Hizbullah imports Iran steel in breach of sanctions

By Nohad Topalian in Beirut


An employee works at the Iran Alloy Steel Company (IASCO) plant in the central Iranian city of Yazd on April 6th, 2015. [Atta Kenare/AFP] 

Hizbullah has been flooding the Lebanese market with Iranian steel brought into the country in violation of sanctions to the detriment of local traders and the Lebanese economy, traders and economists told Al-Mashareq.

Hizbullah’s trade in Iranian steel is a new means of financing Iran's Islamic Revolutionary Guard Corps (IRGC), they said, noting that Iranian steel is on the US Treasury Department’s list of sanctioned items.

In early May, the US imposed sanctions on Iranian iron, steel, aluminum and copper, after re-instating sanctions in November aimed at slashing Iran's oil exports, by far its top source of foreign currency.

Revenue derived from the export of these items "may be used to provide funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion", a White House statement said.

"Since the end of January, the markets have been flooded with more than 50,000 tonnes of Iranian construction steel," according to a steel trader in Lebanon, who asked to remain anonymous for security reasons.

"Some of it was brought in directly through the port of Beirut, and some through the [Syrian] port of Latakia and then by land across the Syrian border," he said. "Other quantities were shipped in from Turkish ports after crossing the Iran-Turkey border by land."

Impact on Lebanon

"The cost of construction steel of Iranian origin is lower than the price of steel from other sources, such as Ukraine, Belarus, Greece, Italy and Turkey, by about $110 per tonne," the Lebanese steel trader said.

Therefore Hizbullah's flooding of the Lebanese market with Iranian steel "causes heavy losses for Lebanese traders because they are unable to compete with such a huge difference in price", he said.

Lebanese banks have "warned the steel traders against dealing with Iran, and any trader who deals with and imports steel from Iran risks having his bank accounts closed", said the source.

This has been enforced since the US Treasury’s Office of Foreign Assets Control sanctioned Iranian steel imports, he added.

The import of Iranian steel by Hizbullah and its collaborators violates the recent US sanctions and puts Lebanon at risk, Levant Centre for Strategic Affairs director Sami Nader told Al-Mashareq.

"This places additional pressure on banks at a time when Lebanon is facing a real economic crisis," he said.

Funding for Hizbullah

Hizbullah's import of steel represents "indirect Iranian funding for Hizbullah", Nader said, noting that the Lebanese militia is one of the IRGC's main affiliates.

"The party is once again violating the sanctions imposed on it and on Iran, which found in steel revenues an illegal means to finance Hizbullah," he said.

"Hizbullah needs money, as does Iran, which has seen the exchange rate of its currency deteriorate," he said, explaining that the import of Iranian goods to Lebanon, particularly steel, provides it with liquidity in US dollars.

The issue of Iranian steel smuggling to Lebanon, whose broad outlines were revealed recently, "has raised many concerns in Beirut", said al-Joumhouriya economic editor Tony Farah.

"This raises concern because Lebanese banks are compliant with the sanctions imposed by the US and refuse to open letters of credit for any trader who wants to import from Iran, or even from Syria," he told Al-Mashareq.

It has become clear that the financing of the import of Iranian steel is done in cash outside the framework of the Lebanese banking system, he said.

"It is known that Hizbullah receives funding and makes payments without going through the banking system," he added.

The export of Iranian steel appears to be "a new way used by Iran to fund its ally Hizbullah, where individuals working with the party receive the steel and sell it to small traders or even directly to consumers and get paid in cash", he said.

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