Supporters of Lebanon's Hezbollah and Amal Movement ride on motorbikes as they hold Hezbollah and Amal flags in Marjayoun, Lebanon, May 7, 2018.
Reuters/Aziz Taher

Lebanese banks seek to soothe US concerns about Hezbollah gains

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Lebanon’s crucial financial sector is lobbying overtime to make sure that Hezbollah’s rising political clout doesn’t trigger a US crackdown.

No fewer than six Lebanese banks and their trade organization spent a combined $1.27 million trying to influence the Donald Trump administration and Congress last year, lobbying records reviewed by Al-Monitor indicate. That’s almost twice as much as in 2016 amid Trump’s hawkish rhetoric on Iran and its proxies.

The banks are on track to once again crack the $1 million ceiling this year as gains by Hezbollah and its allies in the May parliamentary elections have sparked fears of new sanctions that could destabilize the country’s economy.

“Lebanese leaders have raised concerns about potential unintended consequences of any new sanctions on groups with ties to Hezbollah, given that Hezbollah is deeply embedded in Lebanon’s political and social spheres through its membership in Lebanon’s governing coalition and management of a vast network of social services,” the Congressional Research Service writes in its latest report on Lebanon. “Some have also noted that sanctions imposing new regulations on the Lebanese banking sector could lower the inflow of foreign remittances into Lebanon, estimated at 15% of the country’s GDP.”

The banks are particularly worried about the unintended consequences of the pending Hezbollah International Financing Prevention Amendments Act, introduced by House Foreign Affairs Chairman Ed Royce, R-Calif., and Sen. Marco Rubio, R-Fla., which passed both the House and Senate in slightly different form last year. The two chambers are currently bridging their differences and staffers expect the bill, which would increase pressure on banks that do business with the US-designated terrorist group, to pass this year.

The international law firm DLA Piper has been leading the charge on behalf of the Association of Banks in Lebanon with a team of six lobbyists led by former Rep. Mike Castle, R-Del. The firm spent $1.09 million last year, up from $580,000 in 2016. Separately, Bank of Beirut paid Avenue Strategies Global and Trump campaign adviser Barry Bennett $150,000 in 2017 while Cedrus Bank paid Blank Rome Government Relations $30,000.

DLA Piper is also lobbying regarding legislation from Reps. Tom Suozzi, D-N.Y., and Adam Kinzinger, R-Ill., that calls on the Trump administration to pressure the Lebanese government and the UN mission in Lebanon, UNIFIL, to disarm Hezbollah. A congressional staffer said the banking sector’s interest in the bill remains unclear, and neither DLA Piper nor the Association of Banks in Lebanon responded to Al-Monitor’s request for comment.

“The UN Security Council demanded that Hezbollah disarm after the devastating 2006 Lebanon War that killed so many Israeli and Lebanese civilians. They have not,” Suozzi said in an April statement announcing the bill. “Hezbollah continues to build up its military capabilities, with tens of thousands of advanced missiles that threaten our Middle East interests and allies, particularly Israel.”

Lawmakers have also begun raising concerns about Lebanon’s dalliance with the Bashar al-Assad regime in neighboring Syria. With the UN refugee agency raising concerns about the voluntary return of refugees, Senate appropriators included a provision in the report accompanying their annual foreign aid spending bill that directs Secretary of State Mike Pompeo to “work with the Government of Lebanon to ensure that it is fully cooperating with UNHCR to find safe, voluntary, dignified, and sustainable solutions for Syrian refugees.”

Trump administration officials have also raised alarm bells.

“We need a review … to make sure that we’re using American tax dollars right in supporting the groups that can most likely achieve our outcome there,” Pompeo testified before the House Foreign Affairs Committee on May 23, two weeks after the elections.

Despite the clouds on the horizon, Prime Minister Saad Hariri and his Future Movement ended their seven-year lobbying contract with Bridges International earlier this year after tapping CEO Amal Mudallali to be Lebanon's next ambassador to the United Nations. The prime minister’s office, however, is still nominally represented by Will Brooke of the Alabama-based investment firm Harbert Management Corporation; Brooke is registered as a volunteer Lebanese agent tasked with facilitating “a possible introduction for the purpose of direct communications” with the Trump White House.

For now, the Trump administration appears to remain fully supportive of the Lebanese Armed Forces (LAF). The State Department has asked for $153 million for bilateral economic and security aid in its budget proposal for the fiscal year that starts July 1, up almost 50% over last year’s request. The request includes $50 million in military assistance to the LAF, which was left out of last year’s request.

“US security assistance to the Lebanese Armed Forces (LAF) is vital to Lebanese security and stability and develops the LAF’s capacity as the sole legitimate defender of Lebanese sovereignty,” the State Department wrote in its budget justification to Congress in March. “By strengthening the LAF, the United States has built a pillar of stability in the Lebanese state, transformed Lebanon’s army into an essential partner on the front lines against ISIS [the Islamic State], and undermined Hezbollah’s narrative as the guarantor of Lebanese security.”

Congress is even more generous, with the Senate seeking $233.5 million in aid, including $105 million for the LAF. 

The Lebanese army is also reaping outsize benefits from the Pentagon. According to the Security Assistance Monitor, last year Lebanon received $204 million under Section 333, a program that provides the secretary of defense with authority to train and equip foreign military forces for counterterrorism and stability operations.

US support for UNIFIL, however, has taken a hit. The State Department’s pending budget proposal seeks a 42% cut over last fiscal year for the UN mission, from $146.1 million to $84.2 million.

Reduced support for multilateral missions “reflects the administration’s commitment to seek reduced costs by reevaluating the mandates, design, and implementation of peacekeeping missions and sharing the funding burden more fairly among UN members,” the State Department writes in its request.

Bryant Harris contributed to this report.

Influencers

Lebanese Embassy

Ambassador: Gabriel Issa

Lobbying By Prime Minister Saad Hariri

Lobbying by Office of PM Hariri


Lobbying by Lebanese banks

Association of Banks in Lebanon


MEAB (Middle East & Africa Bank)


IBL Bank


Al-Mawarid Bank


Fenicia Bank


Bank of Beirut


    Avenue Strategies Global
    Terminated Dec. 31, 2018

Cedrus Bank


Jammal Trust Bank


Lobbying by other companies

M1 Group


Privinvest Holding SAL


Africell Holding


Travel


U.S. Assistance


U.S. Arms Sales


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