Which is the Hezbollah-linked financial institution that Israel is targeting in Lebanon?

BEIRUT (AP) — The Israeli military has carried out a wave of airstrikes on branches of a financial institution linked to Lebanon's Hezbollah, claiming the quasi-banking system is being used to finance the militant group's military wing.

The strikes destroyed more than a dozen branches al-Qard al-Hasan Sunday night across Lebanon, coming two weeks after an airstrike killed the man many described as Hezbollah's “finance minister.”

Following the assassination of most of Hezbollah's top political and military commanders, including the group's longtime leader, Sayyed Hassan NasrallahAs Israel bombs and destroys its communities with devastating airstrikes, it says it is now targeting the Shiite group's donors and financial institutions to further destroy it and its support base.

A day after Hamas' attack on southern Israel on October 7, 2023, in which about 1,200 people were killed and about 250 were taken hostage, Hezbollah began attacks on Israeli military posts along the border with Lebanon. Hezbollah said it was supporting its Hamas allies in the Gaza Strip with the attacks along the Lebanese-Israeli border.

What is al-Qard al-Hasan and who benefits from it?

Al-Qard al-Hasan is officially a non-profit charity that operates outside the Lebanese financial system and is one of the tools Hezbollah uses to consolidate its support among the country's Shiite population.

In addition to its military wing, Hezbollah has branches that operate schools, hospitals, low-cost grocery stores, and Al-Qard al-Hasan, which benefits hundreds of thousands of its followers.

Israel says the institution finances arms purchases and is used to pay Hezbollah fighters. The U.S. Treasury Department has imposed sanctions on it since 2007, saying it is “used by Hezbollah as a front” to control the militant group's financial activities and “gain access to the international financial system.”

Founded four decades ago, shortly after Hezbollah's founding, the association, whose name means “the benevolent loan” in Arabic, offers interest-free loans and allows people to deposit gold as collateral in return for the loan, thus covering school fees to be able to pay for weddings, buy a car or start a small business. You can also open savings accounts.

Al-Qard al-Hasan has more than 30 branches across Lebanon. After Lebanon's financial collapse in 2019, the institution provided a lifeline for many Lebanese. Unlike banks across the country that limited the amount of withdrawals from their bank accounts, people with deposits at al-Qard al-Hasan were still able to withdraw their cash.

In 2021, the U.S. Treasury Department's Office of Foreign Assets Control imposed sanctions on seven individuals related to Hezbollah and al-Qard al-Hasan. A year later, the Biden administration imposed terrorism sanctions on two more individuals, including al-Qard al-Hasan director Adel Mansour, and two companies in Lebanon for providing financial services to Hezbollah.

Mansour was not returned for comment by The Associated Press. After two years of sanctions being imposed on him, he told the AP: “I'm proud and this is a medal of honor for me.”

A senior central bank official in Beirut declined to comment on the Israeli attacks on branches of al-Qard al-Hasan when contacted by the AP on Monday.

David Asher, an expert on illicit financing who has worked at the U.S. Defense and State Departments and is now a senior fellow at the Hudson Institute, said the Israeli attacks were “a big deal.”

“Al-Qard al-Hasan is part of Hezbollah’s central financial unit,” which is comparable to its treasury, he said.

Faysal Abdul-Sater, a Lebanese political analyst who closely follows Hezbollah's affairs, said the militant group is not funded by al-Qard al-Hasan. He said the money deposited in the facility belongs to individuals and companies and the system benefits low-income people.

“This is a symbolic attack,” Abdul-Sater said of the attack on al-Qard al-Hasan.

How damaging are the Israeli attacks?

The systematic destruction of al-Qard al-Hasan branches following attacks that killed nearly all of Hezbollah's senior leadership and displaced hundreds of thousands of the group's supporters is bound to increase the chaos and fears within Hezbollah's support base.

However, experts say this is unlikely to harm Hezbollah's finances per se.

Al-Qard al-Hasan sought to reassure customers, saying in a statement late Sunday that the company had evacuated all branches and relocated gold and other storage facilities to safe areas.

Lebanese economist Louis Hobeika said the destruction of al-Qard al-Hasan branches will have no impact on Hezbollah's funding because its money comes from Iran and wealthy supporters around the world. The group's salaries are known to be paid in cash in dollars.

“As long as Iran and Hezbollah’s allies fund the group, it will not be affected,” Hobeika said, adding that the flow of “bags of money” from abroad will continue as in the past.

Lina Khatib, an associate fellow at Chatham House who focuses on the Middle East, said al-Qard al-Hasan's clients still trust that “Hezbollah can compensate them for their losses.”

Khatib noted that al-Qard al-Hasan's operations, like those of all other financial institutions, are not limited to physical assets targeted by the attacks.

A Lebanese woman, who gave only her first name, Zahraa, for security reasons, said she needed cash and deposited a gold chain and several rings in exchange for an $800 loan earlier this year. The woman said she paid the money back in monthly installments of $50.

“I don't care whether I get the gold or not, at a time when men in southern Lebanon are sacrificing their souls,” Zahraa said, referring to armed Hezbollah fighters fighting against invading Israeli forces.

Who was the Hezbollah financier killed?

Israel began damaging Hezbollah's finances earlier this month when an Israeli airstrike destroyed the top two floors of a building in southern Beirut, killing Mohammed Jaafar Qassir, who the U.S. Treasury Department and Israel accused of stealing hundreds of millions of dollars during the year from Iran to Hezbollah years ago. The US had offered $10 million for information leading to the disruption of Hezbollah's financial mechanisms.

The U.S. Treasury Department said Qassir financed Hezbollah's operations through a range of “illegal smuggling and procurement activities and other criminal enterprises.”

It added that Qassir was also an important conduit for financial disbursements from Iran's paramilitary Revolutionary Guard's powerful Quds Force, which were used to fund Hezbollah's activities.

The Israeli military said Qassir was in charge of Hezbollah Unit 4400, which supplies weapons from Iran to Lebanon, and oversaw Hezbollah's development of precision-guided missiles.

Hezbollah did not comment on Qassir's killing.

A few days after Qassir was killed in Beirut, an airstrike in Damascus, Syria, attributed to Israel, killed his brother Hasan, who was married to Nasrallah's daughter Zeinab.

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Associated Press writers Adam Schreck in Jerusalem and Mohammad Zaatari in Sidon, Lebanon, contributed to this report.