In an audacious and defiant move, Lebanon has refused to bow to America’s demand that Hizbullah’s bank accounts be frozen as part of Washington’s “war on terrorism.” The matter came to a head in response to a US executive order issued on November 2 adding Hizbullah, along with 21 other groups, to a list of “terrorist” organizations that will be subjected to new measures, including a self-arrogated American prerogative to freeze the US deposits of foreign banks doing business with these groups. The US list also includes three Palestinian organisations: Hamas, Islamic Jihad and the Popular Front for the Liberation of Palestine. Lebanon’s non-cooperation is the first overt challenge to US attempts to crack down on groups it labels “terrorist.”
The US accuses Hizbullah of involvement in the blowing up of the Marine Corps barracks in Beirut in 1983, in which 241 Marines were killed, as well as in the bombing of its embassy there and the kidnap of Western hostages, including several Americans, during Lebanon’s civil war (1975-1990). All that partly explains why Hizbullah has always figured prominently on US lists of “terrorist” groups.
In an interview with the Kuwaiti daily al-Ra’iy al-‘Am (November 16, 2001), Hizbullah secretary-general Sayyid Hassan Nasrallah disclosed that the party had rejected previous US offers, sent through mediators since the September 11, of political recognition in return for ending military action against Israel. Nasrallah said that the secret US offer was linked to three conditions: adopting a new policy that makes a distinction between terrorism and Islam; retreating from involvement in the Palestinian cause and severing ties with the Palestinian Hamas and Islamic Jihad movements; and ending Hizbullah’s strategic relations with Syria. Nasrallah was adamant that Hizbullah’s being put on Washington’s list of “terrorist” organizations resulted from its refusal of these demands.
The rejection of this US diktat is unanimous in Lebanon. The country’s remarkable political and religious diversity often precludes a political consensus, because of a baffling system of fleeting coalitions. Yet this time a rare consensus has emerged: virtually all political entities, parties and personalities have rallied to denounce and reject the US demand for Hizbullah’s assets to be frozen. Support for Hizbullah has even come from sectors that have traditionally criticized its low-intensity war on Israeli troops occupying the Sheba’a Farms, a Lebanese patch of land on the foothills of the Golan Heights that remains under Israeli occupation, because they say that it is damaging economic confidence.
The stance of the Lebanese government centres on drawing a distinction between the ‘right to national resistance’ and ‘terrorism’. In a storm of public statements since the release of Washington’s list, government officials, including president Emile Lahoud and prime minister Rafiq al-Hariri, have been stressing the importance of this distinction and emphasising that armed resistance against Israeli occupation is a legitimate right. “We would have preferred that the lists we received label Israel as a terrorist state,” president Lahoud said. “But regrettably there are double standards in looking at things. They make a dove of a territory’s occupier and a terrorist of he who resists.”
Parliament speaker Nabih Berri held a meeting with Vincent Battle, US ambassador to Lebanon. The ambassador emerged from the meeting to reiterate that his country will not rescind its “request for cooperation in freezing financial assets,” indicating that Washington was not satisfied with Lebanon’s position. But Berri said that he made it clear to the American diplomat that “Lebanon rejects the so-called terrorist list.” He added: “We clearly noticed that he [the ambassador] adopted the Israeli point of view. The least we can say is that this stand goes against the resistance, the intifada and all Arabs, while it is supportive of terrorism.”
In rejecting the US demand, Lebanese officials have used arguments rooted in international law. They have pointed out that the demand was made by the US and not by the UN. Speaking to the press after meeting a French parliamentary delegation on November 13, prime minister Hariri said: “The United Nations is at the front line in these sorts of problems. No state can unilaterally draw and impose any sort of list.”
Officials at the Lebanese Central Bank argue that they consider the request non-binding as it was not included in UN Security Council Resolution 1373 on combatting terrorism. Adopted unanimously on September 28, the resolution says that all countries should work to prevent and suppress the financing of terrorism, as well as to criminalize the deliberate provision or collection of funds for such acts. The resolution also calls on states to freeze the financial assets of those who commit, attempt to commit, or facilitate terrorist acts. Lebanese officials have also noticed the absence of a bilateral agreement between Lebanon and the US that lays down conditions for the freezing of bank-accounts at the re
At a meeting of the parliament’s joint committees on November 8, Lebanese lawmakers moved to buttress the legality of the country’s position. They argued that the US itself had indirectly recognised the legitimacy of Hizbullah’s resistance against the Israeli occupation when it presided over the 1996 April Understanding and its subsequent Monitoring Group, of which Lebanon was a party, along with Israel, France and Syria. The Understanding established a moratorium on attacks on civilian targets by either Israel and its proxies or the resistance. Hizbullah’s secretary-general hinted at the April Understanding in a speech on November 18 saying: “There are a lot of important points in the April agreement, chiefly the recognition by the international community and the United States of the right to armed resistance in Lebanon.”
The lawmakers also pointed to the role played by the United States in formulating the Taif Accord which ended the civil war in 1990. The Accord, concluded at a time when then-president George Bush senior was eager to appease Syria, stipulated that all measures should be taken to free Lebanon from foreign occupation. As such, the parliamentarians argued that any effort or group aiming to end the occupation is legitimate, and enjoys the indirect consent of the US.
The US said that it would continue to bring pressure to bear on Lebanon to squeeze the Hizbullah. After a meeting with Syrian president Bashar al-Asad in Damascus, a four-member US congressional delegation on November 17 called on Hizbullah to reject “terrorism” to end the diplomatic stand-off between Washington and Beirut.
The delegation’s head, Darrell Issa, a Republican member of the US House Committee on International Relations, told reporters that Hizbullah needs to distance itself publicly from activities which lead Washington to consider it a “terrorist” group. He said: “I continue to be convinced that the legitimate areas in which Hizbullah now works are worth preserving and … a charter that formally puts behind it past acts is equally important.”
State department spokesman Richard Boucher hinted that retaliatory US action would come eventually, but not soon. Asked how Washington would respond to Lebanon’s refusal, Boucher said: “I think we’ll have to see in the longer run. Clearly, the president and the secretary [of state] have made clear that this is a long-term battle against terrorism … We’ll keep after them.” He added: “We don’t have any future military targets. But we do have a broad campaign against terrorism. We expect countries to choose, and they have a chance to choose.” He was implyimg that countries around the world should accept America’s definition of who is a “terrorist” and not “cherry-pick” from its designated list of “terrorist organizations.”
This directs attention to the possibility of an American move to freeze assets of Lebanese banks in the US for failing to comply with Washington’s demands. US national security advisor Condoleezza Rice warned the Lebanese government that it “needed to integrate into the international community in order to economically survive.” The country’s banks, with total liquid assets estimated at $47 billion, have been instrumental in backing the government’s efforts to bolster the Lebanese pound and finance a public debt that has reached more than 160 percent of GDP.
Lebanon’s strict banking secrecy laws, which help to make it a haven for foreign capital, forbid the disclosure of details of any bank accounts Hizbullah might be using. Banking secrecy is the foundation of Lebanon’s banking sector, and has been promoted by the government in an effort to make Beirut a regional financial centre. If the Lebanese government complies with the US’s demand, that would unleash a flood of withdrawals that is certain to undermine the economy.
Some bankers fear that this would result in a capital flight, but this may be exaggerated. The effectiveness of American financial sanctions is doubtful. Secrecy will make it difficult for Washington to target individual banks. Moreover, Lebanon is now well placed to draw much Gulf investment away from the US, especially after the harassment and financial losses sustained by Gulf Arab investors in the US since September 11. There is currently an estimated $1 trillion of Arab investment in the West, most of it in the US from the Gulf. Lebanon had served as the mainstay of Gulf investments before the civil war.
Lebanese banks have insignificant deposits in American financial institutions. Most of their business is with European and Arab banks. Lebanon also keeps only about one third of its Central Bank’s $2.7 billion in gold reserves in the US. A move by the US to freeze these gold reserves would have little significant impact on the Lebanese pound or economy. The Central Bank’s policy to maintain the stability of the pound centres on the use of its gross foreign currency rather than the gold reserves to intervene in the Lebanese financial market. During the last two years the Central Bank has spent more than $2.5 billion from its foreign currency reserves to keep the pound fixed.
Even if sanctions were imposed on Lebanon, it is not likely that they will seriously dent Hizbullah’s financial health. In order for the danctions tobe effective, Europe would have to join the US in enforcing them. So far, Britain, which already includes Hizbullah on its own “terrorism” list, is the only European country that seems to be eager to go along with Washington. French president Jacques Chirac, for instance, has publicly supported Lebanon’s right to ignore Washington’s demands.