Iran-US deal could fill Hezbollah's coffers

Iran's interim deal with the United States could appear to strengthen Hezbollah's political and financial position in Lebanon, with Tehran promising more funding for its ally once the money starts flowing in, four sources familiar with ties between Tehran and the group told Reuters.

An influx of money to Hezbollah could help it recover from heavy war losses and deal a blow to Israel.

The US-Iran memorandum of understanding, due to be signed on Friday, is expected to halt hostilities on all fronts, mediator Pakistan said.

The ceasefire, at Iran's insistence, also includes Lebanon, where Hezbollah opened fire on Israel on March 2 in a show of solidarity with Tehran, triggering an Israeli offensive that killed thousands and led to an Israeli invasion of the country's south, in a conflict that ran parallel to a broader US-Iranian confrontation.

The situation in southern Lebanon remains volatile. Iran warned Israel on Tuesday that it expects an Iranian military response if it does not stop attacks in the country's south, where Israel has said it will keep troops and violence, although significantly reduced, has continued.

The ceasefire in Lebanon has given Hezbollah political encouragement after two years of defeats, including the fall of Hezbollah's Syrian ally, Bashar al-Assad, in December 2024.

This has also put the US-backed Lebanese government in a difficult position, having failed in its own efforts to secure a broader ceasefire in direct talks with Israeli officials in Washington over the past two months, which were supposed to serve as a path to limiting Hezbollah's military role.

Two regional diplomats said Iran had assured the group that it would receive more funds as soon as the assets were unfrozen, while a senior Lebanese source said Iran had promised the money as soon as possible, and another Lebanese source said Iran was expected to step up support.

Hezbollah's media office said that Iran has publicly announced its support for Hezbollah and that assistance is continuing.

When asked whether Hezbollah would receive a share of the released Iranian funds, the group's media representatives told Reuters that Tehran would continue to support Lebanon "regardless of the details of the return of its funds."

A US official said Washington had told Iran that "funds will not be unfrozen if they go to any terrorist organisation".

"The memorandum of understanding also encourages Iran to keep allied groups under control, because if it does not do so, it will not be able to reap any benefits from the agreement," the official said.

Iran has maintained financial support for Hezbollah during years of devastating US sanctions: according to the US Treasury Department, in the first ten months of 2025 it transferred $1 billion to the group.

The war caused enormous devastation in Lebanon: Israeli forces displaced a fifth of the population and razed villages in the south, claiming that Hezbollah was operating from civilian areas.

Reflecting its increasingly difficult financial situation, Hezbollah announced in May that it had had to reduce cash payments. Earlier this month, the group offered displaced families $200 in aid — the first cash assistance it has offered during the war, recipients said.

Mohanad Haj Ali of the Carnegie Middle East think tank said a large influx of Iranian money would be a “turning point” for Hezbollah, allowing it to help its supporters and rebuild frayed political alliances in Lebanon.

He expects the issue of Hezbollah disarmament to "fall into the background," noting that Hezbollah could invoke the Israeli occupation as justification for retaining its weapons. Hezbollah, he said, is Iran's strategic asset that Tehran is unlikely to give up.

Iran's insistence on a ceasefire in Lebanon and demands for Israeli withdrawal have dealt a blow to Beirut's efforts to assert its sovereignty and negotiate an end to the war.

President Joseph Aoun sharply criticized Iran earlier this month, accusing it of using Lebanon as a bargaining chip in talks with the U.S. However, he spoke with the Iranian foreign minister on Monday and welcomed the memorandum of understanding.

Andreas Krieg of the School of Security Studies at King's College London said that an Israeli withdrawal "can realistically only be achieved through diplomacy," which raises the question of what concessions Hezbollah might be willing to make.

Israel wants Hezbollah disbanded, but the group rejects the possibility of disarmament.

Krieg said a more realistic formula for resolving the impasse would be some kind of demilitarization of southern Lebanon in exchange for an Israeli withdrawal.

Previous ceasefires required that Hezbollah keep no fighters in the area between Israel and the Litani River, which flows east to west across southern Lebanon.

Nick Blanford, a senior fellow at the Atlantic Council think tank, said that the Israeli occupation has revived “Hezbollah’s narrative of resistance” and that “it will now be very difficult for the government to act against Hezbollah, especially if fighting flares up again.”