Israeli forces carried out a series of airstrikes across Lebanon on Sunday, targeting multiple branches of al-Qad al-Hasan, a financial organization that functions as a bank and is linked to the Iranian-backed militant group Hezbollah.
Military spokesman Maj. Gen. Daniel Hagari said at a press conference on Monday that one of the targets attacked was a vault used by al-Qad al-Hasan under a residential building in the Lebanese capital Beirut. said. He said the safe contained “tens of millions of dollars.”
Israeli Defense Minister Yoav Gallant on Monday signed an order adding al-Qart al-Hassan to the list of groups that Israel designates as terrorist organizations. The designation is part of a broader campaign led by Israel’s defense establishment targeting the economic resources of Hezbollah and other terrorist organizations.
What is Al-Qad Al-Hasan?
In addition to its military wing, Hezbollah also functions as a political organization and provides a variety of social services within Lebanon. Al-Qad Al-Hasan is registered as a charity in Lebanon.
The organization’s name means “charitable lending” and it lends money based on the principles of Islamic finance, which prohibits interest. Loans are typically less than $5,000 and are backed by a deposit of gold, jewelry, or other valuables. It also offers savings accounts and financial transfers and processes payments.
With around 30 branches, this de facto bank is the largest microcredit organization in a country where the traditional banking sector is in turmoil. It is not regulated by a central bank and is not part of the international banking system.
Who will use the organization?
Since its creation in the early 1980s, Hezbollah has been a significant force in Lebanon, wielding political and military power as well as providing social support, particularly to the country’s large Shiite population. The bank was founded in 1983 to serve the Shia community, but gained more customers in 2019, when the banking system nearly collapsed.
The US Treasury alleges that the bank is being used by Hezbollah as a “front to control the terrorist organization’s financial activities and access the international financial system.”
In 2007, the ministry sanctioned Alkad Alhassan for acting as Hezbollah’s de facto banking arm. In 2021, sanctions were tightened in the wake of the Lebanese financial crisis, with the ministry accusing the association of “hoarding badly needed foreign currency for the Lebanese economy” and undermining the stability of the Lebanese state.
Monday at the al-Qaad al-Hassan branch in the southern Lebanese city of Sidon. Credit…Mahmoud Zayyat/Agence France-Presse — Getty Images
Why would Israel target al-Qad al-Hasan?
Shlomit Wagman, former head of Israel’s Office for the Prohibition of Money Laundering and Terrorist Financing, said al-Qad al-Hasan became Hezbollah’s main financial institution, collecting about 750 million yen annually from Iranian funds and the organization’s profits. He said he has a responsibility to protect the dollar. A criminal enterprise being used to fund attacks on Israel.
In a statement after Sunday’s attack, the Israeli military said the banking association “directly finances Hezbollah’s terrorist activities,” including “purchasing weapons and making payments to operatives of Hezbollah’s military wing.” It added that the attack was part of Israel’s efforts to “degrade Hezbollah’s terrorist infrastructure, military capabilities, and reconstruction capabilities.”
What is the impact of the strike?
As of Monday, no casualties had been reported, and the immediate damage from the airstrike remained unclear.
Wagman said few traditional bank branches hold large amounts of cash. However, international sanctions against Alucard Alhassan meant that the branch was more likely to have been storing a physical stash of dollars as well as depositors’ money. If these are destroyed in an attack, Hezbollah’s ability to finance future attacks could be further reduced, Wagman said.
Still, she said, “we can also assume that Iran, Hezbollah’s main sponsor, will refuel those supplies in the near future.” She noted that the psychological impact could be more permanent and “further reduce trust between Hezbollah and the Lebanese people.”
Makram Ouais, executive director of the Lebanese Center for Policy Research, a Beirut-based research institute, said al-Qart al-Hasan probably knew they would be targeted and did not put their valuables in a safe place. He said there was a high possibility that it had been transferred. He also pointed out that most of Al Qad Al Hasan’s branches in Beirut occupy the ground floors of mixed commercial and residential buildings. “This probably won’t hurt Hezbollah, but it will hurt a lot of Lebanese,” he said.
Damaged buildings in Beirut on Monday after an Israeli airstrike targeting a branch of al-Qat al-Hassan. Credit…Wael Hamzeh/EPA, via Shutterstock
What is the economic situation in Lebanon?
In a word: devastating. The traditional banking system nearly collapsed in 2019, largely due to a combination of bad policies, bad loans, and corruption. Account holders at mainstream banks have lost access to most of their funds in recent years.
The World Bank estimates, based on pre-war data, that more than a third of the country lives below the poverty line. Last month’s Israeli bombings displaced more than a million Lebanese and destroyed hundreds of buildings, and the number of people living in poverty is likely to be even worse.
Johnatan Reissand Euan Ward contributed reporting.
