Hit Hezbollah in the Wallet

Women wave Hezbollah flags as they watch Lebanon's Hezbollah leader Sayyed Hassan Nasrallah appear on a screen during a live broadcast to speak to his supporters at an event marking Resistance and Liberation Day in the Bekaa Valley, Lebanon

From Latin America to Tehran, there are plenty of steps U.S. policymakers can take today.

Third, it’s time to end the European Union’s fiction that Hezbollah can be divided into a “military wing” and a “political wing.” Though the EU has only sanctioned the “military wing,” the two wings are one and the same. As Hezbollah’s second in command has said, “We don’t have a military wing and a political one.” There are hundreds of active Hezbollah members in Germany alone who may be raising funds for the group. U.S. diplomats need to raise and push this issue again, at the highest levels of U.S.-EU relations. Further, the United States should force a vote on sanctioning Hezbollah at the UN Security Council, if only to embarrass Russia or any other country that deigns to block such a commonsense measure.

Lastly, any effort to cripple Hezbollah’s finances will run through Tehran. Iran provides an estimated 70 to 80 percent of Hezbollah’s budget, largely sent to the group “in suitcases, not through banks,” flown to Lebanon or Syria, where Hezbollah operatives drive it across the border into Lebanon. A Hezbollah counter-finance strategy without addressing Iran is like devising a basketball strategy to beat the Cleveland Cavaliers without stopping LeBron James.

To target Hezbollah’s funding, lawmakers need to understand that most of Hezbollah’s income comes from parastate entities controlled by Iran’s supreme leader, Ayatollah Ali Khamenei. Khamenei skims off the top of these companies’ revenue to fund Hezbollah. Thus, Iran’s funding for Hezbollah doesn’t show up as a line item in the country’s budget.

Iranian funding has ebbed and flowed over time, largely due to two factors: oil prices and international sanctions. Washington’s hands are not bound. The Joint Comprehensive Plan of Action (JCPOA) dealt only with nuclear proliferation, and thus secondary sanctions levied because of the country’s support for terrorism are fair game. Secondary sanctions would apply financial restrictions to any non-American firm doing business with Iran that also wants to work with U.S. entities. Knowing that the supreme leader is drawing from entities he controls to fund Hezbollah, the United States should invest in better understanding these cash flows, and should then directly target Hezbollah by imposing secondary sanctions on the entities providing the funds from which the supreme leader is drawing.

The first of the Khamenei-controlled conglomerates to be investigated should be the Execution of Imam Khomeini’s Order (EIKO). EIKO’s expansive business holdings were worth an estimated $95 billion in 2013, and secondary sanctions on the entity were lifted as a sweetener for Khamenei to agree to the JCPOA. To avoid multilateral pushback, the United States should not sanction EIKO in its entirety, but should rather issue secondary sanctions against the subsidiary companies providing the money Khamenei is using to fund Hezbollah.

Hezbollah is a dangerous Iranian proxy that traffics drugs, supports the murderous Assad regime and threatens the well-being of Lebanon itself. Destroying the group’s ability to fund its operations inside and outside of Lebanon is of paramount importance to ensuring regional stability. Bankrupting the group is in the U.S. national interest, and should be embraced by both sides of the aisle in Congress. By pursuing a four-step approach to disrupting the group’s funding, the United States can help stabilize the region and possibly prevent another war.

Yaya J. Fanusie is the director of analysis at the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance, where Alex Entz is a research analyst. Follow Yaya on Twitter @SignCurve, and @FDD.

Image: Reuters


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