CIUDAD DEL ESTE, Paraguay (AP) _ This is a wide-open town and looks it.

Arab men with shotguns slung across their backs - bodyguards-for-hire - sip mint tea on street corners. Women guide wheelbarrows loaded with fruit and Japanese televisions through mazes of hawkers and tables laden with goods for sale.

Narrow, smoky streets are clogged with boys fanning shish kebab on grills, Arab women in veils sell nuts and spices. Koreans, Turks and Indonesians sell anything from a $10 fake Cartier watch to farm mules.

Augusto Anibal Lima, spokesman for Paraguay's national police in Ciudad del Este, said billions of dollars of drug and arms money are laundered through the 19 banks and 12 foreign-exchange houses in a 5-square-block area near the Bridge of Friendship connecting the town to Brazil.

Hussein M. Teiyen, a Lebanese immigrant who heads the Chamber of Commerce, said 200,000 people cross from Brazil every day and buy $12 million worth of duty-free goods, not counting arms.

He said that Arabs control 95 percent of the import-export trade and that about two-thirds of the $12 million is unrecorded.

American money is the only permit you need to buy weapons at any of the dozen or so gun shops.

The House of Arms on C.A. Lopez Street will wrap the latest .12 gauge Smith & Wesson shotguns, Mauser semi-automatic rifles and .357 Magnum pistols in brown paper if you say you're smuggling them into Brazil.

''We ask no questions,'' said Ramon Lider Isasa, the owner. Heavier weapons and explosives, his customers say, are available from certain shops after hours.