US expert Emanuele Ottolenghi explains Hezbollah’s criminal networks

The latest Australia/Israel & Jewish Affairs Council (AIJAC) webinar guest was Dr Emanuele Ottolenghi, a senior fellow at the Foundation for Defence of Democracies, whose areas of expertise include Iran and Hezbollah. His topic was “Hezbollah and the Toxic Terror Crime Convergence”.

Dr Ottolenghi remarked that there is a long history of terror groups linked to crime to finance their goals, and Hezbollah is no exception, with involvement, especially in the drug trade. However, he added, Hezbollah is different because of a new dynamic where crime and terror have merged, with crime becoming globalised.

With the drug trade being worth hundreds of billions of dollars a year, criminal networks need their money laundered, and Hezbollah has set up a global money-laundering network that services criminal syndicates. It is truly global in its network and can leverage this to support its terror operations.

He said two decades of court cases show ongoing Hezbollah activities in global crime, including shipping cocaine, blood diamonds and illegal logs and wildlife, and human trafficking and gun-running. In 2015, the US Drug Enforcement Administration (DEA) estimated that Hezbollah’s drug and money laundering brought it US$400 million. Its estimated yearly budget is US$1 billion, including what it receives from Iran.

The commissions paid by criminal syndicates for Hezbollah money laundering services, he said, range from 8% to 15%, so it is involved in billions of dollars.

He also noted that there had been arrests of Hezbollah operatives who had been stockpiling tons of ammonium nitrate taken from ice packs to use as explosives in potential terror attacks in London, Thailand and Cyprus.

He explained that when Hezbollah operatives plan attacks, “they rely on front companies managed by Hezbollah financiers who permanently live in these countries… They provide the logistical support to the infrastructure of terror, and it is done through legitimate businesses and front companies run by friendly people who are supporters, sympathisers or members of the movement.” These local supporters may lend their services to store the material, rent safe houses for the operatives, provide mobile phones, raise funds for them to operate, or manage their escape routes.

He noted Australia had sanctioned only Hezbollah’s External Security Organisation (ESO), adding that Hezbollah does have divisions, but they are all part of the same structure. The US Treasury has designated Hezbollah as a transnational criminal organisation (TCO), as well as a terror group.

He noted the US is the only country to designate Hezbollah as a TCO. In South America, there is a reluctance to proscribe it, so he tells them that it is working to facilitate the criminal syndicates destroying their countries, putting guns and drugs on their streets.

He explained it is a global criminal syndicate that has been using the Lebanese Shi’ite diaspora to build illicit networks since the 1980s. To do this, it invests in infrastructure for these communities, such as mosques and schools, welfare associations and youth movements. It dispatches agents to live in these communities, to coordinate its schemes, pressure members of the community to cooperate and create alliances with local criminal organisations and politicians and authorities. Iran’s Islamic Revolutionary Guard Corps also helps with this.

 

It creates a “miniature south Lebanon”, activating and indoctrinating the communities, sending teachers and imams.

A US law enforcement operation targeted a Hezbollah network that was bringing drugs into the US, using the sale proceeds to buy used cars and luxury goods, ship these for sale to Lebanon and Africa, and use the funds to buy armaments. There have also been sweeping arrests of Hezbollah criminal operatives in Europe, and Australian-based companies have also been involved in criminal Hezbollah operations, he added.

He said Hezbollah is also involved in the illicit tobacco trade, in the Balkans, the Middle East and the US, and is likely laundering money for illicit growers in Paraguay. He added, “There is no illicit activity they will not get involved in. As long as it creates revenue, God will forgive.”

He said proscribing only the ESO, as Australia currently does, goes to the heart of dealing with Hezbollah. It creates problems for law-enforcement agencies, which need to collect evidence and build a case before they can prosecute, but often lack the ability to see the terror financing aspect, so there needs to be communication between law enforcement and intelligence agencies.

There is a tendency to look at Hezbollah and Iran as separate, he said, but they are very much part of the same structure. Iran has two representatives on Hezbollah’s governing organisation, its Shura Council, and Hezbollah’s Ambassador to Iran also heads its business affairs component. “The entire hierarchical structure of Hezbollah is completely integrated and interfacing with the Iranian regime, so whatever is moving one way or the other, it is part of the same whole.”

Cyber-currencies, he said, go unregulated, so there is unlimited potential for mischief, and he would not be surprised if Hezbollah uses it to move money. However, the fluctuations in value may make criminals reluctant. Instead, Hezbollah prefers US dollars and has money-laundering networks in the US because it wants access to the US economy.

He agreed there is an assumption that the question of war between Hezbollah and Israel is a matter of when rather than if, and said that Iran will decide when. There are many things that can be done to try to prevent it, including looking at how Hezbollah raises money. When the US Drug Enforcement Administration moved on Hezbollah, that hurt Hezbollah a lot, because it couldn’t replenish its arms. Today it probably earns a lot more than the US$400 million through drugs and laundering and has branched out into all sorts of criminal activities, so he recommends disrupting the revenue schemes from Hezbollah criminal activities abroad, and also keeping sanctions pressure on Iran, which could lead to a loss of power for Hezbollah in Lebanon as its ability to fund its constituency and procure arms diminishes.

Last year’s massive explosion in the Beirut port accelerated the crisis in Lebanon, he said. The economy is in tatters, and it can’t form a government, so one would think this would lead to Hezbollah’s demise. However, Hezbollah is the only political movement in Lebanon that is still armed and gained good military experience in Syria. The economic crisis won’t bring change. Economic crises actually make ideologues stronger, because they don’t aspire to govern, but to control. They are really violent criminal networks, so the likelihood of the people being able to remove them is very low. The Iranian regime would need to be done away with first.

On Iran’s recent presidential election, he said the regime got what it wanted, describing it as a well-choreographed and staged act of propaganda for outside consumption. The regime decided it was strong enough domestically to have a hard-line manager while the leadership transitions. The new president, Ebrahim Raisi, is likely being groomed to succeed the Supreme Leader Ayatollah Khamenei. Revolutions, he added, are hard to predict, so one is possible, but we can’t assume it will happen. What can be done is to keep economic pressure on the regime. There is a lot of dissatisfaction and unrest among the population. If an agreement is reached in Vienna to revive the JCPOA nuclear deal, that could change, because US sanctions on Iran would likely be released.

On the JCPOA, he said conditions are different to when the deal was first made in 2015, because of Iran’s nuclear advances. He thinks Iran is misreading the US if it thinks it will just get whatever it wants to re-enter the deal, because the US won’t be prepared to allow that. He added that Iran is over-reaching in the region in a way the US will find very hard to ignore, as seen by the recent US bombing raids on Iranian proxy militia in Iraq. There are many things the US is doing quietly, such as disrupting Iranian airlifts, while Iranian ships on the way to Venezuela were turned around. He said he wouldn’t be surprised if the JCPOA talks fail.

AIJAC