Beyond the battlefield: Hezbollah's funding network comes under strain

Report by Theresia Rahme, English adaptation by Yasmine Jaroudi

The confrontation between Israel and Hezbollah is no longer limited to the battlefield. The U.S. and Israel are intensifying their financial campaign against the group's funding networks, particularly the flow of money from Iran, according to a report by The New York Times.

The campaign intensified after late 2024, when the fall of Bashar Assad's government in Syria disrupted one of Hezbollah's most important overland routes to Iran. With that corridor weakened, the focus shifted to alternative channels for moving Iranian funds into Lebanon.

According to officials cited by the newspaper, Iran increasingly turned to Beirut's airport. At the beginning of last year, U.S. officials conveyed an Israeli warning to the Lebanese government that Iran was sending suitcases containing dollars on civilian flights to Beirut. Some of the money was allegedly transported by Iranian diplomats, according to the report.

Lebanon subsequently suspended flights arriving from Iran and removed airport employees who, according to sources cited by the newspaper, were linked to Hezbollah.

The financial pressure then extended to Lebanon's banking system and its cash-based economy. 

Hezbollah has long relied heavily on cash transactions and informal financial networks to move and conceal funds, including money originating in Iran. Under the new Banque du Liban (BDL) governor Karim Souaid, Washington has pushed for tighter oversight of financial transfers, while BDL has investigated major money-transfer companies over suspicions that they were being used to move funds linked to Hezbollah.

Hezbollah has denied the allegations, describing claims that it exploits Lebanon's cash economy as false and baseless.

With greater scrutiny on formal financial transfers, alternative channels have become increasingly important. 

One of the main mechanisms is the transfer system, in which money is transferred through networks of currency exchangers and intermediaries rather than through conventional banks. Under the system, the recipient receives money from funds already held by another intermediary, while the accounts are settled elsewhere.

According to officials cited in the report, Iranian funds have moved through the United Arab Emirates, Turkey and Iraq before reaching Hezbollah. The U.S. Treasury Department has estimated that Iran transferred about $1 billion to Hezbollah over a single year, with a significant portion allegedly moving through such informal networks.

Gold has also emerged as another channel for generating liquidity. 

The U.S. Treasury has said senior officials at Hezbollah-linked Al-Qard Al-Hassan established a network of gold-trading companies to help provide the group with access to cash. Israel has destroyed more than a dozen Al-Qard Al-Hassan branches, while strikes have also damaged portions of Hezbollah’s foreign-currency and gold reserves, increasing pressure on the group to convert its remaining gold holdings into cash.

Iranian funding has historically been crucial to Hezbollah’s operations. Before the war, the U.S. State Department estimated that Iran provided the group with about $700 million annually, out of a total Hezbollah budget estimated at roughly $1 billion.

According to officials cited by The New York Times, Iran increased its support over the past year, but the additional funding was still insufficient to cover the enormous costs associated with the war.

The financial strain is increasingly affecting Hezbollah’s wider social network. 

According to Hezbollah officials and people who benefit from its services, salaries for tens of thousands of fighters have largely continued to be paid, but some social services have been reduced as the group prioritizes spending, with military expenditures receiving greater emphasis.

Compensation for families whose homes were destroyed during the 2024 war provides one example. Hezbollah had announced payments of between $12,000 and $14,000 to families whose homes were destroyed. But according to Hezbollah spokesman Youssef al-Zein, the payments were repeatedly postponed before eventually being suspended altogether.

Lebanon has also barred banks and financial intermediaries from dealing with Al-Qard Al-Hassan, while the Trump administration is reportedly pushing for the institution to be shut down entirely.

The pressure campaign therefore extends beyond Hezbollah’s weapons and military capabilities. It increasingly targets the financial and social infrastructure that the group has built over decades, potentially putting additional strain on its ability to maintain both its military operations and its extensive network of services.