Lebanese militant group Hezbollah is set to lose 40 per cent of its income from Iran after the dramatic fall in oil prices as a result of coronavirus, a leading expert in terrorist finance said on Wednesday.
But the group’s financing has become so sophisticated that it can rely on significant income from activities in Europe through fundraising that includes fake orphanages.
There are now renewed calls for more European governments to proscribe both Hezbollah’s political and military wings as terrorist organisations to clamp down on the funding.
The blow to funding has emerged in a paper on Hezbollah's finances by Dr Matthew Levitt, a former FBI analyst.
The huge drop in oil prices, US President Donald Trump's "maximum pressure" campaign and sanctions on Iran has meant that funding could be cut by $280 million (Dh1.02 billion) from an estimated annual $700m.
Dr Levitt, speaking to an online seminar hosted by the Royal United Services Institute, said that on three previous occasions Tehran has “very suddenly cut back its financing for Hezbollah” by 40 per cent, according to Israeli intelligence.
“I should imagine it’s happening again,” he said.
Sanctions and a need to focus on internal domestic issues, including the Covid-19 crisis that has infected 86,000 Iranians, has probably forced Iran to cut funding.
But Dr Levitt, of the Washington Institute, warned: “This has led Hezbollah to have its own source of income so that if Iranian income had to shrink a bit, it would be OK.”
In the paper he outlines how the organisation has made extensive provisions to continue funding from the Shiite diaspora.
“The group's independent fundraising, conducted alongside its generous subsidies from Iran, are also intended to guarantee the group's future independence through diversified funding no matter what happens to Iran,” Dr Levitt wrote.
“That is, Hezbollah likely wants to ensure that even in the event that Iran were to ever strike a ‘grand bargain’ with the West, the group would continue to be able to exist and function on its own.
“Hezbollah funds are spent primarily on furthering the group's overall agenda of establishing a Shia entity in Lebanon and radicalising Muslims against the West.
"To that end, the majority of its funds finance social welfare and political activities that finance terror in a more indirect fashion."
Dr Levitt told the audience that the terrorists had been able to “find a gap in the seams of European law enforcement” and had discovered it was a “fairly comfortable place” in which to raise funds.
This was partly due to a political decision by areas of Europe not to proscribe both wings of Hezbollah.
This has allowed fund-raising in "legitimate" areas such as orphanages.
And people with dual nationalities, as well as criminal gangs, were being used to open companies that launder cash, move weapons and aircraft equipment, or raise funds.
Dr Levitt concluded by urging countries such as Germany to designate the whole of Hezbollah as a terrorist groups.