US sanctions Lebanon companies for funnelling millions to Hezbollah

Washington accused officials of favouring the companies with millions in government contracts that were transferred to Hezbollah leadership

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The US announced sanctions on Lebanon-based Arch Consulting and Meamar Construction on Thursday, a week after it backlisted two former ministers accused of enabling Hezbollah.

The US said it sanctioned the two companies for being owned, controlled, or directed by Hezbollah. It also added Hezbollah Executive Council official Sultan Khalifah Asaad, who it said was tied to both companies, to its OFAC list of sanctioned individuals.

“Through Hezbollah’s exploitation of the Lebanese economy and manipulation of corrupt Lebanese officials, companies associated with the terrorist organisation are awarded government contracts,” said Secretary of the Treasury Steven Mnuchin. “The United States remains committed to targeting Hezbollah and its supporters as they corruptly abuse Lebanese resources to enrich their leaders while the Lebanese people suffer from inadequate services.”

The US Treasury said that both companies funnelled money to the leadership of Hezbollah from government and private contracts with the assistance of former Lebanese transport minister Youssef Fenianos and former finance minister Ali Hassan Khalil – two officials hit with sanctions on September 8.

Seperatly on Thursday, the US sanctioned two Iranian entities and 45 associated individuals who carried out a malware campaign targeting Iranian dissidents, journalists and international travel companies.

The sanctions on entities tied to Hezbollah financing came as the Iran-backed political-party-cum-militia said it was standing firm on its insistence to name ministers to the new government despite attempts to form a technical administration free of political appointees.

Hezbollah said on Thursday that it would be naming a Shiite as the next finance minister, despite the issue stalling the formation of the new government and attempts by French President Emmanuel Macron to broker a new political initiative to pass reforms needed to drag the country out of the worst economic crisis in decades and rebuild the shattered capital after a massive explosion on August 4.

Prime Minister-designate Mustapha Adib met with President Michel Aoun on Thursday to discuss the stalled formation of government. He said afterwards that they agreed to allow more time to form a new administration.

Firas Maksad, a Professor at George Washington University, saw the sanctions as part of Washington’s strategy to attempt to isolate Hezbollah and limit Iran’s leverage in Beirut.

“The US administration is utilising targeted sanctions as a cost-free tool against Iranian influence in Beirut. At a minimum, this strategy could help distance Hezbollah from some of its allies. Whether it can succeed in encouraging the formation of a more neutral technocratic government remains to be seen,” Mr Maksad told The National. “In Beirut, the French initiative to form a neutral technocratic government is on its last leg. Another indication that Iran and Hezbollah are unwilling to cede any influence ahead of the US elections, risking a catastrophic financial crisis for Lebanon in the process.”

Instead, Mr Maksad argued that Hezbollah is waiting for US election on November 3 to buy time and determine its leverage.

“US sanctions are part of the full-court press against Iran and its allies as the parties position themselves for possible negotiations after the US elections,” he said.

The US Treasury Department said last Tuesday that it had designated Mr Fenianos and Mr Khalil for engaging in corruption and leveraging their political power for financial gain.

“Fenianos and Khalil were involved in directing political and economic favours to Hezbollah and involved in some of the corruption that made Hezbollah’s work possible in Lebanon,” David Schenker, a senior State Department official for the Middle East, told a briefing call.

The Wall Street Journal in August reported that some US officials wanted to designate Gebran Bassil, the son-in-law of the president and a former foreign minister who heads the largest Christian political bloc in the sectarian power-sharing system.

Heavily armed group Hezbollah has risen to become the overarching power in a country that is now badly struggling under a series of crises.

Lebanon’s banks are paralysed, its currency has crashed and sectarian tensions are rising. A port blast last month smashed a large swath of Beirut, killing more than 190 people and causing huge economic damage.

US officials said Washington was co-ordinating with France on Lebanon but voiced criticism over Mr Macron's recent meetings in Beirut with Lebanese politicians, including a member of Hezbollah, seen as a terrorist organisation by the United States.

“We don’t believe that people should be meeting, attempting to legitimate or otherwise these organisations or individuals. That said ... we think that the French initiative has a lot of merit.”

Mr Macron, whose pressure prompted Lebanon's bickering leaders to agree on a new prime minister, has spearheaded international efforts to set Lebanon on a new course after decades of corrupt rule led to its deepest crisis since the 1975-1990 civil war. - Additional reporting by agencies