US Lobby to Lebanon’s Top Banker: Carrot or Stick?

For quite some time now, the US-based United Against Nuclear Iran organization has been trying to prove that Lebanon’s banks are “a theater of operations” for Hezbollah. Having failed to provide any evidence of this, it began threatening Lebanon’s Central Bank Governor Riad Salameh.

United Against Nuclear Iran (UANI) was not satisfied with earlier correspondences with the Lebanese Central Bank (BDL), encouraging it to support its cause. Early last June, it began to escalate its criticism of the whole banking system in Lebanon.

It accused it of running a “scheme” to “fraudulently support Lebanese debt securities.” It called on “all credit rating agencies to re-rate Lebanon to a ‘no rating’ as a result of this fraud” and for the country “to be cut off from the US financial system.”

In UANI’s latest letter sent last May to BDL Governor Riad Salameh, the organization explained why it considered Lebanon “a sovereign money laundering jurisdiction that receives massive inflows of illicit deposits.”

It claimed the conclusion was the result of a confidential, three-month long investigation, following their last letter to Salameh sent at the beginning of 2012 and his response.

UANI, which is based in New York, spoke of being “concerned” about four Lebanese banks and requested that Salameh investigate them.

The letter included a long list of questions: “Why did you take action to adopt the ‘Basic Circular’ [anti-money laundering/terror financing set of rules for the Lebanese Banking System (LBS)] on April 4, 2012?” “What role if any have BDL and/or the LBS had in the financing of any weapons-based transaction by and among Hezbollah, Iran, and/or Syria?” it asked.

But regardless of its insolent language, it was nothing more than a redrafting of several old accusations based on media reports – most notably in the New York Times – which claimed that the Lebanese banking sector is a monetary playground for Hezbollah.

One of the indicators underpinning its analysis was “the irrational strength of Lebanese sovereign bonds” in keeping its credit margins stable. UANI believes that economic logic should lead to financial instability.

Lebanon’s public debt stood at around $53.8 billion by the end of 2011. Its GDP does not exceed $40 billion. The debt to GDP ratio is 137 percent, “one of the highest in the world.”

“The obvious risk of sovereign default is great – unless there is a fraudulent hidden scheme driven by Hezbollah and its state sponsors, Iran and Syria, to support this economic house of cards. There is exactly such a scheme,” the letter claimed.

The letter revisits the case of the Lebanese Canadian Bank (LCB) and accusations by the US Department of Treasury that it had been a money laundering conduit for businessmen belonging to Hezbollah.

It repeated claims about Lebanese businessman Ayman Joumaa’s “drug trafficking” network between South America and West Africa, which had laundered “as much as $200 million per month, through various channels, including bulk cash smuggling operations by way of Lebanese exchange houses.”

The letter ends with a bold request by UANI’s CEO, Ambassador Mark D. Wallace, asking Salameh to resign.

“In your role as Governor of BDL, under the political control of Hezbollah, it may very well be impossible for you to effectively perform your role as a legitimate central bank governor. If that is the case, we respectfully request that you resign,” Wallace wrote.

“To the extent that you fear for your safety and/or the safety of your family given the history of violence in Lebanon, we will advocate for the grant of political asylum for you and your family here in the United States,” he promised.

This article is an edited translation from the Arabic Edition.