Hezbollah and the Looting of Lebanon

As is well known, Hezbollah is a terror group supported by the world’s leading terrorist state, Iran. Hezbollah is also a criminal enterprise, that has managed to live off of, and now has helped to destroy, its host country of Lebanon.

For years Lebanon has been living beyond its means. The extent of the country’s profligacy was hidden by the large sums sent back to Lebanon by a vast and successful Lebanese diaspora, and by the investments of rich Gulf Arab states, especially Saudi Arabia and Kuwait. But the remittances have collapsed for several reasons. Lebanese abroad would send money to Lebanese banks, or often, bring the money back to Lebanon personally. Now there is no trust in Lebanese banks, many of which are close to failing. They lent money heedlessly to the Lebanese state, which cannot pay those loans back. To prevent a run on the banks, they have been limiting depositors to withdrawing $100 a week, a move that has of course terrified and angered depositors. So remittances from abroad will not be going to the banks. But the most important reason for the decline in remittances has been the economic situation of Lebanese in the diaspora, especially in the Gulf Arab states. Although oil prices have increased since 2020, they are still lower than they were ten years ago. This has led to declining revenues in Saudi Arabia, the UAE, and Kuwait, where hundreds of thousands of Lebanese work; like many others, they have lost income from businesses, lost jobs, seen their wages slashed, and have much less to send back to their home country.

Now that Iran’s proxy Hezbollah controls the Lebanese government, none of the rich Sunni states of the Gulf (save possibly for odd-man-out Qatar) is about to invest in, or lend money to, Lebanon. Lebanon has no significant hard currency reserves. It does, however, have $16 billion in gold reserves. But when the government owes more than $100 billion, $16 billion is small beer. Then there is what the Jerusalem Post’s Seth J. Frantzman has referred to as “the shadow economy controlled by Hezbollah. Referred to as ‘the system,’ it appears that Hezbollah siphons off pieces of the economy, amounting to between $500 million and $1 billion a year.”

How Hezbollah “siphons of pieces of the economy” is not explained. But I would assume that it operates as do most criminal organizations – that is, becoming the part-owner of legitimate businesses by making offers that “can’t be refused.” We already know that Hezbollah is one of the world’s major drug traffickers and smugglers, specializing in cocaine and heroin, with operations across the world, but mainly in the U.S., West Africa, and, especially, in the Triple Frontier (where Argentina, Paraguay, and Brazil all meet). If it adds $1 billion a year to its criminally-acquired “portfolio” of businesses, this still does not account for the full – devastating — effect Hezbollah has had on the Lebanese economy.

Hezbollah has gone in a decade from being completely outside the government to now holding almost half of the cabinet posts in Beirut. In addition, Hezbollah now controls non-Shi’a collaborators including, most notably, the former Lebanese President, Michel Aoun, who is a Maronite but follows the policies set down by Hezbollah’s leader, Hassan Nasrallah.

As long as Hezbollah runs Lebanon, the American government is not going to aid Lebanon to help bail out its economy. The conditions it would set are impossible for Nasrallah to meet. He is not about to cut his ties either to Iran or to Syria, nor to give up his arsenal of 150,000 missiles that he hopes eventually, and possibly quite soon, to use against Israel. As for the Gulf Arabs, and especially the most deep-pocketed of them all, Saudi Arabia, it will neither give, nor lend, nor invest money, as far as Lebanon is concerned, until Hezbollah has been stripped of its power, disarmed, and ended his links to Iran..

I don’t see how Lebanon can fall much deeper into crisis than it already has. Nor can the region be more destabilized than it is now, other than if all-out war does indeed break out between Lebanon and Israel. In Lebanon, the banks are teeter-tottering, severely limiting withdrawals by depositors; the government is held in widespread contempt; Hezbollah bezonians continue to beat up peaceful anti-government protesters, the pound continues to plummet, and unemployment skyrockets. Hezbollah holds onto its 150,000 missiles and threatens to drag Lebanon into a war with Israel, as it did in 2006, a war the Lebanese do not want and that Hezbollah cannot win.

Right next door in Syria, during thirteen years of civil war, more than a half-million people have been killed; six million have fled the country, and five million Syrians have been internally displaced, and now live in tent cities. The country has suffered $350 billion in damage. Turkey now has seized most of Idlib Province, in the west, as it had previously done to Afrin in the north. Erdogan promises that Turkish troops will not leave Syria until the country “is free.” That means they will remain there for a very long time.

Hezbollah will continue to engage in drug trafficking, money laundering, and extortion. It will continue to demand, and get – it has no trouble making good on its threats of violence inside Lebanon – “shares” in Lebanese businesses, cuts of government contracts, kickbacks from private contractors. And its presence will continue to drive potential donors, lenders, and investors away, when those donors, lenders, and investors are most desperately needed. None of them are willing to provide funds long as Hezbollah, that “state within a state,” controls Lebanon. None want to invest in a country that at any moment may be dragged into a war that will be devastating to its infrastructure. Hezbollah now has hidden 150,000 missiles all over civilian areas of southern Lebanon and southern Beirut. It will be very hard for Israel to locate and destroy so many, but the IDF will no doubt find a way, as it always does, and in the process wipe that smile off Nasrallah’s face.

For Hassan Nasrallah, ruling the roost from his hideout (“even I don’t know where my hideout is”), things couldn’t be better. For Lebanon, of course, things couldn’t be worse.