The ru­mors were true

US tar­gets Hezbol­lah fi­nances with new sanc­tions law

Executive Magazine - - Front Page -

In late July, the lat­est round of Amer­i­can leg­is­la­tion tar­get­ing Hezbol­lah ar­rived, de­spite Le­banese gov­ern­ment and bank­ing of­fi­cials down­play­ing ru­mors of it just a few months ago, as re­ported. The Hizbal­lah In­ter­na­tional Fi­nanc­ing Pre­ven­tion Amend­ments Act would sup­ple­ment a 2015 law curb­ing the group’s ac­cess to bank­ing sys­tems, and is the lat­est leg­isla­tive ef­fort to freeze Hezbol­lah’s fi­nances.

The United States al­leges that Hezbol­lah op­er­ates global ter­ror­ism net­works and en­gages in crim­i­nal ac­tiv­i­ties, in­clud­ing drug traf­fick­ing and money laun­der­ing. The Party of God, said Pres­i­dent Don­ald Trump in re­marks af­ter a White House meet­ing with Le­banon’s Prime Min­is­ter Saad Hariri on July 25, “is a men­ace to the Le­banese state, the Le­banese peo­ple, and the en­tire re­gion.[...], threat­ens to start yet another con­flict with Is­rael, ...[and] is also fu­el­ing the hu­man­i­tar­ian catas­tro­phe in Syria.”

The Amer­i­cans seem to be ratch­et­ing up the pres­sure on Hezbol­lah through law en­force­ment ac­tions and vis-á-vis Iran. But it is Le­banon’s bank­ing sec­tor, and thus its econ­omy, that has lo­cal gov­ern­ment and bank­ing of­fi­cials con­cerned. The forced clo­sure of the Le­banese Cana­dian Bank in 2011 is a not so dis­tant mem­ory and the ques­tion now is what will Pres­i­dent Trump, whose be­hav­ior is viewed as er­ratic and im­pul­sive, do with re­gard to this “men­ace”?

The new leg­is­la­tion ar­rived on Capi­tol Hill as an amend­ment to 2015’s Hizbal­lah In­ter­na­tional Fi­nanc­ing Pre­ven­tion Act (HIFPA). HIFPA was aimed at curb­ing Hezbol­lah’s abil­ity to ac­cess the in­ter­na­tional fi­nan­cial sys­tem and dis­rupt for­eign fi­nanc­ing to Hezbol­lah, that the Amer­i­cans be­lieve flows through Le­banese banks.

The amend­ing leg­is­la­tion would fur­ther re­strict Hezbol­lah’s abil­ity to raise funds and re­cruit, in­crease pres- sure on banks to not do busi­ness with Hezbol­lah, and pun­ish for­eign states for sup­port­ing Hezbol­lah. The leg­is­la­tion was only in­tro­duced to House and Se­nate com­mit­tees at the end of July, but in its cur­rent form it gives the pres­i­dent wide lat­i­tude to sanc­tion any per­son or en­tity he deems sup­port­ive of Hezbol­lah, fi­nan­cially or oth­er­wise, to deny in­di­vid­u­als en­try to the United States, re­voke al­ready-is­sued travel per­mits and visas, and to sanc­tion key fig­ures within Hezbol­lah, or any­one deemed af­fil­i­ated to Hezbol­lah.

It is not clear when Congress will vote on this amend­ment and we do not yet know what sanc­tions might re­sult. If the leg­is­la­tion is passed and signed into law by Pres­i­dent Trump, his ad­min­is­tra­tion could is­sue sanc­tions against Le­banese fi­nan­cial in­sti­tu­tions.

The no­tion stokes fear of past Amer­i­can ac­tions, as one vice pres­i­dent of in­vest­ment bank­ing at a lo­cal bank, who spoke on con­di­tion of anonymity be­cause he was not au­tho­rized to com­ment pub­licly, wrote to Ex­ec­u­tive in an email. “Other than the ef­fect of lower con­fi­dence in the bank­ing sys­tem, which would prob­a­bly be ex­ter­nal rather than in­ter­nal, will we have more cases like the Le­banese Cana­dian Bank which was closed fol­low­ing sim­i­lar sanc­tions?” A se­nior of­fi­cial at Le­banon’s cen­tral bank (Banque du Liban), who also in­sisted on anonymity, told Ex­ec­u­tive in June that he feared a uni­lat­eral sev­er­ing of bank­ing re­la­tions. “What re­ally scares me is banks and cen­tral banks chick­en­ing out. When you’re hit with sanc­tion af­ter sanc­tion they be­gin to ask, ‘Why should we do busi­ness with Le­banese banks?’”

When it comes to Hezbol­lah’s fi­nances, the United States be­lieves the group ma­nip­u­lates the in­ter­na­tional fi­nan­cial sys­tem to move money be­tween Le­banon and other coun­tries.

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