Brazil confirmed that it will build a steel and concrete wall along the Paraguayan border to help combat contraband in the Triple frontier area where Brazil, Argentina and Paraguay meet. This at the same time that it has pledged to lower Mercosur barriers for junior members Paraguay and Uruguay.

According to the official Agência Brasil, the one mile long by three meters high wall perpendicular to the river Paraná, and next to the Brazilian city of Foz de Iguaçu, should be finished by next July and will be equipped with all the gadgets common to a high security presidium.

The purpose of the wall, say Brazilian authorities, is to stop smugglers from buying cheap imported goods in Paraguay's Ciudad del Este and selling them in the big Brazilian cities such as São Paulo. Computers, electronics, cigarettes, watches, brand textiles are some of the most common items smuggled.

But the Triple Frontier area also has long been suspected of harboring followers of radical groups such as Hezbollah and collecting funds for those terrorist organizations that are under the surveillance of US intelligence.

Brazil, which has a significant Arab community has always rejected US claims that the Triple frontier area has become an operational base for Middle East fundamentalists and extremists. However, according to the Brazilian press, strangely enough the initiative was leaked during the visit to Brazil of US president George Bush.

When the announcement was made Paraguayan officials flew to Brazilian capital Brasí­lia to meet with Foreign Affairs minister Celso Amorim and in Asunción the Chamber of Commerce called for the country to definitively abandon Mercosur.

"This is a repeat of the bullying attitude of the US with Mexico and their wall. It's time we leave Mercosur and fight for our rights", said Alfredo Amarillo member of the chamber.

Cristiane Larcher Attorney General from Foz de Iguaçu confirmed the construction of the wall and said it was meant to prevent smugglers sending the merchandise from Paraguay across the river Paraná to the Brazilian side.

"We're building a wall to impede the illegal action of people crossing with merchandise", said Larcher.

Besides the wall, the Brazilian government has sent fiscal task groups to work together with federal police and highway patrols to check the area including hotels, farms, rural roads plus coordination with the Judiciary to allow night searches.

Brazil's Economy Ministry said the initiative will "facilitate relations, the movement of tourists between Brazil and Paraguay plus optimizing fiscal monitoring, law enforcement and sanitary measures in the area."

Last year Brazilian fiscal authorities confiscated US$ 77 million of merchandise smuggled in from Paraguay and in the first two months of this year US$ 7 million, up 36% from a year ago, according to official data.

Merchandise smuggled from Paraguay can easily be purchased from street vendors in most major Brazilian cities and in a network of "legal" wholesale depots, usually at half the going legal price.

Landlocked and one of the least developed countries of South America, Paraguay has historically been a haven for smugglers tempted by the high tariffs systems of neighboring "giants" Argentina and Brazil.

Mercopress