Lebanese Government in Denial about Illicit Imports of Iranian Steel

Despite consistent reports from local media that Iranian steel is flooding the Lebanese market, the country’s minister of economy and trade tried to cover up the Iranian origin of the steel in a meeting with a senior U.S. Treasury official, according to official notes from the meeting allegedly leaked by the Lebanese embassy in Washington. The Lebanese denial shows how a Hezbollah-dominated government cannot be a reliable partner in the U.S. campaign to exert maximum economic pressure on Iran.

Marshall Billingslea, the U.S. assistant secretary of the Treasury for terrorist financing, raised the issue of Iranian imports in an April meeting in Washington with Lebanese Minister of Economy and Trade Mansour Bteich. The Lebanese ambassador to Washington, Gabriel Issa, apparently leaked the official notes, as memorandized for the Foreign Ministry, to the pro-Hezbollah Al-Akhbar newspaper. Both Issa and Bteich are part of President Michel Aoun’s political bloc, which is allied with Hezbollah.

According to the minutes, Billingslea told Bteich that the Lebanese government should stop the imports of Iranian steel. Bteich claimed that “neither Customs nor the Ministry of Economy and Trade could stop the importing, because it is not shipped from Iran,” but rather from Turkey or Egypt.

Billingslea replied that “customs officers know how to determine [the authenticity of] certificates of origins,” and proposed Lebanese Customs communicate with their Turkish counterparts on the matter. Bteich conceded there were some imports from Iran, but tried to minimize their volume and significance, saying “All that came in were two ships carrying rebar, which came through the port of Tripoli.”

Iranian steel imports became a subject of debate for Lebanon in March, when importers voiced complaints about the influx of cheap Iranian rebar into the Lebanese market. Lebanese Forces MP Chaouki Daccache, who owns a steel pipe manufacturing business, was among the first to raise the issue, when he claimed that a vessel carrying 21,000 tons of rebar had flooded the market with low-priced goods.

In April, the local daily al-Joumhouria cited “one of the largest steel traders” in Lebanon saying that a vessel carrying Iranian steel arrived weekly, either in Beirut or a Turkish port. Other traders told The National, an Emirati paper, that when steel arrives via Turkey, the Iranian certificates of origins are changed to Turkish documents. The report in al-Joumhouria estimated that 35,000 tons had recently entered Lebanon, priced 25 percent lower than steel from elsewhere. Selling at about $500 a ton, this generated roughly $17 million.

Even though Lebanese law does not prohibit imports from Iran, steel traders maintain that Lebanese banks do not finance these transactions because they fear becoming the target of U.S. sanctions. Instead, importers pay in cash or through local companies, which also helps to hide their identities.

When a delegation of traders complained to Bteich about unfair competition, he reportedly told them that “importing steel from Iran was not against Lebanese law,” and thus “Lebanese Customs could not get involved in the matter.” Contacted by The National, Bteich said he had “no idea what they are talking about regarding Iranian steel… I have nothing, no documents regarding imports, no bills of lading or certificates of origin coming from Iran.” Bteich then tried that same play in Washington, even as he asked for continued U.S. support for Lebanese “state institutions.”

Treasury is right to press Beirut on the subject of Iranian steel, but Bteich’s transparent excuses show that the Lebanese government, which is dominated by Hezbollah, is itself part of the problem. This should be clear, yet the Trump administration, like its predecessors, maintains the convenient fiction that Lebanon has independent state institutions that the U.S. can strengthen as a bulwark against Hezbollah. Until the U.S. abandons this premise, its policy toward Lebanon will remain incoherent.

Tony Badran is a research fellow at the Foundation for Defense of Democracies. Follow him on Twitter @AcrossTheBay. Follow FDD on Twitter @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.