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Hezbollah Isn’t Broke. So Why Is Everyone Claiming Otherwise?

U.S. officials claiming that sanctions against Iran have put the Lebanese terrorist organization in dire financial straits are cherry-picking evidence to paint a misleading picture

Tony Badran
May 31, 2019
Photo: Anwar Amro/AFP/Getty Images
Photo: Anwar Amro/AFP/Getty Images
Photo: Anwar Amro/AFP/Getty Images
Photo: Anwar Amro/AFP/Getty Images

“Terrorist groups like Hezbollah are withering on the vine as Iran sanctions take effect,” Sen. Tom Cotton tweeted last week, voicing what has now become a consensus in Washington. In this age of polarization, the unanimity of this take is all the more remarkable, as it is shared by the Trump administration, Middle Eastern analysts, as well as The New York Times, The Washington Post, and even the Israeli government.

But this conventional wisdom is wrong. Hezbollah is nowhere close to being broke.

Such a result would indeed be remarkable, if true, considering that many of the administration’s new sanctions meant to hurt Hezbollah’s patron, Iran, have only been in effect for a few months, and not all have been fully applied. Without question, the maximum pressure campaign is the right policy. And there is no doubt that the administration’s economic squeeze is inflicting serious pain on Tehran, though more pressure can and should be applied. But none of this means that Hezbollah is “withering” or close to it. That assessment has been concocted by U.S. officials who latched onto isolated comments by Hezbollah’s secretary general, Hassan Nasrallah, and other flimsy evidence, which they are using to reach rash and unfounded conclusions about the organization’s financial state.

A cynic might dismiss all this very public messaging as a PR product by administration officials, highlighting newspaper stories about their successes. An even more cynical mind might imagine that stories about the impending financial collapse of Hezbollah are a way for the Trump administration to declare victory prematurely before pivoting to a new round of negotiations with Iran.

In early March, shortly after the United Kingdom blacklisted the entirety of Hezbollah, Nasrallah addressed his supporters in a speech marking the 30-year anniversary of the Islamic Resistance Support Association, a Hezbollah fundraising organization. Nasrallah explained that the U.S. was waging a financial war against the group and against Iran, and that more American sanctions were to be expected. After recalling the association’s past work, Nasrallah went on to say that “today, the ‘resistance’ needs this popular support and embrace.”

American media reports highlighted these select, decontextualized quotes, and the conventional wisdom took form: Things were so bad that Hezbollah was begging for donations. In turn, U.S. officials saw in Nasrallah’s remarks evidence of desperation caused by the economic pressure on Iran. Indeed, Nasrallah’s speech became the centerpiece in the public briefings of U.S. officials, as the best exhibit for the success of the pressure campaign on Iran. “Nowhere better can the impact of our efforts be seen than in the statements of Hezbollah’s secretary general,” said Assistant Secretary of the Treasury for Terrorist Financing Marshall Billingslea. “In fact, he’s stooping to new lows, recently resorting to exploiting charitable donations and diverting that funding to its fighters.” Meanwhile, U.S. special representative for Iran, Brian Hook, declared, “The leader of Hezbollah made a public appeal for donations and it was the first time in history they’ve had to do that.”

Even Secretary of State Mike Pompeo joined in, citing Nasrallah’s speech during his visit to Beirut: “Our pressure on Iran is simple. It’s aimed at cutting off the funding for terrorists, and it’s working,” Pompeo said. “On March 8th, Hassan Nasrallah begged Hezbollah supporters to make new contributions.”

Since officials and analysts have relied heavily on Hezbollah’s rhetoric, it’s useful to begin by reexamining what Nasrallah actually said, in context. Nasrallah’s line about popular support for the “resistance” began with an exposition of the work of the Islamic Resistance Support Association and Hezbollah’s changing needs, based on circumstances, in previous years. Between 1982 and 2000, and right up to 2006, he said, there was a dire need for support. Then after 2006, he continued, Iran, especially, increased assistance. As a result, Nasrallah explained, he had told association activists at the time “that we might not need money, but continue your work to provide room for participation for those who want to perform jihad with their money.”

In other words, Nasrallah was saying that the association’s donations drives were taking place even during the period when Iran’s funding was increased, after the 2006 war with Israel. That is to say, these fundraising drives are not an indicator of the group’s financial health.

How does the current moment compare with these previous eras? “Today, we are [somewhere] in between,” Nasrallah clarified; an acknowledgment of the challenges of blacklisting, and, more specifically, an anticipation of added pressure down the road; but hardly the message of cash-strapped panic it was portrayed as.

At the heart of Nasrallah’s much-cited speech was the domestic situation in Lebanon, which is central to Hezbollah’s operations and finances. The Lebanese economy is moribund, and international donors are demanding structural reforms from the government in Beirut. Given that context, it’s clear that Nasrallah’s messaging was not aimed at raising insignificant amounts of small change from the Shiite community to fund Hezbollah’s operations. Rather, he was addressing the Shiites, as their communal representative in the political system at a moment of economic hardship and uncertainty in Lebanon. Nasrallah was making his appeal to Lebanon’s Shiites while the sectarian leaders that form the Lebanese government were maneuvering to agree on measures supposedly to reduce spending, especially in the bloated public sector, in order to unlock Western loans that might keep the country afloat just a little while longer.

However, the assumption that Hezbollah was teetering on the brink of financial collapse was so unshakable that analysts engaged in even further misreading. This time it was a follow-up speech by Nasrallah in April, commemorating Hezbollah’s wounded. The evidence was yet another isolated line; an anecdote about a supporter telling Nasrallah how he and his wife and son would be willing to sell their kidneys so that the “resistance” could go on. Whether it was due to laziness or simply the inability to properly read obvious rhetorical devices, analysts once again asserted Hezbollah’s desperation for funds: Conditions are so bad now that Nasrallah needs supporters to sell their organs!

Well, not really. In fact, before Nasrallah relayed this and another similar anecdote at the end of his speech, he prefaced it by joking that, after his March speech, he reassured everyone who inquired that things were not actually that dire.

So why was Nasrallah openly making these statements at this particular juncture? He wasn’t reacting to any outcry from his supporters. It was he who decided to take the initiative; his speeches and anecdotes are purposeful rhetoric intended to serve a specific function: promoting total identification between Hezbollah and the Shiite community. A couple of years ago, for example, analysts held up the Islamic Resistance Support Association’s “Equip a Mujahid” crowdfunding campaign as yet another proof of the group’s financial dire straits—that’s two years before the maximum pressure campaign against Iran. Only that longstanding practice also had a specific function, which Nasrallah mentioned in his March speech: to open up the space for the community to participate in the jihad, further strengthening the bonds between it and Hezbollah.

Nasrallah uses his anecdotes—whether true or fictional it makes no difference—to foster a sense among the Shiites of Lebanon of a union of fate between them and Hezbollah. But since analyzing rhetoric only takes us so far, what about actual evidence?

Since March, officials and analysts have been amplifying Nasrallah’s rhetoric with various claims reported in the Lebanese and American press. The first of these to appear in the U.S. was a report in The New York Times that more or less encapsulated the gist of the consensus. In addition to the quotes from Nasrallah’s speech, the report quoted the grumblings of a Shiite militiaman in Syria complaining about a cut in his salary. The report proceeded to juxtapose the status of such Shiite fighters in Syria with that of Hezbollah. It then quoted a “Hezbollah fighter” who received “only base salaries,” and a “Hezbollah employee”—his job is unclear—who alleged that his salary, and some other perks, were cut. Lastly, the report quoted a “Hezbollah official,” who denied any cuts in salaries.

Taken together, the reports appeared to be more like a game of telephone, with bits and pieces getting passed on and mutating from one report to the next. In part, this reflects how the U.S. press has ingested the habits and style of Beirut’s cafe culture: trafficking in rumors from “insiders” and “sources close to” this or that, who supposedly heard something, which is never pinned down and verified, within a framework of endless speculative analysis and excitable confirmation bias. Analysts cited articles in the Lebanese press which spoke of Hezbollah closing down “a thousand offices and apartments.”

Were these apartments inhabited by families or were they repurposed for use by the group? Leaving this detail unaddressed creates an impression that Hezbollah was cutting down on its housing subsidies—which was the claim The New York Times report cited in the Syrian context. If that were the case, then closing down nearly a thousand apartments means that several hundred families were made destitute. Only nobody has heard a peep about that in Lebanon.

Compare this with 2017, when people in the Hezbollah-controlled southern suburbs of Beirut rioted, and even cursed out Nasrallah in front of TV cameras, after the party removed and shut down some illegal construction, which negatively affected a limited number of people’s businesses and livelihoods. Today we’re told Nasrallah is so desperate he’s appealing for people to sell their kidneys, and yet—far from rioting—no one makes a sound.

Rather, according to the second report on the subject in the American press, published in The Washington Post, the result of Hezbollah’s supposedly stifling financial crunch was to cancel unspecified programing on its al-Manar television station, which resulted in some layoffs. The source for this claim is a “Hezbollah insider,” whatever that means. None of those who were allegedly let go were located or reached for comment. At the same time, the southern suburbs of Beirut are headquarters to media operations supporting other Iranian assets in the region, like Yemen’s Houthis, who receive training and support from Hezbollah. None of these outlets has shut down, nor have there been stories of layoffs. In contrast, there has been ample local coverage of dismissals and payroll problems at al-Mustaqbal, the TV station and newspaper owned by the prime minister, Saad Hariri.

In fact, far from closing down institutions, Hezbollah has been building new ones. For instance, in recent months, Hezbollah’s Islamic Health Commission opened the Shifa Specialty Hospital, a large facility for psychiatry and mental health in the Aramoun region, in southern Mount Lebanon, at a cost of $15 million. There are also major investment projects in Hezbollah’s southern suburbs of Beirut. Just this month, the massive Centro Mall opened its doors in Jnah, a few minutes from Beirut airport.

Other services don’t seem to have been affected much, either. Again in March, Hezbollah’s small-loans provider, Al-Qard Al-Hassan Association (which is on the Treasury Department’s sanctions list) posted that it gave $476 million in interest-free loans in 2018. And when Nasrallah addressed supporting the “resistance” in his speech, he claimed that party members and institutions had raised $2 million a few months ago, which he made sure reached “the brothers in Yemen.”

So what is actually going on? Well, Nasrallah said it rather plainly: “reorganization, proper management, and prioritization.” To be sure, this in part reflects the cumulative sanctions the U.S. has slapped on the group in recent years. The close watch the U.S. has kept on Lebanon’s banks has made it more difficult to openly launder large sums through those institutions, as it did only a few years ago. But there are other considerations as well.

Over the past eight years, Hezbollah has been involved in military campaigns in four countries, most notably in Syria. In addition, Hezbollah has been using Lebanon as an operational headquarters to host, train, and treat militia fighters from the region. To sustain the logistical needs alone of these campaigns, Hezbollah’s expenditures had to grow exponentially. While its fighters are still very much actively deployed, in Syria especially, the conditions in all four theaters today have de-intensified since the peak of the conflicts, which has allowed Hezbollah to decrease or reallocate spending on the operations.

In fact, this is precisely the picture which emerges from local media reports—those which analysts either don’t cite or cherry-pick from. Some reports relay a decrease from previous spending levels on provision of food for fighters in Syria. One report, citing “sources close to Hezbollah,” explained that the group was now “squeezing expenses.” It is curbing spending in certain areas, for example by dispensing with rented spaces—which clarifies that these rented spaces were indeed for official, not civilian, use, and were now no longer essential. However, both this and the previously mentioned report about the closing down of “offices and apartments,” published seven months apart, categorically deny any freezing or reduction in salaries. Rather, the explanation their sources present is one of precaution and proper management: “The money is still there. But priority now is to manage it properly.” In other words, the message is uniform, and it repeats what Nasrallah said in March: prioritization and proper management.

The anecdotal evidence gathered in U.S. media reports hardly paints a different picture. If anything, it reinforces it. The “Hezbollah insider” The Washington Post spoke with in Beirut, for instance, affirmed that full-time fighters continued to receive salaries. Other fighters, the source claimed, are being pulled from Syria and reassigned back to reserves. This is in keeping with the premise that Hezbollah’s operations today no longer require what they did a few years ago and things are being brought back to their normal state—not that sanctions are forcing a cutdown in operational expenditures.

There are other questionable assumptions in the statements of U.S. officials. For instance, it is unclear whether or not the money Iran sends Hezbollah really constitutes “70% of their budget,” as some have asserted. If 70% of Hezbollah’s budget stands at $700 million, that means the entirety of Hezbollah’s global criminal enterprise (cocaine sales included) accounts for only $300 million. This makes little sense. To believe that Hezbollah has gone from taking in hundreds of millions from Iran and hundreds of millions more from criminal ventures to relying on paltry sums from the Shiite community in Lebanon is near-fantastical. And it is unwise for the administration to claim it is true.

Hezbollah is not bankrupt. But have Iranian funds to the group been affected by sanctions on Tehran? The answer is most likely yes but it misses the key point. The more critical question is: Has Hezbollah’s ability to continue to run its operations, both military and nonmilitary, been substantially curtailed at this point in the maximum pressure campaign? There is no convincing evidence to suggest that anything like that is happening.


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Tony Badran is Tablet’s news editor and Levant analyst.

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