How US Sanctions are Impacting Hezbollah

Pressures Against Tehran’s Main Proxy Could Push the Group to Its Limits 

Sanctions that the United States re-imposed on Iran have been more effective than expected, according to top US administration officials. These sanctions are not only causing Iran’s own economy to suffer, it has also affected Iran’s main proxy: Hezbollah. With HIFPA 2 (Hezbollah International Financing Prevention Amendments Act) being amended to include associated and more vigorous reporting, additional treasury sanctions against Hezbollah, and sanctions against the Iranian regime, Hezbollah is starting to feel the pressure. 

The United States’ policy has shifted recently to focus more on Iran and its proxies now that ISIS has been significantly weakened, and its caliphate defeated. The new policy – although focused on sanctions – entails other mechanisms, and is directed at hurting Iran and its proxies financially. 

A WAR OF SANCTIONS

After the first wave of sanctions, which ended on Aug. 6, the U.S. has put sanctions on the Iranian government to purchase or acquire U.S. dollars. This first wave also included sanctions on Iran’s trade in gold and precious metals, and in the supply or transfer of aluminum, steel and coal.

Sanctions were also placed on "significant transactions related to the purchase or sale of Iranian rials," in addition to sanctions on Iran’s automotive sector.

However, the second wave which will take effect on November 4 will be most painful. Iran’s port operators, shipping and shipbuilding sectors will be limited. The National Iranian Oil Company (NIOC) will also see sanctions along with petroleum-related transactions that include the purchase of petroleum, petroleum products, and petrochemical products from Iran.

Along with the impact on Iran's energy sector, sanctions will also affect transactions between foreign financial institutions and the Central Bank of Iran.

On a related level, sanctions against Lebanese Hezbollah have increased to unprecedented levels. Only last week, the US Treasury Department has imposed sanctions on one person and seven Lebanese companies on charges of financing Hezbollah. U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) accused Mohammad Abdallah al-Amin of “assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, [Adham] Tabaja,” an alleged Hezbollah financier.

The companies include: Sierra Gas SAL Offshore, Lama Foods SARL, Lama Foods International Offshore SAL, Impulse SARL, Impulse International SAL Offshore, M. Marine SAL Offshore and Thaingui SAL Offshore.

Earlier in May, the US Treasury imposed new sanctions on Hezbollah Secretary General Hassan Nasrallah and other leaders of the organization. This was significant because the Treasury has rarely targeted political officials but rather focused on financiers and business associates. Many saw this as a political message with a clear warning to Hezbollah’s political arm, as HIFPA 2 was being prepared and policy shifts were being discussed. 

In the same month, the Treasury Department also imposed sanctions on Muhammad Qasir, a Hezbollah official, as well as the governor of the Central Bank of Iran, three others, and an Iraqi-based bank.

Not only do these sanctions cripple Hezbollah’s financial movements, they mainly shatter the financial bond that Hezbollah shares with its business community; that is, Shia businessmen who had long-term partnerships with the group. Today, many of these businessmen are wary of maintaining their relationship with Hezbollah, fearing being sanctioned themselves. 

Although Hezbollah needs them today more than ever, these businessmen prefer to protect their money than sacrifice it to the Resistance. The days of free donations are over and the Shia community understands this clearly. 

In addition to the months-long protests in Iran over deteriorating economic conditions and charges of corruption and mismanagement, Iran’s financing of its proxies will also decrease. Signs of this are felt deeply with the Shia community in Lebanon, where reports of salaries cutbacks are increasing, making it more difficult for Hezbollah to reassure financial stability or make any promises. 

In addition, if the Senate approves the part of HIFPA 2 that includes the “reporting on Hezbollah’s associates,” Hezbollah might start also losing its allies or the trust of some of them. The US has so far only targeted Hezbollah, its officials, and financiers. However, the word “associates” is stretchy enough for the US President to go after Hezbollah’s allies, such as the Amal Movement or the Aounist Party (also known as the Free Palestine Movement, or FPM). 

Without Hezbollah’s financial insecurity, and with fear of sanctions, these allies will start reconsidering this alliance. But there’s more. 

THE ISRAELI THREAT 

Israel has been targeting Iran and Hezbollah in Syria for a few years now, and it seems an unspoken understanding has developed whereby Israel bombs Hezbollah’s missile depots and factories in Syria – not in Lebanon – and Hezbollah won’t retaliate. This has worked for a while, until Hezbollah started moving many of its missiles from Syria to Lebanon.

In a surprising presentation, and speaking at the UN General Assembly on September 27, Israeli Prime Minister Benjamin Netanyahu accused Hezbollah of building missile production sites in the Ouzai neighborhood of Beirut. The group reportedly intends to use these underground facilities—located in the middle of an urban area near mosques, homes, schools, and the international airport—to convert regular missiles into more accurate precision weapons. 

The Israeli military also released a video and photos of three Beirut sites reportedly established to improve the precision of Hezbollah’s missiles—a goal that the prime minister tied directly to Iran.

Israel might not use this revelation to start a war against Hezbollah in Lebanon, as a war in Lebanon is not Israel’s priority. However, if Hezbollah continues to move and convert its missiles in Lebanon, Israel might not have a choice but to bomb these sites, even if they go for surgical attacks. 

This possibility – stemming from the message behind Netanyahu’s revelation – is not sitting well with Hezbollah. Yes, it knows that Iran has transformed Lebanon into its regional operation room, and yes, it knows that their regional role involves many risks and compromises, but it’s also well aware that another war with Israel in Lebanon is not going to end with another ”Divine Victory”. 

Hezbollah does not want to fight Israel in Syria, and it won’t, but it specifically doesn’t want to fight Israel in Lebanon. The arsenal it got from Iran and stored in Lebanon so far could be its last, and it can’t afford to lose it; otherwise, the main power of these weapons, which is deterrence, will be eliminated. 

Also, Hezbollah can’t afford to deal with hundreds of thousands of Shia refugees with the current financial crisis its going through. In 2006, many of these refugees went to Syria, and today this is not an option. Others moved to other Lebanese areas, and that today is complicated, given that 1,500,000 Syrian refugees are taking these spots in Lebanon. As such, if another war is to happen, Hezbollah will have to deal with a major refugee crisis. 

Moreover, post 2006, reconstruction was not an issue, as money came from everywhere, including the Gulf states. But, these previous donors might not be as willing to send money to Hezbollah or even the Lebanese government for reconstruction, if this funding is going to empower Hezbollah as it did in 2006. 

With all these pressures and more on the way post November 4, 2018, Hezbollah might find itself in a very tight spot where its support base will push it to the limits. Old methods of pressuring Hezbollah while making deals with the mothership in Tehran failed. It is becoming more apparent that Hezbollah is part of – not a proxy of – Iran’s Revolutionary Guards Corps, and if this entity is not targeted, Hezbollah will never be weakened.


Subscribe to the discussion