Op-Ed: Hezbollah's Global Criminal Empire

Hezbollah fighters parade during a ceremony to honor fallen comrades, in Tefahta village, south Lebanon, Saturday, Feb. 18, 2017. (AP Photo/Mohammed Zaatari)
Hezbollah fighters parade during a ceremony to honor fallen comrades, in Tefahta village, south Lebanon, Saturday, Feb. 18, 2017. (AP Photo/Mohammed Zaatari)

Joseph V. Micallef is a best-selling military history and world affairs author, and keynote speaker.

Over the last several decades, the militant Lebanese organization Hezbollah has morphed from an Iranian-inspired and Iranian-funded Shiite militia into a political and social movement as well. In the process, notwithstanding the $200 to $350 million in financing it allegedly receives from Tehran, it has turned increasingly to criminal activities to fund its operations.

Today, Hezbollah sits astride a worldwide criminal syndicate that generates upwards of a billion dollars a year in income for the group.

Hezbollah's criminal income is generated from four main areas of activity: narcotics, money laundering and currency counterfeiting, widespread low-level crime centered primarily on financial fraud, and extortion.

Subversive organizations have often turned to criminal activities as a way of funding their operations. At the turn of the 20th century the Bolsheviks robbed banks to finance themselves. During the 1970s and 1980s, European groups like Baader Meinhof, Brigate Rosse, and Direct Action supplemented the funds they received from the Soviet Union by staging kidnappings for ransom or robbing banks.

More recently, the FARC in Columbia, the Taliban in Afghanistan and Islamic State have all turned to dealing in narcotics as a source of funds.

Many current criminal organizations, the Yakuza in Japan, the various criminal organizations in South China, and the Sicilian Mafia and its related brethren, the Camorra in Naples and the Ndràngheta in Calabria, all began or were in part inspired by a political agenda.

All of them turned to crime to obtain funds for that agenda. Over time, their political inspiration was watered down and eventually disappeared. The criminal element remained, however, now transformed into a for profit crime syndicate.

The FARC in Colombia has shown a similar evolution. What began as a Maoist-inspired insurgency against the Colombian government, which used cocaine trafficking as a source of funds, has evolved into an organization that is not quite a for profit crime syndicate, but neither is it just an insurgency any longer.

The UN Office of Drugs and Crime (UNODC) estimates that the worldwide narcotics market generates between $400 and $500 billion in turnover every year. Over the last several decades terrorist organizations have increasingly looked to narcotics as a source of funds.

The skill set necessary to survive as a militant organization, to smuggle arms and munitions, to move operatives around the globe surreptitiously and to stage attacks, is the same skill set needed to manufacture, transport and distribute narcotics on a world-wide basis.

Hezbollah's Narcotics Trade

Hezbollah's foray into drugs began in the 1980s, in its Beqaa Valley stronghold in eastern Lebanon. The turmoil of the Lebanese Civil War from 1975 to 1990, and the virtual collapse of the Lebanese economy, prompted many Lebanese farmers to turn to producing hashish and marijuana to support themselves.

The cultivation of marijuana in the region dated back to Ottoman times. Traditionally, roughly 10% of the local farmland was devoted to hashish production. Typically, it was grown on land that was to arid to support any other crops.

During the civil war, marijuana cultivation soared. At its peak, it covered more than 100,000 acres. Hezbollah quickly emerged as an intermediary, arranging the smuggling of marijuana, both its own production and that of local farmers into Egypt as well as, via the Balkans, into Europe.

After the end of the civil war the Lebanese Army tried to suppress the cultivation of marijuana, burning fields and interdicting shipments, but for the last several decades the Lebanese government has tacitly accepted that activity.

Today, the Beqaa Valley is a major source of marijuana exports to Europe and the Middle East with an annual turnover of around $4 billion.

Since the 1990s, South America has emerged as a major nexus of Hezbollah's narcotics activity. The tri-border area (TBA), where Argentina, Paraguay and Brazil meet, is the next largest center of Hezbollah activity outside of Lebanon. There is a large expatriate Lebanese community in this region.

Combined with lax enforcement and even less supervision by the local government authorities, the TBA has become a wild west where narcotics, gun running and a host of financial scams flourish. The TBA has also become a hub for the re-export of Chinese made counterfeit branded goods to Europe and North America by Hezbollah linked firms.

Hezbollah has developed working relationships with the FARC in Colombia, with whom it trades guns for cocaine and partially processed cocaine paste, as well as with various Mexican drug cartels. It has a particularly close working relationship with the Los Zetas crime syndicate. It has relied on Los Zetas to smuggle narcotics and Hezbollah militants into the United States.

In the meantime, it has supplied automatic and heavy caliber weapons to Los Zetas. It has also provided tunnel building expertise, the same that it provided to Hamas in Gaza, to enable Los Zetas to build sophisticated tunnels beneath the Mexican-U.S. border.

Perhaps the most worrisome aspect of the Hezbollah-Los Zetas partnership is the fact that Zetas members have undergone training in Hezbollah run camps in the Beqaa Valley. There they have been taught specialized skills like bomb making and have attended a Hezbollah run "sniper school."

Over the last several years both the DEA and Homeland Security have noted a sharp increase in the number of Mexican drug gang members sporting Farsi and Arabic language tattoos as well as, in a few instances, Hezbollah related symbols.

It is Venezuela, however, that has been the focal point of Hezbollah's narcotics traffic, its growing Latin American network and Iran's anti-American foreign policy. According to the DEA, large numbers of Venezuela's government elite, including former President Hugo Chavez and current President Nicolas Maduro, have been implicated in Hezbollah's drug trafficking through Venezuela.

The Trump administration recently designated Venezuelan Vice President Tareck el Aissam as a "super narcotic kingpin" and charged that he had been involved in trafficking drugs and weapons for more than a decade and that he had also been instrumental in a conspiracy to provide Venezuelan passports and false identities to Iranian and Hezbollah agents.

Over the last decade, Hezbollah's shipments of cocaine via Venezuela have increased from 50 tons to 250 tons a year. This is roughly one-third of the international traffic in cocaine.

Hezbollah operates cocaine producing facilities in eastern Venezuela. It also ships semi-processed cocaine paste from Venezuela to Lebanon where it is refined in facilities in the Beqaa Valley. It also uses Venezuela to stage drug shipments to Europe, the United States and West Africa.

In particular, Guinea Bissau has become the principal logistics point for Hezbollah's transshipment of Latin American drugs into Europe.

According to the Foreign Policy Research Institute, Iran Air operated Flight 744, a bi-weekly flight from Caracas to Tehran via Beirut and Damascus. Dubbed "Aeroterror," the flight was used to carry drugs and cash from Venezuela to Beirut. Once in Beirut, the drugs would make their way to Europe.

It was also one of the principal means for transporting so called prohibited dual use items sourced in North America to Iran. Such items ranged from sophisticated night vision equipment to components and machinery needed for Tehran's nuclear and missile programs.

The return flights would bring arms, Hezbollah and Iranian operatives and, on occasion, counterfeit U.S. currency for transshipment to the U.S.

In addition, according to the U.S. State Department, Caracas has issued thousands of Venezuelan passports to individuals from Syria, Pakistan, Egypt and Lebanon.

It is far easier to obtain an American visa with a Venezuelan passport than it is with one from a Middle Eastern country. The result is that under Hugo Chavez and now under his successor Nicolas Maduro, Venezuela has become what the State Department calls a "Terrorism Hub of South America."

Hezbollah has made similar moves into Southeast Asia's Golden Triangle. It has built an extensive network within the region's Muslim community and it has been a source of cash, weapons and training for radicalized Sunni militants in the area. It has also become involved in the drug trade there.

Hezbollah's Money Laundering

Money laundering goes hand-in-hand with narcotics. Drug dealing is a cash business, one that generates considerable amounts of money, which needs to be either recycled or moved into the financial system in a way that doesn't arouse suspicion.

Hezbollah's worldwide networks and its links with supportive governments puts it into an ideal position to launder cash from its own narcotics operations as well those from other criminal syndicates.

Historically, Hezbollah has used a variety of means to launder cash. These range from the informal money transfer systems of the hawala dealers, which now have spread globally, to money service companies like Western Union, to smuggling money into Lebanon.

One way of laundering cash is to simply convert it into goods that can be sold elsewhere. For many years Hezbollah has operated an extensive used car export business that saw used cars purchased for cash in the United States being exported to Benin, from where they were distributed across West Africa.

The Justice Department estimates that the used car export business generates around $500 million in revenue for Hezbollah every year. Proceeds from the sales of used cars in Africa can be deposited into local financial institutions where they merge seamlessly into the global financial system.

The other alternative is simply to move cash into financial institutions that will take such deposits or to first run them through legitimate businesses that typically operate on a cash basis. In recent years, there have been a number of banks that have actively been involved in laundering funds, knowingly or unknowingly for Hezbollah.

In 2012, for example, the U.S. government seized $150 million from Lebanese Canadian Bank. The bank was accused of knowingly laundering money for Hezbollah as well as providing financing for the groups used car export business.

While the seizure was significant, it was a drop in the bucket of the $200 million a month that Hezbollah was laundering through the bank. According to the DEA, the bank laundered several billion dollars for Hezbollah before it was shut down

In 2016, the DEA arrested three men linked to Hezbollah and charged them with laundering money for the Medellin based drug syndicate, La oficina del Envigado, through banks in Dubai and Miami. There have been similar incidents involving banks throughout Latin America.

Large-scale money laundering can continue for a while before there is sufficient evidence for legal authorities to act. Even when a bank is shut down and is subject to the seizure of deposits and penalties, the sums are often dwarfed by the scale of illegal activity that preceded it.

Hezbollah has also created a broad universe of front companies around the world, especially in South America, and in particular in the travel/tourism and import/export sectors. These activities can provide a way of laundering funds by making them look as legitimate deposits of actual businesses.

The counterfeiting of currency, principally U.S. dollars, but also Euros and the currencies of various Middle Eastern countries, has also been a focus of Hezbollah. It is likely that Hezbollah's expertise in currency counterfeiting came from the Islamic Revolutionary Guards Corp (IRGC), which has long been active in this area and has close operational ties with Hezbollah.

The Iranians, in turn, probably learned it from the North Koreans, who also have a long history of counterfeiting foreign currencies.

The challenge of monetizing counterfeit currency is to find a means of moving it into the financial system. Hezbollah friendly banks may be willing to launder narcotics cash, but they have little interest in tainting their own cash holdings with counterfeit bills.

The usual avenue is to sell that currency at a discount to an organization that can either spend it or mix it with authentic currency and gradually move it into the financial system.

Hezbollah has been implicated in trying to sell counterfeit U.S. currency to organized crime groups in the U.S. It has also been charged with trying to distribute counterfeit U.S. bills in Eastern Europe and the Balkans, two areas popular with counterfeiters.

Hezbollah's Worldwide Crime Wave

Hezbollah has also been implicated in widespread low level criminal activity around the world, especially in North and South America and Europe. The scope of this activity is vast, although it is often difficult to tie it specifically to Hezbollah.

In some cases, this criminal activity directly involves members of Hezbollah. In other cases, the perpetrators are not members of Hezbollah but are related to high ranking officials in the organizations.

In other cases, participants are sympathizers, often times of Lebanese ancestry, who are either counterparties to Hezbollah in criminal activities, use services provided by Hezbollah in the conduct of their criminal actions, i.e., security or smuggling, or simply donate a portion of their criminal profits to the organization. The FBI refers to such participants as "useful idiots."

In 2003, for example, U.S. officials arrested Elias Mohamad Akhdar and various associates, all linked to Hezbollah members, and charged them with operating a cigarette smuggling ring from Charlotte North Carolina.

The group purchased cigarettes in North Carolina or from the Cattaraugus Indian reservation in upstate New York and used counterfeit cigarette tax stamps to resell the cigarettes at a hefty profit. A portion of the proceeds were then donated to Hezbollah.

In 2006, Imad Hammoud, a self-described avid supporter of Hezbollah, was indicted for the importation and distribution of counterfeit Viagra pills from China.

Viagra is the most widely counterfeited drug in the world and its manufacture and distribution is as profitable as narcotics. Hammoud had links to Akhdar and had also run a parallel cigarette smuggling ring that moved $500,000 of cigarettes across state lines each week.

In 2009, the FBI arrested another group of Hezbollah supporters for attempting to procure and ship to Syria 1,200 M-4 Carabine machine guns in exchange for providing counterfeit currency, forged passports and stolen money.

Elsewhere, Hezbollah and its supporters have been implicated a wide range of criminal activity from credit card fraud in the U.S. and Europe to dealing in African blood diamonds.

Hezbollah was reportedly involved with the export of between $3 billion and $4 billion of illicit diamonds from Angola as well as so called blood diamonds from Sierra Leone to the Congo. Many of these activities have been documented for several decades and continue to this day.

Hezbollah and the Lebanese Expatriate Community

Finally, Hezbollah raises considerable funds from the expatriate Lebanese community around the world. There are approximately four million Lebanese citizens living in Lebanon. There are an estimated 10 to 14 million people of Lebanese ancestry living abroad. Roughly 1.2 million of those expatriates also hold a Lebanese passport.

The expatriate Lebanese community reflects the same divisions and rivalries present in contemporary Lebanese society. Some are passionate, committed followers of Hezbollah. Others simply wish to support what they see as a noble cause, even though they may not feel any allegiance to Hezbollah.

Others are simply exhorted to make payments to Hezbollah, often in the form of contributions to Hezbollah sponsored charities, to protect their families and businesses or relatives back in Lebanon.

It's unclear how significant a sum is generated from the Lebanese expatriate community, but U.S. intelligence sources believe it could be several hundred million dollars a year.

Hezbollah as a Criminal Syndicate

The picture that emerges from Hezbollah's worldwide criminal activity is that of a highly sophisticated, broadly diversified criminal syndicate with a global reach. It is an organization where the chain of command is often opaque, and which involves individuals who are not part of the group but still act to support its criminality or give it the benefit, in the form of taxes and contributions, of criminal activity in which it is not directly a party.

From a legal standpoint, that makes it particularly difficult for the U.S. government to prosecute Hezbollah's activity. It can shut down specific operations and arrest its perpetrators, but the ability to tie back such activity to the organization's leadership can be problematic.

The implications of Hezbollah's criminal activity, however, go beyond that of simply another very sophisticated global criminal syndicate. Hezbollah represents a unique fusion of political and criminal agendas that is more than simply co-opting corrupt political elites around the world. Such corruption is hardly new. High level corruption among law enforcement and government elites has often paralleled the rise of powerful drug syndicates.

In Hezbollah's case, however, not only is its criminal activity a source of funds for its own agenda but the activity itself also functions to advance the broad aims of Iran's anti-American foreign policy. This is particularly true in South and Central America.

Hezbollah's willingness to supply sophisticated weaponry and training to Mexican drug cartels, for example, not only serves its criminal interests but creates political and social instability in a key American ally, escalates the level of domestic violence in Mexico and encourages that instability to spill over into the American homeland.

For Hezbollah, shipping narcotics into the United States satisfies not only a financial goal but a political one as well. Hezbollah's leaders have often quoted a fatwa issued by an Iranian cleric that declares, "we are making drugs for Satan -- America and the Jews. If we cannot kill them with guns, so we will kill them with drugs."

Likewise, Iran has strongly supported, left wing, anti-American governments in Venezuela, Bolivia and Ecuador. Among the first things those governments did when they came to power was end cooperation with the DEA and expel its agents from their countries.

Moreover, Hezbollah has emerged as a super facilitator in the crime world. Its links to foreign governments and its strong support from Iran gives it capabilities that it can leverage in its relations with other criminal syndicates. In doing so it can also enhance the capabilities of those criminal organizations.

Hezbollah's willingness to supply automatic and heavy caliber weapons and training to Los Zetas, for example, has enhanced their ability to engage in combat with government troops or other drug cartels. Likewise, Hezbollah's ability to launder cash from drug sales is a key point of leverage in its dealings with other criminal organizations.

The linkage of terrorist organizations like Hezbollah with Mexican and Colombian drug syndicates has created the threat of narcoterrorism and transformed what, up until recently was primarily a criminal matter, into a national security issue.

Narcoterrorism is both an instrument of terror and an enabler. The same rat lines and tunnels that are used to bring illegal immigrants and drugs into the United States can just as easily be used to bring Hezbollah militants and explosives across the border.

Considering Hezbollah's worldwide criminal operations and its capabilities, the Obama Administration's attitude toward Hezbollah, between 2012 and 2016, is perplexing. Two aspects stand out.

First, in allowing Iran's banks to relink to the international financial system as part of the suspension of sanctions that accompanied the Iran nuclear deal, the U.S. significantly enhanced Hezbollah's ability to leverage its Iranian connections to help it launder money both for itself and for other criminal organizations. In doing so not only did it strengthen Hezbollah's criminal network but also enhanced Hezbollah's role as a super facilitator.

Secondly, also inexplicable, is the alleged suspension of a broad DEA lead criminal investigation, dubbed Project Cassandra, of Hezbollah affiliated narcotics and money laundering activity.

As detailed by Politico in a recent feature on The Secret Backstory of How Obama Let Hezbollah Off the Hook, the Obama administration effectively shot down an eight year DEA-led investigation of Hezbollah's criminal activity in order to curry favor with Iran and promote its acceptance of the proposed nuclear deal.

Various members of the Obama administration have denied the charge. U.S. Attorney General Jeff Sessions has ordered the Justice Department to investigate the matter.

The emergence of global terrorist organizations with billion dollar-plus budgets supported by a worldwide criminal activity is an unprecedented development in international politics and is rapidly becoming the template for other subversive organizations to follow.

Hezbollah has already succeeded in this objective; the Taliban is well on its way and Islamic State has started to move in this direction also.

Ultimately other terrorist organizations, like al Qaeda for example, will need to follow this same path if they are to secure their finances and preserve their credibility and freedom of action in the jihadist space.

The emergence of non-state organizations, armed with multi-billion-dollar budgets and extensive and sophisticated arsenals, poised to threaten both the American homeland and U.S. interests abroad will pose an unprecedented challenge to Washington. A challenge that is only now just beginning.

-- The opinions expressed in this op-ed are those of the author and do not necessarily reflect the views of Military.com. If you would like to submit your own commentary, please send your article to opinions@military.com for consideration.

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