U.S. Targets Hezbollah Funds

Jay Solomon, The Wall Street Journal:

The Bush administration is intensifying efforts to cut off funding to Hezbollah, the Shiite organization the U.S. believes is Iran's principal vehicle for conducting terrorist attacks globally.

The moves come as counterterrorism officials grow concerned that if the standoff between Washington and Tehran over Iran's suspected nuclear-weapons program heightens tension between the two sides, that could fuel terrorist strikes against Western targets in Iraq and Afghanistan and other nations where American forces are active.

Many U.S. intelligence officials say they believe Hezbollah could pose a more serious threat than the al Qaeda terrorist network, because of its structured military command and decades of experience. READ MORE

Hezbollah, which means "Party of God," is a militia and sociopolitical party based in Lebanon with a global following and infrastructure that could allow it to conduct operations in Europe, Latin America and even the U.S., counterterrorism experts say. They note that Tehran has used Hezbollah as a proxy in its conflict with the U.S., as evidenced by the group's attacks against American and Israeli targets in Saudi Arabia, Lebanon and Argentina over the past three decades.

Washington's focus on Hezbollah "is at a pretty high level now," says Kevin Brock, the deputy director of the U.S. government's National Counterterrorism Center. "There are active investigations" going on against the Islamist organization's global activities, he said.

U.S. counterterrorism officials emphasize that they never ignored Hezbollah's threat but that a priority was placed on al Qaeda after the Sept. 11 terrorist attacks.

The crackdown on Hezbollah comes as the U.S. is turning off the money spigots to the Hamas faction in charge of the Palestinian government. The Bush administration accuses Hamas of backing terrorism. Both Hamas and Hezbollah are active in fighting Israel's military presence in the Palestinian territories and Lebanon, but, historically, the two groups have drawn from different religious ideologies and state supporters.

Over the past month, the Bush administration moved against a number of operations it believes played significant roles in funding Hezbollah activities in recent years, indicting alleged cigarette smugglers in Detroit and imposing financial sanctions against Lebanese media businesses.

Lawyers who represent some of the men charged in Michigan denied that their clients have ties to Hezbollah or that they were engaged in illicit businesses, suggesting the Bush administration exaggerated the claims of terrorist connections. In the Detroit case, they noted that their clients were allowed to post bail, a sign that the government didn't view them as serious threats to security. "This case has absolutely nothing to do with Hezbollah or terrorism," said Jim Burdick, a Michigan lawyer representing one of the accused, Majid Mohamad Hammoud. "All these guys ever have done was work hard and send money back to Lebanon."

Since 9/11, the Bush administration has blacklisted more than 400 entities for allegedly providing material support to terrorist groups, and nearly a dozen of them for alleged links to Hezbollah. In 2004, the Treasury Department proscribed an Arab businessman in Latin America and two of his companies for allegedly aiding Hezbollah's operations from his base in the border area that links Paraguay, Brazil and Argentina. It also blacklisted in 2001 one of Hezbollah's chief intelligence officers, Imad Fa'iz Mughniyah.

In late March, the Treasury Department initiated financial sanctions against three Lebanese media organizations that the U.S. charges have funded and facilitated Hezbollah's military operations. They are the Al-Manar satellite television channel, the Nour radio channel and the Lebanese Media Group, which owns the two companies.

The Treasury action prohibits any financial transactions between Americans and the designated entities and freezes any of their assets under U.S. jurisdiction. A Treasury spokeswoman said U.S. laws prohibited her from detailing the amount of any assets that were frozen.

U.S. officials say the sanctioning of the Lebanese media companies illustrates how Hezbollah's military operations are intertwined with Middle Eastern businesses and civilian organizations. The Treasury Department alleges that Al-Manar helped Hezbollah recruit foot soldiers and transfer money. It also alleges that an Al-Manar employee cooperated with Hezbollah to conduct surveillance on suspected terrorist targets.

Al-Manar "is a good example of how we're trying to undermine this false dichotomy" between Hezbollah's military and political wings, says Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence. "Hezbollah is a terrorist organization. This designation shows that Al-Manar is owned and operated by Hezbollah."

Al-Manar officials say the channel is an independent media outlet and denied that it supports terrorism. Attempts to reach officials at the company's headquarters in Lebanon were unsuccessful.

The Justice Department last month indicted 19 men on charges of participating in a global smuggling network dealing in contraband cigarettes and pharmaceuticals that allegedly generates funding for Hezbollah. The arrests of nine of these men in Detroit last month marked the second time in the past five years that federal agents have disrupted what they say are fund-raising cells for Hezbollah inside the U.S. In 2002, the Justice Department successfully prosecuted two men in Charlotte, N.C., for running an interstate cigarette-smuggling ring and shifting some of the profits to Hezbollah.

Justice Department officials say the North Carolina operation was tied to the Detroit one, supplying it with some contraband cigarettes. Both rings allegedly reaped large profits by moving cigarettes from low-tax states to higher-tax ones in the northeastern U.S., such as New York.

The Detroit defendants also are accused of forging tax stamps for the cigarettes to allow them to generate large profits. The men also allegedly smuggled contraband pharmaceuticals, such as knockoffs of Pfizer Inc.'s Viagra, into the U.S. from Asia and the Middle East.

"The case evidences a real serious federal effort to combat funding of terrorism at its root," said Stephen J. Murphy, the U.S. attorney for the Eastern District of Michigan. "The grand jury returned a sweeping indictment that uncovered a racketeering operation that helped fund Hezbollah."

The indictment alleges that the men imposed what they called a "resistance tax" to help combat Israel on some of their buyers, mainly gas-station and shop owners of Middle Eastern descent in the Detroit area. The defendants then sent the money to Hezbollah. The accused men also allegedly solicited money from buyers for the orphans of a martyrs program run by Hezbollah in southern Lebanon.

In all, Justice Department officials estimate that the Detroit operation evaded around $20 million in sales taxes, though they don't know how much of this may have been sent to Hezbollah.

During the 1980s, Hezbollah engaged in a stream of kidnappings, assassinations and suicide bombings against American targets, in response to the Reagan administration's deployment of American troops into Lebanon. But those have dwindled, with the most recent terrorist attack U.S. law-enforcement officials publicly attributed to Hezbollah being the 1996 suicide bombing of the Khobar Towers in Saudi Arabia, where U.S. military personnel were housed.

Few counterterrorism officials believe Hezbollah would currently attack inside the U.S., because of the significant amount of money it has raised from American sources. But they do believe Iran could seek to use Hezbollah if a conflict with the U.S. over Tehran's nuclear program intensifies. They believe Hezbollah could be activated if either the U.S. or Israel used military strikes to sabotage Iran's nuclear facilities.

These officials say Hezbollah could prove potentially more difficult to contain than al Qaeda, because of its support from Iran and its following among many Lebanese and Iranians globally.

In Lebanon, Hezbollah is widely viewed as a legitimate organization with roots in Lebanese society -- even by many anti-Syrian political leaders working with the U.S. government. Indeed, since Syria withdrew its troops from Lebanon last year, Hezbollah has expanded its profile in the Lebanese government and was allowed to openly participate in negotiations over the fate of President Emile Lahoud, a longtime Syrian ally.

"If Iran turns Hezbollah loose on the U.S. and Western Europe, they'd make al Qaeda look like a bunch of high-school kids," said a retired covert U.S. intelligence officer with years of experience in the Middle East. He noted that Hezbollah teams have regularly done surveillance on U.S. embassies in Europe, in case they're activated to strike.

Write to Jay Solomon at jay.solomon@wsj.com