by Al-Fassel | 2026-02-27

Hizbullah, a militant and political organization, exerts significant influence over the Lebanese economy through its extensive financial operations.

By exploiting Lebanon's cash-based system and running a parallel, illicit economy, Hizbullah not only undermines the country's financial stability but also jeopardizes its sovereignty.

The US Department of the Treasury's Office of Foreign Assets Control (OFAC) has taken action to disrupt two key sources of funding for Hizbullah.

These mechanisms include revenue generation in collaboration with the Iranian regime and exploitation of Lebanon's informal financial sector for furthering their operations.

OFAC sanctioned the gold exchange company Jood SARL, which operates under Hizbullah's US-designated entity, al-Qard al-Hassan (AQAH).

Jood SARL plays a critical role in converting Hizbullah's gold reserves into usable funds to support its operational and rearming efforts.

Shadow banking and international scrutiny

Hizbullah has exploited Lebanon's fragile financial sector through sophisticated shadow banking practices and methods.

According to the US Department of the Treasury, the group uses front companies to bypass formal banking systems.

This network allows Hizbullah to convert its gold reserves into cash, sustaining its militant operations while evading international oversight.

These illicit activities have drawn international attention; in 2024, the Financial Action Task Force placed Lebanon on its "grey list" due to significant financial deficiencies.

The high cost of economic instability

The consequences of Hizbullah's financial scheming are dire for Lebanon's national and local economy.

Economy Minister Amer Bisat has emphasized that meaningful economic recovery and regional investment are contingent upon security reforms and disarmament of militias.

His stance reflects the sentiment of potential investors who remain hesitant to inject capital into a nation entangled in regional conflicts.

While the World Bank projects a modest 4% GDP growth for Lebanon in 2026, it warns that this recovery could be fragile.

This instability is fueled by external support from Iran, which prioritizes funding its proxies over resolving its own domestic economic challenges.

Treasury Secretary Scott Bessent noted that Iran faces critical issues, such as 60% inflation and a collapsing currency, yet it prioritizes supporting malign activities instead.

The implementation of US sanctions on Hizbullah's finances is crucial in cutting off the organization's key funding streams that enable its operations.

By targeting its financial networks, these sanctions hinder Hizbullah's ability to support its militant activities and maintain influence in the region.