The problems of combating terrorist crimes in the framework of the modern world are becoming increasingly important in view of the apparent increase in cruelty and more frequent cases of this group of crimes. Like any manifestation of terrorism, its financing is public in nature and aims to create a climate of fear and social tension in society. The problems of financing terrorism directly or indirectly affect all countries. In the fight against this negative phenomenon, cooperation of all forces and a joint search for the most effective mechanisms for solving the problem are necessary, which is possible only if there is an understanding of the sources and mechanism of financing a specific terrorist organization, as well as its ideology. In this context, it seems appropriate to consider Hezbollah ‑ a militant Shiite organization and a political party operating in Lebanon, the territory of which in recent decades has been turned into an arena of unceasing clan and ethno-confessional clashes, which in fact reflect a more global conflict between Arabs and Israel.
Hezbollah
Brief History and Ideology
More than a quarter century after the formation of Hezbollah, one could state that it went through several successive stages in its development: from the Islamist protest movement to a full-fledged political party. It should be noted than Hezbollah was formed in 1982 in Baalbek by part of the Lebanese Shiites for the armed struggle against the Israeli occupation of southern Lebanon (Worrall et al., 2015). Since the early 1990s, Hezbollah began to adapt to the Lebanese political system, trying to gain influence by participating in political processes. In the domestic political arena, it (with the generous financial support of Iran) has turned into a kind of system operating in parallel with the Lebanese executive authorities, into a civic organization that is gaining political strength not only among the Shiite population (Worrall et al., 2015). That is, Hezbollah has become a kind of Middle Eastern semblance of the Irish Republican Army, which has both a military wing and legal political representation.
It is obvious that the “party of Allah” arose in the Middle East political arena with the goal of destroying Israel, since the existence of a Jewish state did not fit into the project of establishing Islamic justice. The multi-confessional nature of Lebanon has had a significant impact on Hezbollah’s entry into the political life of the state (Farida, 2019). As before, the priority of its activity is anti-Zionism, to which anti-Americanism was added. The political situation that existed in Lebanon at that time required the party leadership to determine the main lines of activity in order to make its existence legitimate in Lebanese society (Farida, 2019). Therefore, protection against an external threat, primarily from Israel, was put to the forefront. The Hezbollah organization is an important player both in the domestic politics of Lebanon and in the international arena. The organization is recognized as terrorist in the EU, Canada, the USA, Israel and Egypt, the Gulf countries, as well as partially in Australia and the UK.
The pillar of Hezbollah’s ideology is the exclusively Shiite political-legal-religious doctrine of Khomeinism, which includes values, views, and norms aimed at establishing an Islamic rule of law and determined by an Islamic lawyer (Wali al-Fakih). The party’s mission is not only to worship God (Ibad), but also to establish a special Islamic regime that will become an expression of a just divine society (mujtama al-adl al-allahi), where God has all power over people (hakim Allah) (Levitt, 2015). God is considered the source of sovereignty and power, He directs Muslims through the prophet and his followers (imams) (Levitt, 2015). This inextricable link between divine governance and the need to create an Islamic rule of law in accordance with Hezbollah’s ideology turns Islam into a comprehensive system of social existence.
Sources and Mechanism of Financing
Hezbollah enjoys financial and military support from Iran and Syria. Hezbollah’s general secretary himself claims that funding has only come from Iran since the party was created in 1982 (DeVore & Stahli, 2014). Iran sought to turn it into a “regional power” in order to further use it to achieve its goals in the region. However, there is an opinion that there are other sources of financing for this organization, namely, the most complex financial network that exists in parallel with the official financial system (Farida, 2019). Many countries, led by the United States of America, have attempted to discover and subsequently eradicate these sources, but significant success has not been achieved.
With tangible financial support from Iran, the “party of Allah” appeared able to organize such a structure, which many call the “state in the state,” that is, the organization is self-sufficient and able to independently provide itself with everything necessary (Darshan-Leitner & Katz, 2017). This structure is based on certain ideological principles, and although it exists within the state, it has no real influence on its existence and activity. In its structure, the party has its military strength (Islamic Resistance), a construction company (the Organization of Construction Jihad, which is engaged in electrification, construction and provides drinking water).
In addition, the organization is the creator of numerous foundations that address the problems of disabled, wounded, and families of murdered shahids (Darshan-Leitner & Katz, 2017). Moreover, the party is engaged in education; in addition to religious specialized educational institutions, the party maintains schools, technical schools, and higher educational institutions. Moreover, the education expenditures of the “party of Allah” are many times higher than government spending on education (DeVore & Stahli, 2014). At the same time, such a cultural ‘incline’ and social steps should in no way diminish the guilt of Hezbollah members for numerous terrorist acts that claimed the lives of a huge number of innocent people.
Moreover, it would be a mistake to assert that the interests of the party are limited only to Lebanon and the struggle against Israel. Hezbollah is increasingly starting to touch on regional and international issues. At the same time, the message of the party leader Hassan Nasrallah to the leaders of European and Arab states represents the evidence that the party is trying to bring its ideas to the international level as part of the confrontation with America.
Terrorist groups, such as Hezbollah, rely on special networks to finance and facilitate their activities and organize attacks on a global scale. Hezbollah receives almost one billion dollars a year from direct financial support from Iran, international business and investment, a network of donors, corruption and money laundering (Blanford, 2017). The group uses these funds to support its destructive activities around the world.
The activities of Hezbollah includes the deployment of its militants in Syria in support of the Assad dictatorship; alleged surveillance and intelligence operations in US territory; and building military capabilities to such an extent that Hezbollah claims to have high-precision missiles at its disposal (Blanford, 2017). These terrorist operations are sponsored through international network of financial backers of Hezbollah and its activities ‑ financial instruments and infrastructure that form Hezbollah’s lifeblood. Hezbollah’s annual revenue is about $1 billion, including Iranian assistance, international business operations and investments, donor funds and money laundering proceeds (Darshan-Leitner & Katz, 2017). At the end of 2008, American and Colombian investigators discovered and liquidated an international gang based in Colombia engaged in drug trafficking and money laundering. The statement said that part of the profit, which exceeded hundreds of millions of dollars a year, was used to finance Hezbollah (Daher, 2016). Hezbollah receives a significant amount of weapons, funding, and assistance in military training from Iran.
Shadow Economy of Hezbollah
The Hezbollah party has managed to build its own economy that goes beyond the framework of the Lebanese state and its institutions so that information on financial flows is not reflected in the statistics of the official banking system of Lebanon. Since its inception, the party has relied solely on Tehran’s financial assistance. Lebanese sources report that in the 1980s, Hezbollah received $100 million annually, and over time, it increased to 600 million (Daher, 2016). Such support covered the party’s material and military expenses, and from these funds, social assistance was provided to the families of the deceased party members and unemployment benefits. Activists of Hezbollah in Africa invest and launder huge sums of money. They recruit local activists, and collect intelligence data. The choice fell on Africa not accidentally ‑ all this is done in order to provide financial support to Hezbollah, namely the huge number of Shiite and Lebanese expats living in Africa.
It is known that the word “economy” includes the production, distribution, exchange, and consumption of goods and services in accordance with certain rules and regulations. The Lebanese government recognizes the role of Hezbollah, which is both a military and a political organization. It is assumed that all transactions conducted by this party are subordinate to the state, whether they come from abroad or from any other sources (Daher, 2016). Given the fact that Hezbollah receives huge amounts of money from Iran, financial transfers should be carried out through banking operations. However, this does not happen during the last period of time.
This raises a problem for all those who are trying to find third-party sources of party funding. Financial transactions are limited to cash, because Hezbollah refrains from receiving financial transfers, deposits or checks, which, in turn, makes the mechanism for monitoring financial transactions very difficult. Due to the lack of any official data, except for information leaks, expected calculations of financial costs or American intelligence reports, the available information is equated with guesswork and virtual assumptions. In addition, after receiving the money, the party seeks to immediately spend or transfer money due to the sanctions imposed by the United States on Hezbollah and related institutions and individuals (Darshan-Leitner & Katz, 2017). It is also worth noting some of the people who actively finance Hezbollah.
In particular, Adham Tabaja is a member of Hezbollah, who maintains direct contacts with senior Hezbollah organizers, including the operational component of the Islamic Jihad terrorist group. Tabaja also owns real estate in Lebanon for the benefit of the group. He is the controlling owner of the Lebanese construction company Al-Inmaa Group for Tourism Works. Tabaja, the Al-Inmaa Group for Tourism Works, as well as its subsidiaries, were qualified as especially dangerous international terrorists in June 2015 (Darshan-Leitner & Katz, 2017). The Kingdom of Saudi Arabia has also qualified Tabaja and his companies as terrorist under the Crimes and the Financing of Terrorism Act.
Another active supporter of Hezbollah, Mohammad Ibrahim Bazzi, is one of Hezbollah’s chief financiers, who has provided the organization with millions of dollars from his business activities. He owns or controls companies such as Global Trading Group NV, Euro African Group LTD, Africa Middle East Investment Holding SAL, Premier Investment Group SAL Offshore and Car Escort Services S.A.L. Off Shore. Bazzi and his subsidiaries were qualified as particularly dangerous international terrorists in May 2018 (Darshan-Leitner & Katz, 2017). In 2019, the United States offered rewards of up to $10 million for information that would help eliminate Hezbollah’s funding schemes.
One important feature that makes it difficult to track Hezbollah’s (as well as other Islamist terrorist organizations’ funding channels) is worth noting. The most important source of funding for all Islamic groups is the regular (zakat) and voluntary (sadaka) donations of believers to charity ‑ they are considered mandatory for all faithful Muslims. Although zakat is made regularly by private and legal entities, it is traditionally not legally regulated by the authorities and is not subject to tax, audit, or any other verification by the state.
At the collection stage (in mosques, Islamic banks, etc.), these funds are absolutely legal. They are managed by various Islamic foundations and charitable organizations ‑ the International Organization of Islamic Aid in Saudi Arabia or the World Muslim League, which has over 100 branches in more than 30 countries. The institutions of the Islamic banking system play a large role (Farida, 2019). In accordance with the norms of Islam, regular donations in the form of zakat are officially intended for charity: helping the poor (lil-fuqara), those in need, including travelers (lil-masakiin), and, finally, charitable deeds (fi-sabil-alla), for example, on propaganda of Islam, printing and distribution of the Koran and construction of mosques. According to experts, in fact, part of these funds can be redistributed to the needs of jihad and its leading radical Islamist groups (Farida, 2019). Thus, even those from radical Islamic organizations that carry out terrorist activities and are outlawed are often funded from originally legal sources. “Power-up” in this case is carried out according to the principle of not laundering dirty money, but pollution of the “clean.”
In the most simplified form, funds of “Islamic donations” from private individuals, companies, and financial institutions through bank transfers are transferred to the accounts of the leading charitable organizations, while remaining legal at this stage. Then they are transferred (also often legally) to the local branches of the respective funds (Daher, 2016). There they are split up and in various ways go to the disposal of radical groups ‑ at this stage, the money is criminalized.
Official banking channels are by no means the only instrument for transferring financial transactions. In Islamic countries, for example, the traditional informal money transfer system known as hawala is widespread (Daher, 2016). It is based on trust, secured, as a rule, by the extremely long (sometimes, several generations) experience of personal or family-clan business communication between financial intermediaries in different countries. Under such a system, it is normal practice to verbally (by telephone) notify one side of a representative in another country or another city about the need to simply transfer (without a receipt or other documentation) cash directly to a named person (Darshan-Leitner & Katz, 2017). Naturally, such operations are not officially registered in any way; the fact of their carrying out is almost impossible to confirm legally, and it is extremely difficult to trace them.
Today, the range of sources, channels and entities involved in the financing of terrorism has expanded. Modern technologies, including social networks and new payment systems, have provided a wide platform for maneuvering terrorist organizations and Hezbollah in particular. Moreover, attracting professionals to manage the financial assets of terrorists is a separate problem both in terms of increasing the profitability of terrorist resources and in terms of conducting terrorist operations through financial institutions. In this context, the fight against money laundering with its traditionally high requirements for the legality of the income of any “suspicious” individuals or organizations does not fully take into account the specifics of financing Islamic groups. In this sense, its effectiveness is deliberately limited. That is why a set of measures is needed that focus precisely on the prevention of criminalization of funds obtained legally, both in Muslim countries and in Islamic communities of non-Muslim, primarily Western countries.
References
Blanford, N. (2017). Hezbollah’s evolution: From Lebanese militia to regional player. Middle East Institute Policy Paper, 4. Web.
Daher, J. (2016). Hezbollah: the political economy of Lebanon’s Party of God. Pluto Press.
Darshan-Leitner, N., & Katz, S. M. (2017). Harpoon: Inside the covert war against terrorism’s money masters. Hachette Books.
DeVore, M., & Stahli, A. (2014). Explaining Hezbollah’s effectiveness: Internal and external determinants of the rise of violent non-state actors. Terrorism and Political Violence, 10, 1-27.
Farida, M. (2019). Religion and Hezbollah: Political ideology and legitimacy. Routledge.
Levitt, M. (2015). Hezbollah: The global footprint of Lebanon’s Party of God. Georgetown University Press.
Worrall, J., Mabon, S., & Clubb, G. (2015). Hezbollah: From Islamic resistance to government. Praeger.