Commentary

Freed-Up Frozen Funds, Sanctions Relief and Ransoms Only Aid Iran’s Global Crime Syndicate

Clare Lopez
By Clare Lopez | August 10, 2016 | 1:25 PM EDT

With Hezbollah a major terrorism threat, Iran must be forced to dismantle its nuclear program (Mohammed Zaatari/AP Photo)

“As long as Iran has money, Hizballah will have money,” Hizballah’s Secretary General Hassan Nasrallah boasted in a late June 2016 interview. “We are open about the fact that Hezbollah’s budget, its income, its expenses, everything it eats and drinks, its weapons and rockets, are from the Islamic Republic of Iran,” he added to Hizballah’s official Al Ahed newspaper.

Well, not quite everything.

In the past, Hizballah’s annual income from Iran was estimated at $100-200 million annually, with more received after the devastating 2006 war with Israel. More recently, however, as sanctions bit down on the Iranian economy even as the mullahs ramped up Iran’s nuclear weapons development and poured resources into the battle to save its Damascus proxy regime, the amounts Tehran could provide to Hizballah declined. Hizballah itself was called upon by Tehran to provide fighters, funding, and weapons to the Syrian effort. At least partly as a result, the time since 2011 has been marked by an expansion of Hizballah’s already-extensive global crime network. While Hizballah long has relied on a worldwide network of Shi’ite Lebanese businesses, criminal syndicates, and other supporters for financial and operational support, the urgent need to bolster its own funding efforts has pushed Hizballah increasingly into scaling up its narcotrafficking and related criminal activities—naturally with the full knowledge and approval of its Iranian masters.

Since its creation by Ayatollah Khomeini’s Islamic Revolutionary Guard Corps (IRGC) in the early 1980s, Hizballah has been involved in the local drug trade, built on traditional smuggling operations across the Middle East. Then the Lebanese civil war sent a Lebanese diaspora to the Western Hemisphere in which Hizballah operatives easily blended. Its first foothold was in the lawless Tri-Border area of South America, where Argentina, Brazil and Paraguay meet. Partnership with Colombian cocaine traffickers and willing collaboration from Venezuela gave Hizballah a new revenue stream as well as a base of operations with hemispheric proximity to Tehran’s number one ‘Great Satan’ enemy.

It’s no exaggeration to say that the drug trade is now Hizballah’s number one source of income. Collaboration between Iran, the IRGC, Qods Force, Hizballah, narcotrafficking cartels, and organized crime has grown exponentially in recent years, according to Michael Braun, retired senior official for the Drug Enforcement Agency (DEA). In June 2016 testimony to the House Financial Services Committee, Braun reported that Hizballah today is smuggling “hundreds of tons of cocaine from the Andean Region of South America into Venezuela” and from there onto ships destined for European markets via West and North Africa.

Nor is Hizballah’s presence confined south of the border. Hizballah’s success in forming partnerships with Mexican drug cartels facilitates the movement of cocaine, heroin, methamphetamines, and other contraband across the U.S. southern border. U.S. law enforcement success in dismantling Hizballah criminal operations with branches throughout the U.S. demonstrates the reach of this crime syndicate cum Islamic jihad terror proxy for Iran. Operation Titan was a Hizballah drug-trafficking and money-laundering operation broken up in 2008 in a combined effort by the U.S. and Colombia. Colombia, Mexico, Panama, Europe, the U.S. and Western Africa were all targets of a cocaine distribution network involving the Fuerzas Armadas Revolucionarias de Colombia (FARC). A significant portion of the proceeds went directly to Hizballah.

Operation Smokescreen was the name given to a Hizballah cigarette-smuggling operation run out of Charlotte, North Carolina, with links across the U.S. and in both Canada and Lebanon. Describing the complex network of banks, criminal operations and front companies that garnered tens of millions of dollars in profit for Iran’s terror proxy, law enforcement spokesmen identified a restaurant, painting business, tobacco shops, and credit card, mail and visa fraud, all as part of this Hizballah operation that was shut down in 2002.

In December 2011, DEA unraveled a large Florida-based criminal used car operation whose known profits netted Hizballah close to $500 million through the sale of counterfeit currency and bulk cash smuggling, some of which was also used to procure “a long list of sophisticated weapons.”

And finally, in January 2016, Customs and Border Protection (CPB), DEA, and international law enforcement partners busted yet another narcotics trafficking and money laundering operation dubbed Project Cassandra. Once again, the direct involvement of Hizballah operatives—always under the authority and supervision of the Iranian IRGC, Quds Force and Ministry of Intelligence and Security (MOIS)—was uncovered. A South American network of drug cartels called the Business Affairs Component (BAC), set up by Hizballah terror chieftain Imad Mughniyeh (assassinated in 2008) as a criminal division of Hizballah’s External Security Organization, managed this drug trafficking operation and laundered the proceeds through the Black Market Peso Exchange (a drug money laundering system). Managed by senior Hizballah operatives, some of whom are Specially Designated Global Terrorist (SDGT) figures, the BAC was moving cocaine and money to Europe, Iraq, Lebanon and the U.S. The arrest of SDGT Mohamad Noureddine in connection with Project Cassandra may have put a temporary crimp in some of Hizballah’s drug trafficking, but officials point to an actual expansion of such operations since a nuclear deal was made with Iran, the Joint Comprehensive Plan of Action (JCPOA) that took effect in July 2015. 

U.S. willingness to deal directly with the number one state sponsor of terrorism in the world has emboldened both Tehran and Hizballah. The JCPOA was only supposed to be about Iran’s nuclear industry, but its criminal, narcotics and terror industries got the message, too: individual U.S. agencies do their best, but the mullahs still have top cover.

Billions in freed-up frozen funds, sanctions relief, and ransoms paid for American hostages don’t hurt either.

Clare M. Lopez is the Vice President for Research & Analysis at the Center for Security Policy.

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