Middle East Strategy at Harvard

From Matthew Levitt

Even under geographic siege and financial sanction, Hamas was still able to smuggle some 80 tons of explosives, roadside bombs and longer-range rockets into Gaza over the course of the past ceasefire. Were it not for that success, Hamas would not have been able to continue firing rockets at southern Israeli communities, let alone effectively control Gaza. Denied access to regular trade routes and international banking, Hamas developed alternative mechanisms such as an extensive network of smuggling tunnels, taxes and custom fees, and increases reliance on charitable front organizations.

But Hamas is not the only terrorist group proactively looking for ways to evade international sanction. Today, the Treasury Department designated the Waad Project (logo pictured) as a terrorist entity, describing it as a Hezbollah-run construction firm. According to information released by the Treasury Department, the Waad Project built underground weapons storage facilities and other military infrastructure for Hezbollah in Lebanon. Its website directed viewers to telephone numbers for those wishing to donate aid to Hezbollah, Jihad al-Bina, and the Martyrs Association, the latter two both previously designated as terrorist entities for providing material support to Hezbollah. The Waad Project has tried to hide its affiliation with Hezbollah, employing deceptive means to seek funding projects from international development organizations, according to Treasury.

This should not surprise. As my colleague Michael Jacobson and I wrote in our recent study “The Money Trail,” terrorist front groups often respond to the exposure of their activities by attempting to distance themselves from the alleged illegal activity and engage in otherwise legitimate endeavors to paint themselves in a more benign light. Against international efforts to combat terrorism, in which much of the information used to designate individuals and organizations as terrorist entities remains classified, such legitimization campaigns take on even greater importance and utility.

Hezbollah, for example, employed deceptive means to seek funding for projects from international development organizations for its construction arm, Jihad al-Bina. According to the Treasury Department, “In cases when intended solicitation targets were thought to object to the group’s relationship with Hezbollah and the Iranian government, the organization employed deceptive practices, applying in the name of proxies not publicly linked to Hezbollah.” Similarly, in September 2006 the Treasury Department designated two Hezbollah-controlled financial institutions as terrorist entities, Bayt al-Mal and the Yousser Company for Finance and Investment. Bayt al-Mal served as a bank, creditor, and investment arm for Hezbollah, according to Treasury, and used the Yousser Company to secure loans and finance business deals for the group’s companies. And in November 2006, the Italian press reported that a ship said to be carrying refrigerators to Lebanon was impounded in Cyprus after it was found to contain eighteen trucks with mobile anti-aircraft radars and other vehicle-mounted monitoring equipment.

Given that its proxies Hezbollah and Hamas engage in deceptive financial practices to fund their illicit activities, it should not surprise that Iran itself engages in similar deception to conceal the nature of its sponsorship of terrorist groups. Iran has used Bank Saderat as a preferred means of transferring funds to terrorist organizations such as Hezbollah, Hamas, PIJ, and the Popular Front for the Liberation of Palestine–General Command. The Treasury Department revealed one case in which Iran sent $50 million to a Hezbollah-controlled organization between 2001 and 2006.

In terms of the current fighting in Gaza, dealing with Iran’s parallel support of Hamas—be it through smuggling tunnels, “charitable” front organizations, or otherwise—will have to be a central focus of any international ceasefire plan.