One of the biggest tasks for new Lebanese President Joseph Aoun will be to cut off the flow of cash from Iran to Hezbollah, which is the source of 90% of the Shiite terrorist organization's budget, and according to the Lebanese army's intelligence service is close to $1 billion a year. The rest comes from illegal activities such as cocaine trafficking, or from charitable institutions operated by Hezbollah.
Hezbollah's financial activity base was and remains, despite the Israeli attacks during the war, the Al Qard al-Hassan banking association. The financial institution, which is not connected to the SWIFT system, operates about 30 branches in Shiite population centers, about half of them in Beirut. The association allows customers three types of accounts: basic, a donation account for wealthy people, and a social cooperation fund. The organization, which in practice acts as a bank, provides interest-free loans in exchange for collateral that range from gold to third-party guarantees.
According to the Foundation for Defense of Democracies (FDD), a US think tank that focuses on foreign policy and national security, the volume of loans provided by Al Qard al-Hassan grew from about $76.5 million in 2007, the year after the Second Lebanon War, to about $480 million in 2019. The total amount of activity from the network since opening in 1983 until 2019 is estimated at about $3.5 billion. The use of US dollars is intentional because it ensures protection from the erosion of the Lebanese pound and perpetuates a situation in which Hezbollah operatives receive salaries that are ten times higher than soldiers in the Lebanese army.
The pursuit of cash
The main challenge for Al Qard al-Hassan is that its activities are based on cash. Hezbollah suffered severe blows both from the actual damage to them in Lebanon and from the fall of the Assad regime, which had allowed Iran to make Syria the focus for the flow of funds to Hezbollah. Israel's Ministry of Defense recognizes that Hezbollah has adopted two methods of obtaining cash that were less significant until the war: managing large projects in areas such as supermarkets and construction developments, as part of a long-term strategy to increase economic "independence," and Iranian diplomats who arrive at Beirut airport with suitcases of cash.
According to a report on Lebanese TV station Al Jadeed, a week and a half ago local security forces, in a rare incident, detained an Iranian diplomat at Beirut airport to inspect his baggage. This move is in addition to the long-standing activity of the Intelligence Agency and the Mossad against Al Qard al-Hassan, which used private accounts in banks that allowed the use of SWIFT for transfers, withdrawals, and then deposits with the help of the organization's employees in its reserves. This monitoring led to US sanctions, which almost completely strangled Hezbollah's connection to the SWIFT international clearing system.
Those senior Hezbollah figures who have survived are already developing rehabilitation plans with the help of Al Qard al-Hassan. According to a report in Asharq al-Awsat, Hezbollah has allocated about a $1 billion to aid Shiite families affected by the war, with each of them receiving $12,000 - a large amount in Lebanese terms. This is partly because the Shiite community opened its doors to Hezbollah's terrorist activity, including turning rooms into launcher or weapons depots.
Despite the challenges, the IDF expects that due to the significant cash reserves with which Hezbollah entered the war, the terrorist organization can function without a regular cash supply for several more months. The period of time will be affected by the fact that Hezbollah's expenses have soared, as reconstruction needs have been added. So far, no country has volunteered to provide reconstruction funds. Lebanon has already issued construction tenders, and in the absence of major international players, those who are awarded these projects are companies linked to Hezbollah. The proliferation of projects led by such companies as part of the reconstruction plans will deepen the grip of the terrorist organization and Iran - instead of distancing it, but Washington has not yet acted on the issue.
Turkey enters the fray
The latest player to become more central in the fight against Hezbollah is Turkey, although the Nagel Commission recently warned that Israel and Ankara could find themselves on a collision course.
In one of Israel’s attacks on Hezbollah’s financial targets, a branch of a currency exchange in Lebanon was attacked - and the security establishment understands well that if they found one, then there are many. Therefore, Israel is working to prove the connection of currency exchanges in Lebanon to Hezbollah activity, and to bring about US sanctions on those institutions.
Published by Globes, Israel business news - en.globes.co.il - on January 14, 2025.
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