Just like most groups that earn significant amounts of money through a variety of illicit and quasi-illicit means, Hezbollah maintains a portfolio of businesses that it uses to launder money, disguise criminal activities, and evade authorities and law enforcement officials. Like most of Hezbollah’s enterprises, these businesses span the globe. It is not entirely clear how closely Iran is involved, but according to Levitt, “The IRGC is known to operate front companies and employ agents in Dubai, a critical trans-shipment point for goods—both legitimate and illicit—from around the world to Iran.”20 Furthermore, Hezbollah maintains several front companies throughout sub-Saharan Africa, in countries including Angola and the Democratic Republic of Congo (DRC). In addition, the U.S. Treasury Department has targeted businesses in The Gambia, Sierra Leone, the British Virgin Islands, and Lebanon.21
In the United States, front companies included Sigma Distribution, Inc. and Byblous Distribution Investment, Inc., the latter of which was a perfume distribution company. Other front companies included Arosfram, a food import company, and Tajco Company, LLC, a property developer in Lebanon. Still, perhaps one of Hezbollah’s most valuable assets is Jihad al-Binaa (JAB), (translated as “Construction Jihad”), widely recognized as the group’s reconstruction and humanitarian assistance wing. As Kilcullen recounts, within days of the cease-fire that ended the July 2006 33-day war with Israel, JAB deployed teams to assess the destruction of Beirut’s suburbs. JAB helped Hezbollah garner crucial political capital among its constituents following the war, as the group leveraged its nonmilitary capabilities to help balance the military losses it incurred.22
Money Laundering
The Lebanese Canadian Bank (LCB) has been accused of helping the Shiite terrorist group launder its profits from cocaine trafficking by mixing drug proceeds from money earned through the sale of used cars, purchased in the United States and resold in Africa.23 In 2011, the Obama administration accused the LCB of laundering money in connection to a complex smuggling ring that involved narcotics shipped from Latin America through West Africa and to Europe. The ring also allegedly involved used automobiles purchased in the United States and sold in West Africa.24 The U.S. Drug Enforcement Administration (DEA) insists that over $300 million was transferred to the United States for the purchase of used cars, which were then sold and the money sent through Hezbollah networks to the group’s finance committee in Lebanon.25 Hezbollah has also laundered money through hawala dealers, money service businesses like Western Union, and charities, in addition to smuggling bulk cash packages onto airplanes and hiding money in the tires of used cars shipped overseas. A DEA investigation found that the Lebanese Canadian Bank also did business with a Belgian diamond trader named Ibrahim Ahmad, whose clan (according to a UN report) has ties to Hezbollah and was involved in counterfeiting, money laundering, and diamond smuggling.26
Dark Economy
Lebanon’s 15-year civil war helped expand Hezbollah’s dark economy by relocating supporters and sympathizers to other parts of the world. And just around the time Lebanon’s civil war was coming to a close, the horrific civil wars in Liberia and Sierra Leone made it easier for Hezbollah to exploit the natural resources of West Africa. As noted above, Lebanese traders and merchants have been active in the region stretching back decades. The Lebanese presence grew even more robust during Lebanon’s own civil war, which raged over a 15-year period between 1975 and 1990. Lebanon’s once robust economy was devastated by the civil war, as several generations of Shia left the northern Bekaa and the Hirmil Region to find work in West Africa, many becoming quite successful.27
Kidnapping for Ransom (KFR)
For Hezbollah, kidnapping has been less about collecting a ransom and more about terrorizing Israelis living abroad and acquiring persons that can be traded in future swaps for imprisoned terrorists. Kidnapping rings have been active throughout Africa, not just in the traditional Hezbollah stronghold of West Africa, but also in East Africa, in countries including Eritrea, Ethiopia, Kenya, Somalia, and Tanzania. As Levitt notes, “Hezbollah’s interest in kidnapping Israelis appears to have been an Islamic Jihad Organization (IJO) innovation—a new take on an old tactic—executed as a means of collecting intelligence and securing the release of comrades incarcerated in Israel’s and other countries’ jails, completely different from the classic model of kidnapping for ransom.”28
Kidnapping teams mostly operated within clan and family networks to maintain operational security and throughout the mid- to late-1980s, Hezbollah targeted Russian diplomats, Israeli soldiers, American intelligence officials, and French citizens. The CIA station chief in Beirut was kidnapped, tortured, and subsequently executed in 1984. In return for kidnapped French citizens, France agreed to release the Lebanese terrorist Anis Naqqash and four of his accomplices, and agreed to the unfreezing of financial assets and military hardware for Iran.29 Two years later, in 1986, two Israeli soldiers were abducted from the occupation zone. In 1988, Hezbollah abducted Lt. Col. William Higgins, head of the 76-man Observer Group Lebanon (OGL). In exchange for his release, the terrorists demanded the withdrawal of Israeli forces from south Lebanon; the closure of all American diplomatic missions in the Middle East; release of all Lebanese detainees held in Khiam prison and all Palestinian prisoners in Israeli jails; and finally, the rather abstract (and unrealistic) demand of “the end of US influence in Lebanon.”30
In late 2000, Hezbollah began targeting Israeli soldiers in the disputed Sheba Farms region, snatching three soldiers during a cross-border raid in October of that year. (The three soldiers—Benny Avraham, Adi Avitan, and Omar Sawaid—were executed by Hezbollah).31 That same year, in October, Hezbollah arranged an elaborate kidnapping of Elhanan Tannenbaum, an Israeli reservist colonel, during an alleged drug deal in Dubai.32 In 2003, Hezbollah operatives planned to kidnap a former Israel Defense Forces (IDF) colonel and diamond trader in Cameroon. Finally, the most recent Hezbollah kidnapping in July 2006 of two Israeli soldiers on patrol, Sergeant Ehud Goldwasser and the patrol’s commander, Eldad Regev.33
Armed Robbery and Theft
While Hezbollah is not necessarily known for armed robbery, it does deal in stolen money and goods, pilfered from a cross-section of sources. Among the stolen goods that Hezbollah traffics are inane items like socks and toilet paper, but also cutting edge technology and electronic gadgetry that the group makes thousands of dollars from, like the newest cell phones, laptops, and game consoles, including Sony PlayStation systems. In some cases, “blood money,” as it has been called, is stolen currency purchased by the group for 65 cents on the dollar. The money is stolen abroad and then smuggled from Iran through Turkey and Syria into Lebanon, with some of this money emanating in Iraq.34 Similar to archetypal mafia organizations, Hezbollah is able to make a profit off of a dizzying array of seemingly benign goods, including baby formula.
Smuggling, Trafficking, and Counterfeiting
Among the goods that Hezbollah has been known to counterfeit, including fake Nike sneakers, unlicensed T-shirts, knockoff sports jerseys, DVDs, zigzag rolling papers from Indonesia (commonly used to roll marijuana), perhaps the most lucrative has been Viagra from China. From a more sinister perspective, the group has also been known to make, sell, and use counterfeit passports and national identity cards, as well as counterfeit currency (with the help of Iran).35 Considering all of Hezbollah’s counterfeiting, smuggling, and trafficking operations, among the most lucrative scams the group executed was a cigarette smuggling ring based in Charlotte, North Carolina. Cartons of cigarettes purchased in North Carolina for USD $14 could be sold in Michigan for twice as much. In all, it is believed that Hezbollah earned tens of thousands of dollars by transporting and selling untaxed cigarettes throughout the United States.36
In February 2003 alone, it is alleged that Hezbollah raised nearly US $2 million through the illegal diamond trade.37 Many of these diamonds were mined in Sierra Leone and then transported through Liberia and Guinea.38 Next, they were sent abroad to the world market, to cities in
cluding Antwerp, Dubai, London, Tel Aviv, New York City, and Mumbai. Antwerp is the center of the global diamond trade and authorities there estimate that less than a third of US$600 million worth of diamonds exported annually from Congo are done so legally. According to a Belgian intelligence report dating back to 2000, individual Lebanese merchants and entire companies have been linked to Hezbollah, among them Imad Abdul Reda Bakri, Ali Ahmad Ahmad, Afrostars Diamonds BVBA, Triple Diamonds NV, and Ezzideen Diamonds BVBA.39
Hezbollah has been particularly active in the war-torn DRC over the years, where its members have exploited the country’s vast natural resources, which include diamonds but also gold, uranium, and tanzanite.40 Perhaps even more troubling, Al-Qaida reportedly used the same model and contacts as Hezbollah when operating throughout West Africa.41 Hezbollah members and Israeli diamond buyers have even placed business above politics or personal animosity in an effort to collaborate in moving diamonds onto the global market from Sierra Leone, the DRC, and Angola. The expression that came to characterize this working relationship was, “here we do business, there they do war.”42
These same networks used by Hezbollah to transport diamonds and licit goods can also be used to transport narcotics. In recent years, West Africa has emerged as a critical hub in the global cocaine trade, with South American cocaine transiting through the region before being shipped abroad to Western Europe and parts of Asia, including Russia. Lebanese networks, and specifically Hezbollah, are one of the main players involved in the import and smuggling of cocaine from West Africa across the Sahel and on to Europe.43
High levels of corruption, a lack of the rule of law, and police forces overwhelmed by general security issues, to say nothing of counter-narcotics, make West Africa the ideal “soft target” for drug traffickers. This is especially true of criminals who are seeking to use the region as an area to forge new criminal relationships and illicit partnerships.44 It is unknown whether or not the rise in drug trafficking through the West African conduit is driven by Hezbollah, or whether its members are merely opportunists, taking advantage of a longstanding financial and logistical network already in place (to include logistical networks used to smuggle arms).
Known Hezbollah supporters and brothers, Ali Farhat and Hassan Farhat, were accused of trafficking in cocaine, heroin, and marijuana, in collaboration with a Nigerian drug dealer in possession of a Canadian immigration document.45 More broadly, Hezbollah has also dealt methamphetamine and in the last several years has been receptive to a burgeoning relationship with Mexican drug cartels. Hezbollah operatives have been accused of trafficking in arms, drugs, and women. Indeed, Hezbollah operatives have been tied to Poland, Hungary, Moldova, the Balkans, and Romania.46 Another Hezbollah hangout and criminal hotbed is Margarita Island, located off the coast of Venezuela.
Extortion and Protection
Hezbollah’s foray into extortion and protection grew out of a copycat mechanism after watching the success of its erstwhile rival, Amal, a group which collected nearly USD $2 million from Lebanese expatriates across Nigeria, Liberia, and Cote D’Ivoire. These individuals paid, because they warned that if they eschewed such payments, their families in Lebanon would be targeted.47 In an attempt to emulate the success of Amal, Hezbollah also began conducting Mafia-style shakedowns and threatening the welfare of relatives living back in Lebanon if “donations” were not paid.
Other than necessity, it remains unclear why a group so concerned about its image as a protector, would turn to such parasitical means of obtaining money. When Hezbollah’s threats have gone unheeded, the group has employed thugs to attack commercial businesses and employ “Chicago-style racketeering” methods to collect cash. Living among the mostly middle-class Lebanese traders in West Africa is a small number of multimillionaires who have made their money from import-export, manufacturing, and agro-industrial companies. According to the European Union, although only a small portion of Lebanese in West Africa are sympathetic to Hezbollah’s goals, many business owners pay the extortion money as a way of keeping the group “off their backs.”48
External State Support
From Iran alone, Hezbollah is estimated to receive between $200 million and $350 million annually.49 This money is transferred to the terrorist group in deliveries of cash, in the form of weapons, and through private charities linked to Iran’s leadership.50 Even as its own economy suffers under increasing sanctions, Iran continues to fund Hezbollah because the simple fact is that Iran needs Hezbollah. The showdown over Iran’s nuclear program has led to an escalating “shadow war” between Iran on one side and Israel and the United States on the other.51 This war has the plotlines and characters of a great spy novel. Iran accuses the Tel Aviv-Washington alliance (with the tacit blessing of Riyadh) of assassinating its nuclear scientists, launching sophisticated cyber attacks aimed at crippling its ability to enrich uranium, and funding anti-Iranian terrorist groups like Jundallah.52 Besides targeting Israeli diplomats and embassies abroad, Iranian nationals and Hezbollah members were implicated in a foiled assassination plot that involved hiring Mexican gang members to kill the Saudi ambassador to Washington.53 From a conventional military standpoint, Iran is limited in what it can do to strike back at its adversaries, so many observers believe this will lead Tehran to continue funding Hezbollah to provide it with the operational ability to strike on Iran’s behalf.54
There is no doubt that Iran has played a major role in Hezbollah’s rise from a disorganized militia to a powerful politico-military force in Lebanon, although Tehran’s influence has waxed considerably since the death of Khomeini. Khamenei lacks the same currency with Hezbollah’s leadership and “although in theory Khameini has the final say, his role appears to be more subtle,” never overruling a single decision made by the Consultative Council.55 His influence via Hezbollah is de jure rather than de facto and as his approval has been reduced to little more than a rubber stamp.
The relationship between Iran and Hezbollah is based on a shared ideology and a financial backing that provides Hezbollah with both money and weapons to ensure that Israel must account for the threat on its border. But despite Iranian largesse, Hezbollah does not take orders from Tehran nor does it operate at the behest of the Iranian government, the Pasdaran, or the Supreme Leader.56 Most experts agree that Iran had no operational involvement with the planning and execution of Hezbollah’s 2006 conflict with Israel.57 Still, after observing the popularity that the battle generated for Hezbollah throughout the region, the Iranians were quick to take credit. More recently, Israel’s Prime Minister Benjamin Netanyahu has accused Iran of using Hezbollah to strike at Israeli targets abroad, including the July 2012 suicide bombing of a Bulgarian bus that killed five Israeli tourists.58 Other attacks have been thwarted in locales as diverse as Cyprus, Kenya, India, Thailand, and Georgia.
Unfolding events in Syria will undoubtedly affect Hezbollah. Syria has served as the main conduit for Iranian arms passing into Hezbollah-controlled Lebanese territory. Moreover, Syria has worked tirelessly behind the scenes to manipulate Lebanese internal political dynamics from 1992 until 2005, when Syria was forced minimize its presence in Lebanon following the assassination of Lebanese Prime Minister Rafiq Hariri in February 2005.59 Up until the 2005 Cedar Revolution in Lebanon, Syria relied on Hezbollah and to a lesser extent the Lebanese government to further its regional policy objectives, especially as these related to countering Israeli hegemony in the Middle East.60
WHAT HEZBOLLAH ACHIEVED WITH THESE FUNDS
Through its reliance on the gray and dark economies, Hezbollah has grown both its operational and organizational capabilities. On the operational side, such a vast war chest has allowed Hezbollah to purchase the newest arms, munitions, and technologies; operate a sophisticated intelligence network; train its recruits; and control precious territory. The group’s organizational capabilities have been bolstered by its bank account as well. Leadership, ideology, human resources (to include recruitment), and media have all received a boost
from a steady flow of funding.
Hezbollah is unique because it is such a richly resourced organization. This embarrassment of riches has allowed Hezbollah to create an extensive social services network throughout Lebanon, build a sophisticated political party complete with its own media wing, and maintain an arsenal of high-tech weaponry that affords it the ability to conduct terrorist attacks abroad or stand its own against Israel, the most feared military force in the region.
Operational Capabilities
Throughout much of its existence, Hezbollah has enjoyed state support not only from one regional power, but from two. In the history of insurgencies, this arrangement is rare, and it is one of the main reasons why the group has established itself as a major force in Lebanon. Syria and Iran have provided Hezbollah with a wide range of resources, including sanctuary, intelligence, training, organizational aid, financing, and weapons. The Lebanese diaspora communities in Latin America, West Africa, and Southeast Asia have also given Hezbollah financial support and a transnational intelligence gathering capability. These communities abroad have been linked to organized crime, with funds sent from Ciudad del Este, Abidjan, and Bangkok back to Beirut.
Weapons
In Lebanon, Hezbollah relied on resourcefulness and Iranian sponsorship to keep its arsenal current. Besides making Hezbollah more lethal, weapons and matériel were a resource that helped sustain the group since the early 1980s, contributed to its victory over intra-Lebanese rivals, made the group a more versatile threat, and had a major psychological impact on Israel. In his assessment of Hezbollah’s performance in the July 2006 battle with Israel, Andrew Exum writes, “Hezbollah trained on, maintained, and used all of its weapons systems in a skilled and disciplined manner.”61 Hezbollah’s stockpile of Russian made, wire-guided and laser-guided antitank missiles even managed to destroy Israel’s most modern tank, the Merkava.62
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