In a picture that could have been taken from a PR notice for the series “Narcos,” a man who knows the good life is sitting on a pile of dollar bills, a cigar in hand, looking like he’s enjoying himself.
But it isn’t from a TV show or from South America. In this case, this is the Middle East version of reality – the man in the picture is Amar Shweiki, a Syrian businessman who functions as one of the region’s main conduits for illicit money transfers and someone who is helping Iran skirt sanctions as well as fund Hezbollah and other groups.
The Iranian method, which has become a sort of agreement between Tehran and Damascus, works like this: Syria is heavily indebted to Russia for the weapons and other aid that Russia has provided to it. Because of the current sanctions, Syria cannot pay those debts directly. Iran covered part of the debt through a variety of methods, including barrels of oil. In exchange, Syria took hundreds of millions of dollars in cash out of its central bank and passed it on to Hezbollah.
This method, which was used until Iran found itself under new sanctions last year, allowed both Syria and Iran to “play by the rules.” Syria wasn’t violating the sanctions against its regime, because Iran was making the payments, and Iran wasn’t in violation of the sanctions that forbid it to transfer money to Hezbollah, a terrorist organization, because Syria was making the payments. There were two main figures who were pulling the strings of the operation: Shweiki and Mohammad Jafar Qasir.
Israel Hayom reported extensively on the activity of Qasir, known as Hajj Fadi, last year. In a nutshell, he is the main man in charge of the logistics for Hezbollah, and he is much more important to Hezbollah than his “title” would suggest. His brother is married to the daughter of Hezbollah leader Sheikh Hassan Nasrallah, and another brother became the first Hezbollah “martyr” when he was killed in the first Tyre Disaster in 1982. Hajj Fadi handles Hezbollah’s complicated weapons smuggling activity and enjoys direct access to the leaderships in Tehran, Damascus, and Beirut. Last year, he was photographed in a meeting in Tehran, sitting between Iranian President Hassan Rouhani and Syrian President Bashar Assad. Another participant in that meeting was then-commander of Iran’s Quds Force, Maj. Gen. Qassem Soleimani.
Hajj Fadi is responsible for Hezbollah’s weapons smuggling, but he is also deeply involved in the transfer of money. Because Hezbollah depends largely on cash, its smuggling apparatus moves the bills – dollars or euros – from Tehran to Beirut, mostly via Damascus. Shweiki is a key player in moving the money. According to Western intelligence officials, the picture mentioned earlier shows him sitting on $100 million – that’s how great his self-confidence is. In the past few months, he’s had to dial it back after he was added to a list of people and organizations subject to US Treasury Dept. sanctions in November 2018. These sanctions are important, but it’s uncertain how effective they are: people like Hajj Fadi and Shweiki usually operate in the shadows and don’t often leave their home field.
Nasrallah: Tighten your belts
For the past year, Hezbollah has been in serious financial trouble, partly because of changes that took place within the organization: thousands of its wounded who came back from Syria require rehabilitation, families of casualties need aid, and veterans are retiring. All this adds up to a heavy outlay for which the group never had to budget for in the past.
The other part of the financial crisis is the result of the stringent sanctions on Iran, which forced it to cut its support to Hezbollah (as well as other protégé groups, from the Palestinian Islamic Jihad in Gaza to the Houthis in Yemen, as well as groups in Iraq and elsewhere). The current assessment is that Hezbollah now needs to slash its budget, which used to be $850-$900 million per year.
The crisis forced Nasrallah to declare “economic jihad” about six months ago. He made it clear to his people that they needed to know how to cope with periods of austerity. That is no minor matter, and not only because of the element of honor – Hezbollah funds a variety of activities. Israel naturally focuses on its military aspects, but as patron of the Shiite people in Lebanon and as a “Dawah” group that sponsors educational, cultural, and welfare activities as a way of bringing people closer to its goals, Hezbollah is having to maneuver very carefully to maintain its civilian activity, which is the base of its political power in Lebanon.
Iran is also having to tread carefully to keep funding Hezbollah under the new US sanctions. Last year, Western intelligence agencies revealed that Iran’s central bank was in contact with Bedouin money changers to accept cash that it could distribute to the various organizations Iran funds in the region. The information was passed on to the Americans, who shut down that pipeline.
At the same time, it turned out that Iran was still operating straw companies, sometimes under fictitious names, to use in transferring money. One such conduit ran via al-Bilad Islamic Bank in Iraq; here, too, intelligence led to the American decision to sanction the bank for aiding and abetting terrorism.
Such creativity is necessary given Iran’s growing difficulty in funding its “customers.” According to prevailing assessments, Iran pays monthly salaries to some 100,000 soldiers for hire who are fighting on its behalf, mostly in the Middle East, but also in other places around the world. (Only the US pays for more soldiers on foreign soil.) That takes vast sums, and the sanctions make it difficult, certainly when the beneficiary is Hezbollah, a terrorist organization that is also barred from receiving money through regular bank transfers.
The result is that a large part of the financial activity is conducted in cash. A few days ago, a reporter with the Al Midan television station ran a video in which he counted the salary he received. He was paid in US dollars, as the Iranian rial is worthless in Lebanon and other countries in the region. That was a rare glimpse at how Hezbollah pays the salaries of its tens of thousands of operatives and employees. Incidentally, Hezbollah is seen as the second-largest employer in Lebanon, after the government.
The Iranians have a well-ordered plan to fund terrorism. The money comes in an annual budget that is agreed upon and subject to oversight after being passed by a number of committees. Most of the money is sent out through the Iranian Revolutionary Guards Forces’ elite Quds Force, and in recent years, Syria has become the main axis along which the money, as well as weapons, is moved.
The hefty sanctions that the Trump administration issued this year against Iran after withdrawing from the 2015 nuclear deal have caused a major economic crisis in Iran. Oil production dropped from 2 million barrels per day to half a million, and oil exports face constant difficulties. Recently, the American administration put out a document in which it details how Iran tries to get around US sanctions. The document, which was aimed at governments in the Middle East and beyond, was designed to block the Iranian end-run around the sanctions.
These closing loopholes are forcing Iran to depend more on cash. The Quds Force isn’t the only entity involved: the Iranian Foreign Ministry transfers some $100 million in cash to Hezbollah every year through the use of diplomatic passports. It is done by Iranian diplomats who arrive in Beirut on commercial flights carrying suitcases full of dollars and hand them off to Hezbollah members. The money itself can’t be touched because it is defined as “diplomatic mail,” and the couriers’ diplomatic passports give them immunity. Although the names of the people involved and the dates of the money transfers are known to a variety of international officials, this money smuggling road has yet to be blocked.
The growing financial distress requires Hezbollah to play a major part in finding funding for its own activities, which means it must walk a thin line: in addition to the sanctions the US enacted against Hezbollah at the end of the 1990s, it passed a specific law in 2014 named the Hezbollah International Financing Prevention Act (HIFPA), which is designed to make it difficult for the organization to find funding. Since then, Hezbollah has found it difficult to maintain bank accounts that are directly linked to it and has to maneuver carefully.
One of its methods is collecting donations from the various Shiite communities in the world. Another method, which was exposed too late, was selling goods to businesspeople and companies affiliated with Hezbollah. Last year, these people and companies were sold an Iranian ship that was anchored in the Port of Beirut, carrying a load of iron. The Iranian company that owned the ship was under sanctions, but the deal wasn’t blocked, and it is likely that Hezbollah received some of the money.
In the past few years, the US Treasury Dept. has placed sanctions of people and companies linked to Hezbollah financing. Adham Tabaja, a prosperous Lebanese businessman who owns a few real estate and construction companies, was one. According to information passed on to the Americans, he used his companies’ profits to help Hezbollah, and also assisted the organization by handling money transfers for it via his own firms. Because of that activity, Tabaja and his companies, as well as a few of his colleagues, were put on a US sanctions list.
Mohammad Bazzi is another Lebanese businessman who was added to the list. Bazzi, too, is suspected of using his companies (which were active in Europe, mainly Belgium) and Africa (mostly Gambia, a well-known Hezbollah base with a large Shiite population), to provide financial assistance to Hezbollah and indirectly fund some of the group’s activities.
Pre-emptive strikes
The intensive activity that is designed to stopper Hezbollah’s money funnels has only seen partial success. The organization is deeply rooted in Lebanon and is heavily entwined in Lebanese banking, business, and trade. Thus far, the West – mainly the US – has refrained from striking a financial blow to Lebanon out of fear that it would undo the fragile political stability and plunge the country into chaos.
To a large extent, the situation is reminiscent of the 2006 Second Lebanon War. Then, under international pressure, Israel refrained from attacking national infrastructure in Lebanon to keep the country from collapsing. The result was a lack of internal pressure on Hezbollah as being responsible for the downfall of the nation, and Hezbollah came out of the war bruised, but still standing.
It appears that the financial war against Hezbollah won’t succeed, either, if it is waged without involving the Lebanese nation.
“All of Hezbollah’s finances are built on the Lebanese banking system, and people are afraid to touch it,” says former intelligence official Uzi Shaya, who led the struggle to shut down the Lebanese Canadian Bank, which was one of Hezbollah’s main sources of funding.
“An organization of that size can’t live off of suitcases of money. It’s not Hamas. It has a budget of nearly $1 billion, and that can’t be handled by cash in suitcases. They have methods of financing. We need to locate them and shut them down,” Shaya adds.
“The US recently offered a $10 million prize to anyone who can supply information about Hezbollah’s financial system. That means they still aren’t there, that they don’t have enough information. And if they aren’t there – we probably aren’t either,” he says.
Shaya thinks that the battle against money changers and cash transfers is “nice to have,” but that the main target must be the organization’s core finances.
“We need a national entity that will address the issue broadly, strategically,” Shaya says.
“In the current situation, every organization takes care of its own matters – the Mossad and Military Intelligence are on Iran and Hezbollah, the Shin Bet [security agency] is on Hamas, and the Defense Ministry is doing its part, but there isn’t a well-established system. … We have great partners in the US, we just need to work with them the right way.”
Pressure like that – given the difficult economic situation in Iran, which directly affects Hezbollah – could definitely back the group into a corner. With at least another year left of the Trump administration, and possibly five, Nasrallah will need to make some tough decisions in order to keep the organization operational in its current form. That includes choosing between increasing its military might or the social activity that is the core of its existence.
Lebanon understands the meaning of that kind of economic war and is afraid of its possible ramifications. Visiting Washington last week, Lebanese Prime Minister Saad Hariri asked the US not to take action that would harm Lebanon or its institutions. Hariri made his request after the US Treasury, for the first time, placed two Hezbollah parliament members under personal sanctions. Hariri sought to prevent heavier steps that would attempt to detach Hezbollah from the Lebanese financial system.
Hariri wasn’t working for the good of Hezbollah. He knows very well who assassinated his father, and who thwarted efforts to promote the most important aspect of Lebanon’s economic future – its offshore natural gas resources. That was Parliament Speaker Nabih Berri, who is working hand in glove with Hezbollah to scoop up as many dividends as possible from the future bonanza.
Still, Hariri fears that major economic steps would hurt not only Hezbollah, but also (and mainly) his nation. On the other hand, experts believe that there is no alternative.
“If we want the Lebanese government to take action, we won’t attack it with planes. The economic path is a great solution. It might come as a shock, but it will prevent the need for even bigger actions in the future. We just need to decide, focus our strength, and act,” Shaya says.
Source » israelhayom