Iran: A State Sponsor of Poverty

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Since 1984, the Islamic Republic of Iran has been designated as a “State Sponsor of Terrorism” by the U. S. State Department. While most analysts have focused on the violence resulting from terrorism, few have considered another consequence. Wherever Iran’s terror proxies dominate a society in the Middle East, there is also massive corruption that creates extreme poverty and human suffering. That is why Iran should also be considered a “state sponsor of poverty.”

The tragedy of Lebanon is a prime example of the destructive role of Iran through its powerful proxy, Hezbollah.

The horrific images we saw on our television screens following the massive explosion in Beirut on August 4th compounded an already desperate economic situation in Lebanon. Years of corruption and mismanagement by the government of Lebanon are bringing it to becoming a “failed state”.

According to a study by the World Bank, 45% of the population of Lebanon is now living in poverty. To make matters worse, the country is suffering from runaway hyperinflation making basic food needs inaccessible for many Lebanese.

Maha Yaya, Director of the Carnegie Middle East Center, wrote, “Clothes, food, and fuel are becoming unaffordable as year-on-year purchasing power has been halved, with inflation reaching 90 percent in June 2020. The prices of basic goods increased by around 55 percent in May, alone. All this represents an epic collapse with a generational impact.”

As we have seen in the street protests in Beirut (pictured above), the young people of Lebanon have had enough.

While there are several causes for Lebanon’s current situation, at the heart of the problem is the pivotal role of Hezbollah in the politics of Lebanon. Hezbollah has created a state within a state while also becoming a dominant player in the Lebanese political system.

Thanks to Iran, Hezbollah now has 130,000 rockets and missiles aimed at Israel and a force of over 20,000 fighters. And Iran is continuously working to upgrade the range and accuracy of this massive arsenal. Yet, Hezbollah also has a vast social and educational network.

According to United Against Nuclear Iran (UANI) on its Hezbollah.org webpage, “The group runs a vast social services network – including hospitals, schools, vocational institutions, and charities — in predominantly Shiite areas of Lebanon…”

How does Hezbollah pay for all of this?

In an in-depth conversation between Lt. Colonel (Res.) Sarit Zehavi, founder of the Alma Research Center, and Dr. Matthew Levitt, a Senior Fellow at the Washington Institute, we learn about the three sources of Hezbollah funding.

According to Levitt, the first source of Hezbollah funding is from Iran. Hezbollah receives about $700-800 million dollars a year from Iran. Secondly, Hezbollah gets money from corruption by siphoning off money from the government of Lebanon. Third, a major source of income comes from Hezbollah’s role as a “transnational organized criminal enterprise” that deals in narco-trafficking and money laundering of the proceeds of its role in the international drug trade.

The vast extent of Hezbollah’s worldwide reach is revealed through a highly detailed Lebanese Hezbollah Interactive Map recently created by Levitt and the Washington Institute.

It should be no surprise that Hezbollah launders their profits from criminal enterprises through the Lebanese banking system. A prime example is the now defunct Lebanese Canadian Bank. In 2011, it was designated by the U.S. Treasury “…for the bank’s role in facilitating the money laundering activities of an international narcotics trafficking and money laundering network”.

This explains why it will be difficult for Lebanon to receive international economic aid. Lebanon has been offered billions of dollars in financial aid from the International Monetary Fund (IMF) to help alleviate its economic crisis. However, Hezbollah has been the main obstacle to this crucial aid.

The reason is simple. According to Levitt, the IMF demands reform and transparency of the Lebanese banking system. Those basic reforms would be a direct threat to Hezbollah’s exploitation of the Lebanese banking system for criminal money laundering. Until Hezbollah agrees to these reforms, nothing will change.

The Larger question is this: What is Iran’s end game in creating and supporting proxy groups like Hezbollah throughout the Middle East?

Iran’s strategy can be found in a concept called the “Axis of Resistance”. The goals of this “Axis” are to create proxy forces- like Hezbollah- in order to “export the Islamic Revolution” and to use these proxies for “resistance” to the very existence of Israel.

The phrase was first used by Ali Akbar Velyati, a senior advisor to Iran’s Supreme Leader Ali Khamnei. In 2010, Velyati said, “The chain of resistance against Israel by Iran, Syria, Hezbollah, the new Iraqi government and Hamas passes through the Syrian highway… Syria is the golden ring of the chain of resistance against Israel.”

The tragedy of Syria is a clear example of the dangerous implications of this strategy.

Since 2013, Iran has done everything possible to prop up the brutal regime of Bashar al-Assad with massive financial support and an endless supply of ammunition and weapons. With the help of Hezbollah, Iran recruited, trained and deployed thousands of foreign fighters to Syria from Afghanistan, Iraq, and Pakistan.

The human costs of Iran’s ambitions are shocking: half a million dead Syrians, more than six million refugees and a decimated economy. In other words, Iran destroyed one country so that it can create a platform to destroy another country, Israel.

And then there is Iraq, another key to the “Axis” that is also in danger of coming to be dominated by Iran. The proxy forces supported by Iran were originally part of the effort to defeat ISIS. Now they have become part of the Iraqi state where they are using the model of Lebanese Hezbollah to corrupt state institutions.

Iranian proxies, especially Kataib Hezbollah and Asaib Ahl al-Haq, are stealing the future of Iraq. Their agenda is not an Iraqi agenda, it is Iran’s agenda. Over the past year, we have also seen a growing frustration of Iraq’s youth over corruption in the Iraqi government. This has brought thousands of young people out into the streets for protests.

In a recent feature article in the New York Times titled, “Inside the Iraqi Kleptocracy”, journalist Robert Worth wrote, “To those who took part in the rallies, groups like Kataib Hezbollah are not just Iranian proxies; they are the newest faces of a kleptocracy that has enriched itself at the expense of Iraq’s youth, who have been left jobless and destitute in ever-increasing numbers.”

It is no coincidence that both Kataib Hezbollah and Asaib Ahl al-Haq have also been designated as Foreign Terrorist Organizations by the U.S. State Department for their attacks on U.S. forces in Iraq.

Across the Middle East in Gaza, Iraq, Lebanon, Syria and Yemen, wherever Iran creates and supports proxy forces, there is a direct correlation between the corruption of state institutions and poverty. The cost of Iran’s support for terror proxies is both the loss of human life and the loss of hope for a better future. Until the international community decides to hold Iran accountable for its support for terrorism, there will be no hope for peace and prosperity for the people of the Middle East.

About the Author
Bob Feferman is Outreach Coordinator for United Against Nuclear Iran (UANI), a not-for-profit, non-partisan, advocacy group that seeks to prevent Iran from fulfilling its ambition to obtain nuclear weapons. UANI’s private sanctions campaigns and state and Federal legislative initiatives focus on ending the economic and financial support of the Iranian regime to compel Iran to abandon its illegal nuclear weapons program, support for terrorism and gross human rights violations.
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