Hezbollah confronted with US banking restrictions

Sunday 22/05/2016
Lebanon’s Central Bank in Beirut.

Beirut - Hezbollah members and sympathisers are find­ing it harder to have financial dealings with Lebanese banks that have begun carrying out US sanc­tions against the militant Shia group and its affiliates. The Iran-backed militia is unlikely to suffer much, however, because it carries out its core transactions outside the country’s banking system.

Lebanese banks have started of­ficial enforcement of measures against people and institutions suspected having transactions with Hezbollah in accordance with US sanctions on the movement, which Washington and its Arab al­lies in the Gulf consider a terrorist group.

The measures apply to bank ac­counts in any currency held by people who are proved to do any kind of business with Hezbollah, which is represented in the Leba­nese government and parliament and whose militants are fighting in Syria and Iraq against Sunni in­surgents, a source with the Asso­ciation of Banks in Lebanon (ABL) said.

US President Barack Obama signed the Hezbollah International Financing Prevention Act (HIFPA) in December. The law had an im­mediate effect in Lebanon where banks cancelled credit and debit cards, including for internet trans­actions, held by affected people.

Ignoring the US sanctions would isolate Lebanese banks from the international banking system, an ABL team told Hezbollah officials, according to the source. “They agreed on mitigating the effect of the US sanctions,” he said but would not elaborate.

Asked about reports that Hez­bollah pressured the central bank to cancel its instructions to banks about the implementation of the US sanctions, the ABL source said: “Defying the sanctions in a glo­balised banking sector would mean the collapse of Lebanese banks and Hezbollah knows it”.

A source at the central bank, Banque du Liban (BDL), said he ex­pected a compromise to be reached with Hezbollah on the matter but ruled out exempting US-blacklist­ed organisations and persons from the sanctions.

Hezbollah’s parliamentary bloc said the US sanctions could threat­en Lebanon’s financial sector, hint­ing that supporters may withdraw funds from local banks. The bloc, known as Loyalty to the Resist­ance, criticised the central bank for saying it would abide by the US law, which Hezbollah lawmakers claim violates Lebanon’s sover­eignty.

The statement came after a cabi­net meeting during which officials discussed the banks’ decision to shut accounts of at least two Hez­bollah lawmakers, a government source said. Cabinet members ex­pressed concern that the law could affect Hezbollah’s large network of social, educational and health or­ganisations, which regularly deal with the government and provide services to needy Lebanese.

Central Bank Governor Riad Salameh said Lebanese banks must comply with the US law and that failure to do so risked inter­national isolation of the country’s banking sector.

“The US law has to be imple­mented worldwide and in Leba­non,” he said in a statement. “It is not possible to guarantee credit stability if (the central bank) does not implement the US law. If we do not do that… our banking sec­tor could become isolated from the world.”

Those under sanctions include about 100 people and businesses, including Hezbollah Secretary- General Sayyed Hassan Nasral­lah and top commander Mustafa Amine Badreddine — recently killed in Syria. The list includes the group’s Al-Manar TV and Al-Nour Radio. Nasrallah said Hezbollah would not be affected by the law because it does not deal with Leba­nese or foreign banks.

Asked whether banks dealing with Hezbollah cabinet ministers or legislators who are paid by the state would be affected, the ABL source said the law does not men­tion salaries, recalling a statement by Salameh in April. Lebanese offi­cials say the effect of the law on the country’s economy remains un­clear, the government source said.

Hints by Hezbollah’s parlia­mentary bloc that supporters may withdraw funds from local banks were soon heard. “The banks risk losing current or new deposits by Lebanese expatriates,” said Kamel Wazni, a Lebanese economic ana­lyst, estimating that Lebanese living abroad have $31 billion de­posited in Lebanese banks “and a good chunk belongs to Shia expa­triates”.

Hezbollah does not deal itself with banks, Wazni said, “but it does not want its supporters who are not members to suffer. After all, the group liberated southern Lebanon.”

A source with Hezbollah’s parlia­mentary bloc said BDL should reg­ulate the implementation of the US law. “Such things cannot be left to bankers, who may, due to certain political affiliations, exaggerate in implementing the law,” the source said.