CONTENT PREVIEW
Country Risk

US sanctions against Hizbullah part of strategy countering Iran, wider targeting reduces risk against Lebanon’s banking sector

09 February 2018

Key Points

  • The US Treasury Department is unlikely to issue comprehensive sanctions against the Lebanese banking sector, targeting instead Hizbullah’s wider financing networks.
  • In the unlikely event of sanctions targeting the country’s entire banking sector, Hizbullah is likely to respond by attacking banks and state institutions, risking a complete takeover of the state.
  • Increased sanctions from the US are likely to drive Iran, Lebanon, and Hizbullah to increasingly use criminal financial networks already in place, notably across Latin America and Africa.

Event

The US Department of the Treasury’s Office of Foreign Assets Control issued sanctions on 2 February against six individuals and seven entities identified as being linked to Hizbullah.

A portrait of Hizbullah leader Hassan Nasrallah in Adshit, south Lebanon, on 5 November 2017. US sanctions target Hizbullah's wider financial networks. (Mahmoud Zayyat/Contributor/Getty Images)A portrait of Hizbullah leader Hassan Nasrallah in Adshit, south Lebanon, on 5 November 2017. US sanctions target Hizbullah's wider financial networks. (Mahmoud Zayyat/Contributor/Getty Images)

The individuals targeted in the US sanctions are accused of acting on behalf of one of Hizbullah’s main financiers, Adham Tabaja, and his company Al-Inmaa Engineering and Contracting LLC, based in Haret Hreik, Beirut. Tabaja was designated by the Office of Foreign Assets Control as a terrorist financer in 2015. The seven designated companies are based one each in Lebanon and Ghana, two in Sierra Leone, and three in Liberia.

On 22–23 January, US Assistant Secretary of the Treasury for Terrorist Financing Marshall Billingslea travelled to Beirut to meet the president, prime minister, the central bank governor, and senior bankers to put pressure on the Lebanese state to comply with previously issued banking sanctions restricting Hizbullah’s access to financial institutions. However, Billingslea stated that there were no current plans to sanction Lebanese banks. Hizbullah has developed loyalists within key state security forces, including the army. It also has ministers in cabinet, is well represented in parliament, and has successfully imposed its will over political parties and state actors that might attempt to undermine its financial position or its armaments.

The February 2018 sanctions indicate that the United States is looking to target Hizbullah’s wider financial networks of individuals and companies, as a preliminary step, rather than risk destabilising the Lebanese state, for example by issuing broad sanctions or restrictions affecting the entire banking sector, a vital part of the Lebanese economy.

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