Articles

US Financial War on Hezbollah: Round II

By Elie Joe Dergham

Ever since the former and current lawmakers in United States of America passed and signed the law of Hezbollah’s International Financial Prevention Act (HIFPA), the Lebanese Party of God has been pressured financially by the United States. Over 100 Hezbollah related accounts were closed and reported to US banking authorities. Special Bank Du Lebanon (BDL) procedures were introduced in order to show the Lebanese Central Bank authorities’ seriousness in implementing the new American regulation. These procedures enraged Hezbollah and a mysterious bombing occurred against a main Lebanese bank (Blom Bank) in Hamra region.[1]

Moreover, one of Donald Trump’s main policies when running for election was to contain and isolate the threat of the Islamic state of Iran and its proxies in the region. What are the new measure the US will implement in order to pressure Hezbollah financially and what will be the future steps taken?

On the 29th of June, the bill “US House. H.R.3118 – Iran and Hezbollah Western Hemisphere Prevention Act of 2017” was introduced by Representative Jeff Duncan into the house of representative in the US congress. Hezbollah and Iran’s presence in the western hemisphere specifically South America can be dated back to the early 1980s, when the Lebanese internal conflicts drove many Lebanese Shiite to immigrate to South America.[2]

Some of these immigrants stayed connected to their culture, norms, and heritage instead of integrating into the South American community that they immigrated to.[3] One example is the Groupo Escoteiro Libanese Brasileiro (GELB), or the Lebanese Brazilian Scouts Group attached to Shi’a mosques and communities in numerous Brazilian cities. GELB has the outward appearances of youth movements, but is actually the mirror image of Hezbollah’s Mahdi scouts. [4] This gave Hezbollah the proper breeding ground in order to have roots in Latin America. US authorities has highlighted and pointed out the Tri Border Area (a region that connects the border of Paraguay, Brazil, and Argentina together) as a region with high probability of terrorist activities.[5]

The bill proposed discusses Hezbollah and Iran’s criminal activity like money laundering and weapon dealings in South America. However, the bill didn’t mention how Hezbollah and Iran are using their position in South America to access the US financial system through South American Banks. One example of this access was discussed in the 2009 congressional testimony. The financial aspects of the penetration of Iran in Venezuela and elsewhere in the hemisphere have already been outlined which gives Iran the ability to use the Venezuelan banking system to evade financial sanctions declared by the United States, the European Union and the United Nations. The Treasury Department has sanctioned the Iranian banks and various individuals but so far has not sanctioned any Venezuelan bank. This is odd because Iran makes extensive use of the Venezuelan banking system as the congressional testimony experts have identified a number of bank such Banesco Panama, Banco Occidental de Descuento, Banco Caroni and Banco Guyana being some of the bank Iranian owned entities use in order to evade authorities. The availability of these financial institutions for Iranian use is advantageous to Iran for obvious reasons.[6] The flow of the money can be tracked Venezuela back to places like Syria, Iran, and Lebanon. One known link is Tarek El Aissami, former interior minister and current Venezuelan Vice President. Aissami provided Venezuelan passports and special clearance to individuals in order to travel on flights from Venezuela to Iran that made stops in Syria.[7] These flights called “Aeroterror” carried drugs, weapons, and cash according to US government officials.[8] Furthermore, international organizations have contributed to the closing of ties between Hezbollah, Syria and Iran. Venezuela’s Federal of Venezuelan-Arab Entities (FEARAB) is headed by Mr Adel El Zebayar. Mr. Zebayar is an important figure in building Venezuela’s relationship with Middle East regimes including Syria and Iran.[9] Furthermore, Raymundo Kabchi (Raymond Kabchi) is a Venezuelan Lebanese lawyer for many important firms in Venezuela. Furthermore, Kabchi was one of the closest advisors of the Middle East foreign affairs to the former president Hugo Chavez.[10] Although no action or sanctions were taken by the US authorities, this example shows the possible link between Iran and its proxy Hezbollah to Venezuela.

Additionally, the congress introduced Hezbollah International Financial Prevention Amendment Act of 2017 (HIFPA II) last month. Both House and Senate presented their drafts HR 3329 by representative Edward Royce and S 1595 by Senator Marco Rubio respectively in order to be debated and discussed. Both drafts increase the level of sanctions in order to reach secondary actors and financiers. Furthermore, the drafts request detailed reports about Hezbollah money laundering activities. What is newly requested is a report on combating illicit tobacco trafficking network belonging to Hezbollah. These networks were active in the United States and were providing large funds to Hezbollah. With the congress in their August recess, the drafts are expected to be discussed within the congress once they reconvene in September and the congress may add several more amendments.   

Another law presented to the US House of Representative in Congress is HE. 3342. Sanctioning Hezbollah’s Illicit Use of Civilians as Defenseless Shields Act (H.R.3342) is a new type of law targeting Hezbollah. This draft finds that Hezbollah has been using civilians as human shields in their armed conflicts. One prime example the draft stated is that throughout the 2006 conflict with the State of Israel, Hezbollah forces utilized human shields to protect themselves from counterattacks by Israeli forces, including storing weapons inside civilian homes and firing rockets from inside populated civilian areas. This law will allow the US treasury to expand sanctions to individuals or entities that will put civilians in harm’s way in Lebanon or abroad in places like Syria or Iraq.

All the above brings up several conclusions and questions. The new bill HR – 3118 gives the US authorities specifically the US Treasury Department the option to sanction financial entities such as banks in Latin America because of their engagement with Hezbollah related entities. Additionally, this link might indirectly threaten the Lebanese banking system. Although Lebanese banks might not have direct relations with the Venezuelan banks however many transfers wire and funds are received from Latin America. Remittances from Lebanese Expatriates reached $ 8.9 billion in 2014 with around $ 827 million received from South America.[11] One may ask how much of these funds are received from Hezbollah related individuals or entities. Another question that must be monitored furthermore is the possible US designation of Hezbollah as a “transnational criminal organization”. If the US moves forward on this, the US authorities will have more authority and legality in prosecuting Hezbollah members under the RICO[12] laws. Under the RICO laws, US agencies such as the Drug Enforcement Agency (DEA) will be able to conduct arrest and sting operations in US and abroad with more legitimacy. One such example was a drug money scheme that was halted by the US in coordination with several countries including France, Germany, Italy and Belgium[13].  In addition, the new draft in HR 3342 allows the US Treasury to target individuals and entities like the social network of Hezbollah that are part of the social services the party provides for their supporters. These social networks that were until today off the US sanction list will become under the direct scope of US sanctions with the passage of this new law. With the growing tension between Iran and the new US administration, will the Trump administration explore and possibly use this option to increase pressure on Iran especially after reports and congressional hearing testimony highlighting the fact that the Obama administration stopped probing these ties in order to preserve the Iranian deal?[14] There are now 5 draft laws or resolutions in the US congress concerning Hezbollah and Iran. The only thing that is sure is that the pressure on Hezbollah and Iran will grow however no one is certain what the consequences of this pressure will be.

[1] Azakir, M. (2016). Bomb Blast in Central Beirut aimed at Bank, Reuters, retrieved from: http://www.reuters.com/article/us-mideast-crisis-lebanon-idUSKCN0YY0UK

[2] Levitt, M. (2013). Hezbollah The Global Footprint of Lebanon’s Party of God, Hurst Publishers

[3] Ibid

[4] Ottolenghi, E. (2016), The Enemy in our Backyard: Examining Terror Funding Streams from South America, retrieved from: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=400715

[5] Ibid

[6] Congressional Testimony – IRAN IN THE WESTERN HEMISPHERE 2009

[7] Lopez, L. (2017). A Suspected Terrorist and Drug Trafficker just became Venezuela’s Vice President, Business insider, retrieved from: http://www.businessinsider.com/new-venezuela-vice-president-has-ties-to-iran-hezbollah-2017-1

[8] Ibid

[9]   Kuri, M. (2016). Latin America Foreign Policies towards The Middle East: Actors, Context, and Trends, Palgrave Macmillan US

[10] Ibid

[11] Cuevas, H. (2015). LEBANON: Remittance Inflows & Outflows, IMT conferences, retrieved from: http://imtconferences.com

[12] Rackteer Influenced and Corrupt Organizations

[13] Browne,R (2016). DEA Hezbollah drug money scheme disrupted, CNN, retrieved from: http://edition.cnn.com/2016/02/01/politics/hezbolla cocaine-drug-money-arrest-dea/index.html

[14] Martin, S. (2017). To Preserve Iran Deal Obama Stopped Probe Into Venezuela’s tie to Hezbollah, Panama Post, retrieved from: https://panampost.com/sabrina-martin/2017/07/11/venezuelas-ties-to-hezbollah/