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Damage control

Lebanon braces itself for US anti-Hezbollah law

by Jeremy Arbid

New legislation in the United States targeting Hezbollah has Lebanese government and banking officials shuttling between Beirut and Washington, not to rush to its defense but to assess the level of damage heading this way. Remembering the forced closure of the Lebanese Canadian Bank in 2011, local officials are more than a little concerned at the prospect of not just one bank as a victim but the entire sector.

Ratified into US law in December, the Hezbollah International Financing Prevention Act (HIFPA) is a continuation of the United States’ war on terrorism, an American policy that dates back to the Bush Administration. It is also a consequence of the P5+1 nuclear agreement with Iran (the Iran deal) and the lifting of that country’s sanctions. Those opposing the Iran deal – Republicans and American allies in the Gulf and Israel – have focused their residual fury at Hezbollah. They fear that the lifting of sanctions against Iran will allow it to float more money and aid to Hezbollah and other proxies in the region.

A pawn in US domestic politics

The Americans allege Hezbollah is a key player in global narcotics trafficking and money laundering networks, using front companies to access local and international banking services to finance its military operations – charges vehemently denied in December’s “show me the evidence” speech by Hezbollah leader Hassan Nasrallah.

Cabinet officials in the Obama Administration and Congress – the Senate plus House of Representatives – both agree on the need to curtail Hezbollah’s access to Lebanese and international financial systems. But the message that the Administration has portrayed – in statements and through meetings with Lebanese government and banking officials of shielding Lebanon’s banking sector and economy does not exactly jive with that of the Congress.

There is not a discrepancy between the White House and Capitol Hill on the question of targeting Hezbollah, says Alain Aoun, a Member of Parliament representing Hezbollah’s ally, the Free Patriotic Movement. He told Executive following February meetings with representatives from both that it’s not yet clear how aggressive the implementation rules will be for the HIFPA. “It’s a question of implementation so as not to provoke any collateral damage – this was the message we [emphasized],” Aoun said.

Shielding Lebanon’s financial institutions, banking sector and economy has been the key point reiterated by Lebanese government and banking officials in trips to Washington. Amal Movement MP Yassine Jaber, another Hezbollah ally, told Executive in early March that the Americans were puzzled by all the meetings Lebanese officials were taking in DC. “Their reaction was to ask why [is Lebanon] panicking? We told them, well, the perception in Lebanon is that it’s going to be crazy,” Jaber said. Lebanese concern regarding HIFPA implementation is that the law will disrupt the country’s banking sector, blowing up the Lebanese economy in the process, with individuals and businesses that come into contact with Hezbollah, even if not facilitating financial transactions or involved in alleged illicit activities, as collateral casualties.

The Obama Administration has been quick to point out that it is only Hezbollah that the Americans are interested in. Following meetings with US officials, Jaber told Executive that “[The Americans] have no intention of neither hurting the Lebanese economy nor the Lebanese banking sector, nor of targeting any community or religious group. This is about [specific] individuals, entities and companies.” Following his mid-March visit to Washington, Minister of Finance Ali Hassan Khalil stated that Assistant Secretary for Terrorism Financing at the Treasury Department, Daniel Glaser, clearly confirmed “that the regulations will not target the Shiite community or any groups in general.”

The Obama Administration does not want to push Lebanon further toward chaos says Ibrahim Warde, an expert on terrorism financing at Tufts University. According to his reading of the situation, at least some departments in the Administration do not want to instigate a breakdown of Lebanon’s banking sector. “Certainly someone like John Kerry and the State Department institutionally, don’t want to see the collapse of the Lebanese banking sector because they are well aware of the fact that it is one of the few things left standing in Lebanon,” Warde told Executive.

Preserving the integrity of the banking sector is a point underlined by Obama’s nominee for ambassador to Lebanon, Elizabeth Richard. Richard testified to Congress in her nomination hearing in mid-March that shielding Lebanon’s banking sector and economy from Hezbollah infiltration is a top priority for the Administration. “Our goal,” she said, “is to dismantle Hizbollah’s international financial network while supporting Lebanese institutions and the Lebanese people. The success of the Lebanese banking sector, a backbone of the country’s economy, relies on upholding an already excellent reputation. Both Lebanon and the United States have an interest in ensuring Hizbollah cannot penetrate the Lebanese financial sector.”

But Congress is taking a much more hardline approach in the lead up to writing the law’s implementation rules. The case being made to Congress by partisan academic experts is that, since the signing of the Iran deal, Hezbollah’s financial latitude to purchase weapons and military technology has expanded. That is, according to testimony in front of the House of Representatives’ Foreign Affairs Middle East and North Africa subcommittee in late March by Matthew Levitt of the Washington Institute for Near East Policy, because the lifting of Iranian sanctions has “Increased Iranian spending… likely to benefit Hezbollah’s regional and international operations.”

Critics of the Iran deal have labored over the question of whether the removal of sanctions would provide more money for terrorist funding – Exhibit A being Hezbollah, Warde told Executive. From his perspective, “The way in which the Obama Administration has tried to deflect that kind of criticism was to go along with [HIFPA] in December… the [Iran deal] had been under very strong attack by the Republicans, Gulf countries and Israel.”

The advice presented to Congress during that subcommittee hearing was to go hard at Hezbollah, whatever the cost. Tony Badran of the Foundation for Defense of Democracies recommended that “Congress should push the Administration on the implementation of H.R. 2297 [HIFPA], targeting Hezbollah’s criminal and financial activities. It’s important not to be dissuaded by the argument that pushing too hard would break Lebanon’s economy.”

The subcommittee is chaired by Florida Congresswoman Ileana Ros-Lehtinen – a known hawk on Syria and self-declared supporter ‘of the state of Israel.’ She stated during the hearing that it was a near certainty the Iran deal will strengthen its regional proxies. “Hezbollah receives financial and material support from Iran and now with the regime receiving this financial windfall of over $100 billion it is not only reasonable to expect that Iran will increase its support of its proxy, but it is as near of a guarantee as one can have,” Ros-Lehtinen said.

P5+1 leaders negotiated with Iran to halt its nuclear missile program in exchange for lifting sanctions | CC 4.0

P5+1 leaders negotiated with Iran to halt its nuclear missile program in exchange for lifting sanctions | CC 4.0

Republicans, Gulf countries and Israel

Republican leaders, like Ros-Lehtinen, are pushing to target Hezbollah because the measures will serve as a counterweight to the Iran deal. Republicans as well, especially on the far right, have for a long time questioned Obama’s commitment to Israel. To many voters in the Republican primaries, Obama is considered a Muslim, and his fumbling of the America-Israel alliance, in their view, is part of an Islamic conspiracy to push Israel into the sea. The president has at times publicly feuded with his Israeli counterpart, Benjamin Netanyahu, but Obama has not veered far from US policy norms concerning issues like the Israel-Palestine peace process. Ros-Lehtinen subscribes to this critique of Obama and the narrative has played well among 2016’s Republican presidential candidates.

That HIFPA is politically driven legislation is underscored in small part by the 2016 presidential election cycle in the US. Then Republican presidential candidate Marco Rubio, a key sponsor of the bill in the Senate and one-time protégé of Ros-Lehtinen, had leveraged other important issues, such as immigration, as a way to spring up the political rungs of his career ladder. Rubio’s tendency, as a recent article pointed out in Rolling Stone, an American magazine covering music, pop culture and politics, has been to pursue issues and political alliances that best benefit his quest for power until they don’t.

America’s Arab allies fear that an Iran flush with cash will pursue regional goals more aggressively, leading one Saudi Arabian diplomat to describe the deal as “extremely dangerous,” The Washington Post reported in July 2015. Several sources tell Executive that Saudi Arabia’s decision to pull its $3 billion aid package to Lebanon’s army, the designations of Hezbollah as a terrorist group by the Gulf Cooperation Council and Arab League, as well as recent measures taken by several GCC countries to deport Lebanese nationals because of alleged ties to Hezbollah are designed to show anger over, or to blunt the impact of, sanction lifting.

Criticism by Arab governments that view Iran as competition agree that the Iran deal will enable it to give more aid to its proxies, particularly Hezbollah. More money for Hezbollah, they say, will allow it to increase military capabilities on multiple fronts in the region, strengthen Hezbollah’s alleged terrorism, narcotics and money laundering networks across the globe, and restore and expand social services to its constituency in Lebanon, allowing it to further entrench itself in domestic politics. The position Israel has taken on the Iran deal has been clear for some time: Iran represents an existential threat to the Jewish state with Hezbollah in the position to execute this threat both directly and covertly.

Partisan policy advice

The arena of power battles includes the use, by all combatants, of not only politics but also partisan think tanks. Gulf countries have bought political influence by funding think tanks in Washington. A 2014 investigation by The New York Times found that “More than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities.” The investigation linked Arab funding to several well known think tanks including the Brookings Institution, the Center for Strategic and International Studies and the Atlantic Council.

Israeli interests influence think tanks in DC too, Warde says, like the Washington Institute for Near East Policy (WINEP) and the Foundation for Defense of Democracies (FDD). “This constituency has always been quite powerful. It is especially clear whenever you have the experts testifying, it’s always the same names and affiliations – WINEP, FDD – these kinds of groups always send their ‘experts or pseudo-experts’ to just say all sorts of bad things about Hezbollah,” he tells Executive.

FDD is a think tank that describes itself as a non-partisan foreign policy and national security institute, but it does not publish its financials or donor lists. In 2011 ThinkProgress, a left-leaning policy advocacy organization, published FDD’s Form 990s, a tax document required of nonprofits by the United States Internal Revenue Service, accounting for nearly all of the organization’s funding from 2001 to 2004. ThinkProgress concluded that: “Most of the major donors are active philanthropists to ‘pro-Israel’ causes both in the US and internationally. With the disclosure of its donor rolls, it becomes increasingly apparent that FDD’s advocacy of US military intervention in the Middle East, its hawkish stance against Iran and its defense of right-wing Israeli policy is consistent with its donors’ interests in ‘pro-Israel’ advocacy.”

WINEP is the alleged policy think tank of the American Israel Public Affairs Committee (AIPAC), its critics say. In a 2010 blogpost for Foreign Policy, Stephen Walt, a professor of international affairs at the Harvard Kennedy School of Government, suggested that foreign policy officials in the White House at that time held convictions closer in line to Israeli policy than to America’s, prompting an indignant rebuttal by WINEP director Robert Satloff labeling Walt a McCarthyite, one who makes accusations of treason without evidence – an underhand way of calling Walt an anti-semite.

Israel has the added weight of supposedly non-partial academic policy organizations with that of pro-Israeli lobby groups. According to opensecrets.org, a website compiling records from the US Senate Office of Public Records, AIPAC was one of the pro-Israel organizations that paid for lobbying in 2014 and 2015 against loosely wording the text of HIFPA. Lebanon had one organization, the Association of Banks in Lebanon, that lobbied on its behalf both years. (The association declined to comment for this article). Organizations like AIPAC hold a lot of weight in Washington, and American leaders often speak in front of it to push their policy agenda or to gain support for political appointees.

In March, for example, Deputy Secretary of State Antony Blinken addressed AIPAC to garner congressional votes in favor of Obama’s nominee as the next undersecretary of the Treasury Department for Terrorism and Financial Intelligence, Adam Szubin. Blinken told AIPAC that Szubin is the right person for the job because in his sleep he dreams “about how to maintain and sustain the pressure we need on Iran” and that “every senator who has called for more sanctions should be pushing for, not delaying, his confirmation.”

Likewise, Democratic presidential candidate Hillary Clinton also addressed AIPAC in March. She told the pro-Israeli lobby group that the US “must work closely with Israel and other partners to cut off the flow of money and arms from Iran to Hezbollah.”

Underrepresented in Washington

When compared with Arab countries and Israel, Lebanon commands exceedingly insignificant influence in Washington. Diplomatic presence – the ambassador retired in December – was described to Executive as “pretty weak” and “not sufficient to do what is required.” MP Alain Aoun said that “the embassy is understaffed for such an important country like the United States. Where many decisions concerning the whole world are taken, we are so underrepresented that we are almost completely absent. One congressman is probably staffed better than our embassy.”

Compared to that of America’s Middle East allies – countries of the Gulf plus Israel – MP Yassine Jaber told Executive that, “We have really been sitting on our butts – if you compare two countries in the region, Lebanon and Jordan, we have more burden fighting terrorism, and vis-à-vis the refugees. But Jordan has a lot more attention, a lot more money, a lot more support because they’re [actively present in Washington],” adding that Lebanon has virtually “no bilateral engagement” with the United States.

The conundrum for Lebanon in all this is its perception in Washington as a problem country because of Hezbollah, an image it has little latitude to alter. Lebanon is underrepresented diplomatically and is outspent in its lobbying efforts. Ultimately, Lebanon has little ability to articulate its position, drowned out by America’s Arab allies plus Israel, on American policy in the Middle East, leaving its national concerns to go virtually unheard.

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Jeremy Arbid

Jeremy is Executive's former economics and policy editor.

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