The U.S. Treasury imposed sanctions on three top officials from Iran-backed Hezbollah on Tuesday: Amin Sherri and Muhammad Raad, members of Lebanon's parliament, as well as Wafiq Sada, who coordinates with Lebanon's security agencies.
It marks the first time the U.S. Treasury has designated a Lebanese MP under a sanctions list targeting those accused of supporting terrorist organizations. U.S. Secretary of State Mike Pompeo said the sanctions were part of efforts to counter Hezbollah's "corrupting influence" in Lebanon.
Washington classifies Hezbollah, a heavily armed Shi'ite political and military movement that wields major influence in Lebanon, as a terrorist group.
"It is an assault on the parliament and as a result an assault on all of Lebanon," Berri, a Shi'ite ally of Hezbollah, said in a statement.
Lebanon's dollar-denominated sovereign bonds fell and the cost of insuring exposure to its debt rose on Wednesday after the sanctions.
Meanwhile, 5-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."
Hezbollah MP Ali Fayyad told Lebanese al-Jadeed TV the move was "an insult to the Lebanese people" and a blow to the country's sovereignty.