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Finances of the Islamic State

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The finances of the Islamic State of Iraq and the Levant have come into focus as many countries wage war against the militant group.

According to a 2015 study by the Financial Action Task Force, ISIL's five primary sources of revenue are as followed (listed in order of significance):

  • proceeds from the occupation of territory (including control of banks, oil and gas reservoirs, taxation, extortion, and robbery of economic assets)
  • kidnapping for ransom
  • private donations from Saudi Arabia and Gulf states, often disguised as meant for "humanitarian charity." Allegations have been made that the Saudi government has directly supported ISIL, but experts remain uncertain, especially considering the Saudi state's own conflicts with the group.[1][2]
  • material support provided by foreign fighters
  • fundraising through modern communication networks[3]

In 2014 the RAND Corporation analyzed ISIL’s funding sources by studying 200 documents — personal letters, expense reports and membership rosters — captured from the Islamic State of Iraq (which included al-Qaeda in Iraq) by US Forces in Iraq between 2005 and 2010.[4] It found that over this period, outside donations amounted to only 5% of the group’s operating budgets, with the rest being raised within Iraq.[4] In the time period studied, cells were required to send up to 20% of the income generated from kidnapping, extortion rackets and other activities to the next level of the group's leadership. Higher-ranking commanders would then redistribute the funds to provincial or local cells which were in difficulties or which needed money to conduct attacks.[4] The records show that the Islamic State of Iraq depended on members from Mosul for cash, which the leadership used to provide additional funds to struggling militants in Diyala, Salahuddin and Baghdad.[4]

In mid-2014, Iraqi intelligence obtained information from an ISIL operative which revealed that the organisation had assets worth US$2 billion,[5] making it the richest jihadist group in the world.[6] About three-quarters of this sum is said to be represented by assets seized after the group captured Mosul in June 2014; this includes possibly up to US$429 million looted from Mosul’s central bank, along with additional millions and a large quantity of gold bullion stolen from a number of other banks in Mosul.[7][8] However, doubt was later cast on whether ISIL was able to retrieve anywhere near that sum from the central bank,[9] and even on whether the bank robberies had actually occurred.[10]

Since 2012, ISIL has produced annual reports giving numerical information on its operations, somewhat in the style of corporate reports, seemingly in a bid to encourage potential donors.[11][12]

A 2015 analysis also contends that ISIL's financial strength is in a large part due to "fanatical spending discipline".[13]

Oil revenues

Main article: Oil production in ISIL
Pictures show damage to the Gbiebe oil refinery in Syria following airstrikes by US and coalition forces.

Exporting oil from oilfields captured by ISIL has brought in tens of millions of dollars for the group.[14][15] One US Treasury official estimated that ISIL earns US$1 million a day from the export of oil. Much of the oil is sold illegally in Turkey.[16] In 2014, Dubai-based energy analysts put the combined oil revenue from ISIL's Iraqi-Syrian production as high as US$3 million per day.[17]

In 2014, the majority of the group's funding came from the production and sale of energy; it controlled around 300 oil wells in Iraq alone. At its peak, it operated 350 oil wells in Iraq, but lost 45 to foreign airstrikes. It had captured 60% of Syria's total production capacity. About one fifth of its total capacity had been in operation. ISIL earned US$2.5 million a day by selling 50,000–60,000 barrels of oil daily.[16][18] Foreign sales rely on a long-standing black market to export via Turkey. Many of the smugglers and corrupt Turkish border guards who helped Saddam Hussein to evade sanctions are helping ISIL to export oil and import cash.[5][18][19]

In April 2015, after the fall of Tikrit, ISIL apparently lost control of three large oil fields, which will have significantly degraded its ability to generate income from selling oil.[20] Air strikes, by the US-led coalition fighting ISIL, in the wake of the 2015 Paris attacks, destroyed hundreds of trucks the group had been using to transport its oil.[21][22]

Other energy sales include selling electric power from captured power plants in northern Syria; some of this electricity is reportedly sold back to the Syrian government.[23]

Sale of antiques and artifacts

See also: Destruction of cultural heritage by ISIL

Sales of artifacts may be the second largest source of funding for ISIL.[18] More than a third of Iraq's important sites are under ISIL's control. It looted the 9th century BC grand palace of the Assyrian king Ashurnasirpal II at Kalhu (Nimrud). Tablets, manuscripts and cuneiforms were sold, worth hundreds of millions of dollars. Stolen artifacts are smuggled into Turkey and Jordan. Abdulamir al-Hamdani, an archaeologist from SUNY Stony Brook, has said that ISIL is "looting... the very roots of humanity, artefacts from the oldest civilizations in the world".[18]

Taxation and extortion

ISIL extracts wealth through taxation and extortion.[16][24] Regarding taxation, Christians and foreigners are at times required to pay a tax known as jizya. In addition, the group routinely practices extortion, by demanding money from truck drivers and threatening to blow up businesses, for example. Robbing banks and gold shops has been another source of income.[25] The Iraq government indirectly finances ISIL, as it continues to pay the salaries of the thousands of government employees who continue to work in areas controlled by ISIL, which then confiscates as much as half of those Iraqi government employees' pay.[26] Policemen, teachers, and soldiers who had worked for religiously inappropriate regimes are reportedly allowed to continue work if they pay for a repentance ID card that has to be annually renewed.[13]

ISIL has announced by video a new currency, the Islamic Dinar and a gold dinar, but the US dollar is the de facto currency used in its zones.[citation needed]

Illegal drug trade

According to Victor Ivanov, head of the Russian anti-drug agency, Islamic State, like Boko Haram, makes money through trafficking Afghan heroin through its territory.[27] The annual value of this business may be up to $1 billion.[27]

Agriculture

The acreage between Tigris and Euphrates has produced half of Syria's annual wheat crop and a third of Iraq's. It is able to produce crops worth possibly US$200 million per year if properly managed.[13]

Donations by Saudi Arabia and Gulf states

Further information: Response of Saudi Arabia to ISIL

Website The Daily Beast in June 2014 accused wealthy donors in Saudi Arabia, Kuwait and Qatar of having funded ISIL in the past.[28][29] Iran and Iraqi Prime Minister Nouri al-Maliki have accused the governments of Saudi Arabia and Qatar of funding the group.[30][28][31] Ahead of the pro-Iraq, anti-ISIL conference held in Paris on 15 September 2014, France's foreign minister acknowledged that a number of countries at the table (the Saudis, Qatar and Kuwait were present) had "very probably" financed ISIL's advances.[32] According to The Atlantic, ISIL may have been a major part of Saudi Arabian Bandar bin Sultan's covert-ops strategy in Syria.[33]

There are sources, however, that stress that there is no evidence that ISIL has direct support from the Saudi government, and that such support would contradict the Saudi state's other actions regarding the group.[34][35][31] Saudi Arabia considers ISIL an enemy that has carried out attacks on their soil. They have worked openly with the United States in the arming other rebel groups the US hopes will fight ISIL and retake territory in Syria and Iraq.[1][2] Saudi Arabia has also developed its own counter-propaganda efforts in response to ISIL's recruitment.[36]

Unregistered charity organisations act as fronts to pass funds to ISIL; they disguise fundings for ISIL's operations as donations for "humanitarian charity". As they use aliases on Facebook's WhatsApp and Kik, the involved individuals and organisations are difficult to trace. Saudi Arabia therefore has imposed a blanket ban on unauthorised donations destined for Syria in order to stop such funding.[18]

Allegations of Qatari support

See also: Qatar and state-sponsored terrorism

The State of Qatar has long been accused of acting as a conduit for the flow of funds to the Islamic State of Iraq and the Levant. While there is no proof that the Qatari government is behind the movement of funds from the gas-rich nation to ISIL, it has been criticized for not doing enough to stem the flow of financing. Private donors within Qatar, sympathetic to the aims of radical groups such as al-Nusra Front and ISIL, are believed to be channeling their resources to support these organisations.[37][38] According to the U.S. Treasury Department, a number of terrorist financiers have been operating in Qatar. Qatari citizen Abd al Rahman al Nuaymi has served as an interlocutor between Qatari donors and leaders of al-Qaeda in Iraq (AQI). Nuaymi reportedly oversaw the transfer of US$2 million per month to AQI over a period of time. Nuaymi is also one of several of Qatar-based al-Qaeda financiers sanctioned by the U.S.Treasury in recent years. According to some reports, U.S. officials believe that the largest portion of private donations supporting ISIS and al-Qaeda-linked groups now comes from Qatar rather than Saudi Arabia.[39]

In August 2014, a German minister Gerd Müller accused Qatar of having links to ISIL, stating "You have to ask who is arming, who is financing ISIS (ISIL) troops. The keyword there is Qatar". Qatari foreign minister Khalid bin Mohammad Al Attiyah reiterated this stance when he stated: "Qatar does not support extremist groups, including [ISIL], in any way. We are repelled by their views, their violent methods and their ambitions."[40][41][42][43]

References

  1. ^ a b Lister, Charles (October 14, 2014). "Cutting off ISIS' Cash Flow". Brookings Institution. Retrieved 29 January 2016.
  2. ^ a b "ISIS / Caliphate - Funding and Strength". globalsecurity.org/. Retrieved January 29, 2016.
  3. ^ "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant" (PDF). Financial Action Task Force. February 2015. Retrieved 19 April 2015.
  4. ^ a b c d Allam, Hannah (23 June 2014). "Records show how Iraqi extremists withstood U.S. anti-terror efforts". McClatchy News. Retrieved 25 June 2014.
  5. ^ a b Chulov, Martin (15 June 2014). "How an arrest in Iraq revealed Isis's $2bn jihadist network". The Guardian. Retrieved 17 June 2014.
  6. ^ Moore, Jack (11 June 2014). "Mosul Seized: Jihadis Loot $429m from City's Central Bank to Make Isis World's Richest Terror Force". International Business Times. UK. Retrieved 19 June 2014.
  7. ^ McCoy, Terrence (12 June 2014). "ISIS just stole $425 million, Iraqi governor says, and became the 'world's richest terrorist group'". The Washington Post. Retrieved 18 June 2014.
  8. ^ Carey, Glen; Haboush, Mahmoud; Viscusi, Gregory (26 June 2014). "Financing Jihad: Why ISIS Is a Lot Richer Than Al-Qaeda". Bloomberg News. Retrieved 19 July 2014.
  9. ^ "U.S. Official Doubts ISIS Mosul Bank Heist Windfall". NBC News. 24 June 2014. Retrieved 22 July 2014.
  10. ^ Daragahi, Borzou (17 July 2014). "Biggest bank robbery that 'never happened' – $400m Isis heist". Financial Times. Retrieved 21 July 2014.(subscription required) Accessible via Google.
  11. ^ Khalaf, Roula; Jones, Sam (17 June 2014). "Selling terror: how Isis details its brutality". Financial Times. Retrieved 18 June 2014.
  12. ^ Matthews, Dylan (24 July 2014). "The surreal infographics ISIS is producing, translated". Vox. Retrieved 25 July 2014.
  13. ^ a b c Simpson, Cam; Philips, Matthew (19 November 2015). "Why ISIS has all the money it needs". Bloomber Business. Retrieved 19 November 2015.
  14. ^ Cite error: The named reference mesr22 was invoked but never defined (see the help page).
  15. ^ Karouny, Mariam (4 September 2014). "In northeast Syria, Islamic State builds a government". Reuters.
  16. ^ a b c Bronstein, Scott; Drew Griffin (7 October 2014). "Self-funded and deep-rooted: How ISIS makes its millions". CNN.
  17. ^ Leigh, Karen (2 August 2014). "ISIS Makes Up To $3 Million a Day Selling Oil, Say Analysts". ABC news. Retrieved 8 October 2014.
  18. ^ a b c d e di Giovanni, Janine; McGrath Goodman, Leah; Sharkov, Damien (6 November 2014). "How Does ISIS Fund Its Reign of Terror?". Newsweek.
  19. ^ Solomon, Erika (28 April 2014). "Syria's jihadist groups fight for control of eastern oilfields". Financial Times. Retrieved 17 June 2014.
  20. ^ "ISIS revenues hit after it loses 'large oil fields' in Iraq". Al Arabiya. Agence France-Presse. 9 April 2014. Retrieved 10 April 2015.
  21. ^ "U.S., allies target 283 Islamic State vehicles, oil facility - statement". Reuters. 23 November 2015. Retrieved 30 November 2015.
  22. ^ Gordon, Michael R. (16 November 2015). "U.S. Warplanes Strike ISIS Oil Trucks in Syria". nytimes.com. Retrieved 16 November 2015.
  23. ^ Fisher, Max (12 June 2014). "How ISIS is exploiting the economics of Syria's civil war". Vox. Retrieved 17 June 2014. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  24. ^ Kulish, Matthew Rosenberg, Nicholas; Myers, Steven Lee (29 November 2015). "Predatory Islamic State Wrings Money From Those It Rules". The New York Times. ISSN 0362-4331. Retrieved 30 November 2015.{{cite news}}: CS1 maint: multiple names: authors list (link)
  25. ^ Lister, Tim (13 June 2014). "ISIS: The first terror group to build an Islamic state?". CNN. Retrieved 14 June 2014.
  26. ^ Peritz, Aki (4 February 2015). "How Iraq Subsidizes Islamic State". The New York Times. Retrieved 25 February 2015.
  27. ^ a b "ISIS economy based on illegal drug trade – Russian anti-drug chief". RT. 23 July 2015. Retrieved 24 July 2015.
  28. ^ a b Rogin, Josh (14 June 2014). "America's Allies Are Funding ISIS". The Daily Beast. Retrieved 21 September 2015.
  29. ^ Cockburn, Patrick (13 July 2014). "Iraq crisis: How Saudi Arabia helped Isis take over the north of the country". The Independent. London. Retrieved 9 August 2014.
  30. ^ Parker, Ned; Ireland, Louise (9 March 2014). "Iraqi PM Maliki says Saudi, Qatar openly funding violence in Anbar". Reuters.
  31. ^ a b Bozorgmehr, Najmeh; Kerr, Simeon (25 June 2014). "Iran-Saudi proxy war heats up as Isis entrenches in Iraq". Financial Times. Retrieved 29 June 2014.
  32. ^ Stanglin, Doug (15 September 2014). "As summit strategizes on ISIL, French jets fly over Iraq". USA Today.
  33. ^ Clemons, Steve (23 June 2014). "'Thank God for the Saudis': ISIS, Iraq, and the Lessons of Blowback". The Atlantic. Retrieved 9 October 2014.
  34. ^ Carey, Glen; Almashabi, Deema (16 June 2014). "Jihadi Recruitment in Riyadh Revives Saudi Arabia's Greatest Fear". Bloomberg News. Retrieved 17 June 2014.
  35. ^ Black, Ian (19 June 2014). "Saudi Arabia rejects Iraqi accusations of Isis support". The Guardian. Retrieved 19 June 2014.
  36. ^ "Saudi Arabia launches TV programme to counter ISIL recruitment". [arabianbusiness.com]. 27 August 2015. Retrieved 27 August 2015.
  37. ^ "Qatar and ISIS Funding: The U.S. Approach". The Washington Institute. August 2014. Retrieved 8 May 2015.
  38. ^ "Islamic State: Where does jihadist group get its support?". BBC. 1 September 2014. Retrieved 8 May 2015.
  39. ^ "Qatar Is a U.S. Ally. They Also Knowingly Abet Terrorism. What's Going On?". New Republic. 6 October 2014. Retrieved 8 May 2015.
  40. ^ "German minister accuses Qatar of funding Islamic State fighters". Reuters. 20 August 2014. Retrieved 8 May 2015.
  41. ^ "Qatar allows money to flow to Islamic State, other terrorists: report". Washington Times. 10 December 2014. Retrieved 8 May 2015.
  42. ^ "Who funds ISIS? Qatar and state-sponsoring allegations". Security Observer. 23 December 2014. Retrieved 8 May 2015.
  43. ^ "Qatar denies backing Islamic State group". Al Jazeera. 24 August 2014. Retrieved 8 May 2015.
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