09.01.2015 Author: Natalia Rogozhina

ISIS and its riches

66666999ISIS’s ability to control a large territory in Syria and Iraq, to recruit new allies, to maintain a big functioning army of 31 31,000 soldiers (according to other sources, this number is twice as bigger), to successfully carry out military and terrorist operations and to extend its authority in the world, can be largerly explained by its financial strength.

In contrast to al-Qaeda, which exists only because of the support of financial donors, the ISIS’s leadership havehas taken up a different financial strategy, which focuses on the financial self-reliance and independence from a potentially vulnerable external funding. This, however, does not exclude such sources of money as a stable flow of funds from individual sponsors (especially from Kuwait), who transferred millions of dollars to extremist organisations in Syria in 2012-2013. But this inflow of money has recently reduced. Today there is no reliable information indicating that Kuwait, Qatar, United Arab Emirates and Saudi Arabia provide financial support to ISILISIS at the state level. Although previously some experts have admitted the opposite. And Iraqi government shares this opinion. The inflow of funds from abroad does not play a crucial role in the life support of this terrorist organisation.

ISILISIS is not only the richest organisation in the recent history of terrorist movements, but also a successful financial enterprise which it manages in the similar way to the mafia organisations. It is engaged in smuggling, extortion, robbery, kidnapping and selling women into slavery.

Then what are the sources of ISIS’s riches, which that now are estimated at $2 billion  – There are several of them. First and foremost, this is oil smuggling from oil fields which are situated on its territories in Syria and Iraq. According to the Iraqi Energy Institute, the army of radical Islamists controlarmy of radical Islamists controls the extraction of 30 30,000 barrels of oil a day in Iraq and 50,000 in Syria. For comparison, in August 2014 Iraq exported 2.4 million barrels of oil a day. Illigal sale of oil on the black market brings the organisation $2-4 million on a daily basis , or about $100 million per month. The ois oil is transported by roads to the border with Turkey and then is selled sold at dumping prices – $25 per barrel in the volume of 9 9,000 barrels a day. Among the buyers are the middlemen from Turkey, Syria, Kurdistan and even Iran.

Oil smuggling is nothing new in this region. The process was set up back in the times of Saddam Hussein, and ISILISIS now actively uses the smuggling network established in these places.

Robbery is a constant source of money for the terrorists. When ISIS appropriated the monetary assets of the Central Bank in Mosul, it immediately became richer by $429 million. To the stability of money inflow contribute is maintained by such means as systemic extortion of money from small businessmen and big companies, for example, construction ones, and even from the representatives of the local administration. ISIS also imposed taxes on non-Muslims who live on its territory, and after ISIL declared declaring caliphate, it introduced customs duty on transportation in the western part of Iraq.

According to the Iraqi intelligence agencies, kidnapping for financial gains brought $25 million to the treasury of ISIS. Despite the denial from the French side, there is information, according to which in April 2014 ISIS was paid a ransom of $18 million for 4 kidnapped Frenchmen. The plundering and smuggling of antiques have given the terrorist $38 million. ISIS also got large quantities of weapons and military vehicles which the US havehas “left” to the Iraqi military.

Money and material values earned illegally enable ISIS to conduct a full-scale terrorist activity, hold under its control the population of the captured territories, to attract numerous adherents of the idea of creation creating of a caliphate, 15 15,000 people from 90 countries of the world fight on its side, and this is without the inclusion of those who support the organisation in the fieldat the local level. One of the leaders of Indonesian jihadists, who pledged allegiance to ISIS, has made it clear that he expects to have a share of the ISIS’s riches in order to strengthen its position in the country. That is why the expenses of the richest terrorist organisation in the world are comparable to its income.

ISIS’s army is, largely, a group of mercenaries who monthly receive a fee in the amount of $600, it can be increased in proportion to the number of family members of a fighter (they often come with families frorm other regions of the world). The financial support does not stop even in case of the fighter’s depthdeath. Money are is also spent on the purchase of high-quality weapons, health services to militants, the maintenance of safe houses, as well as on the management of the territory, water and electricity supply and, finally, the maintenance of the road infrastructure.

Taking into account the financial strength of ISIS, the struggle against it presupposes the measures which could limit the inflow of money to the ISIS. American experts think that alongside the air strikes on the oil fields, oil production enterprises and the routes of oil smuggling, it is necessary to call on the Treasury Department of the US to join the counter-terrorist activity, so that it would be responsible for the control over the sources of financing of ISIS. In particular, it would be responsible for the track of middlemen and buyers engaded engaged in the criminal operations of oit oil smuggling, for the isolation of ISIS from the international financial system, first of all by blocking the operation of banks situated on the territories captured by the terrorists in Iraq and Syria, to reach international consensus on the issue of denial of ransom for the hostages taken by terrorists.

These measures are not only hard to be implemented on practice, but they would not have any positive effect unless till there is a legal order recognized by everyone in IrakIraq and Syria. And until then ISIS will be able to “line its pockets” with money which will enable it to terrorize the region and the whole world for a long time to come.

Natalia Rogozhina, PhD in Political Science, Head Research, Institute of World Economy and International Relations, Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.


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