Hezbollah Took Advantage of Crisis in Lebanon to Build Gold Reserve, Popularity in Preparation for War with Israel

Publication: Terrorism Monitor Volume: 22 Issue: 7

Hezbollah posters in Lebanon. (Source: Flickr/ninjawil)

Executive Summary

  • Hezbollah has used Lebanon’s ongoing political and financial crisis to acquire large gold reserves from its citizens living in poverty, doing so in a way that offers the group the chance to bolster both its popularity its asset reserves in preparation for a possible war with Israel.
  • Many of Lebanon’s citizens obtain personal loans from Hezbollah’s shadow bank/charity, the Al-Qard Al-Hasan Association (AQAH), giving the organization any gold in their possession as collateral. This has become an essential source of cash for individuals in a country where more than 80 percent of the population lives in poverty.
  • Hezbollah’s reserves are further augmented by engaging in gold smuggling internationally, utilizing networks built among the global Lebanese diaspora.

With tensions between Hezbollah and Israel remaining high, the prospect of an eventual war between them cannot be ruled out. Although evidence suggests that Hezbollah has been avoiding such a scenario since Hamas’s attack on Israel on October 7, 2023, it has also been readying itself for such an outcome for many years. Hezbollah’s preparations include building substantial gold and cash reserves while taking an increasingly active role in the Lebanese economy—all this at a time when the country’s financial system is near collapse. These measures are intended to allow Hezbollah to fight a protracted war with Israel, should the situation arise.

Financial Crisis

Lebanon’s ongoing financial crisis was sparked by a sharp downturn in foreign cash coming into the country. This downturn was caused primarily by rampant corruption and mismanagement by the country’s financial elites as well as the growing influence of Hezbollah, which scared off foreign investors, including those from the Gulf States. The value of the Lebanese pound has fallen by some 98 percent since 2019, eviscerating the value of personal savings and potential earnings in the country. As a result, the poverty rate doubled, with more than 80 percent of the population now living in poverty (UN Economic and Social Commission for Western Asia, September 2021). Most Lebanese survive on remittances from family members living abroad (Al Jazeera, August 23, 2023). Given Hezbollah’s broad international financial reach, it is now one of the only organizations capable of injecting cash into Lebanon’s ailing economy, which enables the group to spread its influence substantially.

Moreover, divisions between Hezbollah and other parliamentary factions have scuttled attempts to elect a new Lebanese president on 12 separate occasions, the latest of which occurred in June 2023 (Al Jazeera, June 14, 2023). Hezbollah is prolonging Lebanon’s political and financial crisis, using the ongoing collapse to expand its influence in the country as it prepares for a potential war with Israel.

Shadow Banking

Hezbollah’s shadow bank, the Al-Qard Al-Hasan Association (AQAH), sparked controversy last March when the Shi’a organization announced it was opening a bank branch in the predominantly Christian and Druze town of Souk El Gharb, cutting across Lebanon’s deeply entrenched sectarian lines (Arab News, February 18, 2023). Officially functioning as a charity organization, AQAH serves as Hezbollah’s “financial backbone” by operating some 50 branches in southern Lebanon, Beirut, and the Bekaa Valley. At a time when the Lebanese banking sector remains in deep turmoil, the association continues to expand while operating outside the Lebanese regulatory and legal framework (Al-Mashareq, February 8, 2023). Given Lebanon’s ongoing liquidity crisis and lack of lending, AQAH has become an essential source of cash for Lebanese and has become a powerful force in the country’s economy.

In 2021, several of AQAH’s branches began installing ATMs that dispense large sums of Lebanese pounds and U.S. dollars to borrowers. Borrowers can withdraw as many dollars as they want and renew loans indefinitely, so long as they provide the collateral of gold, whose value is currently at an all-time high (Al-Mashareq, January 14, 2021). Although there have been reports of gold confiscations in response to defaults, these cases are limited due to the negative impact this would have on Hezbollah’s public image (Daraj, May 19, 2021). Instead, Hezbollah tends to hold onto the depositor’s gold while offering the option of renewing loans against it indefinitely upon repayment (Al Arabiya, January 7, 2021).

Hezbollah’s vast overseas operations, which allegedly include drug trafficking, money laundering, and “blood diamond” smuggling, bring in vast sums of cash each year (The Washington Institute for Near East Policy, September 2012; U.S. Senate Hearing, February 13, 2002). Through AQAH, Hezbollah uses much of this cash to inject necessary liquidity into the ailing Lebanese economy. It allows Hezbollah to expand its influence over the country while acquiring much of the Lebanese public’s gold reserves in exchange. According to the Financial Action Task Force (FATF), gold is attractive to criminal groups as a vehicle for money laundering because such groups may convert illicit cash into a “stable, anonymous, transformable, and easily exchangeable asset to realize or reinvest the profits into other illegal activities” (Financial Action Task Force, July 2015). By lending cash for gold, Hezbollah is bolstering its asset reserves to prepare it for a wartime scenario.

Gold Smuggling

Hezbollah is also involved in international gold smuggling with the Iranian government. In 2020, evidence showed that Hezbollah controlled multiple gold mines in southeastern Venezuela. In May 2022, Israeli intelligence found that dozens of kilograms of Venezuelan gold were sent to Tehran on an Iranian Mahan Air flight in exchange for oil, with the proceeds from this later transferred to Hezbollah (Al Arabiya, May 20, 2020; The Jerusalem Post, February 26, 2023; Asharq Al-Aswat, February 27, 2023). Iran has become more willing to pay vast sums of cash for gold amid attempts to increase its reserves in response to ongoing pressure from U.S. sanctions. The efforts by Tehran to hoard gold have gone as far as to include the execution of citizens accused of hoarding gold (Mehr News [Iran], September 3, 2023; Times of Israel, November 14, 2018).

Hezbollah’s role as an intermediary in international gold smuggling likely stems from its ability to infiltrate various Lebanese diaspora groups across South America to West Africa (Times of Israel, February 26, 2013). By helping smuggle gold to Iran in exchange for cash, Hezbollah can lend this cash to Lebanese citizens in exchange for their gold. This system increases Hezbollah’s gold reserves while playing a vital role for its Iranian patrons, who of course also furnish Hezbollah with an extensive military arsenal.


Hezbollah’s vast international dealings and growing influence in Lebanon are financially empowering the group to prepare for a wartime scenario with Israel. The Israeli military, for its part, has publically announced that it has plans drawn up for invading Lebanon if the situation comes to it (Asharq Al-Aswat, December 23, 2023). Should such a war occur, Israel will find itself fighting a group that is not only deeply embedded in Lebanese territory and society but also one that is financially well prepared to fight a long-lasting war.