This analysis was part of Prime Source's Weekly Regional Assessment
Recent Development: During his visit to Washington and meeting with US President Donald Trump, Lebanese Prime Minister Saad Hariri lobbied the Congress in a bid to temper the impact of upcoming sanctions against entities suspected of financing Hezbollah. US lawmakers introduced legislation dubbed the Hezbollah International Financing Prevention Amendments Act of 2017 on July 20 seeking to bolster sanctions against Hezbollah, accusing the Iranian-backed group of violence in Syria and amassing rockets along Israel’s border. The Lebanese PM also aimed to secure Washington’s support for the Lebanese Armed Forces (LAF), while also successfully securing renewed financial aid tied to the presence of hundreds of thousands of Syrian refugees in Lebanon.
Asked whether he had taken any decision regarding sanctions against Hezbollah, President Trump stated he would make his position “very clear” in the coming 24 hours, yet no statement has been made thus far. The US President also praised the Lebanese government for being at the forefront of the war against Hezbollah, prompting no reaction from Hariri, whose government includes Hezbollah.
Meanwhile, following days of fighting between the al-Qaeda-linked Hayyat Tahrir al-Sham (HTS) and Hezbollah, a ceasefire was brokered, in the framework of which HTS fighters will be transferred to Syria while prisoners will be exchanged between the two groups. The agreement also includes the transfer of thousands of Syrian refugees living in the area to northern Syria.
The offensive has led to significant criticism from several political figures denouncing the fact that the Lebanese militia, rather than the Lebanese army, was spearheading the offensive. Hariri himself, stated during a conference at a think tank in Washington that he would have preferred the Lebanese military lead the offensive in Arsal, rather than Hezbollah.
Finally, reports suggest the next phase of the offensive, which will target the ISIS-held area near the town of Ras Baalbeck, is slated to start in the coming days. Reports indicate the Lebanese military will lead this offensive.
Analysis: Hariri’s ability to achieve his goal in Washington, which will likely become apparent in the coming months, will be critical for his own position in the country as well as the US ability to push back Iranian influence in the country. Since the beginning of the year, Tehran has renewed offers to support the Lebanese military, while such efforts have been faced with resistance stemming from ongoing sanctions against Iran as well as anti-Iranian opposition within the Lebanese political landscape. The withdrawal of Saudi Arabia’s military aid last year, however, continue to push the Lebanese military to find other foreign supporters, with the risk that it will eventually be convinced to accept Iran’s proposal. Such a scenario would further expand Tehran’s sway over Lebanese security forces, which are already accused of being infiltrated by Hezbollah. In this context, Hariri’s visit and ability to potentially convince Washington to support the LAF is of particular importance when it comes to countering Iranian influence, particularly if such military support is conditioned on efforts to curb Hezbollah’s influence over the country’s security apparatus.
The Lebanese PM, however, walks a fine line here given Hezbollah’s presence inside the government and ability to undermine his authority. Even if Hariri’s efforts do succeed in convincing the Congress and the White House of the necessity of supporting the LAF, Hezbollah and Iran will likely attempt to thwart such efforts in the coming months. The fact that Hezbollah spearheaded the Arsal offensive just as Hariri was visiting Washington, will further boost those among the Congress who see the LAF as too weak to fight Hezbollah, and assess that further financial support to the LAF would eventually help Hezbollah in light of the group’s influence over the military. In that sense, the upcoming battle against ISIS near Ras Baalbeck and whether the LAF will lead it successfully may be particularly scrutinized by the Congress. Criticism of Hezbollah’s leading role in the battle for Arsal and the organization’s own interest in preserving the sectarian and political balance of Lebanon may have opened a window of opportunity for the LAF to show that it is an efficient force against terrorism, yet a failure to complete the offensive will also result in calls for Hezbollah to resume its operations in Lebanon and thus further undermine the Lebanese military’s image abroad.
Similarly, Hariri’s efforts to temper the impact of the upcoming anti-Hezbollah sanctions will be key to Lebanon’s stability in the coming months. Several elements within the Congress are keen to drastically increase the pressure on the Lebanese financial system to withdraw any kind of support or ties with Hezbollah, which is already leading Lebanese banks to pre-emptively close accounts of Shiite citizens over mere suspicions that they may be tied to the group. Last year, similar sanctions had led to significant tensions between Hezbollah and Lebanese banks, peaking with the explosion of an IED near a bank in central Beirut in June 2016. The closure of several accounts tied to Hezbollah triggered by the US Hezbollah International Financing Prevention Act of 2015 (HIFPA) had prompted a warning by Hezbollah, and veiled accusation that the group was carrying out an “intimidation campaign”. While Hezbollah has been pre-empting US sanctions by shifting its economy toward a “cash-centered” one where banks are not as vital, we assess that the upcoming bill will still significantly impact Hezbollah, which is already in the middle of a mild financial crisis tied to its involvement in Syria. This in turn carries with it the potential to renew tensions between Lebanese banks and the group, which could act forcefully to deter them from applying the sanctions.
 The upcoming Hezbollah International Financing Prevention Amendments Act of 2017 is slated to be passed in or before September this year.