FOZ DO IGUACU, Brazil - The heavily forested junction of Brazil, Paraguay and Argentina on the Parana River is a hub of lawlessness where almost anything or anyone can be bought, sold or hidden.
Smugglers move liquor, electronic goods, cocaine, refugees, even babies, among the three countries. Brothel owners pay sex traders to bring in teenage prostitutes. Arms dealers peddle weapons.
Now police and intelligence agents are investigating rumors that Foz do Iguacu and Ciudad del Este, just across the Parana in Paraguay, are hideouts or bases for Islamic terrorists.
Agents from Israel, the United States, Argentina and Brazil are trying to determine whether Arabs who live in the region have links to the bombing of the Israeli Embassy in Buenos Aires that took 29 lives in 1992 or to the July 18 car bombing of a Jewish center there that killed 95.
Philip Wilcox Jr., U.S. State Department coordinator for counterterrorism, said terrorist "cells" of Hezbollah, a Shiite Muslim group supported by Iran, were operating in the region.
Although there is no proof that Arabs were involved in the July bombing, police have detained and questioned dozens of recent immigrants from Lebanon, where Hezbollah is based.
About 1,000 fundamentalist Shiites have arrived illegally in Cuidad del Este and Foz do Iguacu since 1992, according to Brazil's federal police. This is the group under suspicion.
Brazilian soldiers and federal police have searched Arab-owned ranches, gun shops and residences along the borders with Paraguay and Argentina and on the frontier with Uruguay several hundred miles to the south.
The effort has angered prominent Arabs.
"For God's sake, leave us alone," said Kamal Osman, 43, owner of a shopping center and discount variety store in Foz do Iguacu, who emigrated from Lebanon in 1961.
"We want to work, to live in peace," he said. "This type of hysteria hurts our business. Who knows? We could have a Jewish fanatic come here and set off a bomb because of this false propaganda."
Paraguayan and Brazilian police say there have been four bomb threats in the area in two months, three in Ciudad del Este and one in Foz do Iguacu. In July, police found a small bomb outside an office building of Arab businessmen in Ciudad del Este. No one has claimed responsibility for any of the incidents.
Arabs have long been a part of Brazilian culture, achieving prominence in business, politics and the arts. Many were Lebanese Christians who fled persecution in the 1860s and, after World War I, rule by the Ottoman Empire. As Christians, they faced little overt prejudice.
Many became traders in duty-free Ciudad del Este, or merchants who bought goods there to resell in Foz do Iguacu or Puerto Iguazu, Argentina, the third border town.
Most of the Arabs who arrived after 1975 were Shiite or Sunni Muslims fleeing the Lebanese civil war that began that year.
Wilson Romao, chief of the Brazilian federal police, said in February that five Arab men had approached arms traffickers to buy plastic explosives and assault rifles. He told the news weekly Isto E that the border region offered "all of the facilities for the acquisition of arms and eventual escape useful for terrorist operations."
After the July bombing in Buenos Aires, Argentine and Paraguayan authorities began interrogating new Lebanese immigrants who lacked papers.
Paraguayan police also detained a Lebanese merchant and a woman who claimed they witnessed the bombing and knew Arabs who financed the attack. Both were released for lack of evidence.
On the Argentine side of the border, police detained five Lebanese citizens for questioning early in September, including a 16-year-old boy.
"This is a witch hunt," said Hassan Wahab, treasurer of the Islamic Cultural Center in Foz do Iguacu. "If a terrorist came to me for help, I would go to the police. Terrorists should have their hands cut off."
Nonetheless, the laxity of border controls heightens police suspicions that the area is a haven for terrorists.
Thousands of foreigners flock to see the spectacular Iguacu Falls, drifting among Argentina, Brazil and Paraguay with few or no questions asked.
Police in Brazil and Paraguay say it is easy to get a false passport, birth certificate, driver's license or other documents through corrupt officials.
Altino Remy Gubert Jr., police chief in Foz do Iguacu, said millions of dollars worth of sophisticated weapons arrive each year from Miami in sealed drums aboard cargo ships.
Small planes carrying drugs flit over the border, landing on clandestine airstrips. At dawn each day, scores of "oranges" - smugglers for hire - cross the half-mile-long Bridge of Friendship to Ciudad del Este and carry back TV sets, cases of liquor or sealed, unmarked boxes.
Border guards rarely intercede.