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Plates appeared, piled high with fried eggplant and eggplant salad, and platters of humus garnished with parsley and olive oil. Huge pots overflowed with rice, and there were bottles upon bottles of soft drinks. Morale was high. This was the celebration two months ago of Victory of Resistance Day, the anniversary of the withrawal from Lebanon in May, 2000 of the Israeli army.

The scene was captured by a novice photographer in the village of Bint Jbail - the same village in which an especially fierce battle between the Israel Defense Forces and Hezbollah is now raging. Only six years ago, some of the revelers were working in Metula, Kiryat Shmona and other villages in the Galilee. Israelis are familiar with the stories of the South Lebanese Army (SLA) soldiers who came to live in Israel but less so (perhaps from schadenfreude) with the fate of those SLA soldiers who opted to return to Lebanon or of those workers who in one fell swoop were deprived of their livelihood and could no longer receive a salary from Mr. Yehezkel or from the Gavriel family, and whose home village was conquered by Hezbollah.

These workers found themselves in a new situation. As long as they were working in Israel, they were required to pay the SLA approximately $50 a month per worker in exchange for a work permit. This is how the arrangement worked: Every SLA soldier who enlisted in the army received a salary and benefits - in the form of work permits for workers over whom he was responsible. The higher his rank, and the more dangerous his position, the more work permits he received.

When this comfortable arrangement ended with the IDF's withdrawal from Lebanon, Hezbollah introduced new practices in the villages of southern Lebanon. The SLA men, who in some cases had amassed a small fortune, were required to pay large sums to the organization, as a means of "redeeming" themselves for their treachery. Those who had worked in Israel, earned good wages and had built impressive homes (some of which have now been bombed by the IDF) were required to pay for services and transit permits. Tuition payments for the al-Mahdi school network run by Hezbollah, were graduated. The poor paid nothing, those who had worked in Israel paid full tuition, at least initially, and the remainder paid according to a graduated scale.

According to Hezbollah spokesmen interviewed in the Arab media in recent years, at least 14,000 children are enrolled in the movement's school system, which employs several thousand teachers. For these children, Hezbollah is not only a system of studies, teachers and buildings, but also summer camps, youth movements, excursions and parties such as the celebration mentioned above of Victory Day.

Branches of an empire

This is not the only civilian sector in which Hezbollah is active. Last week, when a Hezbollah spokesman guided a foreign press tour of southern Beirut - the same neighborhood in which all of the organization's institutions are clustered - he showed the journalists not only the former homes of Hassan Nasrallah and his deputy, Naim Kassem, but also Hezbollah's institutions, including the huge contracting firm Jihad al-Bina (Jihad of Construction, founded in 1988, whose name is identical to that of the Iranian organization founded in the wake of the Khomeini revolution; the headquarters of Hezbollah's health authority; an organization that provides support for the wounded; a loan society; an organization that looks after the needs of "martyrs" and their family members; and the offices of Hezbollah's accountants and economists, who concern themselves with investment and distribution of the profits from the organization's partnerships in Lebanese companies.

Where did all this money come from?

Data amassed by Israeli intelligence refers to the transfer of approximately $50 million per year from Iran to Hezbollah. But there have been periods, for example when Hashemi Rafsanjani was the president of Iran, when the organization received close to $280 million in a single year and average $100 million a year. These are direct cash transfers, and do not include the cost of arms and ammunition sent by Iran and Syria.

Nevertheless, these amounts are still insufficient to sustain such a widespread system of institutions, officials, teachers, drivers and activities. The annual cost of keeping a single pupil in school for one year is, according to the organization's own reports, close to $1,500. Merely keeping these pupils in school roughly costs the organization about $20 million a year.

Most of the organization's high-ranking officials are volunteers, but nurses, doctors (including physicians from foreign countries) and the other professionals on the Hezbollah work register easily account for all of the Iranian financial aid. So the organization needed to find additional sources of income.

Payment for services

One of the most important of these is the payment of fees for services and transit permits. For example, the hospital in Nabatiya, which came under Hezbollah control, did not offer free health care to anyone but the most needy. All others paid for services, albeit at a rate that was 30 percent less than the cost in government hospitals. Contributions from Lebanese citizens and foreign donors provided the organization with critical financial support.

Another source of income is Hezbollah's partnership in government corporations, such as the airport authority, the Lebanese airline and other financial corporations. But the most important economic institution of all is the contracting firm that has the declared purpose of reconstructing buildings destroyed during the Israeli occupation. If truth be told, the company has essentially become an ordinary contracting firm.

The magnitude of the company's construction business is not known for certain, nor the scale of its revenues. Estimates in Lebanon refer to tens of millions of dollars. Jihad al-Bina operates everywhere in the country. It has constructed housing projects for young couples and new neighborhoods in Beirut, including impressive reconstruction projects.

The company not only engages in construction, but also in earthworks, laying water pipelines and electricity lines to villages in the south, providing services (including veterinary services) to farmers, and granting loans to farmers for the purpose of working their land - interest-free loans of approximately $3,000 to any farmer who expresses the need. A perusal of the institution's brochures shows an extensive array of professional instruction, from beekeeping and use of pesticides and fertilizers to symposia on the construction and use of plastic-roofed hothouses.

Officially, assistance from Hezbollah institutions is available only to those considered part of the "uprising population" who belong to "a certain religious community," as stated in the bylaws. The definition of "the uprising population" is every Shi'ite living south of the Litani who supports Hezbollah. Nevertheless, civilians in Baalbek or in the southern neighborhood of Beirut can also enjoy the institution's services, providing they pay the membership fees of about $10 a year.

The numerous services granted by Hezbollah, such as the water system it built in the southern neighborhood of Beirut, which supplies water to about one-half of its residents, have essentially supplanted the Lebanese government, which is not present along the border with Israel and does not come close to matching Hezbollah in providing services to residents along the southern border. Hezbollah is believd to be currently providing services to more than 200,000 people. But according to another estimate, it provides services to about 10 percent of all of Lebanon's citizens - about 350,000 people.

Even if Hezbollah is miraculously disarmed, it will continue to dominate Lebanon's public life, and not only in the south, and that the government's declared ambition of controlling the border area would at best be translated into partial control, unless it takes full responsibility for providing services to the villagers.

In 2000, after the Israeli army's withdrawal, the government of Lebanon pledged with great pomp that it would see to the needs of its citizens in the south, but it didn't take long before the official visits halted.

Essentially, Hezbollah did not have to compete with the government for local control. The central government was content to shift responsibility to the organization, and went back to the work of rebuilding central Beirut.