Hezbollah’s Iran Money Trail: It’s Complicated

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A rocket launcher is seen at the Mleeta museum, Lebanon. (Photo: Haitham Moussawi)

By: Amal Saad-Ghorayeb

Published Tuesday, July 31, 2012

Tehran’s funding of Hezbollah remains one of Washington’s principal grievances against the Islamic Republic as demonstrated by its oft-repeated demand for Iran to end its “support of terror.” This demand is invariably made in the same breath as calls on the Islamic Republic to relinquish its nuclear program. As such, one could very plausibly argue that given the nuclear record of Washington’s allies, the US would be more than willing to turn a blind eye to Iran’s nuclear program were it not for its material and political support for resistance movements in the region. The problem for the US is not the prospect of a nuclear-armed Iran as such; the problem is a nuclear-armed Iran which actively backs movements that resist Israel.

For mainstream Western and Arab media, the funding issue is perhaps one of the most ubiquitous features of the Iran-Hezbollah relationship, and also one of the most elusive due to Tehran’s outright denials of financial assistance to the movement and, until quite recently, Hezbollah’s reticence on the topic.

One of the first such public admissions was made in 2009 when Hezbollah leader Sayyid Hassan Nasrallah delivered his Quds Day speech and thanked Iran for providing “all the moral, political, materialist and financial support.” Most recently, the resistance leader announced that “[By providing us] with the Islamic Republic of Iran, God has enabled us not to resort to others. And we have enough money and weapons to carry out our duty...” Although Hezbollah has acquired a fair degree of financial autonomy over the years through its own investments and charities, it continues to rely on significant funding from Iran for maintaining its social services infrastructure as well as equipping its resistance force.

Yet details about the extent and sources of Iran’s financial assistance remain hard to come by. Many observers rely on rough estimates of annual funding figures, which generally fall within the realm of speculation considering the lack of verifiable evidence with which to back their claims. While some have made relatively conservative estimates, such as John Bolton, Washington’s former ambassador to the UN, who puts the figure at around “$100 million” per annum, others, like Ali Nourizadeh of the Saudi-owned Asharq al-Awsat newspaper, claim that the figure “exceeds $400 million.” Such annual averages do not include Iranian funding for crisis periods such as the 2006 War which, observers believe, reached $1.2 billion. Nor do these estimates include other exceptional circumstances like the June 2009 parliamentary election for which both Hezbollah and its chief rival, the March 14 camp, reportedly received foreign funding.

It is crucial at this juncture to clarify precisely what is meant by “Iran” in the context of its financing of Hezbollah, or any other foreign organization. The frame of reference adopted by most Western observers of Iranian support for Hezbollah is Iran – the state – and hence, the financial assistance it provides is believed to go through official governmental channels. However, a close study of Iran’s various financial channels reveals that Iranian support for Hezbollah is essentially non-governmental and, as a consequence, does not appear in any official fiscal budget. Abdallah Safieddine, Hezbollah’s representative in Iran, told me in an interview that his organization receives funding directly from the Wali al-Faqih himself. As detailed by Safieddine: “Khamenei has his own budget outside the state,” which is financed by certain “religious associations other than the awqaf /bonyads [Islamic charitable endowments].”

Though a rare admission for a Hezbollah official, it was not the first of its kind given Nasrallah’s earlier disclosure in November 2006. In a speech to some 7,000 residents of Beirut’s southern suburbs, Nasrallah revealed that the $300 million the party had paid in post-war compensation to families who had lost their homes during the 2006 War, was “all religious legal money (amwal shariyeh) from Sayyid Ali Khamenei.”

While not providing any sources for her information, Asharq al-Awsat’s Raghida Bahnam makes a similar assessment about the Faqih’s direct funding of the party: “The financial assistance provided to Hezbollah by Iran comes via a special fund allocated to the Supreme Leader and comprises revenue from oil resources and production organizations. This fund is not included in the public budget and the Supreme Leader is solely in control of its distribution.”

The party’s direct financial relationship with Khamenei explains why it remains largely unaffected by changes of government in Iran – regardless of which president assumes office and the political faction he represents, the Faqih’s financial assistance to the party continues unabated. By extension, financial support neither diminishes with reformist presidents like Khatami, nor increases with radical conservatives like Ahmadinejad.

However, Safieddine is careful to note that the Faqih “gives funding to Hezbollah and the Palestinians in his capacity as Wali al-Faqih only, not as a state leader.” But this distinction is conceptually misleading; although the Faqih’s support for Hezbollah stems from his transnational authority as a religious figure, this should not obscure the fact that he is also the Supreme [political] Leader of the Islamic Republic, in other words, the Iranian state. So while the Faqih’s support may be non-governmental that doesn’t ipso facto render it non-state support.

Over and above this direct financial assistance from the Wali al-Faqih, Hezbollah is also subsidized by other maraji taqlid (religious sources of emulation) in Iran and as well as in other countries. The maraji are paid religious taxes (khums) – 20 percent of the believer’s annual net income – by their followers (muqalidin), which they in turn distribute to the needy, as well as to specific political organizations. Hezbollah is entitled to a share of these “religious legal rights,” as they are known, on account of the fact that “it defends Muslims everywhere,” as explained by Safieddine.

The 15 to 20 Iranian maraji taqlid and the hawzas (Shi’ite religious seminaries) they are affiliated with constitute a semi-independent religious civil society within the Islamic Republic. Although all maraji in Iran must subscribe to the general guidelines delineated by the Faqih, concerning which “oppressed” groups are eligible for support, they still have a considerable degree of freedom in the dispensing of their funds and determining their recipients. The maraji have the option of channeling the khums through the Wali al-Faqih or bypassing him altogether.

Some maraji have their own offices outside of Iran, such as Sayids Makarem Shirazi and Jawad Amouli who have offices in Lebanon. Moreover, as maintained by Shaybani, the maraji often give permission to their muqalidin to set aside a portion of the khums and give it directly to Hezbollah or any other group they deem worthy of support.

But despite this margin of freedom, Iran’s maraji are subject to various financial, administrative and politico-legal controls which explain the clerical establishment’s semi-independence. Mehdi Khalaji, a senior fellow at the Washington Institute of Near East Policy, with a background in theological training at Qom, reports that the Iranian clerical establishment is partly subsidized by the government through “hefty stipends.” He also notes that the “Center for Seminary Management,” which controls clerical finances and the seminary’s educational system, falls under Khamenei’s direct supervision.

Moreover, Khalaji describes how the maraji are politically held in check by means of the “Special Court of Clerics,” a supra-judicial body which functions outside the parameters of the state’s judicial system. Such checks on the clerical establishment serve to weaken the marajis’ religious authority and political autonomy vis-à-vis the Wali al-Faqih, effectively blurring the line between state and civil society. Viewed from this perspective, the contributions bestowed upon Hezbollah by Iranian maraji are not strictly apolitical or civilian in origin or character, nor are they completely divorced from the state insofar as the clerical establishment enjoys only partial autonomy from it.

Another sub-system of Iran’s religious civil society which appears to provide funding for Hezbollah is the network of charitable religious foundations, known as bonyads. These foundations are not merely major land-owning endowments, but possess massive holdings accumulated through decades of individual donations, which now render them formidable business and industry consortiums that together control a large portion of the Iranian economy. In fact, some would argue that they represent an unofficial, parallel economy that competes with and undercuts the private sector, in so far as they are not required to publish accounts of their earnings or to pay taxes, and are therefore not subject to formal state control. Moreover, their being controlled by former and current government officials as well as influential religious figures – all appointed by the Wali al-Faqih – grants them a significant degree of political power. However, since they are accountable to the Faqih, the bonyads cannot be considered fully autonomous elements of civil society, nor does their being controlled by some political officials grant them the status of apolitical non-state actors. The implication of this is that any financial assistance they do give to Hezbollah cannot be considered as falling outside the realm of the Iranian state.

Proving that Hezbollah is a beneficiary of this aid is complicated by the fact that such financing is funneled through unofficial channels. What is certain is that some bonyads do donate money through the maraji that sponsor them. Sheikh Naim Qasim’s admission to me in an interview that, “in Iran there are non-governmental organizations from religious sources and from awqaf which give [us] support,” further lends credence to the claim that the party receives some of its finances from the bonyads. Much harder to prove though, is which bonyads actively support Hezbollah.

The biggest bonyad of all is the Bonyad-e Mostazafen va Janbazan (Foundation for the Oppressed and Disabled) which according to Forbes is the second largest company in Iran after the state-owned National Iranian Oil Co. The foundation has been linked with several “hard-line” political officials including one time Revolutionary Guards Minister Mohsen Rafiqdoost who headed it from 1989 to 1999. Although there is no tangible evidence which suggests that the foundation provides any funding to Hezbollah, that has not prevented some observers from making such claims. In a 1995 report for the Independent newspaper, veteran journalist Robert Fisk noted that, “within Tehran's chattering embassies, diplomats wonder whether the Bonyad e-Mostazafan supplies the cash for Hezbollah.” More recently, Republican activist Kenneth Timmerman asserts that Sayyid Mir Hussein Mousavi “coordinated the financing for Hezbollah as the head of the Bonyad Mostazafan, which he chaired as prime minister,” on the report of a former Iranian intelligence officer.

The other major bonyad that is also rumored to finance Hezbollah’s activities is the Shrine of Imam Reza Foundation, reportedly the largest landowner in Iran, and according to some “the Islamic Republic's biggest and richest business empire.” In one detailed study of the Imam Reza Bonyad, Andrew Higgins quotes Hussein Shami, Hezbollah’s former director for social services, as claiming that it “provided the cash” for the party’s post-war reconstruction and relief work. There are other indicators which confirm Shami’s statement, chief among which is the “unprecedented” decision made by the bonyad’s head, Ayatollah Vaez Tabasi, to offer Nasrallah the flag that is usually raised on the shrine of Imam Reza as a “tribute” to Hezbollah’s achievements. Apparently, the decision was made upon the request of a delegation representing the shrine who had returned from a trip to South Lebanon. The import of the flag lies not only in its religious symbolism and political significance, but also in how illustrative it is of the close relationship between the foundation and Hezbollah. For it necessarily follows that if the bonyad’s leadership is willing to take the unprecedented step of relinquishing the shrine’s flag – and all the sacred connotations that it carries – to Hezbollah, then it would far more readily forgo some of its revenue to such a privileged movement.

Amal Saad-Ghorayeb is a Lebanese academic and political analyst. She is author of the book, “Hizbullah: Politics and Religion,” and blogger at ASG’s Counter-Hegemony Unit.

The views expressed by the author do not necessarily reflect Al-Akhbar's editorial policy.


Nice article Amal, you clarified it very well.

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