Israel targets Hezbollah’s financial services with strikes on Al Qard Al Hassan in Beirut

A series of air attacks hit branches of the micro-finance organisation

Documents belonging to Hezbollah-run Al Qard Al Hassan are scattered after an Israeli air attack on Sunday night in southern Beirut. AP

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Israel bombarded Beirut's southern suburbs and other parts of Lebanon on Sunday night following a warning by the army that it would attack "important economic targets" associated with Hezbollah.

There were at least 11 air strikes on the capital's southern suburbs, including at least three on branches of Al Qard Al Hassan, a Hezbollah-linked charity that functions like a bank. An Israeli attack on one branch on the ground floor of an eight-storey residential building flattened the structure in Chiyah. A security source said it had been emptied of residents before being hit.

“In the coming days, we will reveal how Iran finances Hezbollah's terror activities using civilian institutions and associations as cover,” Israeli military spokesman Adm Daniel Hagari said in a statement.

A senior Israeli intelligence official said the attacks were also aimed at “units within Hezbollah responsible for the organisation's economic system”.

Israeli strikes target Hezbollah-associated Lebanese banks

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The Israeli army had issued eviction orders to residents of “several buildings located near Hezbollah facilities” in Beirut's southern suburbs and the Bekaa Valley.

Al Qard Al Hassan, a Hezbollah-affiliated financial institution founded in 1983 and registered as an NGO in Lebanon, has grown to become the country’s largest provider of microcredit, particularly among the Shiite community. It has more than 30 branches across Lebanon, including 15 in Beirut and its suburbs.

According to Joseph Daher, a scholar and expert on Hezbollah's political economy, Israel's strikes demonstrated its strategy to "militarily and politically weaken Hezbollah by claiming their civil institutions as legitimate targets".

The strikes on Al Qard Al Hassan are not the first on Hezbollah's civil structure since the war began but possibly the clearest, he said.

"These branches are mostly located in Shiite-majority areas, but in recent years branches have also opened in more religiously mixed areas", as the institution slowly gained in popularity with other subsets of Lebanon's population, he said, particularly after the country's financial crisis deepened post-2019.

Lebanon's fiscal problems have left most of the traditional banking sector insolvent. Al Qard Al Hassan provides interest-free microloans against gold or jewellery collateral. It operates according to the principles of Islamic finance and is part of Hezbollah's extensive network of social welfare services.

But the organisation is "not a huge source of income for Hezbollah's armed activities and definitely not a primary source, although it probably plays a role in laundering money for the party's illicit activities", Mr Daher said. The institution was a tool of soft power for the Lebanese group that helps consolidate its popular Shiite base, he added.

"It's more of an intermediary role than a main source of revenue for the group. Hezbollah's main source of income remains Iran, as well as its hand in licit and illicit markets such as smuggling networks and Captagon trade."

A man inspects a safe in the rubble of a building housing an Al Qard Al Hassan branch in Beirut that was hit by an Israeli strike. AFP

Nadim Houry, executive director at the Arab Reform Initiative think tank, said the attacks on Al Qard Al Hassan suggested the Israeli army now considers all Hezbollah-affiliated institutions to be military targets.

“Israel has decided – it already did so in 2006 to a certain extent but now a lot more – that anything remotely tied to Hezbollah will be attacked to weaken Hezbollah's community of support,” Mr Houry said.

Civilians institutions “would lose their protected status as a civilian object only if they were somehow directly contributing to the war effort. But being a lending institution that benefits people close to Hezbollah does not make them a legitimate target,” he added.

Fate of gold deposits

It is not the first time Al Qard Al Hassan's branches have been struck by Israeli fire. In the 2006 war between Israel and Hezbollah, Israel hit six of the nine existing branches.

"Around 5,000 deposits of gold were also hit," Mr Daher said. "But according to the institution, all of the depositors were able to get their money back."

But the fate of the gold that clients have currently put up as collateral at the bank is unclear.

Al Qard Al Hassan posted a statement on its website after the strikes, saying it had taken “all measures since the beginning of the war” and that these were “sufficient to preserve the trust of the people’s deposits and their life savings”.

Nour, 24, who tried to close her account and withdraw her gold collateral from Al Qard Al Hassan last week, said she was told: “We can’t return your gold right now.”

“They said you can give us the money but we won’t be able to return your money to you now, so it’s better to hold on to it for the time being,” she said. Like other depositors who spoke to The National, she asked to be identified by only her first name.

“Under usual circumstances, we would return the loan in cash to them and our gold would be returned to us within a maximum of 15 days. But this time they said, ‘keep the cash because we can’t tell you when your gold will return'.”

She said she was unsure whether that meant gold had been moved to keep it safe, but she was otherwise unperturbed by the prospective loss: "We're alive," she said. "That's the important thing."

Hassan, another displaced resident, arrived on a bike to survey the scene of the levelled branch in Chiyah. He said he had two ounces of gold deposited which were worth about $2,700 each, but was not concerned.

“It's worth it for the resistance. Anyway, they've guaranteed that the money will return. They put out a statement. We hope that this is the case,” he said. “The resistance has never wronged us in the past and there's no reason for them to wrong us now.”