-cross.

It’s another risk of the trade. Unsavory middle men come with the territory.

“He told me ‘you lost,’ so I lost, that’s all there is to it,” says Machado. “All I’m returning to Riowith this time is my health.”