Israel and US Target Hezbollah’s Financial Networks to Cut Funding Amid Renewed Conflict

Since the resurgence of hostilities between Israel and Hezbollah in March, the initial targets were not military assets but financial institutions. Israeli airstrikes destroyed over ten branches of Al-Qard Al-Hassan, Hezbollah’s de facto bank in Lebanon, alongside attacks on currency exchange businesses used by Iran to transfer funds and fuel stations generating income for the group. This campaign represents a peak in coordinated efforts between Israel, the Trump administration, and the Lebanese government to choke Hezbollah’s financial lifelines.

According to US State Department estimates, Iran transfers approximately $700 million annually to Hezbollah, a significant portion of its budget. Tehran has attempted to increase this support recently due to the group’s soaring war expenses. The collapse of Assad’s regime in Syria in late 2024 severed key smuggling routes, forcing Iran to seek alternative money transfer methods through Beirut’s international airport. US and Israeli officials revealed that Iranian diplomats smuggled cash in suitcases on civilian flights, prompting Lebanon to suspend all direct flights from Iran, remove Hezbollah-affiliated airport staff, and deploy security officers in coordination with the US.

Lebanese Prime Minister Najib Mikati warned Iranian officials against interfering in Lebanon’s internal affairs. Concurrently, the Trump administration influenced the appointment of Karim Soweid as Lebanon’s central bank governor, who has since purged Hezbollah-linked figures, tightened oversight on money transfer companies, and imposed strict controls on Lebanon’s cash-based economy, which Hezbollah exploited for money laundering.

With official banking channels closed, Hezbollah increasingly relies on informal hawala networks operating through countries like the UAE, Turkey, and Iraq, though enhanced monitoring hampers these operations. The economic pressure severely affects Hezbollah’s support base among the Shia community. While the group continues to operate hospitals, schools, and welfare services, resources are now strictly prioritized for military spending. Hezbollah spokesman Youssef al-Zein admitted the group has frozen compensation payments promised to displaced families, previously estimated at $12,000 to $14,000 per household.

Although fighters’ salaries are mostly maintained, many supporters report cuts in medical aid and reconstruction promises. To cope with cash shortages, Hezbollah has turned to creative fundraising, including establishing gold trading companies and selling gold reserves after Israeli strikes destroyed much of its foreign currency and gold stockpiles. Despite its operational resilience, Hezbollah faces its most severe financial crisis to date.