After war losses, Hezbollah seen gaining from Iran-US deal

A potential US-Iran interim deal may bolster Hezbollah's power in Lebanon by providing Tehran with funds to support its ally, potentially hindering Israel's efforts.

Iran's interim deal with the U.S. looks set ​to bolster Hezbollah's political and financial hand in Lebanon, with Tehran promising more funding for its ally once ‌cash ​starts to flow, according to four sources familiar with ties between Tehran and the group.

A cash infusion to Hezbollah could help it recover from heavy wartime losses and deliver a setback to Israel, which dealt the Iran-backed group crushing blows in a 2024 war and has campaigned against sanctions relief for Tehran. The U.S.-Iranian memorandum of understanding (MoU), due to be signed on Friday, is expected to halt hostilities across all fronts, mediator Pakistan has said, although its terms have not been made public.

The ‌halt to fighting -- at Iran's insistence -- includes Lebanon, where Hezbollah fired at Israel in solidarity with Tehran on March 2, igniting an Israeli offensive that has killed thousands and led Israel to invade the south, in a conflict that has unfolded in parallel to the wider U.S.-Iran confrontation. The situation in south Lebanon remains volatile. Iran warned Israel on Tuesday to expect an Iranian military response if it didn't stop attacks in the south, where Israel has said it will keep troops and violence, albeit much reduced, has continued.

The ceasefire in Lebanon leaves Hezbollah politically emboldened after two years of setbacks, including the fall of Hezbollah's Syrian ally Bashar al-Assad in December, 2024. It also corners ‌Lebanon's U.S.-backed government, which failed in its own efforts to secure a broader ceasefire in face-to-face talks with Israeli officials in Washington over the past two months as a pathway to curbing Hezbollah's military role.

Hezbollah, a Shi'ite Muslim group designated a terrorist organisation by Washington, has been armed and financed by Tehran since it ‌was founded by the Revolutionary Guards in 1982. US SAYS NO UNFREEZING OF FUNDS FOR 'ANY TERROR ORGANISATION'

Two regional diplomats briefed by Tehran said Iran had assured the group it would receive more funds once assets are unfrozen, while a senior Lebanese source said Iran had promised funds as soon as possible, and another Lebanese source said Iran was expected to boost support. None of the sources gave figures. Hezbollah's media office said Iran had publicly announced its support to Hezbollah and that help was continuing.

Asked whether Hezbollah would receive a share of released Iranian funds, the media office told Reuters Tehran would continue to support Lebanon "regardless of the details of the retrieval of its funds". A U.S. official said Washington had told Iran "funds will not be unfrozen if they are going to any terror organization".

"The MoU ⁠also incentivizes Iran to ​keep proxy groups in check, as if they fail to do so, they will ⁠be unable to access any benefits of the agreement," the official said. The Israeli prime minister's office and Iran's foreign ministry did not respond to requests for comment.

Iran has maintained financial support to Hezbollah through years of crippling U.S. sanctions: it transferred $1 billion to the group in the first 10 months of 2025, according to the U.S. Treasury Department. PRICE OF WAR

The war has inflicted huge costs on Lebanon: ⁠Israeli forces have uprooted a fifth of the population and razed southern villages, saying Hezbollah operates from civilian areas. Reflecting squeezed finances, Hezbollah said in May it has had to cut back on cash payments. Earlier this month, the group offered assistance of $200 to displaced families -- the first cash aid it has offered during the war, recipients said.

Mohanad Hage Ali of the Carnegie ​Middle East Center, a think-tank, said a big injection of Iranian cash would be "a game changer" for Hezbollah, allowing it to aid constituents and repair frayed political alliances in Lebanon. He expected the issue of Hezbollah's disarmament would "take a backseat", noting Hezbollah could cite Israeli occupation as justification for staying armed. ⁠He called Hezbollah a strategic asset for Iran that Tehran was unlikely to give up.

Iran is pressing for an Israeli withdrawal from Lebanon -- its foreign minister said on Tuesday Israel's continued troop presence in Lebanon would be considered a breach of the MoU. Hezbollah believes Iran will not sign a final nuclear deal with Washington unless Israel withdraws from Lebanon.

Iran's push for a Lebanon ceasefire and its 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 criticised Iran earlier this month, accusing it of using Lebanon as a bargaining chip in its talks with the U.S. But on Monday, he spoke to Iran's foreign minister and welcomed the MoU.

Andreas Krieg, at the School of Security Studies at King's College, London, said Israeli withdrawal "can realistically only be achieved through diplomacy", raising the question of what concessions Hezbollah might be willing to offer. Israel wants the dismantlement of Hezbollah, but the group rules out disarming.

Krieg said a more plausible formula for resolving that impasse would be some ⁠form of demilitarisation of south Lebanon in return for Israeli withdrawal. Past ceasefires have required Hezbollah to have no fighters in the area between Israel and the Litani River, which flows east to west across the south. The Hezbollah media office said the group could not discuss its arms while Israeli troops are ⁠in Lebanon.

BOLSTERING RESISTANCE NARRATIVE Hezbollah assessed that joining the war would put Lebanon on the agenda of ⁠U.S.-Iranian talks and that Iran could secure a more robust ceasefire than the one that ended the previous conflict in November 2024, Hezbollah officials have said.

Israel continued to attack Hezbollah members after that ceasefire while the group held fire. Hezbollah's media office said Israel could not return to the pre-March 2 situation "without there being a response".

It also reiterated its demand for the government to retract a decision banning its military activities. Nick Blanford, a senior fellow with the Atlantic Council think-tank, said Israeli ‌occupation had revitalised "Hezbollah's resistance narrative and it's going to ‌be very difficult for the government to move against Hezbollah now, particularly if fighting flares up again". (Additional reporting by Gram Slattery in Washington, Jihed Abidellaoui in Beirut, Rami Ayyub ​in Jerusalem; Writing by Tom Perry, Editing by Alex Richardson and William Maclean)