Israeli airstrikes on Dahieh, Beirut credit: Screenshot

The Israel Defense Forces (IDF) has this week launched extensive attacks on Hezbollah’s financing pipeline with an emphasis on Al-Qard Al-Hassan, which helps to finance the Lebanese Shia organization’s terror activities. The Lebanese media has reported attacks over the past day with images of the destroyed Al-Qard Al-Hassan banking branch in the Dahieh neighborhood of Beirut. Next to the bombed bank stands the statue of Qasem Soleimani, the former commander of Iran’s Quds Force, who was assassinated by the US in 2020.

Although many experts in Israel agree that the attack has been a worthwhile endeavor and perhaps should have been undertaken before, Dr. Udi Levy, the former head of the Mossad’s Economic Warfare Division and today a Senior Researcher at the Jerusalem Institute for Strategy and Security insists that there will be no immediate economic damage to Hezbollah.

Levy explains. “The money hasn’t been there for a long time. Hezbollah withdrew the money and assets and transferred them underground. So the money has probably not been harmed.” However, the damage according to Levy is found among other things in the message that the attack conveys. The message is, “We will damage your softest underbelly – the money.” Without it Hezbollah cannot rehabilitate itself.”

Levy also points out further damage that has been done. “The critical point from the terrorist organization’s point of view is that the IDF attack is expected to cause panic among the Shia population, whose assets were deposited in Al-Qard Al-Hassan. People can now be expected to demand the withdrawal of their funds, and this may result in severe damage to Hezbollah, which is already in dire straits.” He adds, “The Iranians understand that without money, Hezbollah will lose its grip on Lebanon, which is why Supreme Leader Ali Khamenei issued a religious ruling two weeks ago, according to which half of donations should go to Lebanon and Hezbollah.”

$480 million in loans

Al-Qard Al-Hassan is not a bank in the classic sense of the word. It was founded in 1982 by Hezbollah itself. It provides customers three different types of accounts, and even gives interest-free loans, in exchange for collateral (such as gold). However, for 17 years the bank has been subject to US sanctions, which prevent direct access to the global banking system.

These sanctions have not prevented the bank from prospering. According to the Foundation for the Defense of Democracies (FDD), the volume of loans extended by Al-Qard Al-Hassan grew from $76.5 million in 2007 to $480 million in 2019. The total activity of the banking association until 2019 is estimated at about $3.5 billion. According to estimates by Israel’s Ministry of Defense, Hezbollah stored hundreds of millions of dollars in some 31 branches of the association.

How has the terrorist organization managed to do this, despite the sanctions? Al-Qard Al-Hassan operates “private” accounts in full-fledged Lebanese banks. When Iran wants to transfer money to the terrorist organization and its people, it does so through accounts in the various Lebanese banks. There, an Al-Qard Al-Hassan employee working secretly, withdraws the money, and deposits it in the association. The US Treasury Department is aware of this method of operation, and has imposed personal sanctions on six employees of the Hezbollah association, noting that the six transferred over $500,000 within a decade using this method.

“Israel must continue targeting the money, and convey clear messages to the Lebanese banks, not to cooperate with Hezbollah,” Levy says. “During my time, I put pressure on the Americans that they must put pressure on the Lebanese banks. Now, bankers who helped Hezbollah are fleeing Lebanon.”

“A blockade should be imposed on seaports and airports”

Hezbollah’s annual budget is about $1 billion, with about 70% coming from Iran and about 30% from illegal activities, most of which are worldwide and based on drug trafficking. These activities are undertaken in various places, mainly in Syria, in cooperation with the Assad regime, in Latin America and West Africa.

An investigation by French newspaper “Le Monde” published last week found that Al-Qard Al-Hassan is used by the Shiite terrorist organization, among other things, to raise funds from Lebanese communities in the Ivory Coast and Guinea – based on money laundering from drug sales. According to Levy, the lion’s share of Hezbollah’s drug industry money in West Africa and Latin America arrives in Beirut through the air and sea ports.

“Israel must impose a blockade on seaports and airports,” he says, “and this would make possible the economic collapse of Hezbollah. If Israel also carries out a symbolic action of attacking Hezbollah’s drug factories in southern Syria, it will also serve as a message to Jordanians and Saudis that we are helping them and directly dealing with the money that flows from their countries to the drug industry. If this happens, a new reality will be created that conveys a clear message to the Iranians: your economic system is in our crosshairs.”

“Even if we did not hit the money, the message is clear”

The IDF attack on Hezbollah’s financial system was carried out a few hours before US envoy Amos Hochstein returned to Beirut, with Israel’s demands for an end to the fighting in Lebanon. According to a report in the “Asharq Al-Awsat” newspaper, which is published in Arabic in London, Hochstein will present Israel’s demands for an end to the fighting through diplomatic channels and at the heart of these is allowing Israel freedom of action against a renewed strengthening of Hezbollah in the border region.

According to Levy, Israel now has a rare opportunity to create a significant loss of confidence in Hezbollah for the Lebanese population, including the Shiite population. “The terrorist organization felt comfortable after Israeli attacks to send property taxes to Shiite homes that were destroyed, and to provide aid, but the moment a financial problem is created they lose their hold on the population.”

According to Levy, the move against Al-Qard Al-Hassan also contains a message to Iran. “Damage to strategic economic assets is of grave significance. Even if we did not achieve damage to the money, the message is clear – and economics is psychology in the end. Therefore, it is expected that there will be an uproar among the Shiite population regarding money with Al-Qard Al-Hassan.”

Published by Globes, Israel business news – en.globes.co.il – on October 21, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

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