by H. Varulkar and E. B. Picali
If Lebanon's banking sector does not comply with the law it will be barred from the global financial system, which could bring about its collapse
Introduction
The Hizballah International Financing Prevention Act, passed by the
U.S. Congress in December 2015, is aimed at curtailing the organization's funding
of its domestic and international activities, and also at combatting its global
criminal activities – including money laundering, drug trafficking, and human
trafficking – by which it funds the terror operations that it carries out
worldwide.[1]
It bars any "foreign financial institution" that engages in
transactions with Hizbullah or with persons or bodies affiliated with it, or
which provides them with financial services or launder money for them, from
maintaining a relationship with the U.S. banking system. This means that any
bank in the world, including in Lebanon, that provides financial services to
the organization will be denied access to U.S. financial institutions – and
thus to the global financial sector. The ramifications of this are far-reaching
and can lead these banks to collapse. The law also imposes sanctions and
penalties (fines, imprisonment or both) on individuals or bodies that violate
its provisions. It came into effect on April 15, 2016, after the U.S. Treasury
issued regulations for its implementation; the Treasury also published a list
of some 100 bodies and figures associated with Hizbullah with whom financial
institutions may not conduct dealings.[2]
Since Congress passed the law, Hizbullah has
been perturbed and apprehensive about its ramifications and the impact it would
have on its operation. This has been expressed both in statements by Hizbullah
officials and in articles in the Lebanese press, especially the press close to
Hizbullah.[3]
In a speech a few days after the law was passed, Hizbullah secretary-general
Hassan Nasrallah exposed his concern, by warning Lebanon's banks not to "submit to the will of
America."
In early May 2016, two weeks after the law
went into effect, Riad Salameh, governor of the Banque du Liban (BDL),
Lebanon's central bank, stressed, in a directive to Lebanon's banks, the need
to fully comply with the law. Following this, Lebanese banks began to close
accounts of Hizbullah officials and their family members, and it has been
reported that dozens such accounts have already been closed. Hizbullah reacted with
a campaign of severe criticism against Salameh and the Lebanese banking system,
accusing them of "surrender[ing] to the American financial mandatory authority in Lebanon and warning that this would
bring about the collapse of Lebanon's currency and lead to "complete chaos"
in the country. Hizbullah ministers argued that the banks had crossed every red
line, and other Hizbullah members leveled threats against the banks.
These reactions clearly indicate the scope
of Hizbullah's fears about the U.S. law and its ramifications. It should be
noted that in recent months Hizbullah has also been the target of sanctions by
the Gulf states and several other Arab countries, which have designated it a
terror organization and have begun expelling its operatives from their
territory.[4]
It should further be noted that it is not
only Hizbullah that is concerned about the U.S. law, but also Lebanon's banking
sector, because if it does not comply with the law it will be barred from the
global financial system, which could bring about its collapse. In light of
these concerns, two Lebanese delegations were recently dispatched to the U.S.,
one on behalf of the Lebanese parliament and the other on behalf of the Association
of Banks in Lebanon. The aim of the visits was to meet with U.S. Congress and
Treasury officials and to discuss the law and its implementation, and perhaps
also persuade them to soften the language of the law and provide guarantees for
the Lebanese banks' stability.[5]
This report will review Hizbullah's
apprehensions about the U.S. law as well as the organization's threats to the
Lebanese banking sector, the Lebanese government, and the U.S. following the
law's passage by Congress, and the intensification of these threats since the
Lebanese banks began implementing the law.
Following Congress's Passage Of The Law,
Nasrallah Warns Lebanese
Government, Banks Not To Comply
On December 21, 2015, three days
after President Obama signed the act into law, Hizbullah secretary-general
Hassan Nasrallah claimed that the law was part of the U.S. war on his
organization that it declared years ago. In an attempt to downplay the
importance of the new sanctions, Nasrallah argued that they would have no impact.
He added that ever since the U.S. designated Hizbullah a terrorist organization
in 1995, it has been trying to force the rest of the world to accept this
designation, but to no avail; he added that since it failed in this attempt, it
is now making false accusations against the organization. "The
Americans," he said, "are trying to pressure Hizbullah again with a
decision they issued, according to which it is a criminal organization, and
they are accusing us of drug trafficking, human trafficking, and money
laundering. This is not true. These accusations are unjust, and we are not interested
in presenting proof of our innocence, because the accuser is the one who should
be presenting proof... This is a political accusation, part of a political,
security, and military campaign in the region, aimed at tarnishing Hizbullah's
image in the eyes of the peoples of the world... It is part of a psychological
war that will not succeed."
As part of his
attempts to reassure Hizbullah's supporters and to convince them that the
sanctions would have no impact, Nasrallah stated that his organization holds no
accounts in Lebanese banks, nor any investments in or partnerships with Lebanese
companies or merchants – and that therefore neither the BDL nor any other Lebanese
bank has any cause for concern. At the same time, he revealed his concerns when
he said: "The minute the U.S. gives the signal to harm some sector or
political stream, some Lebanese banks will begin settling scores [with that
sector or stream]." He declared that this would be
"unacceptable" and warned the government and the banks against
"obeying the American will." He claimed that these American sanctions
were aimed not just at Hizbullah but at Lebanon's citizens, companies and
businessmen, and demanded that the Lebanese state defend them: "We do not
want the state to defend Hizbullah and its operatives, its sons and its
daughters. We are defending ourselves and know how to do so. But the state must
have people to defend any individual that the Americans wish to accuse."[6]
Hizbullah Faction In Lebanese Parliament:
American Law Will Spur Hizbullah To Act Against U.S.'s "Terrorist Branches"
In The Region
On December 24, 2015, several
days after Congress passed the law, the Hizbullah faction in the Lebanese
parliament harshly criticized the U.S. over it, saying that "arrogance and
terrorism" were behind the decision targeting Hizbullah, its supporters,
and "ostensible organizations and elements working with it". This, it
stated, confirmed that the U.S. administration is indeed "the Great
Satan." The faction also said that the law "would
spur Hizbullah to continue its actions against the American takeover plan and to
continue resisting its terrorist branches, represented by the Zionists and takfiris,
in Lebanon and the region."[7]
Hizbullah-Affiliated Daily: Sanctions Could
Lead To Intra-Lebanese Tension
Additionally, on March 31, 2016,
the Lebanese Hizbullah-affiliated daily Al-Akhbar published an article implicitly
warning that the U.S. law would destabilize
Lebanon: "As the countdown to the release of the regulations for
implementing the American anti-Hizbullah sanctions begins, the fears that the [Lebanese]
domestic arena will be impacted by it and its ramifications are revived... as have
fears that this issue will become volatile..."
The article
also outlined the assessments that the sanctions and the anticipated
regulations for their implementation will be harsh and will cover a broad range
of individuals and political, financial, and media institutions, and added that
if this proves to be the case, "it could constitute a worrisome factor that
could stoke domestic tension [in Lebanon,
especially] in everything connected to Hizbullah's reaction to the attempts at besieging
it..."[8]
On April 11, 2016, the U.S.
Treasury Department released the regulations for implementing the Hizballah
International Financing Prevention Act; they included details for applying the
sanctions as well as a list of 99 Hizbullah-linked individuals and institutions
with whom banks and financial institutions worldwide may not conduct business.
The law, which as mentioned came into effect on April 15, 2016, is binding on
all the world's financial institutions, including Lebanese banks.
BDL
Governor Salameh Orders Lebanese Banks To Comply With U.S. Law, Enraging Hizbullah
On April 28, 2016, the governor
of the Central Bank of Lebanon, Riad Salameh explicitly stated, on the Lebanese
LBC TV channel's show Kalam Al-Nas, that Lebanese banks must comply with
the U.S. law. He stressed: "The American law cannot be circumvented,
because the regulations for its implementation include all currency, including
the Lebanese lira." The BDL, he said, would issue a statement emphasizing
that Lebanon was committed to complying with the law and would hold banks
responsible for implementing it. He added, "This will be clear and there
will no way to get around it. This is an official and legal position. The banks
must align with us."[9]
A few days
later, on May 3, 2016, Salameh issued guidelines requiring "all banks in
Lebanon and all institutions under the oversight of the BDL" to comply with
the law and to immediately inform the BDL of any freezing or closure of any
account, or of any refusal to open any account, and to state their reasons for
doing so.[10] According to reports in
the Lebanese press, Lebanese banks have begun implementing these guidelines,
and have already closed dozens of accounts belonging to Hizbullah MPs and
associates.[11] Salameh's guidelines
sparked enraged responses from Hizbullah.
Riad Salameh (nna-leb.gov.lb, April 4, 2016)
Hizbullah MP: U.S. Is The
Great Satan, We Must Resist Its Plans In The Region
Hizbullah MP Hussein Al-Moussawi threatened
the U.S., saying: "The U.S. is still the leader of the camp of lies, and,
as the Great Satan, it attempts to give the resistance a satanic image, and
marginalize it with terrorism accusations and economic sanctions... The sons of
the ummah should be wary of the American plans and carry out resistance against
them."[12]
Hizbullah: Salameh Surrendered
To "The American Financial Mandatory" Rule In Lebanon; Implementing
This Law Will Lead To Chaos In The Country
After Lebanese banks began
closing the accounts of Hizbullah affiliates, the organization launched
criticism not only at the U.S. but also at the Lebanese banking sector. On May
12, 2016, the Hizbullah faction in the Lebanese parliament issued an
exceptionally harsh statement against Riad Salameh, noting: "The recent
American law, which forces Lebanese banks to comply with its sections, is completely
unacceptable because it will form the basis for a local war of exclusion, which
the central bank and other banks are helping to stoke. This is in addition to
the fact that complying [with the U.S. law] constitutes an appropriation of
Lebanese financial sovereignty."
The statement
also said: "The orders recently published by BDL governor Riad Salameh...
are a form of unjustified surrender to the American financial mandatory
authority in Lebanon – which could exacerbate the financial crisis in the
country, lead it to bankruptcy because of the ramifications of the deep schism
[that could come about] between the Lebanese and the banks, and place the
country on the brink of a grave currency collapse in the country and
complete chaos that will be unstoppable." The announcement also called on
the governor "to reexamine the recent guidelines, such that they will be
compatible [with the principle] of national sovereignty," and on the
government "to take the necessary steps to prevent the dangerous
ramifications that are likely to emanate from this."[13]
Hizbullah-Affiliated Daily: Hizbullah Is
Furious At BDL Governor For Reneging On Understandings It Reached With Him
The Lebanese daily Al-Safir,
which is close to Hizbullah, revealed on May 13, 2016 that the reason for
Hizbullah's fury at the BDL governor is that the guidelines he issued for the
banks effectively countermanded previous understandings at which he had
secretly arrived with Hizbullah, that were meant to mitigate the impact of the
sanctions. According to the report, former Hizbullah MP Amin Shiri had
concluded with Salameh that the Lebanese banks would not decide independently
on the closure of any Lebanese citizen's bank account, but would obtain Salameh's
personal approval beforehand. They also agreed that the banks would allow any
citizen, including Hizbullah members, to open an account in Lebanese lira.
However, the new guidelines that Salameh released in early May contradicted
these understandings; under the new guidelines, banks should close accounts on
their own and then inform the BDL, and must prevent Hizbullah members from opening
accounts in Lebanese lira –because the American regulations for implementation
specifically bar opening accounts in any currency.
According to Al-Safir,
Hizbullah was surprised, and enraged, by Salameh's guidelines. It quickly tried
to contact him, but after receiving no persuasive answer, it decided to publish
the harsh statement against him, and to raise the issue in the upcoming cabinet
session.[14]
The daily Al-Akhbar,
which is also close to Hizbullah, added that the organization had sent a
message to Salameh claiming that "some banks decide for themselves to go
too far in implementing the American sanctions, punishing Lebanese [citizens]
that the U.S. did not even seek to sanction." The daily added that
Hizbullah had told Salameh that it would not allow the Lebanese banking sector
"to act purely as the executive arm of the American administration [in
carrying out its] decisions."[15]
Al-Safir: Lebanese
Elements, Saudi And UAE Foreign Ministers Worked To Step Up The Sanctions
Al-Safir reported that
several MPs, apparently from Hizbullah, had complained to parliament speaker
Nabih Berri that the regulations for implementation released in April by the
U.S. Treasury Department had included new sections that were not in the law
itself – for example, that the sanctions apply to all currencies, not only to
U.S. dollars. They argued that these additions undercut
the understandings between Hizbullah and Salameh, which were aimed at
circumventing the sanctions and mitigating their effects. The MPs argued that
an apparent "Lebanese element... leaked these [Hizbullah-Salameh understandings]."
The daily cited sources as saying that "there is an Israeli-Lebanese-Arab
lobby operating daily in Washington under the direct supervision of the office
of Saudi Foreign Minister 'Adel Al-Jubeir and the office of UAE Foreign
Minister 'Abdallah bin Zayed," and adding that UAE Ambassador to
Washington Yousef Al-'Otaiba is working hard on this matter in Congress and the
Treasury Department.[16]
Hizbullah Ministers: Lebanese Banks Have
"Gone Too Far" In Implementing The American Law"; This Crosses
All Red Lines
On May 12, 2016, the same day the
Hizbullah faction in the parliament issued its statement against the Lebanese
banking sector, Hizbullah ministers raised the issue in the cabinet session.
The Al-Akhbar and Al-Safir dailies reported that Hizbullah
ministers in the unity government, Hussein Al-Hajj Hassan and Muhammad Fneish,
had delivered scathing attacks on the Lebanese banks, saying that they had
"gone too far in implementing the American law" and had begun
"taking steps against people with no ties to Hizbullah other than familial
ties to organization officials."
At the meeting,
Hizbullah ministers claimed that one bank had closed the account of the
daughter of a former Hizbullah MP. Al-Hajj Hassan claimed that banks had also
recently closed the accounts of MPs Nawar Al-Sahili, 'Ali Fayyad, 'Ali Ammar,
and 'Ali Al-Miqdad, as well as that of former MP Amin Shiri. Also closed, they
said, were accounts belonging to various cultural, religious, healthcare, and
societal institutions, as well as charity organizations; he also expressed
apprehension that the accounts of dozens of local municipalities would be
closed "on the pretext that they [are administered] by Hizbullah
members." It was also reported that during the meeting, other ministers
who are not members of Hizbullah related how U.S. and French banks had refused
to open accounts for them and also closed their existing accounts.
According to
Al-Hajj Hassan, these closures constituted "a serious attack that
crosses all red lines," especially since the law harms all Lebanese, not
just one group or sect. Other reports in the Lebanese press noted that Al-Hajj
Hassan had issued threats, and had said that the BDL guidelines and the conduct
of the banking sector had "crossed the red line and reached the black
line, and Hizbullah will not agree to this, and the American sanctions will not
be allowed to pass." It was also reported that Hizbullah ministers had called
the Lebanese banks' implementation of the U.S. law submission to aggression,
and added that there must be no silence over this law, "because the
occupation is not only military, but also financial, political, and
cultural."[17]
Al-Safir
reported that some ministers from the March 14 Forces, the rival bloc in the
unity government, were claiming that Hizbullah had brought this situation on
itself, and that the resistance had become a weak point for Lebanon, not a
source of strength. Furthermore, one minister argued that Hizbullah ministers could
not shift responsibility to the Lebanese banks or the BDL governor, since no
one in the world can confront the U.S. The cabinet meeting ended with a
decision by Prime Minister Tammam Salam and Finance Minister 'Ali Hassan Khalil
to meet with Salameh to discuss the matter and update the government on the
results.[18]
Hizbullah
Sources Threaten: Hizbullah Won't Remain Silent – We Will Upend Everything
On May
14, 2016, the Lebanese daily Al-Nahar quoted sources in the
Hizbullah-headed March 8 Forces as saying that the organization would not
remain silent about the new guidelines released by Salameh, and that it would not
back down from its demand that they be cancelled. The sources argued that the
banks were implementing the sanctions also against people who were not on the
U.S. Treasury Department list, only because they were Shi'ites or relatives of
a Hizbullah member. They added: "How is it possible that the bank accounts
of MPs representing the Lebanese people are being closed – how will they
receive their salaries?"
Hizbullah maintained that the BDL and the other
banks are going beyond what the Americans are demanding in their implementation
of the sanctions, and thus are strangling an entire community. The sources
said: "When [Hizbullah] asked the BDL governor about the implementation of
the U.S. law, he said nothing about what he is implementing today, but [said that
there would be] an investigation and an examination of every account about
which there are doubts... But closing the accounts of innocent people who have
no connection [to Hizbullah] without any investigation or examination [as is
happening right now] – that is a dangerous sign of concessions on
Lebanese sovereignty and of punishment of the Lebanese people by the state,
which we will in no way allow to happen." The sources argued that the
government must "cancel the BDL's guidelines, otherwise [Hizbullah] will
react not only by thwarting the government['s activity] but will upend
everything, and will open the file of the banking sector from the
1990s onward..." – hinting that Hizbullah has information on improper
conduct by the banks.
Asked what
was meant by the term "upend everything," the sources quoted a hadith
attributed to Imam 'Ali bin Abu Taleb, the fourth caliph: "I am amazed how
a poor man who lacks a crust of bread does not go out and brandish his sword at
the people" – hinting that Hizbullah's reaction will be harsh.[19]
Nasrallah:
We Face A Challenge To Obtain Monetary Aid – "We Will Be Grateful For
Every Donation"
Hizbullah
officials' threats and harsh reactions clearly attested to the distress and
pressure felt by the organization, and to the scope of the sanctions' impact on
its activity. Additional evidence of this could
be found in a May 6, 2016 speech by Nasrallah following the release of the
regulations for implementing the U.S. law.
In his
speech, Nasrallah reiterated, as he had first stated in his December 2015
speech, that the sanctions would do little damage to Hizbullah because the
organization was accustomed to such pressure and that it would overcome it as it
had in the past "under much worse circumstances." But despite
Nasrallah's efforts to convey the message that Hizbullah was just fine, the
scope of the economic damage done to the organization came through in his
statements, in which he noted, inter alia, that the Islamic Resistance
Support Organization was now playing a vital role in financially helping the
organization. He even personally appealed to the public of supporters of the
resistance for monetary donations, no matter how modest:
"I want to talk about this point openly,
so that the people will also know how we think and operate. We first of all
consider the importance and real value of the intention of the donors, not the
size of the contribution... The families of the martyrs donate, the wounded
donate, the people donate, the elderly lady who saved for her old age gives a
little of her savings to the resistance, the boy who is in school takes some of
his allowance and drops it into the cashbox of the
resistance. This, for us, is worth millions. This is the real support for us...
"Therefore, today, when we stand before America's,
Israel's, and Saudi Arabia's attempts to dry up our sources of funding, we must
realize that the sums donated by this or that family via the the Islamic
Resistance Support Organization, even if modest, are in fact very large and
extremely valuable sums. Obviously, we do not want to embarrass anyone... [so
that they will] donate to us, but we trust the faith, the insight, and the
reliability of all those who donate to us, since they are the people with whom we
have, together, [overcome] the most difficult of days and circumstances, and the
most dangerous of challenges and hardships. With them, we have completed the
path; we have triumphed, and passed through all the difficult stages; with
them, we will pass through all the
difficult stages to come, Allah willing."
In an attempt to reassure the resistance-supporting
public, he added that they must not worry, because Iran would continue to send
economic, material, and military aid to Hizbullah despite the pressures and
threats against it as well.[20]
*H.
Varulkar is Director of Research at MEMRI; E. B. Picali is a Research Fellow at
MEMRI.
Endnotes:
[1] On Hizbullah's involvement
in global drug trafficking, see MEMRI Inquiry and Analysis No. 1227, Hizbullah's
International Drug Network Preoccupies Europe, February 9, 2016.
[2]
Congress.gov/bill/114th-congress/house-bill/2297/text;Treasury.gov/resource-center/sanctions/Programs/Documents/31cfr566_hizballah.pdf;Treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20160415.aspx.
[3] Al-Akhbar
(Lebanon), January 11, 2016, March 31, 2016.
[4] See MEMRI Inquiry and Analysis No. 1232, Lebanon's Failure To
Support Saudi Arabia In Struggle With Iran Sparks Crisis Between Lebanon And
Saudi-Led Gulf, March 7, 2016.
[5] Al-Akhbar (Lebanon), January 11, 2016,
February 2, 2016, March 31, 2016.
[6] Alahednews.co.lb, December 21, 2015; Al-Safir
(Lebanon), Al-Akhbar (Lebanon), December 22, 2015.
[7] Al-Akhbar
(Lebanon), December 25, 2015.
[8] Al-Akhbar
(Lebanon), March 31, 2016.
[9] Al-Liwa (Lebanon), April
29, 2016.
[10] Al-Nahar
(Lebanon), May 4, 2016.
[11] Al-Akhbar
(Lebanon), May 16, 2016, Al-Safir (Lebanon), May 13, 2016.
[12] Alahadnews.com.lb, May 2,
2016.
[13] Al-Safir (Lebanon),
May 12, 2016.
[14] Al-Safir
(Lebanon), May 13, 2016.
[15] Al-Akhbar (Lebanon),
May 13, 2016.
[16] Al-Safir (Lebanon),
May 13, 2016.
[17] Al-Safir, Al-Akhbar,
Al-Mustaqbal , Al-Modon (Lebanon), May 13, 2016.
[18] Al-Safir
(Lebanon), May 13, 2016; Al-Akhbar (Lebanon), May 13, 2016.
[19] Al-Nahar (Lebanon), May 14, 2016. This hadith is attributed
to Abu Dhar Al-Ghafari, a Companion of the Prophet Muhammad, and the fourth
person to be converted to Islam by him. However, no verification or evidence
has been found for such a hadith in the Book of Hadiths, and some even claim
that it is not reliable.
[20] Alahednews.co.lb, May 6,
2016.
Source: http://www.memri.org/report/en/0/0/0/0/0/0/9196.htm
Copyright - Original materials copyright (c) by the authors.
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