Hezbollah’s Legacy in Syria: Drug Labs, Counterfeit Money Factories

Syrian border security forces patrol a border area in Wadi al-Hourani, Hawik village, near the Lebanese border (Asharq Al-Awsat)
Syrian border security forces patrol a border area in Wadi al-Hourani, Hawik village, near the Lebanese border (Asharq Al-Awsat)
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Hezbollah’s Legacy in Syria: Drug Labs, Counterfeit Money Factories

Syrian border security forces patrol a border area in Wadi al-Hourani, Hawik village, near the Lebanese border (Asharq Al-Awsat)
Syrian border security forces patrol a border area in Wadi al-Hourani, Hawik village, near the Lebanese border (Asharq Al-Awsat)

Syrian border security forces have discovered dozens of factories producing narcotics, Captagon pills, hashish, and counterfeit US dollars in abandoned warehouses on a hilltop in Al Qusayr’s village of Hawik, near the western countryside of Homs, close to the Syrian-Lebanese border.

The illicit goods were intended for smuggling into neighboring countries and beyond, authorities said.

The border area, facing Lebanon’s Baalbek province, was until recently under the control of Hezbollah. Following the group’s expulsion, Syrian security forces dismantled the drug operations, paving the way for the Lebanese army to secure the region, according to officials.

In a makeshift drug lab perched on a remote hill along a secondary road in Hawik—just a few hundred meters from the Lebanese border—Syrian security forces found stockpiles of equipment and materials used in drug production.

Inside the warehouses, they uncovered industrial machinery, large blue storage tanks filled with raw substances for Captagon production, as well as wooden containers and sealed plastic boxes containing hashish.

Homs border security chief Maj. Nadim Mdakhneh told Asharq Al-Awsat that the previous regime and Hezbollah had turned the area into a drug smuggling route and a hub for illegal drug production, weapons trafficking, and counterfeiting before being expelled this month.

Syrian military operations forces launched a sweeping security campaign this week, targeting villages near the Lebanese border, including Hawik, Jarmash, Wadi al-Hourani, Akoum, and Wadi Hanna.

Clashes erupted with Hezbollah fighters, remnants of the ousted regime, and drug and arms traffickers.

The forces seized full control of the border strip, set up checkpoints, and implemented strict measures to prevent smuggling, officials said.

The crackdown included raids in several Syrian villages, particularly Hawik, Jarmash, and Hit—key hubs for drug trafficking.

Mdakhneh said security forces discovered around 15 drug production facilities and a counterfeit currency printing press.

“We seized massive shipments of weapons, drugs, and raw materials intended for smuggling,” Mdakhneh said. “These areas were the economic lifeline of these criminal networks.”

Syria and Lebanon share a 330-kilometer border, much of it unmarked and stretching across valleys and rugged mountains—terrain long exploited by drug smugglers and arms dealers.

Counterfeit Money Operation

In a third warehouse, Hezbollah operatives set up a counterfeit money operation, producing fake $100 bills using advanced printers, holograms, ultraviolet scanners, and an offset printing press, security officials said.

During Syria’s war, the country became the region’s top producer of Captagon, especially under ousted President Bashar al-Assad. Some reports have called Syria a “narco-state,” with British data estimating it produced nearly 80% of the world’s Captagon supply by the end of last year.

In another warehouse hidden in a mountainous area, a security officer opened a device and found round drug tablets inside.

“This is how they made and hid the drugs before smuggling them to the Gulf and beyond,” said security officer Nader Abu al-Bara, who took part in the raid.

Captagon Pills, Hashish Stored in Packages

Captagon pills were packed in sealed bags. Hashish was stored in medium-sized wooden crates and plastic containers, while processed batches were wrapped in red gloves for identification, security officials said.

Residents of the border region said civilians were strictly prohibited from approaching the heavily guarded drug production sites.

“No one was allowed near these facilities,” said Ahmad al-Saab, 55, a resident of Hawik. “Syrian intelligence and Hezbollah fighters stationed in the area kept us away. We often smelled strange, unpleasant odors, but we had no idea what was happening inside. We only heard rumors about factories, but no one dared to get close.”

Security forces discovered surveillance cameras and network lines connected to Lebanese territory during their operations, officials said.

Mdakhneh stressed that the crackdown was limited to Syrian villages near the Lebanese border.

He said coordination between Syrian military operations and the Lebanese army is ongoing, adding that “for the first time in 14 years, the Lebanese army has begun deploying in this area.”

Mdakhneh said clashes erupted with Hezbollah fighters and traffickers, and during the raids, security forces found documents linking members of Lebanese tribal families to the smuggling operations.

The trade in Captagon pills in Syria was worth an estimated $6 billion by the end of 2024, according to United Nations figures. The drugs were primarily smuggled to neighboring Iraq and Jordan before being trafficked onward to Gulf states.



The 60-day Deadline for an Iran Peace Deal is Expiring. Here's Where Things Stand

A woman holds an Iranian flag as part of a pro-government campaign in downtown Tehran, Iran, Monday, Aug. 17, 2026. (AP Photo/Vahid Salemi)
A woman holds an Iranian flag as part of a pro-government campaign in downtown Tehran, Iran, Monday, Aug. 17, 2026. (AP Photo/Vahid Salemi)
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The 60-day Deadline for an Iran Peace Deal is Expiring. Here's Where Things Stand

A woman holds an Iranian flag as part of a pro-government campaign in downtown Tehran, Iran, Monday, Aug. 17, 2026. (AP Photo/Vahid Salemi)
A woman holds an Iranian flag as part of a pro-government campaign in downtown Tehran, Iran, Monday, Aug. 17, 2026. (AP Photo/Vahid Salemi)

The deal that US President Donald Trump signed at Versailles in June set an ambitious 60-day deadline for ending the war with Iran and reaching an accord on its nuclear program.

The deadline was Monday, and the two sides are further apart than they were then, The Associated Press said.

Talks, such as they are, have focused on reopening the Strait of Hormuz and lifting a US blockade on Iran, both of which were supposed to have happened under the interim deal. There has been no sign of any compromise on the strait, or that detailed nuclear talks have even begun.

The US, meanwhile, has no good options for getting out of the war it started alongside Israel.

Acceding to Iran's latest demands would mean giving it control over a critical international waterway that carried a fifth of the world's traded oil and gas before the war — and would be tantamount to admitting defeat. Escalating the deeply unpopular war would further draw down US supplies of advanced missile interceptors, jolt the world economy, and drive up gas prices ahead of US congressional elections.

So both sides have dug in, hoping the other will blink first. So far, neither has.

The interim deal collapsed weeks later

The June deal, known as the Memorandum of Understanding, called for a halt to all military operations and set a 60-day deadline for an agreement to permanently end the war and resolve the longstanding dispute over Iran's nuclear activities.

It called for the Strait of Hormuz to be reopened but gave Iran a vaguely defined role in facilitating traffic, leaving open the possibility it could charge fees after the 60-day deadline. Iran has seized on that clause to claim control over the waterway.

A week after the deal was signed, Iran began firing on vessels using a route along the coast of Oman, on the other side of the strait, that is overseen by the US military and intended to bypass Tehran's control.

The US responded by striking Iran, which retaliated by attacking Arab countries hosting American forces, like Jordan, Kuwait and Bahrain. The US canceled waivers issued as part of the deal that had allowed Iran to sell its oil internationally and Trump restored a blockade of Iran's ports.

Each side accused the other of violating the June agreement, of which almost nothing remains.

The fighting eventually died down. A related truce in Lebanon between Israel and the Iran-backed Hezbollah has mostly held, even as Israeli troops occupy large areas in the country's south. Lebanon's "territorial integrity and sovereignty" were to have been ensured under the June deal.

Iranian officials say they stopped negotiating with the US in June, while acknowledging that messages have been relayed by intermediaries. Trump says the talks have continued, occasionally claiming progress after pulling back from threatening major strikes.

Pakistan, which played a key role in brokering the June agreement, noted last week that the deadline was Monday while expressing hope it would be extended.

“We are not closing the chapter,” Foreign Ministry spokesman Tahir Andrabi said. “Pakistan is making all-out efforts to bring the two parties to the negotiating table.”

Iran's leaders think they can force Trump to give up the strait

Earlier this month, Iran issued a list of demands for reopening the strait, including the lifting of the American blockade, the withdrawal of US forces from around Iran and the payment of reparations for damage inflicted in the war started by the US and Israel on Feb. 28.

Even then, Iran has said it would control the strait — and potentially charge fees — through an agreement it is negotiating with Oman, and that the strait will not go back to being an open, toll-free waterway as it was before the war.

Iran-backed Houthis in Yemen have meanwhile begun attacking oil tankers in the Red Sea, threatening another crucial trade route that had been used to relieve some of the pressure from the strait being closed.

Trump has rejected Iran's demands — saying it's Tehran that should pay war reparations and claiming the US controls the strait. He appears to be banking on economic pressure — in the form of the blockade and longstanding sanctions — to bring Iran's rulers to their knees.

Iran's economy has been battered by the war and isolation, and inflation has soared. The crisis could stoke renewed anti-government protests, like those that were brutally crushed in January.

Traffic through the Strait of Hormuz, which rose immediately after the interim deal, is back to a small fraction of what it was before the war. Rising prices of fuel and other goods are expected to climb further the longer this continues with effects far beyond the Middle East.

The clock is still ticking for both sides.


Battered by War, Iran’s Rulers Wary of More Economic Pain and Unrest if US Tightens Pressure

People walk in the Grand Bazaar in Tehran, Iran, August 17, 2026. Majid Asgaripour/WANA (West Asia News Agency) via Reuters
People walk in the Grand Bazaar in Tehran, Iran, August 17, 2026. Majid Asgaripour/WANA (West Asia News Agency) via Reuters
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Battered by War, Iran’s Rulers Wary of More Economic Pain and Unrest if US Tightens Pressure

People walk in the Grand Bazaar in Tehran, Iran, August 17, 2026. Majid Asgaripour/WANA (West Asia News Agency) via Reuters
People walk in the Grand Bazaar in Tehran, Iran, August 17, 2026. Majid Asgaripour/WANA (West Asia News Agency) via Reuters

Even as Iran projects resilience in the war with the United States, its leaders are worried that a threat of more economic punishment by Donald Trump could increase hardships, reignite unrest and further erode the regime’s legitimacy.

The US president vowed on Friday to hit Iran hard economically, a day after Treasury Secretary Scott Bessent said Washington would impose measures on Tehran that have "never been seen" as early as next week. Washington has not said what those measures will entail.

For all the bravado of Iran's leaders after holding out in nearly six months of conflict and effectively closing the Strait of Hormuz, a vital global oil supply route, they face mounting pressure at home that could result in nationwide unrest, according to three Iranian officials.

The officials, two political insiders, a former Iranian official and a dozen ordinary Iranians spoke to Reuters for this story on condition of anonymity, either for fear of retribution or because they are not authorized to speak to media.

Iran entered the war with high inflation, a weakening currency, energy shortages, sanctions and deep structural weaknesses, and must now contend with damaged infrastructure, disrupted trade, lost production and the cost of rebuilding.

Arshia, a civil engineer, spent a decade working in Iran’s construction industry before the war that began with US and Israeli attacks on February 28 brought projects largely to a standstill.

He is now struggling ‌to find work as ‌projects are delayed or cancelled and costs soar, with little prospect of a rapid recovery.

"I’m worried. If Trump imposes ‌more sanctions, ⁠how will ordinary ⁠people survive? I don’t want my country to be punished militarily or economically. We’re already struggling,” said the father of two from the central city of Isfahan.

His plight reflects a broader reality across Iran, where US strikes damaged factories, power plants, transport networks and other critical infrastructure, adding to pressure on an already strained economy.

Mohsen, 53, was forced to shut his small import-export business with Gulf countries after Iran retaliated against US strikes by targeting American bases and assets in the region.

"I had to lay off 10 employees. It was painful, but I had no choice. I could no longer afford to pay their salaries, and now I’m relying on my savings to support my family," he said from the southern port city of Bandar Abbas.

INFLATION, UNCERTAINTY HIT HOUSEHOLDS

Iran’s annual inflation rate reached 66% in July, while consumer prices were 87.9% higher than a year earlier, according to Iran’s Statistical ⁠Center. Food inflation hit 128% year-on-year.

For Iran’s rulers, the greater threat may be not economic pain itself, but the risk ‌that worsening hardship reignites mass unrest, said the two insiders and one official.

The appointment of Hossein Taeb ‌last week, a key architect of past crackdowns, to lead Iran’s Basij militia is one of the clearest signs yet of growing concern over a resurgence of unrest, a former reformist ‌official said.

The Basij, a paramilitary volunteer militia, is affiliated with Iran's powerful Revolutionary Guards, which have both been used by the clerical rulers to quell protests.

Economic ‌grievances have repeatedly spilled into nationwide protests in Iran in recent years.

In January, nationwide protests over economic hardships were crushed by the IRGC and the Basij force, with thousands killed.

In recent months, Iran’s clerical rulers have responded to fears of renewed unrest with executions, arrests, summonses and lengthy prison sentences targeting journalists, lawyers, activists, human rights advocates and students, rights groups say.

Officials say the measures are needed to maintain stability during wartime. Critics say they could deepen the divide between the clerical establishment and a public frustrated by rising economic pressures.

SALARY 'GONE WITHIN DAYS'

Families are cutting ‌back on meat and other staples, opting for cheaper alternatives.

"I’m ashamed in front of my children. My salary is gone within days. Meat and chicken have disappeared from our table. I have no idea how we’re going to ⁠get by," said Hossein, a government employee in ⁠the central city of Yazd.

Rents rose 31% year-on-year in March, according to the Statistical Centre, while state media reported Tehran housing prices at roughly 50% above last year.

Iran’s minimum wage was raised by about 60% this year, but continued rial depreciation has eroded purchasing power, with the dollar value of the minimum wage falling from about $105 to $86 since late March.

Bijan, 40, earned about $1,000 a month as an engineer when he entered the job market 15 years ago. He has since turned to online tutoring to make ends meet. Now, he and his wife struggle to make about $400 a month and have left Tehran for a cheaper province.

"I used to work maybe five or six hours a day ... Now, it’s all work or looking for work, or feeling anxious about not having enough work," said Bijan.

For many Iranians, fear of renewed conflict has made planning for the future increasingly difficult.

US NAVAL BLOCKADE RATCHETS UP COSTS

Iran has sought to keep essential goods moving through alternative routes, including land corridors and the Caspian Sea, but those alternatives are also coming under strain.

Strikes on bridges have disrupted overland transport, increasing the cost and time needed to move goods into Iran.

President Masoud Pezeshkian last week acknowledged the squeeze, saying: “Our problems have multiplied several times over, while our income has also fallen.”

Goods that once arrived by ship now take longer routes into Iran, driving up prices, he said, adding that Iran is selling less oil and collecting less tax revenue from damaged or struggling businesses.

The blockade has also effectively cut off Iran’s gasoline imports, lawmaker Reza Sepahvand told Iran's ILNA news agency on Saturday, adding that Iran’s daily gasoline output had reached its limit at about 130 million liters, compared with consumption of 137 million liters.


Trump Wants More Economic Pressure on Iran. What Are his Options?

US President Donald Trump arrives to deliver remarks at the Nassau County Police Academy Center for Training and Intelligence in Garden City, New York, on August 14, 2026. (Photo by Kent NISHIMURA / AFP)
US President Donald Trump arrives to deliver remarks at the Nassau County Police Academy Center for Training and Intelligence in Garden City, New York, on August 14, 2026. (Photo by Kent NISHIMURA / AFP)
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Trump Wants More Economic Pressure on Iran. What Are his Options?

US President Donald Trump arrives to deliver remarks at the Nassau County Police Academy Center for Training and Intelligence in Garden City, New York, on August 14, 2026. (Photo by Kent NISHIMURA / AFP)
US President Donald Trump arrives to deliver remarks at the Nassau County Police Academy Center for Training and Intelligence in Garden City, New York, on August 14, 2026. (Photo by Kent NISHIMURA / AFP)

US President Donald Trump on Friday vowed to hit Iran hard economically, a day after Treasury Secretary Scott Bessent said that Washington would impose measures on Tehran that have "never been seen" as soon as next week.

The United States, United Nations and European Union have applied sanctions, implemented trade embargoes and frozen assets since the late 1970s over Iran's nuclear program, human rights violations and support for militant groups.

Since the Iran war began in February, Washington has levied additional maritime, energy and financial sanctions and started a naval blockade.

Data from the US Treasury Department's Office of Foreign Assets Control (OFAC) shows the agency has imposed sanctions on more than 1,000 people, vessels and aircraft since Trump began his second term.

Recent measures have targeted Iran's shadow oil fleet; shipping insurers; entities and people enabling Iran's acquisition of weapons; and digital exchanges, freezing an estimated $500 billion in Iran-linked cryptocurrency.

According to Reuters, experts say the Trump administration also can try these options:

SANCTIONS ON CHINESE 'TEAPOT' REFINERS

Chinese independent refineries known as "teapots" account for a quarter of Chinese refinery capacity. They operate with narrow and sometimes negative profit margins.

China buys more than 80% of Iran's shipped oil, according to 2025 data from analytics firm Kpler. Independent refiners absorb much of this trade, exposing them to so-called secondary measures that penalize entities helping a primary sanctions target.

Past ⁠US sanctions have ⁠deterred larger independent refiners from buying Iranian oil. But the independent refineries are somewhat immune since they have little exposure to the US financial system, sanctions experts say.

SANCTIONS ON CHINESE BANKS

OFAC has imposed secondary sanctions on smaller China- and Hong Kong-based entities accused of processing billions of dollars in Iranian oil and helping to fund weapons procurement.

Treasury has warned two larger Chinese banks they could face secondary sanctions if Iranian funds were found moving through their systems, but has stopped short of designating them.

Hitting those two banks, which US officials have not publicly identified, or imposing other sanctions could have a chilling effect on bigger financial institutions, sanctions experts said, although they warned it could ⁠also trigger retaliatory actions by Beijing.

Trump administration officials have sought to play down tensions between Washington and Beijing ahead of an expected meeting between Trump and President Xi Jinping later this year.

They worry that China could curtail exports of critical minerals that are essential to advanced technology production at a time when the US and Western allies are still trying to develop their own supplies.

'WHACK-A-MOLE'

The United States could continue targeting Iranian individuals and entities, as well as others in China and the Gulf, that are helping Tehran evade sanctions to collect revenues for its war effort.

Treasury recently issued sanctions against firms that are springing up to facilitate Iran's trading of oil revenue for imports. But such measures amount to a "whack-a-mole" approach that has not altered Iran's behavior, said Brett Erickson, managing principal of Obsidian Risk Advisors, noting that Tehran simply creates new entities to replace them.

Miad Maleki, a sanctions expert with the Foundation for Defense of Democracies, said Bessent was likely signaling a sharpened enforcement push against oil shippers, purchasers and currency exchangers who help Iran pay for ⁠its imports.

Further aviation sanctions were ⁠also possible, aimed at degrading Iran's ability to move trade now that the US has blockaded shipping via the Strait of Hormuz, he added.

LAND BLOCKADE

Some US and Israeli officials have floated the prospect of a land blockade, which would require assistance from Iran's neighbors: Iraq, Türkiye, Pakistan, Afghanistan, Turkmenistan, Azerbaijan and Armenia.

The Trump administration has varying degrees of closeness with all those countries except Afghanistan, but that border is mountainous and extremely difficult to patrol anyway.

SECONDARY TARIFFS

Trump has repeatedly threatened tariffs on goods from countries that do business with Iran, although the Supreme Court struck down the legal basis for such taxes.

The Senate passed a sweeping Russia sanctions bill last week that included new Iran sanctions and would give Trump new tariff powers that he could potentially use against countries that aid Iran's commerce and weapons procurement. That legislation must still pass the US House of Representatives, which could prove challenging given widespread concerns among Democrats and some Republicans about the tariff measures.