Iran and its funding of Hamas, Hezbollah, and the Houthi rebels

(Article originally published in Italian at: https://www.ilriformista.it/umberto-pizzi-linvasione-dellultra-cafonal-532378/)

We meet Emanuele Ottolenghi, a leading expert on finance, terrorism, and international criminal networks. Author of “The Iranian Bomb” (Lindau) and “The Pasdaran” (FDD), he is a Senior Advisor at 240 Analytics, a data processing firm specializing in terrorism risk and financing.

Professor Ottolenghi, let’s start with the heart of your work: how does Iran finance its main proxies in the region—Hamas, Hezbollah, and the Houthi rebels—and what are the main channels for transferring money?

“Primarily through cash transfers, use of the local banking system, and electronic payment platforms outside the traditional banking system. Then there is direct aid—the supply of weapons and other material means—which nevertheless constitutes a transfer of value. Furthermore, there are additional means of financing, coming from abroad, which take place through NGOs and businesses controlled by cronies in the diaspora. Finally, there is the financing derived from the laundering of dirty money from illicit trafficking, again through a variety of formal and informal channels. For large volumes, laundering relies on front companies that transfer value through the trade of consumer goods. The supporting financial transactions pass through multiple channels—including international banking networks as well as electronic payment systems, traditional Hawala networks, and cryptocurrencies.”

In your research, you highlight the increasingly widespread use of unconventional tools to evade controls. Are cryptocurrencies, in particular, playing a growing role in financing terrorist organizations?

“Exactly. There have already been sanctions by US authorities against networks linked to the Iranian regime and its Hezbollah proxies that used cryptocurrencies. They are unregulated and not particularly monitored. It’s easy to cover the tracks of their movements. So they’re an attractive tool for illicit financial activities. There’s a risk—the sharp fluctuations in their values—but as cryptocurrencies gain a greater influence in global finance, they will become an increasingly common tool, even for those who don’t comply with the law.”

Can you give me a reliable estimate of the weapons Iran has supplied to Hamas, Hezbollah, and the Houthis over the last decade?

“Hezbollah and the Houthis’ missile and drone arsenals would not exist without Iranian help. Iran provides intelligence to identify and target ships transiting the mouth of the Red Sea. Iran has provided Hamas, the Houthis, and Hezbollah with training as well as the expertise to build tunnels and develop an asymmetric combat strategy. The weapons followed different routes—through Iraq and Syria by land or air for Hezbollah, for example—or with merchant ships that diverted their course, past the Suez Canal, to deliver weapons via Syrian ports. The fall of the Assad regime in Syria has disrupted these routes, leaving Tehran’s Mediterranean allies in serious difficulty.”

Your investigations reveal surprising connections between terrorist groups and traditional criminal organizations. Is there documented involvement of Italian organized crime, such as the ‘Ndrangheta or Camorra, in money laundering or arms trafficking linked to Iran and its proxies?

“Certainly. Hezbollah derives part of its funding from the intermediary services it offers to organized crime groups to launder their dirty money. The main source of these profits is cocaine trafficking from Latin America, and until recently, Captagon from Syria. Among the regular customers of these goods are the entire European organized crime group, including our own. There’s no doubt that Hezbollah plays a role in these trafficking operations, and there are documented judicial investigations from the last twenty years to prove it.”

What kind of strategic relationship does Iran have with Russia on the energy and military fronts? Specifically, what ties does Tehran have with Russian oil and gas oligarchs, and how do these relationships translate into advantages for their respective global networks of influence?

“It’s a strategic alliance that primarily allows the two countries to help each other evade international sanctions. The Russians depend on Iranian military supplies—including drones used to terrorize civilians in Ukraine—and the Iranians depend on the Russians—for example, for their anti-aircraft systems. But the most important thing from a strategic standpoint is that these are two countries with hegemonic and imperial ambitions over their neighbors, aiming to diminish Western influence and disrupt the international order for their own benefit. This gives rise to a strategic alignment that goes far beyond trade and military and energy cooperation.”

China continues to purchase huge quantities of Iranian oil. How does this trade flow allow Iran to indirectly finance affiliated armed groups?

“Without oil sales, Iran would struggle to continue its imperial adventures in the region, including the huge expenditures to support and supply its followers. This makes it very vulnerable at this time: if Israel were to strike at strategic hubs of the Iranian oil industry, such as the terminal on the island of Khartoum, it could bring its entire economy to its knees.”

Looking to the future: what risks does Europe face if it fails to effectively counter the financial and logistical channels that support the Iranian terror network?

“First of all, there’s the risk of terrorism on European soil. It wouldn’t be the first time, and our compliant attitude, which the Iranians have always known how to manipulate, for example, with the kidnapping of our fellow citizens, is then cynically used as bargaining chips. Then there are the financing channels that not only finance terrorism but also enrich criminals and fuel the degradation and risk associated with organized crime. The main problem for us Europeans is that we continue to treat the problem of organized crime and the financing of terrorism as two separate phenomena. This is also evident in terms of investigative tools: investigators often don’t pursue the terrorism lead in mafia investigations because they don’t have the analytical tools to identify and understand that connection.”

Which tools—investigative, regulatory, diplomatic—are most urgently needed today?

“We need greater integration of data and analysis between law enforcement and intelligence agencies. We also need to make greater use of tools like sanctions, which the Americans have been using with some success for years. The private sector, particularly the financial sector, must strengthen its self-protection tools against illicit finance. The danger here is that our financial, commercial, and real estate sectors will increasingly fall prey to illicit schemes. And of course, we must not forget that these financial flows then fuel destabilizing conflicts that harm our interests.”