BEIRUT — As Hezbollah prepares to hold an elaborate funeral Sunday for its slain leader Hasan Nasrallah, the group he led for more than 30 years is struggling with a looming financial crisis after traditional supply lines of money from Iran have been severed.
The United States, Israel and the new rulers of Syria, who overthrew Syrian President Bashar al-Assad, the longtime Hezbollah ally, have clamped down on the Lebanese militant group’s sources of funding and weapons, analysts said.
The financial straits come at a time when Hezbollah is under pressure to compensate and provide support to constituents disgruntled with the slow pace of reconstruction after their villages and neighborhoods were damaged in the group’s recent war with Israel. The World Bank said in a preliminary report in November that the conflict cost Lebanon an estimated $8.5 billion in physical damage and economic losses.
“Restricting Iranian flows has put the group in a challenging position” said Sam Heller, a nonresident fellow at the Century Foundation.
The war in Lebanon began after the Oct. 7, 2023, Hamas attacks on Israel and intensified in September, ultimately dealing Hezbollah a series of withering blows and diminishing its once powerful role in the Lebanese government.
Israeli airstrikes wiped out a generation of senior Hezbollah leaders, including Nasrallah. A U.S.-brokered ceasefire in November amounted to another setback for the group, requiring it to withdraw fighters and arms from southern Lebanon. And in December, with Assad’s ouster by Syrian rebels, Hezbollah was denied a transit route through Syria for resupply from Iran.
At home, Hezbollah has been increasingly sidelined by its political opponents, who have capitalized on the group’s setbacks. The group was unable to prevent the election of President Joseph Aoun, the former Lebanese army commander and the United States’ preferred candidate. And Hezbollah could not stop the nomination of Nawaf Salam, a former judge at the International Court of Justice, as prime minister.
Both of these Lebanese leaders have signaled that the state should have a monopoly over weapons, meaning Hezbollah should not remain an independent armed force. For the first time in years, Hezbollah and its political allies were not able to secure more than a third of the seats in cabinet, which under the Lebanese constitution is what’s required to take major decisions or force a governing coalition to resign.
But Hezbollah’s financial woes may represent the gravest threat it faces. Last week, an Iranian airplane was barred by Lebanese officials from landing in Beirut, amid Israeli accusations that Tehran was using commercial flights to funnel cash to the militant group. Hezbollah leader Naim Qassem said last week that the Lebanese government was informed by a third country that Israel would strike the runway if the plane was allowed to land.
Hezbollah supporters protested the flight ban, blocking the airport road with burning tires over three days and attacked a U.N. peacekeeping convoy, injuring two of the personnel. The protest provided an early test for Lebanon’s armed forces, which are poised to play a critical role in securing Lebanon under the terms of the ceasefire.
Along Lebanon’s eastern border, the new Syrian government has started to crack down on smugglers affiliated with Hezbollah, sparking clashes between them and the Syrian army, and straining relations between the two countries. The Syrian interdiction efforts appeared to target Hezbollah, which helped prop up Assad’s government during most of Syria’s long civil war. There was little sign Syria was taking action against smugglers in non-Hezbollah areas, Heller said.
Hezbollah is aiming for a show of strength at Sunday’s funeral. Nasrallah, who was killed in an Israeli airstrike on Sept. 27, was temporarily buried in an undisclosed location due to security reasons, the group said. Hezbollah is hoping to draw tens of thousands of people on Sunday, aiming to demonstrate that its support remains broad even if many of its backers are in a precarious position after the war.
Qassem said in a speech in December that the group would pay between $12,000 and $14,000 to each household that had suffered losses to pay for rent and replace damaged furniture, and a report by pro-Hezbollah daily newspaper Al-Akhbar said that the group had so far paid $400 million to its constituents as of late January.
But in early February, al-Qard al-Hasan, the group’s financial arm that was heavily targeted by Israeli airstrikes in the war, halted compensation payments for five days, citing technical difficulties.
Meanwhile, Hezbollah has also been forced in recent months to accommodate the influx of nearly 100,000 Shiite and Alawite refugees from Syria who are hosted in overcrowded mosques and religious centers in Hezbollah strongholds in northeastern Lebanon.
Hilal Khashan, a political science professor at the American University of Beirut, said Hezbollah does not have the financial strength to rebuild by itself and would need outside support. Without a supply route from Iran, he added, the group’s financial position will worsen. “What happened in Syria broke the camel’s back. It broke the connection between Iran and Hezbollah,” he said.
A Hezbollah member familiar with the group’s internal dynamics said that for the moment, the group still has money to work with, but this was uncertain over the long term. Restrictions on getting funds through the airport or overland from Syria are significantly hampering the party’s operational capabilities and efforts to regroup, he said. He added that Lebanese banks have refused to process transfers from the group’s supporters abroad out of fear of violating U.S. sanctions on Hezbollah financial activities.
“While Hezbollah currently continues to pay salaries, the sustainability of this practice remains in question. The party is struggling with reconstruction efforts for damaged homes, in the southern suburbs of Beirut and the south,” he said.
The Hezbollah member noted, however, that even if direct supply routes from Iran have been cut, there could be other ways to bring in money from Iran, including by air via third countries.
In the meantime, the group’s constituents are increasingly desperate. Ali, 36, a supporter of the group from southern Lebanon, who like some others interviewed spoke on the condition of anonymity for fear of reprisals by Hezbollah, said he had received paltry sums compared with what he needed. “It is not enough for one-third of my furniture,” which he said would cost $30,000 to replace.
Others said they may need Hezbollah’s support for much longer than expected. Ibrahim, 60, said he was given $12,000 to support himself for a year and that Hezbollah would “renew the payment in a year if the construction money does not come.” It was not enough to live on, but he said he was keeping faith in the group.
“Hezbollah would not leave us,” he said.