The night of October 21st saw an escalation in Israel’s ongoing military campaign against Hezbollah, with intense airstrikes targeting Beirut and other parts of Lebanon. Israeli forces primarily focused on dismantling the financial network of Hezbollah, which has long been a critical component of the group’s operations. The recent strikes severely impacted Hezbollah’s financial infrastructure, including the destruction of numerous key financial institutions under the network of Al-Qard Al-Hassan, a financial entity created by Hezbollah.
Israel’s military action against Hezbollah is currently following two main strategies: the elimination of Hezbollah’s military capabilities and the crippling of its financial resources. While the group has been engaged militarily for years, targeting Hezbollah’s financial backbone marks a critical shift in Israel’s approach.
Reports suggest that dozens of branches of Al-Qard Al-Hassan, a Hezbollah-linked financial institution, were hit during the night, resulting in severe damage. This blow is expected to limit the group’s ability to fund its military operations and social projects in Lebanon.
The Al-Qard Al-Hassan network has played a significant role in supporting Hezbollah’s operations since its establishment in 1982. Initially presented as a charitable organisation offering interest-free loans to the Shia population of Lebanon, the institution grew into a powerful financial empire with more than 35 branches across the country.
The U.S. imposed sanctions on this organisation in 2007, though it has continued to operate largely outside of the formal international banking systems, utilising cash, gold, and other physical assets to bypass restrictions.
Financial Infrastructure of Hezbollah
Al-Qard Al-Hassan’s operational model highlights the significant role it plays in Hezbollah’s financing. The network provided not only funds for Hezbollah’s fighters but also supported social and infrastructure projects, including schools, hospitals, and fortifications, that benefitted the group’s standing within Lebanon.
The funding of Hezbollah by Iran, channeled through Syria, relied heavily on physical cash, with money transported in suitcases and distributed across Lebanon through this financial network. This system allowed Hezbollah to avoid international oversight, ensuring that it could continue to arm itself and maintain social programmes despite sanctions.
In addition to Iranian funding, Hezbollah also derived substantial income from illegal narcotics trade, particularly captagon, a drug produced in Syria and smuggled through Lebanon. This trade has reportedly become the second-largest source of income for Hezbollah, further complicating efforts to curtail its financial strength.
Links to UNIFIL: Peacekeepers Compromised
Alongside the strikes, recent revelations have emerged from interrogations of captured Hezbollah militants. According to these reports, some UN peacekeepers from the United Nations Interim Force in Lebanon (UNIFIL) were bribed by Hezbollah to turn a blind eye to their activities.
Allegedly, these peacekeepers received payments in exchange for ignoring the construction of tunnels and other Hezbollah infrastructure near UN observation posts, and in some cases, even allowed Hezbollah to use their positions for movement and cover.
This revelation, though long suspected by Israeli officials, adds a new layer of complexity to the already fraught situation in southern Lebanon, where the UN has maintained a peacekeeping force since 1978.
Israel has frequently expressed concern that the UN forces were being used as unwitting shields for Hezbollah operations, but the discovery that some personnel may have been actively complicit has escalated the issue.
U.S. Military Aid to Israel
In response to the heightened conflict, the United States has pledged an additional $5.2 billion in military aid to Israel. This package is outside of the regular ten-year aid agreement and is specifically allocated to bolster Israel’s missile defense capabilities, including systems like David’s Sling, Iron Dome, and the development of new technologies such as the laser-based Iron Beam system.
The need for this additional support became particularly evident following the intensified rocket fire from Hezbollah into northern Israel, with civilian areas such as Haifa and Galilee coming under attack. Israel has also been preparing for a potential full-scale assault on Hezbollah, a move that is expected once all military and political variables align.
Wider Consequences for Lebanon
The airstrikes have severely impacted Lebanon’s already fragile economy, with some estimates suggesting that the damage caused by recent Israeli operations could surpass the destruction seen during the 2006 Lebanon War. The Saudi-owned news outlet Al-Arabiya reports that the financial toll on Lebanon may now be twice as high as it was following the last major conflict between Israel and Hezbollah.
Israel has warned Lebanon repeatedly about Hezbollah’s activities, calling on the government to take action to prevent the group from using Lebanese territory as a base for attacks on Israel. However, with little to no action taken, Israel has intensified its efforts to neutralise Hezbollah’s capabilities, leaving parts of southern Lebanon in ruins. Entire villages that once housed Hezbollah’s military infrastructure have been destroyed in recent operations.
As Israel continues its campaign to dismantle Hezbollah, both militarily and financially, the impact on Lebanon is expected to grow. The financial blow to Hezbollah may have long-term consequences, potentially weakening its grip on Lebanon’s Shia population, but the immediate effects of the conflict, including civilian casualties and economic devastation, are likely to strain Lebanon further.
