The commander of the U.S. Southern Command, General James Hill, Thursday confirmed reports that Islamic terrorist groups are operating in the tri-border area of South America, where Paraguay, Argentina and Brazil converge.

General Hill calls the presence of Islamic terrorist groups, such as al Qaida, the Iranian-backed Hezbollah of Lebanon and Palestinian extremists from Hamas in the tri-border area "a real threat." He says a large amount of money is flowing directly from Paraguay, Argentina and Brazil to the terrorist organizations.

"I could not take you at this second to a smoking gun of al Qaida presence in the tri-border area, an absolute smoking gun," he said. "It is there, but I could not hand you the intelligence to show it to you. I can and could hand you intelligence on Hezbollah, Hamas, al Gamat [Egyptian terrorist group 'Al-Gamat'Al-Islamiyya'] and many others where there is huge amounts of money."

General Hill confirmed the accuracy of a report released in October in The New Yorker magazine, which detailed the activities of hard-core extremists from Hezbollah in the tri-border region. According to the article, radical Islamic groups in the Triple Frontier raise funds both through legitimate businesses and drug smuggling.

The article reports that two-years ago, Hezbollah raised tens of millions of dollars in the area where open borders and general lawlessness have created a haven for terrorists.

General Hill says drug sales continue to fuel terrorism. He called on Latin American governments to improve border-control by transferring responsibility from police to military personnel.

"General Hill made his comments at the private Americas Society where he discussed the role of the United States in working with Colombia to fight narcotics trafficking," he said. "Drug smugglers in Colombia are the world's leading exporters of cocaine and a growing source of heroine."

General Hill says shifting U.S. priorities have cut back on the military effort to help Colombia combat the drug crisis.

"It would be disingenuous for me to sit here and tell you that I am not taking some budget cuts both in terms of dollars and more importantly in terms of assets that come my way because of higher priorities for the United States Military and the United States government," he said.

"Your question said 'have I got enough to do my job?' and the answer is yes but I am hanging on and we are having to do different things and we are having to work different ways to do it. And that is a challenge."

General Hill warns that the violence in Colombia, which last year left nearly 30,000 people dead, has the potential to de-stabilize the entire region.