Hizbollah went on a larger than usual fundraising drive this Ramadan. Calls for donations blared from loudspeakers on cars flying the Iran-backed militant group’s yellow and green flags. Supporters circulated WhatsApp videos appealing for contributions as low as $1. Meanwhile Hassan Nasrallah, the group’s leader, had prepared the ground by issuing an unusual call for “financial jihad”.

The push reflects Hizbollah’s financial difficulties, which US officials say are a result of the economic sanctions it has imposed on Iran. The Trump administration insists its “maximum pressure” campaign to constrain Iran’s oil exports, banks and metals sector has forced Tehran to cut back its funding to Hizbollah, which the US says runs to $700m a year.

Brian Hook, US special representative for Iran, said Hizbollah’s calls for supporters to dig deep were “a consequence of the pressure we are putting on Iran’s revenues”. He claimed that Iran has slashed its defence budget by 28 per cent this year, although official Iranian figures do not corroborate that claim.

The full story behind the troubles of Hizbollah, a Shia Islamist group, is more murky. Several western diplomats and regional analysts said they were sceptical of US claims to have curbed Iran’s funding. They say Washington has not presented any solid evidence, partly because Iran’s financial aid to Hizbollah does not go through official channels and is difficult to trace.

They also cite other pressures that may be hurting Hizbollah, including Lebanon’s stuttering economy, slowing regional growth and a drop-off in remittances from the Lebanese diaspora. The IMF estimates Lebanon’s gross domestic product will rise by just 1.3 per cent this year. “Lebanon is in financial trouble,” said Yassine Jaber, an MP from the Shia-majority Amal party. “That’s affecting Hizbollah and its community.”

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Hizbollah’s political wing is part of Lebanon’s government, but western states disagree over the group’s legitimacy: the US and UK have imposed sanctions on its political apparatus, but the EU and UN have not followed suit. Hizbollah’s sympathisers say it defends the tiny country from Isis, the Sunni extremist group, and Israeli aggression. Memories are vivid of Israel’s last big offensive on Hizbollah in 2006. More than 1,000 Lebanese and more than 100 Israelis were killed.

A collection box featuring Hezbollah leader Hassan Nasrallah in a Beirut shop © AFP

Tehran is open about its support for Hizbollah. The militant group has been armed and trained by Iran’s Revolutionary Guard Corps for nearly 40 years, assistance that helped it emerge from the chaos of Lebanon’s civil war as a powerful paramilitary force, giving Tehran a presence on Israel’s border and the Mediterranean. Since 2015 it has deployed fighters to support Bashar al-Assad’s Syrian regime.

According to Washington policymakers, who accuse Iran of spreading a malign influence in the region, Hizbollah has long been Iran’s most successful and important foreign asset. Jeffrey Feltman, a former American ambassador to Lebanon, called Hizbollah Iran’s “malevolent version of the Swiss Army knife”.

A central goal of US sanctions is to force Iran into reining in its regional policy. But analysts report no meaningful change. Hizbollah has withdrawn some fighters from Syria, but Amal Saad, an academic at the Lebanese University in Beirut, said the move was related to the cooling of the conflict rather than funding cuts.

“Iran has no choice but to continue to play its current role in the region,” said a reformist politician in Tehran. One western diplomat pointed out that Iran was unlikely to restrict support to its overseas allies because the relatively small investments pay off so handsomely for Tehran in terms of regional influence.

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Hizbollah declined interview requests and forbids members to speak with journalists.

The US says that Hizbollah typically earns around $1bn per year from a sprawling business network, transnational crime including the narcotics trade, and donations from Iran. The money fuels a network of militias, media outlets and charitable foundations that spread its influence among Shia communities.

Beyond clamping down on Iran, the US has targeted Hizbollah directly for years, most recently by sanctioning multiple people inside and outside Lebanon for allegedly providing financial support to the group. It has also offered a reward of up to $10m for information.

Signs are appearing that Hizbollah is cutting costs. Four people in Lebanon’s Shia community said that relatives working for Hizbollah institutions had reported salaries being reduced or delayed. These included fighters as well as employees of Hizbollah’s TV channel, Al Manar.

Hanin Ghaddar, a Washington-based analyst at the Washington Institute think-tank, said Hizbollah may be trimming its non-essential outlays so it could maintain its military spending. “It’s not like they’re broke,” she said.

Ms Saad at the Lebanese University said: “No one is pretending [sanctions] don’t have an impact. [But] nobody’s been laid off.”

Additional reporting by Andrew England and Monavar Khalaj

Via Financial Times

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