Israeli strikes on Hezbollah-linked banks hit cash-poor Lebanese

• Israel bombs Hezbollah-linked financial institutions
• AQAH a lifeline for poorer families
• Its importance grew after 2019 economic crisis

BEIRUT - When a Lebanese schoolteacher, who requested anonymity because of the sensitivity of the subject, wanted to buy a car a few years ago, she went to the Hezbollah-affiliated Al-Qard Al-Hassan (AQAH) Association to get a loan.

Some time later, the mother-of-two needed a washer-dryer and a dishwasher, so again she headed over to the nearest AQAH branch where it was a lot easier and cheaper to get a loan than if she had visited one of Lebanon's banks.

"I was running away from paying useless interest," she told Context over the phone, adding that the paperwork was also much easier. 

"Over there I paid a simple, symbolic amount."

Last week, Israel launched airstrikes at around 30 sites belonging to AQAH, which it says acts as Hezbollah's financial arm.

Now branches of AQAH across the country are gutted and surrounded by rubble. On at least one damaged facade, a poster of late Hezbollah leader Sayyed Hassan Nasrallah, who was killed in an airstrike in September, hung among the debris. 

Founded in 1983, AQAH describes itself as a charitable organisation which provides loans to people according to Islamic principles that forbid interest. 

It has more than 30 branches, most of them located in predominantly Shi'ite Muslim areas of Beirut, southern Lebanon and the Bekaa Valley. It operates under a licence granted by the Lebanese government.

AQAH's role expanded as Lebanon sank into a deep financial crisis beginning in 2019, freezing ordinary Lebanese out of their savings. 

Hezbollah encouraged Lebanese from all sects and political factions to use AQAH, and it is estimated to have hundreds of thousands of clients, according to two regional financial sources.

The U.S. Department of the Treasury sanctioned AQAH in 2007 and in 2021 sanctioned individuals linked to the institution.

Washington says that the armed group uses AQAH to illicitly move funds and gain access to the global financial system. Hezbollah has previously denied this.

After the strikes, a Hezbollah spokesperson denied that AQAH was involved in financing Hezbollah salaries or weapons and would fulfil its obligations to clients in full.

Human Rights Watch said the Israeli strikes on AQAH amounted to war crimes. 

"An armed group's use of a financial institution, association, or bank does not amount to an effective contribution to military action, and therefore it is not a lawful military target under the laws of war," the group said in a report published last week.

"The Israeli military's targeting of associations and groups that offer services to hundreds of thousands of people because of their affiliation with Hezbollah not only violates the laws of war but also risks punishing those who depend on these services for their livelihoods," Ramzi Kaiss, Lebanon researcher at Human Rights Watch, wrote in the report.  

Hezbollah and Israel have been fighting along the border for more than a year after the former launched rockets at Israel following the Hamas-led attack on southern Israel on Oct. 7 and Israel's subsequent invasion of the strip.

Gold coins for loans

In late September, Israel ramped up its bombing across Lebanon with strikes now regularly hitting Beirut's southern suburbs, major cities in southern Lebanon and parts of the eastern Bekaa Valley, including along the border with Syria.

It has also sent ground forces into southern Lebanon against heavily armed Hezbollah militants.

Israel said it was targeting Hezbollah to secure the return home of tens of thousands of Israelis evacuated from the north due to cross-border rocket attacks.

Israel's airstrikes have now killed more than 2,500 people across Lebanon and displaced at least 1.2 million.

Hezbollah plays a predominant role in Lebanon, where its influence is underpinned by its military strength, social welfare institutions, and the support of many Lebanese Shi'ites who say the group defends them from Israel. It has ministers in government and lawmakers in parliament.

For example, during the Covid-19 pandemic, it used a corps of volunteers, doctors and facilities to carve out a prominent role in the crisis-riven state's response. 

Hezbollah's Lebanese rivals say the group has undermined the state and unilaterally dragged the country into conflicts.

Many people from Hezbollah's Shi'ite constituency use AQAH, taking hard currency loans against the value of jewellery - for example - repayable over several years on flexible terms.

The schoolteacher used seven gold coins to finance her purchases. Gold coins are often gifted to women and their children when they give birth. 

She paid less than $40 for each loan in administrative fees and processing, she added.

Now with AQAH out of action, she worries about how people like her will be able to fund costly purchases. 

"I bought a car and some appliances, but other people have financed entire homes with them," she said. "It was really facilitating these operations."

(Reporting by Nazih Osseiran ; Editing by Clar Ni Chonghaile.)