Analysis

More Powerful Than Nuclear Weapons: Iranian Money Is Taking Over the Mideast

Checkbook diplomacy is Tehran’s method of choice for becoming a Mideast superpower. It is thought to have spent at least $15 billion on the war in Syria

FILE - This April 20, 2017 file photo shows a Hezbollah fighter holding an Iranian-made anti-aircraft missile on the border with Israel.
Hussein Malla/AP

On the morning of October 17 last year, around two dozen Islamic State militants drove into the center of the Sinai city of El-Arish and split into two groups. One group opened fire on Egyptian soldiers and guards outside the Church of Saint George. It wasn’t the first time the Coptic church had been attacked, and it had gone unused for months following a surge in attacks on Christians in the Egyptian territory.

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This time, the assault on the church was a distraction. The second group of fighters opened fire on the guards outside a nearby bank, stormed it and robbed it, in the process killing three security guards and three civilians, among them a child. Fifteen other people were injured in the two hours of gunfire. The thieves loaded the cash onto a stolen vehicle and three motorcycles, and drove out of town, leaving behind explosives in the bank branch to hold up the Egyptian army.

In contrast to Islamic State’s other actions in Sinai, the motive this time was economic. It wasn’t the first time the organization had resorted to crime to obtain money. Theoretically, drug smuggling and other criminal activity contradicts Islamic State’s official religious ideology and policy. But like any terror organization, Islamic State needs money and anyway, the lower ranks don’t always heed official policy to the letter.

Hezbollah is in the same situation, but it’s sponsored by Iran. Its leader, Hassan Nasrallah, officially opposes the drug trade. In the 1980s and ‘90s, drugs flowing from Lebanon into Israel passed through areas Hezbollah controlled. Then too, forces in the field far from the organization leadership, what they call “the periphery” of the organization’s financing, were involved.

U.S. narcs

Project Cassandra, a U.S. Drug Enforcement Administration mission fighting the global drug trade, also has Hezbollah in its sights.

Hezbollah’s 910 unit, which among other things carries out attacks beyond Lebanon, is also involved in crime and drugs. This drug trade network even served the Iranians and Hezbollah to move agents and armaments among themselves.

Iran’s conduct in the Middle East, notably on the Iran-Hezbollah axis, is now the main threat to Israel. The aerial attack on Iran’s massive surface-to-surface missile buildup in Syria and the press conference the prime minister called the next day to tell the world that the Iranians had been lying in recent years about their nuclear program delivered a clear message: escalation in the Israel-Iran conflict.

Iranian rhetoric against Israel is one of ideological hatred, but isn’t divorced from economic interests in the region. It tries to achieve those through actions designed to establish control over the Middle East, deepen its hold on Hezbollah and its presence on Israel’s border.

Israel needs to deal with the Iran-Hezbollah economic connection: In many ways, trying to starve terrorist organizations financially may prove harder than imposing sanctions on a whole country.

The difficulty was demonstrated during the Second Lebanon War.

The war in Lebanon in 2006 changed the Israeli military’s thinking about the new field of battle it faced. The fact that the Israeli home front suffered rocket attacks that the Israeli army couldn’t stop for two months drove the development of the Iron Dome anti-missile system.

The Second Lebanon War also taught lessons about another level of the economic confrontation. Israel discovered how tricky it is to do anything about a non-state terrorist organization’s funding. Israel could bomb vital infrastructure in Lebanon and destroy the country’s power stations and flatten its airports to pressure Hezbollah, but that’s like trying ot get rid of a parasite by killing the host. Israel found it difficult to strangle the organization directly.

Figuring out how to suffocate a given terror organization, like Hezbollah, one has to understand the way the organization operates.

Actually, according to a report in Forbes Magazine in December, Hezbollah is the richest terrorist organization in the world, with annual revenues of $1.1 billion.

A study by the Washington Institute for Near East Policy estimated in 2012 that Hezbollah was getting $200 million a year from Iran, a level that rose with the years. It also estimated that the organization was making another $200 million a year from drugs, and getting donations as well.

Speaking at the Herzliya Conference last year, the head of Military Intelligence estimated that Hezbollah gets 75 percent of its funding from Iran. Army Chief of Staff Gadi Eisenkot gave a figure: $800 million a year. Don’t forget that Hezbollah also runs a welfare system and communications network, including a television station.

In July 2016, Nasrallah gave a speech slamming Lebanon’s banking system for succumbing to American pressure, in the wake of the U.S. Hezbollah International Financing Prevention Act of 2014. But he also said the organization didn’t care: it got its money from Iran, not Lebanese banks.

That’s just a fraction of what Iran spends on supporting terror organizations. By Israeli estimates, since 2015 Iran has spent from $15 billion to $20 billion on the Syrian civil war.

“The Iranians wanted to save the Assad regime because in practice, Assad is their only permanent ally in the Middle East, and because Hezbollah can’t survive in Lebanon without Syrian cooperation,” says

Ely Karmon, a senior researcher at the International Institute for Counter-Terrorism and the Institute for Policy and Strategy, both at the Interdisciplinary Center Herzliya. “So it was a vital interest for Iran to help Assad. Not only economically. They also sent thousands of Revolutionary Guards to Syria.”

Iran also pays for the training and salaries of Iraqi militias — seven divisions — operating in Syria, Karmon adds. And Iran is hosting a million refugees from Afghanistan and Pakistan. Iran gives the families of soldiers sent from the refugee camps to Syria $500 a month each, and there are tens of thousands of them, he says.

“The Islamic Resistance support organization launches its 2017 campaign: The steel soles marching down the roads of jihad need clothing and military equipment. This project enables you to donate to them. You can donate by one-time payment or monthly installments. To donate, call the local Islamic Resistance support representatives around Lebanon at the following numbers.”

It’s an internet campaign associated with Hezbollah, aiming chiefly at local Shi’ites in Lebanon. Some call these donations a tax. When a Lebanese Shi’ite is born at a Hezbollah-funded hospital and goes to a Hezbollah-funded school, it becomes part of his life. In many ways Lebanon’s Shi’ite community in is captive to Hezbollah, which is reflected in donations.

Guns and butter

Hospitals and schools are often the official reason Iran, not to mention Qatar and Egypt, name for giving Hezbollah money. Hezbollah finds other uses for it too and it isn’t for urban renewal. Nasrallah even stated in the past that he sees no need to separate the organization’s military and civilian arms. Hezbollah has people on salary who just teach at schools and others who just fight.

Salaries in the organization depend on ideological devotion, in reverse: the more devoted the person, the lower the pay. But convincing irreligious locals to work for Hezbollah means offering them more than the minimum wage ($450 a month in Lebanon).

Nasrallah once said he makes just $1,300 a month but the organization’s murky operations create room for corruption. It’s money flow is also hard to track and many senior members have foreign bank accounts around the world.

Hezbollah also has at least two other sources: donations from Shi’ite businesses and communities as well as making counterfeit currency.

Perhaps the sanctions U.S. President Donald Trump has vowed to clap on Iran after pulling the United States out of the nuclear accord with Iran will put pressure on that funding source for Hezbollah.

Terror organizations can’t buy weapons with credit cards or do direct deposits of wages. They move money around through their own channels, including couriers carrying suitcases of cash. The fees charged by the “mules” is a function of their ideological devotion. Hezbollah also moves money through a network of businesses.

Israel’s security services are constantly devising ways to foil the movements of money, which among other things requires understanding the overarching economic interests of the powers in the region.

Iran’s geopolitical aspirations are reflected not only in Syria: In Iraq it funds Afghani and Pakistani refugees moving into cities abandoned by Sunnis, and opens Shi’ite centers. In Syria it’s trying to convert Alawites to Islam, and in Yemen it has been financing the Houthi rebels.

In Syria, Iran makes cars and has invested in real estate, tourism, agriculture and construction, says Meir Javedanfar, a lecturer on contemporary Iranian politics at IDC. They support Assad in exchange for his supporting their economic interest in Syria, and they hope to earn from rebuilding Syria once the fighting ends, he explains.

But the billions that Iran spends in Syria and Lebanon is at the expense of Iranians, who know it, hence the economy-based opposition to the regime. And now Trump’s latest moves could place Iran under greater economic stress, which could wind up constraining its financing for the likes of Hezbollah.