Looming financial woes for Hezbollah

Sunday 23/04/2017

The US Department of the Treasury is preparing to impose sanctions on institu­tions and individuals accused of financing or working with Hezbollah. Banking sources said the expected measures would concern political figures from Lebanese organisations close to Hezbollah, such as the Amal Movement, the Free Patriotic Movement and the Syrian Social Nationalist Party, which is also known for its close ties with the Syrian regime.

Rumours about the US sanc­tions circulated in Lebanese political circles and were picked up by media outlets. If the rumours turn out to be true, the sanctions would be the first time American sanctions were levied against Lebanese parties not listed as anti-American organisa­tions, particularly the Amal Movement and the Free Patriotic Movement, headed respectively by Lebanese Parliament Speaker Nabih Berri and Lebanese President Michel Aoun.

One notable incident in connection to the above was the arrest in March of Lebanese businessman Kassem Tajeddine at the international airport in Casablanca on an Interpol warrant and his subsequent extradition to Washington. Tajeddine is suspected of financing Hezbollah through investments in Lebanon and African countries.

Tajeddine’s arrest led to rumours about other sanctions possibly affecting Lebanese businessmen who invested in Hezbollah’s military and political clout in Lebanon and the Middle East through business ventures in Lebanon, Iraq or Iran.

Many business people had distanced themselves from Hezbollah following the Treasury Department’s tough stance against Hezbollah. Doing busi­ness with Hezbollah had sud­denly turned costly.

Still, the party continued to rely for its financing on a signifi­cant financial network across countries in Latin America, the Arabian Gulf and even the United States.

Reliable banking sources and political personalities said there has been a noticeable drop in Hezbollah’s financial resources in the last two years. The party was no longer capable of financially supporting many of its familiar political, religious and partisan allies. It had to let hundreds of its paid elements go.

After the 2006 war with Israel, Hezbollah was an important employer in Lebanon — second only to the Lebanese governm ent — but the war in Syria drained the party’s resources. The US sanctions delivered a powerful blow to Hezbollah’s financial capabilities.

The sources pointed out that Iran’s permanent financial contribution to Hezbollah since its inception does not exceed 50% of the party’s budget. The remaining amount is from activities that the average citizen could not imagine are taking place. Taking advantage of its military might and its ability to move freely through ports and across borders, the party has allegedly engaged in illegal activities using a widespread network of agents inside and outside of Lebanon. Always using the guise of resisting Israel, the party was able to impose for itself this unique privilege.

A good portion of Hezbollah’s expenses is covered through public funds. It is no secret that the party controls about 100 municipalities and municipal federations in Lebanon. The party placed its members on the municipalities’ payrolls. They are nominally municipal employees but they take their orders from Hezbollah. Thus, one can say that the party has direct access to taxes collected in those munici­palities.

The financial sanctions on Hezbollah increased its voracious appetite for public funds. The party relies first on public cover for its alleged smuggling activi­ties. Knowing that it will not be bothered, it uses a wide network of all kinds of business connec­tions for its supposed illegal commerce. Second, the party will do whatever it can to get its share of public funds as a major party in the government and the parlia­ment. Third, there will always be Iranian financing.

The US sanctions will be slow and gradual in coming and will touch all of Hezbollah’s allies. The Trump administration’s message to Hezbollah is clear: The easy times enjoyed under the previous administration are over.

The talk about US sanctions coincided with two incidents. The first was the strong confron­tation in parliament between Hezbollah and the Free Patriotic Movement about the election law. The latter is unofficially accusing the former of purposely hamper­ing its vision for the law. The second incident involved violent confrontations between the Amal Movement and Hezbollah in villages on the Israeli border.

Some observers have seen in these incidents implicit messages from the Free Patriotic Movement and the Amal Movement. They want to distance themselves from Hezbollah but will that be enough to spare them from US sanctions?