What is Al-Qard Al-Hassan, Hezbollah's main source of funds that Israel is targeting?

New Delhi:

Israel recently used precise airstrikes to target branches of Al-Qard Al-Hassan (AQAH), a financial institution linked to the Iran-backed Lebanese militant group Hezbollah. The attacks hit the southern suburbs of Beirut, southern Lebanon and the northeastern Beqaa Valley, areas known as Hezbollah strongholds. These attacks, which spanned Sunday night into Monday morning, are part of Israel's efforts to cripple Hezbollah's financial infrastructure and weaken its ability to fund operations.

The Israel Defense Forces (IDF) confirmed that at least 11 AQAH branches were attacked as part of a campaign aimed at depriving Hezbollah of access to vital financial resources.

What is Al-Qard Al-Hassan?

Al-Qard Al-Hassan, which translates to “the benevolent loan,” was founded in 1983 and describes itself as a nonprofit organization that adheres to Islamic financial principles that prohibit interest. Its mission is to provide interest-free loans to Lebanon's Shiite population, particularly those allied with Hezbollah. AQAH offers loans against collateral such as gold or jewelry, providing much-needed credit to the Lebanese population struggling with a declining economy.

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Al-Qard Al-Hassan reportedly operates 30 branches across Lebanon, many of them in Hezbollah-controlled areas of Beirut. Its influence increased after Lebanon's financial collapse in 2019, when traditional banks severely restricted depositors' access to their savings. AQAH, on the other hand, continued to operate, allowing those who banked with it to withdraw cash – often in hard currency – while other financial institutions could not.

AQAH operates under a license issued by the Lebanese government. The U.S. Treasury Department imposed sanctions on AQAH in 2007, accusing it of acting as a financial arm of Hezbollah. U.S. officials claim that while AQAH serves Lebanon's Shiite population, it is also used to transfer Hezbollah funds through shell accounts, allowing the group to gain access to the country despite sanctions aimed at cutting off its resources international financial system.

Hezbollah's use of AQAH

Hezbollah, which became a dominant force in Lebanon after Israel's invasion of the country in 1982, has long relied on hawala networks and financial mechanisms to build and maintain support, particularly among Lebanon's Shiite population. Over the years, Al-Qard Al-Hassan has become a crucial element in Hezbollah's strategy.

In Lebanon there are hawala systems that act as money exchange offices and move large sums of money.

Many Lebanese citizens, particularly Hezbollah's electorate, rely on AQAH for hard currency loans with simple collateral such as jewelry or gold. While the average loan does not exceed $5,000, these loans are vital lifelines for those looking to finance weddings, education or starting small businesses. In recent years, Hezbollah has invited all Lebanese, regardless of their denomination or political affiliation, to use AQAH's services. The group has promoted AQAH as an alternative to the traditional banking system, which collapsed amid the 2019 economic crisis.

Hezbollah's leadership openly expressed the group's dependence on AQAH for financial support. After the organization was hacked in 2020 and the names of its clients were leaked, former Hezbollah leader Hassan Nasrallah publicly defended AQAH.

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The Israel Defense Forces (IDF) confirmed that one of the attacks targeted a vault under a hospital building in Beirut that was said to contain $550 million intended to finance Hezbollah's military activities. These financial resources, Israel argues, are crucial for Hezbollah to continue buying weapons and paying fighters. Israeli defense officials have alleged that AQAH is responsible for securing up to $750 million a year in Iranian funds, in addition to proceeds from Hezbollah's other criminal enterprises, including drug trafficking and money laundering.

Yoav Gallant, Israel's defense minister, signed an order on Monday designating AQAH as a terrorist organization.