July 6, 2017 | Policy Brief

Lebanon’s New Electoral Law Seeks to Preempt U.S. Sanctions on Hezbollah

July 6, 2017 | Policy Brief

Lebanon’s New Electoral Law Seeks to Preempt U.S. Sanctions on Hezbollah

Congress passed the first round of Hezbollah sanctions in late 2015. Known as the Hizballah International Financing Prevention Act (HIFPA), the bill targeted banks used by the group and its members. After HIFPA became law, there were rumors in the Lebanese press that some jittery banks were closing the accounts of Hezbollah members. One Hezbollah MP did have his bank account closed.

Lebanese institutions then intervened. The Central Bank of Lebanon reversed the decision of the private bank that closed the Hezbollah MP’s account. Meanwhile, according to Arabic media reports, the Ministry of Finance started paying Hezbollah MPs and ministers’ salaries in cash to avoid banks, though the accuracy of these stories is unclear. Eventually, Hezbollah placed a bomb behind a branch of Blom Bank in June 2016, and everyone got the message: be careful about being “overzealous” in complying with U.S. law.

Reports that Congress is working on an updated and tightened HIFPA have caused much consternation in Lebanon, and this time, state institutions are not waiting until after it passes to undermine it. American lawmakers now face a choice: close loopholes created by the Lebanese state, or watch the new HIFPA be gutted like the last one.

Last month, the Lebanese Parliament passed a new electoral law to govern the next parliamentary elections, scheduled for May of next year. The law includes a little-noticed amendment aimed at preempting future U.S. sanctions.

Article 59 of the electoral law governs campaign finance. The requirements are standard: candidates will have to open a dedicated bank account for their campaign to manage all campaign expenses, filing fees, insurance, and contributions. The campaign account has limits on contributions and spending, is not protected by normal secrecy provisions, and so on.

But Hezbollah candidates will be able to use an amendment, reportedly introduced by Speaker Nabih Berri, which creates an exception. It has the Lebanese government hold money for candidates that cannot open bank accounts: “If a bank account cannot be opened and activated for any candidate or [electoral] list for reasons outside their will, the moneys specified for the electoral campaign of the candidate or the list will be deposited in a general fund at the Ministry of Finance which would substitute for the bank account in all its stipulations.”

The Ministry of Finance is led by Ali Hassan Khalil, a longtime close aide to Berri. Initial reports said the amendment even included a specific reference to sanctions: “if bank accounts cannot be opened as a result of sanctions.” That reference is not in the official text, but it is clear the law is aimed at sanctions.

If a major Hezbollah-linked businessman designated by the U.S. Treasury Department – say, Qassem Hejeij or someone like him – ran in the elections, he could do so without using banks and accounts. It is also easy to imagine how such a fund could take on the added role of directly paying the salaries of Hezbollah parliamentarians and specially designated individuals, if new sanctions prevented payments to their bank accounts.

Critics of the U.S. sanctions law argue that Washington must not work against the Lebanese state. But this is a case of the Lebanese state working on behalf of Hezbollah against Washington.

Tony Badran is a research fellow at the Foundation for Defense of Democracies. Follow him on Twitter @AcrossTheBay


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