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Lebanese Lawmakers Lobbied U.S. Officials to Soften Hezbollah Sanctions

Washington is putting the squeeze on Hezbollah. Lebanon says that could crush its economy.

Images of Hezbollah chief Hassan Nasrallah are seen among scores of Hezbollah and Lebanese national flags being waved by Hezbollah supporters during a ceremony to mark first anniversary of the war with Israel, 14 August 2007. Nasrallah reiterated to a mass rally broadcast live on television that his Shiite group had won a divine victory. "Today is the anniversary of the divine victory," Nasrallah told the thousands of men, women and children who had gathered in an empty lot of Beirut's southern suburb of Dahiyeh controlled by Hezbollah. AFP PHOTO/MARWAN NAAMANI (Photo credit should read MARWAN NAAMANI/AFP/Getty Images)
Images of Hezbollah chief Hassan Nasrallah are seen among scores of Hezbollah and Lebanese national flags being waved by Hezbollah supporters during a ceremony to mark first anniversary of the war with Israel, 14 August 2007. Nasrallah reiterated to a mass rally broadcast live on television that his Shiite group had won a divine victory. "Today is the anniversary of the divine victory," Nasrallah told the thousands of men, women and children who had gathered in an empty lot of Beirut's southern suburb of Dahiyeh controlled by Hezbollah. AFP PHOTO/MARWAN NAAMANI (Photo credit should read MARWAN NAAMANI/AFP/Getty Images)
Images of Hezbollah chief Hassan Nasrallah are seen among scores of Hezbollah and Lebanese national flags being waved by Hezbollah supporters during a ceremony to mark first anniversary of the war with Israel, 14 August 2007. Nasrallah reiterated to a mass rally broadcast live on television that his Shiite group had won a divine victory. "Today is the anniversary of the divine victory," Nasrallah told the thousands of men, women and children who had gathered in an empty lot of Beirut's southern suburb of Dahiyeh controlled by Hezbollah. AFP PHOTO/MARWAN NAAMANI (Photo credit should read MARWAN NAAMANI/AFP/Getty Images)

Amid renewed congressional efforts to tighten sanctions on Hezbollah, delegations of Lebanese politicians and bankers descended on Washington in May in an attempt to minimize the effects of any new sanctions on the Lebanese banking sector.

A draft amendment known as the Hezbollah International Financing Prevention Amendment Act of 2017, which has not yet been formally proposed in the House, would tighten financial regulations on Lebanese banks and extend scrutiny to Hezbollah allies in order to screen for any illicit funding to groups linked to Hezbollah, which the United States, Israel, the Arab League, and others have designated as a terrorist organization.

The draft, first revealed in Lebanese news outlets in April, quickly attracted opposition there. In an April 28 press conference, Lebanese Prime Minister Saad Hariri said that he hoped to work with U.S. politicians to “change” the bill and that such sanctions would be “harsh on Lebanon,” according to the Beirut-based Daily Star.

Amid renewed congressional efforts to tighten sanctions on Hezbollah, delegations of Lebanese politicians and bankers descended on Washington in May in an attempt to minimize the effects of any new sanctions on the Lebanese banking sector.

A draft amendment known as the Hezbollah International Financing Prevention Amendment Act of 2017, which has not yet been formally proposed in the House, would tighten financial regulations on Lebanese banks and extend scrutiny to Hezbollah allies in order to screen for any illicit funding to groups linked to Hezbollah, which the United States, Israel, the Arab League, and others have designated as a terrorist organization.

The draft, first revealed in Lebanese news outlets in April, quickly attracted opposition there. In an April 28 press conference, Lebanese Prime Minister Saad Hariri said that he hoped to work with U.S. politicians to “change” the bill and that such sanctions would be “harsh on Lebanon,” according to the Beirut-based Daily Star.

The banking sector is a mainstay of the Lebanese economy. The delegation of bankers and politicians aimed to convey to Congress that, without amendments, the draft regulations would damage their economy and even the overall stability of the country. Yassine Jaber, a Lebanese politician who visited Washington in May, told Reuters, “There’s one question anyone who wants to put pressure on Lebanon should remember: Do you want another failed state on the eastern Mediterranean?”

The draft amendment is the second round in a series of efforts intended to squeeze Hezbollah’s financing. In 2015, President Barack Obama signed into law the Hezbollah International Financing Prevention Act, which had been authored by U.S. Representative Ed Royce, a Republican from California. The new draft amendment aims to further strengthen sanctions on the political group’s financing both in Lebanon and abroad, and is in line with President Donald Trump’s emphasis on fighting terrorism financing, especially groups such as Hezbollah which receive backing from Iran.

“There’s a lot to be said for carefully measuring and balancing the intended impact of legislation like this on the rest of the Lebanese economy,” said Matthew Levitt, director of the Stein Program on Counterterrorism and Intelligence at the Washington Institute for Near East Policy, in an interview with Foreign Policy. “The Lebanese banking sector is the backbone of the Lebanese economy, and no one wants to undermine that.” The goal, said Levitt, is to “empower Lebanese bankers to identify illicit finance within their banking system, rather than undermining” the banking system itself.

But protecting the Lebanese bank sector from overly broad sanctions wasn’t the only goal of the Lebanese bankers and politicians who have lobbied in Washington, according to Levitt. “Much of the substance from the Lebanese delegations that came then during the first round and now again has more to do with Hezbollah’s allies trying to push back,” said Levitt.

Hezbollah wields powerful influence over Lebanese politics, and even counts the Christian President Michel Aoun as an ally. The group, and its vast military arm, enjoy support among Shi’ites in Lebanon, where it holds numerous seats in parliament. That can make it difficult to distinguish between Shi’ite political parties and Hezbollah-linked groups. The new draft amendment added the Shi’ite Amal Movement, for example, as a potential new focus for sanctions.

“An understanding was reached” with the U.S. officials with whom they spoke, said Ali Hamdan, who is aligned with the Amal Movement and visited Washington in May, told Reuters. Hamdan said that message the delegation brought to Washington was, “More, wider, generalized sanctions are a recipe to destroy Lebanon.” It’s a message that Hamdan believes lawmakers heard loud and clear.

MARWAN NAAMANI/AFP/Getty Images

Bethany Allen-Ebrahimian is a journalist covering China from Washington. She was previously an assistant editor and contributing reporter at Foreign Policy. Twitter: @BethanyAllenEbr

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