Hezbollah is not a problem that was made by Lebanon, says prime minister

CNBC / Ted Kemp@TEDKEMPCNBC / Natasha Turak@NATASHATURAK

 – “Hezbollah is not a Lebanese problem — only — it is a regional problem,” Lebanon Prime Minister Saad Hariri said Tuesday.

 – Tensions between Lebanon and Israel spiked over the weekend after Shiite militant group Hezbollah fired rockets into Israel from southern Lebanon.

 – The United States hit Lebanon’s Jammal Trust Bank with sanctions last week, claiming the bank facilitates Hezbollah’s financial activities. The bank denies that allegation.

 Lebanon and its government are not to blame for Hezbollah and its recent attacks on Israeli territory, Lebanon’s prime minister said Tuesday.

Tensions between Lebanonand Israel spiked over the weekend after Shiite militant group Hezbollah fired rockets into Israel from southern Lebanon, an attack the group claims was in retaliation for an Israeli drone strike.

“Look, Hezbollah is not a Lebanese problem — only — it is a regional problem,” Prime Minister Saad Hariri said in a wide-ranging interview with CNBC’s Hadley Gamble. “Israel wants to have … this scenario that Lebanon is responsible, with what Netanyahu says, and if you want to buy it, buy it. But he knows and the international community knows that this is not true.”

Israeli Prime Minister Benjamin Netanyahuin a speech last week warned Hezbollah — and Lebanon — to “be careful what you say and more careful what you do.”

I am a pragmatic person, and I know my limits, and I know the limits of this region. / Saad Hariri -PRIME MINISTER, LEBANON

Hezbollah, which operates as both a political party and paramilitary group and is designated by the U.S. as a terrorist organization, made record gains during Lebanon’s elections in May 2018. It’s widely regarded as the most powerful political group in Lebanon.

The United States sanctioned Lebanon’s Jammal Trust Bank last week, saying the bank facilitates Hezbollah’s financial activities and funnels money to the families of suicide bombers. The bank denies those allegations.

Hariri expressed no sympathy for any financial institutions that run afoul of American or European rules, saying such banks “should expect the consequences” of running Hezbollah money.

Israeli soldiers stand guard in the northern Israeli town of Avivim, close to the border with Lebanon, on September 2, 2019. -Israel and Hezbollah exchanged fire along the Lebanese border after a week of rising tensions, sparking fears of an escalation and prompting concern from world powers. / Jack Guez | AFP | Getty Images

“If a bank misuses this trust, we don’t like it, definitely. We try to stop it, I try to stop it,” he said, adding that the U.S. “had to take this action, and I don’t like it and I wish this bank didn’t go through (with) what they did.”

At the same time, Hariri on Tuesday acknowledged limitations in his ability to rein in Hezbollah. The group ignores the official Lebanese policy of staying out of regional conflicts and has been active most notably in Syria in support of Syrian President Bashar Assad.

“I am a pragmatic person, and I know my limits, and I know the limits of this region. If people were serious about this issue, they would have done things 10, 15, 20, 30 years” ago, Hariri told CNBC.

His main focus, he said, is strengthening Lebanon’s institutions such as its central bank and its security forces.

  Fighting over the weekend

Israeli Defense Forces (IDF) on Sunday reported that missiles from Hezbollah, which is funded by Iran, hit an IDF military outpost and an ambulance in northern Israel. The Israeli army had braced for an attack after Hezbollah leader Hassan Nasrallah warned the group would make Israel “pay a price” for its alleged drone strike.

The IDF said it responded by shelling Hezbollah positions with artillery and helicopter fire, afterward calling the operation a success.

Hezbollah fired 2-3 anti-tank missiles from Lebanon, hitting an IDF military outpost and ambulance in northern Israel. We fired at the Hezbollah squad responsible. No Israelis were injured in the attack.

— Israel Defense Forces (@IDF) September 1, 2019

Despite the cross-border fire, analysts watching the region say there’s little desire for further conflict ⁠— for now.

“Hezbollah has not ruled out further retaliation over Israel’s drone strikes, but [its] appetite for escalation appears limited,” Agathe Demarais, global forecasting director at the Economist Intelligence Unit, told CNBC.

Demarais said Hezbollah has political backing from within senior levels of Lebanon’s government, and therefore “is wary of compromising its recent increase in political popularity by dragging Lebanon into a new war with Israel.”

Netanyahu is unlikely to want escalation ahead of the country’s elections — which he hopes will keep him in office — later this month, Demarais said.

Netanyahu appeared to play down the seriousness of the weekend fighting in brief comments to reporters on Monday, according to Reuters.

The tensions also make things more complex for Hariri, already under strain amid competing political factions and a looming economic crisis.

 ‘Able to say no one was killed’

Faysal Itani, a senior fellow at the Atlantic Council, sees the latest fighting as more of a face-saving exercise than a genuine provocation.

“For now, everyone is happy. Nasrallah had his party and the Israelis were able to say no one was killed,” he said.

But there is a fundamentally unstable situation at hand when it comes to the broader context, Itani said. That context is increasing joint US-Israeli pressure on both Iran and Hezbollah, imposing mounting costs, like sanctions, unless certain conditions are met — conditions by which neither Iran nor Hezbollah are willing to abide.

“As these costs rise, Hezbollah has to figure out ways to look like it is responding without inviting a war that could devastate it,” Itani said. “Hence attacks like the border operation.”

The last all-out war between the Israel and Hezbollah was in 2006. It left more than 1,200 people dead in the span of a month, the overwhelming majority of whom were Lebanese.

—CNBC’s Emma Graham contributed to this report. Reuters contributed to this report.