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American Focus > Blog > Economy > Can Hezbollah’s shadow economy be dismantled?
Economy

Can Hezbollah’s shadow economy be dismantled?

Last updated: July 29, 2025 4:46 am
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Can Hezbollah’s shadow economy be dismantled?
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Hezbollah, the Iran-backed group that has long been a dominant force in Lebanon, is facing unprecedented challenges that are threatening its power and influence in the country. Following a brutal assault by Israel, Hezbollah’s leadership and financial infrastructure have been severely weakened, leaving the group in a precarious position.

The group, which controls several parts of Lebanon and is designated as a terrorist organization by the United States, has always relied on creative ways to evade sanctions and fund its activities. However, with its traditional revenue sources compromised, Hezbollah is being forced to operate in the shadows more than ever before.

Despite its significant political power in Lebanon, Hezbollah is facing increasing isolation outside of its Shia support base. The group’s funding comes from a variety of sources, including Iran and international financial networks that engage in illicit activities such as smuggling, money laundering, and drug trafficking.

Hezbollah’s parallel governance strategy, which combines political and militant structures, has allowed it to survive and thrive as an armed group for decades. Even in the face of a financial meltdown in Lebanon in 2019, Hezbollah was able to continue funding its activities through cash-only businesses and black-market exchanges.

The recent crackdown on Hezbollah’s financial operations by Lebanon’s central bank is a significant blow to the group. The ban on dealings with Al-Qard al-Hasan, a Hezbollah-linked financial entity, has disrupted one of Hezbollah’s key funding sources and forced the group to adapt to new challenges.

With Lebanon’s government taking steps to control Hezbollah’s activities and international pressure mounting, there is a window of opportunity to weaken the group’s power in the country. However, dismantling Hezbollah’s influence will require a combination of diplomatic pressure, financial sanctions, and support for economic reforms.

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While the current efforts to curb Hezbollah’s power are important, they may not be sufficient to break the group’s hold on Lebanon. International cooperation and strategic diplomacy will be crucial in addressing the root causes of Hezbollah’s influence and finding a peaceful resolution that satisfies all stakeholders.

As the situation in Lebanon continues to evolve, it is clear that the window of opportunity to weaken Hezbollah’s power is now. The Trump administration, the Lebanese government, and the international community must work together to seize this opportunity and pave the way for a more stable and peaceful future for Lebanon.

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