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Will US terrorism finance law do more harm than good in Lebanon?

The recently passed US law to fight terrorism financing targets Hezbollah, but it could put all of Lebanon in the line of fire.

Beirut is awaiting Daniel Glaser, assistant secretary for terrorist financing at the US Treasury Department. Glaser's visit, set for the end of May, has gained great importance given that it comes in the wake of the Hizballah International Financing Prevention Act of 2015, issued by the US Congress in December.

Several delegations of the Lebanese government and banking officials visited Washington after the law was passed to discuss its impact. The delegations concluded that Beirut should wait for more details, which were then published April 15 in the Federal Register.

That same day, the Treasury Department's Office of Foreign Assets Control issued a list of more than 90 people suspected of being involved in financing terrorism. Under the law, the accounts of those people should be closed in all banks around the world. Any bank or commercial entity that deals with those on the list will risk US sanctions.

This development exacerbated the confusion in Lebanon about the law and its potential repercussions.

Lebanon's Central Bank swiftly issued a notice May 4 calling on all Lebanese banks to abstain from closing accounts or preventing the opening of accounts, except after coordinating with the Central Bank.

To highlight the dimensions of the issue, Al-Monitor interviewed parties directly involved.

Parliament member Yassin Jaber of the Liberation and Development Bloc, headed by parliament Speaker Nabih Berri, was one of the members of the Lebanese parliamentary delegation to visit Washington in late February. The delegation met with a number of US officials to discuss the anti-Hezbollah act.

Jaber told Al-Monitor that the released documents "were completely expected."

"Neither the rules and regulations nor the list of names have come as a surprise. During our mission in the US capital, we, the parliamentary delegation, wanted to make sure that the mentioned US law would affect neither Lebanon's economy nor the banking sector. We wanted to make sure it would not affect any Lebanese sector in general, and we have heard US reassurances in this regard. Lebanese parliament speaker Berri sent a letter to US President Barack Obama asking him to take these aspects and the delicate and sensitive situation in Lebanon into account."

Asked about the next stage, Jaber said he expects the Central Bank to appoint an international legal team tasked with following up on the case and its complicated details and develop directions to help Lebanese banks deal with the new law.

Not everyone is comfortable with the situation, however. Fares Soueid, coordinator of the March 14 alliance's General Secretariat unit, did not express the same confidence. "It is a completely new stage at the banking, official, economic and political levels. The issue cannot be taken lightly," Soueid told Al-Monitor.

Asked why he is concerned, he said, "There are several examples we can mention in this regard. There is a hospital in Beirut named the Great Prophet Hospital. Everyone knows that this hospital is owned by Hezbollah. What happens if it gets included on the list of [entities] targeted by the US law? This hospital deals on a daily basis with government institutions such as the Lebanese Ministry of Health or the Social Security Fund. It also deals regularly with several Lebanese private institutions such as insurance companies and traders of medical equipment and hospital supplies, among others. What happens then? How would government institutions deal with the situation in the event that a US ban gets imposed on this hospital? How would the involved traders deal with the situation?"

As another example, Soueid mentioned Jihad al-Bina, Hezbollah's nongovernmental organization specializing in construction contracting. "By virtue of its work, this institution deals with Lebanese government institutions and ministries. What happens in the event that a US ban is imposed on it?" he asked.

"There are also educational institutions belonging to Hezbollah, including schools with tens of thousands of students. These schools naturally deal with the Lebanese Ministry of Education on a daily basis. What happens in the event that these institutions get included on the US list? What if Hezbollah parliament members or ministers get included on the list? This would affect their salaries, legal transactions and signatures on official banking or commercial documents, among others. There are many other examples about institutions linked to the official and private Lebanese economy on the one hand and the overall Lebanese society on the other," Soueid concluded.

Given Jaber’s comfort and Soueid’s angst, Al-Monitor contacted Ali Zbib, a Lebanese lawyer who handles international law. Zbib is one of the experts the Lebanese government consults about how to deal with the US law in question. He told Al-Monitor that the implications of the US law evoke different reactions depending on the Lebanese authorities dealing with the issue.

"What is new about the [law] is that it added the adjective 'criminal' to 'terrorist organization' to describe Hezbollah. This addition means that there are new US government agencies involved in or authorized to prosecute Hezbollah and everything associated with it. These are the important congressional committees, the Office of Intelligence and Analysis within the US Department of the Treasury and, of course, US authorities concerned with combating money laundering and other organized crimes. In other words, most US government agencies have become involved in the prosecution of this party [Hezbollah], which further complicates the Lebanese way of dealing with the issue."

However, Zbib voiced no fear in this regard. He noted, for example, that the list of suspects the United States issued "included the name of a deceased person, namely the late Shiite cleric Muhammad Hussein Fadlallah."

"And it is not Fadlallah’s institutions that were mentioned as legal entities, but him as a real person, even though he passed away of natural causes in 2010. This means that there are loopholes in the law, and these loopholes could be either negative or positive. The Lebanese government has to look for these loopholes to use them and spare Lebanon from potential negative repercussions."

Asked how the Lebanese government could take advantage of the loopholes, Zbib pointed out that the law grants the US president some discretion. The president isn't required to apply sanctions if he vouches to Congress, in writing, that a particular foreign financial institution "is no longer engaging in any terrorist activity or has taken, and is continuing to take, significant verifiable steps toward terminating its terrorist activity." This can be done "if the president has received reliable assurances from the government with primary jurisdiction over the foreign financial institution," Zbib said, quoting the law.

He further explained, "This text allows the Lebanese government to handle any wrongdoings as far as the application of the US law is concerned, and it is the best approach, given that it emanates from the law itself and comes within the context of the US and Lebanese governments' relationship."

The US law's repercussions for Lebanon and for Hezbollah in particular will unfold in time. Lebanon will closely monitor the situation at the governmental, political and banking levels, given that the United States may act on the new law in the near future — possibly with Glaser's visit to Beirut in the second half of this month.

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