The Pillars of ISIS’s Economy Have Collapsed

Note– In the global history of terrorism, which has very ancient roots, no terrorist network has ever reached financial resources at the level of the entity known as the “Islamic State of Iraq and the Levant” (ISIS). However, ISIS’s overflowing treasury did not last long, and following the defeats inflicted on this organization over the past year, which ultimately led to the liberation of the major city of Mosul in Iraq, its financial resources have also severely declined. Today it can be said with certainty that the backbone of this self-proclaimed state’s “economy” has been completely broken.

The emergence and survival of a terrorist group is intertwined with financial resources. Terrorists need money to protect themselves from pursuit and arrest, as well as to move around, provide food and shelter, and most importantly, to acquire weapons and explosives. Maintaining a terrorist network in a city and a region over a relatively prolonged period (the September 11, 2001 terrorists or those responsible for the extensive operations in Paris in November 2015) requires substantial financial resources, the provision of which is not an easy task.

When a terrorist organization permanently and systematically establishes itself in a territory and takes control of it (al-Qaeda’s establishment in Taliban-controlled Afghanistan or ISIS’s establishment in Iraq and Syria), costs increase astronomically. At its peak of power, ISIS controlled a population of eight million people in a relatively vast territory.

Under these circumstances, this terrorist organization operates like a state, establishing ministries, appointing governors and administrators, maintaining thousands of salaried employees, and its military expenses reach their peak. Let us not forget that ISIS, to prove its “statehood,” resorted to the most important symbol of sovereignty: “minting currency.” In fact, this terrorist organization, imitating the monetary system of the Umayyad caliphate, circulated gold, silver, and copper coins in the territories under its control, hoping that one day these coins would end the “imperialist” dominance of the dollar.

How was the budget of such an extensive apparatus financed? Before ISIS faced large-scale attacks in Mosul and Raqqa, it financed its budget mainly from eight primary sources:

One) Oil – At the height of ISIS’s power, 25 to 35 percent of this organization’s financial resources came from the sale of oil extracted from approximately eight to ten oil fields in Iraq and Syria that were under this organization’s control.

To manage the fields, refineries, and oil-related commercial affairs, ISIS created an organizational structure similar to a real national oil company, composed of some former Syrian and Iraqi oil personnel and even experts from outside the region who were hired at high salaries to serve this organization. ISIS sold its oil at prices far below market rates to customers, particularly in Syria and Iraq and neighboring countries, and in this domain utilized the infrastructure that the Saddam Hussein regime had created during the sanctions period.

Before ISIS’s oil fields and facilities were destroyed under pressure from “coalition” attacks and a large portion of the “Islamic Caliphate’s” territories were lost, this organization’s oil revenues were estimated at two to four million dollars per day.

Two) Taxation – ISIS, which considers itself a state, levies taxes on the population living in the territories under its control. This includes taxes on consumption, telecommunications services, truck transit fees, the jizya tax from “people of the book,” and so forth. Of course, given the poverty prevalent in these territories, revenues from this source were likely not substantial.

Three) Confiscation of People’s Property – Property of people fleeing from areas under ISIS’s control or those accused of violating laws imposed by this organization is seized. At the height of its power, ISIS confiscated large portions of agricultural land as well as people’s movable and immovable property in territories under its control, and obtained substantial revenues from their exploitation or sale.

Four) Financial Assistance – Regarding direct financial aid to ISIS from certain states, contradictory reports exist. On the other hand, there is no doubt that wealthy individuals from Persian Gulf Arab countries have contributed to ISIS’s emergence and rise through financial assistance. It is even said that assistance from this source was initially the most important source of financing for this organization.

Five) Hostage-Taking – Kidnapping citizens of Western countries and representatives of international organizations and releasing them in exchange for substantial sums has been another source of ISIS’s income over the past few years.

Six) Bank Looting – In all cities captured by ISIS, money in bank branches fell into this organization’s hands. The most significant prize that reached ISIS’s treasury through this means was obtained with the conquest of Mosul in spring 2014. It is said that approximately five hundred million dollars were looted by ISIS from the Central Bank of Iraq’s branch in this city.

Seven) Sale of Human Organs – Both Iraqi medical sources and the United Nations Office of the High Commissioner for Human Rights state that ISIS profits from the sale of organs from prisoners, executed individuals, and wounded fighters.

Eight) Sale of Antiquities – The ISIS organization showcases the destruction of historical structures in its propaganda videos. Today it can be said with certainty that before using explosives on these structures, portions of them that appeared to be saleable were separated from the whole and placed in the hands of other mafia networks specializing in the sale of historical artifacts.

With the liberation of Mosul from ISIS’s grip, the self-proclaimed Islamic Caliphate has reached the final stages of collapse, and compared to the height of its expansion, has lost more than sixty percent of the territories under its control. Simultaneously with this significant retreat, the financial resources of this terrorist organization have also collapsed dramatically.

According to sources aware of ISIS’s financial capabilities (including IHS Markit), this organization’s revenues have decreased by four-fifths over the past two years. Given the loss of territories and the destruction of oil fields due to airstrikes, this organization’s revenues from oil have dropped to one-tenth of their previous level. Under financial pressure, ISIS has significantly reduced the salaries of its fighters.

The collapse of economic resources, like heavy military defeats, signals the complete collapse of the self-proclaimed Islamic Caliphate in the near future. Of course, this collapse does not mean the end of ISIS terrorism. There is a risk that, at least in the short term, the fighters of the defeated ISIS state may intensify their terrorist attacks. However, due to the drying up of this organization’s financial sources, it seems unlikely that these attacks will continue for long.

Source: Radio Farda