Sanctions bite into Hizbullah's revenue stream

International sanctions on Hizbullah, supported and enforced by Lebanese banks, have triggered a financial crisis for the party, experts tell Al-Mashareq.

The Hizbullah International Financing Prevention Act of 2015 (H.R. 2297), passed by the US Congress, has dealt a severe blow to the group's finances, they said.

Hizbullah leader Hassan Nasrallah has downplayed the impact of the sanctions, claiming in a June 2016 speech that "as long as Iran has money, we will have money ... no law will prevent us from receiving it".

But despite his defiance, some accuse the party of being behind the June 12th, 2016 bombing of BLOM Bank's Beirut headquarters, Change Movement head Elie Mahfoud told Al-Mashareq.

The attack was widely viewed as an attempt to admonish the banking sector for its compliance with anti-terrorism financing laws, particularly the imposition of sanctions against institutions that engage in transactions with Hizbullah.

These sanctions had led to the closure of 100 bank accounts linked to party members, Central Bank governor Riad Salameh said at the time.

The bombing intended to send "a message to Lebanese banks", Mahfoud said.

But commercial banks do not engage in politics, he said, adding that they cannot bargain with or appease any party "because Lebanon is subject to strict banking laws and is a signatory to international treaties that it cannot manipulate".

Sanctions reduce revenues

The sanctions have had "a drastic effect on the party’s behaviour", Mahfoud said, praising the Lebanese authorities for their handling of the sanctions.

"I cite as an example the insistence on renewing the term of Central Bank governor Riad Salameh, who has experience and credibility with the international community, and specifically international banks and stock exchanges," he said.

After the issuance of the Hizbullah International Financing Prevention Act of 2015, he said, Salameh issued a directive affirming the commitment of Lebanese banks to implement the sanctions.

"Hizbullah knows that neither Lebanon's Central Bank governor nor Lebanese banks can ignore the US law, and the banks will be forced to refrain from dealing with any figure affiliated with Hizbullah," Mahfoud said.

The financial sanctions against Hizbullah have reduced the revenues coming in to the party, he said.

This is a result of the severe restrictions on funds coming in to the party from abroad and fears inside Lebanon that those dealing with the party will be accused of money laundering and placed on the list of terror financiers, he said.

Mounting financial difficulties

In an April 28th report, German newspaper Die Welt describes the mounting financial difficulties Hizbullah is facing.

These have forced the party to increasingly rely on illegal activities to raise funds, including money laundering, drug smuggling, counterfeiting, as well as through its substantial property holdings, the newspaper said.

While the party struggles to address its financial crisis, its decision to withdraw from the eastern mountain range on the Lebanese-Syrian border has increased speculation about how it relates to reducing the party's expenditures.

Political analyst Ahmed Ezzeddin drew a link between the party’s withdrawal from the eastern mountain range and the depletion of its resources.

"Naturally, Hizbullah, which has been fighting for five years [in Syria], incurred considerable expenses related to both those who died and were wounded in battle, in addition to the financial cost of the war," he told Al-Mashareq.

"However, there is no doubt that Hizbullah’s ongoing war in Syria, especially as it has expanded from the Syrian north to the southern Syrian-Lebanese border, requires additional fighters," he added.