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US sanctions Hezbollah lawmakers

A heavy hand comes with consequences

by Jeremy Arbid

Last month, the United States designated two elected Lebanese legislators and members of Hezbollah as terrorists. This was an escalation of the US measures targeting the party, alleging that Hezbollah smuggles drugs and launders the proceeds to finance its militia and alleged terrorism activities. Little more than two years since Lebanon’s Prime Minister Saad Hariri visited the White House, we have the Trump administration’s answer to the “menace” of Hezbollah: more of the same in America’s war on terror spanning nearly two decades over multiple American presidencies.

In July, the Office of Foreign Assets Control (OFAC) under the US treasury department, sanctioned two Hezbollah parliamentarians: Mohammad Raad, head of the party’s parliamentary bloc, and Amin Sherri. A third individual, Hezbollah’s liaison and coordination unit official, Wafiq Safa, was also listed. The three were designated for their alleged roles as “terrorists and those providing support to terrorists or acts of terrorism” through an executive order that dates back to the Bush administration.

The latest action comes as the US has ramped up pressure on Iran and looks to squeeze its economy to the point of collapsing the Iranian regime. This represents a change of direction when compared to the former US President Barack Obama’s second term. The main difference between the Obama administration and the Trump administration is that the former was pursuing Hezbollah while easing off its patron, Iran, while the latter is going full throttle after both. Under Obama, the US pursued a diplomatic solution to the prospect of an Iranian nuclear weapon, whereas now, the US is seemingly on a path toward military confrontation with Iran and its allies—if Iran does not change course in its regional influence campaign.

Ramping up the pressure

In May 2018, the Trump administration reneged on the Iran Deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). The Iran Deal was an agreement between Iran and five nations (the US, the UK, France, Russia, China, and Germany), as well as the European Union to limit and delay Iranian uranium enrichment capabilities needed to manufacture nuclear warheads in exchange for the lifting of sanctions. The US unilaterally withdrew from the deal despite evidence that Iran was in compliance. Justifying the withdrawal, US President Donald Trump cited Iranian aggression across the region, its military campaign in Syria, and the implied notion that Iran was using its economic recovery from the JCPOA sanctions relief to fund Hezbollah in Lebanon and other non-state actors and militias elsewhere in the region.

The US is pursuing Hezbollah aggressively and on all fronts. It has attempted to pressure Hezbollah financially by targeting its patron, Iran (which, according to a 2016 speech by Hezbollah Secretary General Hassan Nasrallah, funds the group exclusively). A year ago, it appeared the US might be building a case that could lead to legal actions against Hezbollah officials or their affiliates. Lebanon still remembers the forced closure of the Lebanese Canadian Bank in 2011, which was the end result of a US Drug Enforcement Administration law enforcement campaign that began in 2008, code-named Project Cassandra, to disrupt Hezbollah’s alleged global drug trafficking and money laundering network. 

Earlier this year, OFAC sanctioned two individuals and three entities it alleged were “evasion conduits for major Hizballah financiers,” and, in a separate action, designated Kassem Chams and his money service business, Chams Exchange. OFAC alleged that the money changer “launders drug proceeds throughout the world on behalf of narcotics trafficking organizations and facilitates money movements for Hizballah.” On five separate occasions in 2018, OFAC sanctioned 19 individuals and 16 entities, including Nasrallah and Hezbollah’s Deputy Secretary General Naim Qassem.

Last October, the US Department of Justice named Hezbollah one of the “transnational organized crime threats” to the US, alongside four Central American cartels, and is now looking to “reengage with our partners in the hemisphere” according to recent remarks by US Secretary of State Mike Pompeo at the July 19 Western Hemisphere Counterterrorism Ministerial Plenary. The same day OFAC sanctioned a senior member of Hezbollah’s external support organization, Salman Raouf Salman. “We are targeting Salman Raouf Salman, who coordinated a devastating attack in Buenos Aires, Argentina against the largest Jewish center in South America 25 years ago and has directed terrorist operations in the Western Hemisphere for Hizballah ever since,” according to a readout of the statement. The day before, Argentina announced it had designated Hezbollah as a terrorist organization and froze assets. Iran and Hezbollah have long denied involvement in the bombing. 

The Trump administration also brags it has set the record for “the most sanctions imposed on Hizballah in a single year,” according to a March statement declaring support for Israel (though the announcement did not count how many designations were made, or whether those actions referred only to OFAC listings or included measures by other agencies). Over the course of 2018, by Executive’s count, OFAC had designated nearly 40 entities and individuals. 

So what is to be made of the recent sanctions targeting the elected officials, and what does the Trump administration have in mind for Lebanon by targeting members of Parliament? Reading the sanctions as the targeting of the Lebanese state by the US may be an exaggeration, says Albin Szakola, an illicit finance analyst. “US policymakers have long pursued the objective of bolstering the Lebanese state and its institutions,” he says. According to data from the United States Agency for International Development, the US supported Lebanon to the tune of nearly $600 million last year, counting humanitarian, economic, and military aid, and from 2011 – 2017 provided Lebanon with aid worth nearly $2.7 billion. Szakola adds that, “The US treasury designation statement, in its language, does not fault the Lebanese state, instead painting it as a victim of the Hezbollah officials’ conduct.”

Part of OFAC’s explanation for the action reaffirmed American insistence of no distinction between Hezbollah’s political and military wings, using a quote by Hezbollah’s Raad: “Hizballah itself makes no distinction between its military and political wings, as Hizballah’s own leaders have acknowledged publicly, including Muhammad Hasan Ra’d, who said in 2001, ‘Hizballah is a military resistance party … There is no separation between politics and resistance.’” However, in Szakola’s analysis, the US was only targeting the legislators and not the institution to which they were elected. “The statement was very specific and explained that the US sanctioned these individuals for taking advantage of their political positions to facilitate Hezbollah’s non-political activities, including smuggling of contraband, acquiring passports for foreign operations, and trying to maintain access to Lebanon’s financial system.”

Dangerous game

Is it possible that the US may be attempting to provoke the party into political conflict with Lebanese counterparts? Szakola does not think the OFAC sanction demonstrates a shift in US policy. “I’m very hesitant to interpret this US treasury designation statement as signifying any new policy on the part of Washington to drive a wedge between Hezbollah and the Free Patriotic Movement (FPM), or its other political allies.”

Joe Macaron, a resident fellow at the Arab Center Washington DC, however, reasons that just may be what the Trump administration is attempting. In his reading of the sanctions, the US may be trying to “weigh in on Lebanese politics” by forcing a wedge between members of its national unity government in which all major political parties in Lebanon are represented. He writes that Safa, the security official sanctioned in the most recent OFAC action, is Hezbollah’s conduit to Gebran Bassil, Lebanon’s Minister of Foreign Affairs, who also heads the FPM and is the son-in-law of the country’s president, Michel Aoun. Bassil was a key figure in negotiating the political alliance between the FPM and Hezbollah in 2006, and it was thanks to Hezbollah that Aoun reached the presidency in 2016.

If framing the sanctions as a US effort to provoke political conflict between Lebanese counterparts is accurate, what could happen to Lebanon? Macaron suggests the possible outcome of a dysfunctional or collapsed government. Such a scenario, he says, could derail American efforts to broker border negotiations between Lebanon and Israel. It might also ruin Lebanon’s efforts to unlock desperately needed infrastructure loans pledged last year at the CEDRE developmet conference, and could jeopardize other projects in Lebanon, such as reforming the electricity sector, or finding a sustainable solution for garbage management. 

It could be more damaging for Lebanon than just project failures. The country is in a very delicate position: The economy is in recession and has been for almost a decade, it is under significant financial stress due to high levels of debt and poor public finance, and it faces social upheaval from the burden of hosting Syrian refugees. Any sort of political disruption in Lebanon could—in a worst-case scenario—create a domino effect leading to a security crisis. 

It remains to be seen how the American’s heavy-handed, top-down approach to dealing with Hezbollah will play out in Lebanon politically and on the ground. But at least now we have an answer to what the Trump administration plans to do regarding Hezbollah, even if we still do not understand the White House strategy for containing any possible fallout.

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Jeremy Arbid

Jeremy is Executive's former economics and policy editor.

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