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Alex Rowell

Hezbollah after the sanctions

Tehran’s huge financial windfall stands to help the Party of God, though continuing US sanctions will seek to counter this

AUSTRIA, Vienna : (From L to R) European Union High Representative for Foreign Affairs and Security Policy Federica Mogherini, Iranian Foreign Minister Mohammad Javad Zarif, Head of the Iranian Atomic Energy Organization Ali Akbar Salehi, Russian Foreign Minister Sergey Lavrov, British Foreign Secretary Philip Hammond and US Secretary of State John Kerry pose for a group picture at the United Nations building in Vienna, Austria July 14, 2015

Almost exactly one year ago, reports began emerging that Hezbollah had been forced to cut back on a range of expenditures in light of unprecedented financial troubles. Driving this austerity program, the reports said, were three fundamental strains on the economy of Iran, the Party’s chief sponsor and patron: expanding military activity, whether direct or by proxy, across the Middle East; a nosediving oil price; and severe international sanctions imposed for Tehran’s alleged pursuit of nuclear weaponry.


Today, oil may have tanked even further to a thirteen-year-low of $27 per barrel, and the Islamic Republic may not have scaled back any of its ambitions in the region (or beyond), but on the third front, it has just been thrown a very substantial lifeline. Saturday marked the so-called ‘Implementation Day’ of the Joint Comprehensive Plan of Action, also known as the Iran Deal, putting into motion the lifting of almost all sanctions on Tehran, thereby freeing tens of billions of dollars of frozen Iranian funds and, potentially more importantly, opening up the Iranian economy to a future of lucrative business in European and other global markets.


Few doubt that this financial windfall for Iran will swell the coffers of its regional paramilitary subsidiaries, including Hezbollah. US President Barack Obama himself has admitted as much, saying in July, “Do we think that with the sanctions coming down, that Iran will have some additional resources for its military and for some of the activities in the region that are a threat to us and a threat to our allies? I think that is a likelihood […] They are currently supporting Hezbollah […] so can they potentially try to get more assistance there? Yes.”


While it’s impossible at this stage to know exactly how much Hezbollah stands to receive, and for what specific purpose – the Iranian leadership itself may not even have decided yet – still there are certain bases on which educated guesses may be made.

 

 

Buying back support


When the Party’s financial straits first came to light last year, they were most manifest in the spheres of socioeconomic provisions to the broader base of supporters and low-ranking members, as opposed to the military and other essential activities of its operational core. Reductions were made in things like stipends to non-Party political allies, medical benefits for relatives of fighters, and salaries for employees of Party-affiliated companies. Accordingly, the expectation of analysts with whom NOW spoke was that it would be in these same areas that the bulk of any newly-arriving money from Iran would be spent first.


“I would think that the priority would be on bolstering the social welfare networks, salaries, payments to families of martyrs, the hospitals, the schools, that kind of thing,” said Nicholas Blanford, author of Warriors of God: Inside Hezbollah’s Thirty-Year Struggle Against Israel and a NOW contributor.


While these may appear of lesser significance than the direct military effort, they are in fact of essential importance in maintaining the political sympathies of the Party’s mostly Shiite Muslim constituency, said Blanford – not least at a time when high casualty rates from the war in Syria have stirred malcontent at the grassroots level. One recent report claimed to quote the wife of a gravely wounded Hezbollah fighter, complaining bitterly: “A misery afflicts the Shia; it used to come from Israel, now it comes from Syria […] I want to understand, are the people of the South destined [permanently] for subjugation and tears and grief? What’s our relation to Syria? We have enough [problems] already. The Prophet Muhammad went to Syria and returned, but Sayyid Hassan [Nasrallah] sent us there and kept us there in torment!”


“One of the important things is that the conflict in Syria is putting strains on the support base,” Blanford told NOW. “Whilst they continue to broadly support Hezbollah’s aspirations and goals in Syria, nonetheless this is a war that is dragging on, with no end in sight, and the body bags continue to come back. Money in terms of compensation and financial assistance can go some way to maintaining that grassroots support for the Party and for its activities in Syria.”


All of which is not to say the Party would necessarily direct the entirety of any cash bonus on strictly civilian endeavors. Washington Institute analyst Dr. Matthew Levitt, author of Hezbollah: The Global Footprint of Lebanon’s Party of God, wrote in September that, “A newly enriched Hezbollah would be more aggressive at home and abroad, challenging less-militant parties across the Lebanese political spectrum and boosting its destabilizing activities outside of Lebanon.”

 

 

A countermove?


At the same time as the international community, at the US’ initiative, is lifting sanctions on Iran, Washington is nonetheless pressing them down tighter than ever on Hezbollah specifically. As NOW reported last month, on 18 December President Obama signed into law the Hezbollah International Financing Prevention Act, imposing “the toughest American sanctions yet on Hezbollah, any organization or individual affiliated with it, and any financial institution anywhere in the world that ‘knowingly facilitates a transaction’ for them.” Less than a month later, on 7 January, the Act was put to its first use when the US Treasury Department sanctioned a Lebanese national, Ali Youssef Charara, for allegedly financing the Party via his Lebanon-based telecommunications company.


The case of Charara illustrates how continuing US sanctions on Hezbollah may to some extent counteract the Party’s gains from a wealthier Iran, according to Lebanese analyst Ali al-Amin. Charara was an example, said Amin, of a class of businesspeople who worked with Hezbollah not, or not only, out of Party loyalty, but also simply to turn a profit.


“Some businessmen deal with Hezbollah economically not for love of the Party, but […] to achieve their own interests,” Amin told NOW. “But with the risks such sanctions will create, these businessmen will have no choice but to sever their financial relations with the Party.”


Blanford agreed that sanctions were liable to disrupt Hezbollah’s income to a certain extent.


“Hezbollah is so big now, such a huge organization with multiple revenue streams from all over the world, that one would imagine some of these revenue streams are going to end up being vulnerable to being closed off by the Americans and whomever else,” he told NOW.


At the same time, however, the Party’s expansion over the decades has made it that much harder to target all of its pecuniary supply routes, Blanford added.


“They don’t rely solely on Iranian funds [anymore],” he said. “Now they’ve got their own income generating, here and around the world.”


“Basically, they’ve diversified their portfolio.”

 

Amin Nasr contributed reporting.

Iran stands to gain tens of billions of dollars from the deal, implemented Saturday (AFP PHOTO/POOL/JOE KLAMAR)

Few doubt that this financial windfall for Iran will swell the coffers of its regional paramilitary subsidiaries, including Hezbollah. US President Barack Obama himself has admitted as much"