US Treasury placed Hezbollah parliamentarians on its sanctions blacklist .

Lebanon regrets the US imposition of sanctions on two Hezbollah members in the Lebanese parliament and will pursue the matter with American authorities, President Michel Aoun said on Wednesday.

The United States announced new sanctions against the two lawmakers from the Hezbollah movement on Tuesday, as well as on one of the group’s top security officials, drawing expressions of concern from Lebanese officials.

Hezbollah, a heavily armed movement allied to Iran, is a party in the Lebanese coalition government and considered a “terrorist” group by the US.

“No doubt, it has taken a new direction,” Hariri said of the US move.

“But this will not affect the work we are doing in parliament or the ministers. It is a new matter that we will deal with as we see fit… The important thing is to preserve the banking sector and the Lebanese economy and, God willing, this crisis will pass sooner or later,” he said in a statement.

‘Assault on Lebanon’

Lebanon’s parliament speaker earlier slammed the new US sanctions targeting Hezbollah officials as an assault against the whole country.

Amin Sherri and Muhammad Raad, members of Lebanon‘s parliament, as well as Wafiq Sada, who coordinates with Lebanon’s security agencies were sanctioned.

“It is an assault on the parliament and as a result an assault on all of Lebanon,” Nabih Berri, a Shia ally of Hezbollah, said in a statement on Wednesday.

Hezbollah wields major influence in Lebanon. It was established in 1982 during Lebanon’s civil war. The movement won 13 out of 128 seats in the May 2018 general election and holds three cabinet posts.

190531205107426

US Secretary of State Mike Pompeo said the US targeted the three officials “who leverage their positions to facilitate Hezbollah and the Iranian regime’s malign efforts to undermine Lebanese sovereignty”.

“Any distinction between Hezbollah’s political and military wings is artificial,” Pompeo said.

“We call on our allies and partners to designate Hezbollah in its entirety as a terrorist organisation.”

Financial fallout

Lebanon’s dollar-denominated sovereign bonds fell and the cost of insuring exposure to its debt rose on Wednesday after the sanctions.

Meanwhile, five-year credit default swaps (CDS) jumped 17 basis points (bps) from Tuesday’s close to 925 bps, according to IHS Markit.

CDS last traded at these levels in January when fears of a potential debt restructuring rattled Lebanon investors.

“These sanctions are unwarranted and do not serve financial stability,” Finance Minister Ali Hassan Khalil, a senior Berri aide, said on Tuesday night in a TV interview.

“Lebanon and its banks are committed to all the legislation, and there is no justification at all for escalating these sanctions.”

171112115648693

The move – the first sanctions by Washington to target Hezbollah elected politicians – came as the US increases pressure on Iran and its alleged “proxies” in the Middle East.

Hezbollah fighters have backed government forces in neighbouring Syria in the civil war that broke out there in 2011.

After the US Treasury’s announcement, Hezbollah television Al-Manar said the group’s leader, Hassan Nasrallah, would appear on TV on Friday.

Nasrallah will address a series of Lebanese and regional issues and is expected to also discuss the latest sanctions.