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Finances of the Islamic State

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Since 2012, the Islamic State (IS) 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.[1][2]

In 2014, the RAND Corporation analyzed IS's funding sources by studying Bharatpur 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.[3] 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.[3] 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.[3] 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.[3]

In mid-2014, the Iraqi National Intelligence Service obtained information from an IS operative which revealed that the organisation had assets worth US$2 billion,[4] making it the richest jihadist group in the world.[5] 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.[6][7] However, doubt was later cast on whether IS was able to retrieve anywhere near that sum from the central bank,[8] and even on whether the bank robberies had actually occurred.[9]

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

  • proceeds from the occupation of territory (including control of banks, oil and gas reservoirs, taxation (including zakat), extortion, and theft of economic assets)
  • taxation of the non Muslim population (jizya)[10]
  • kidnapping for ransom[11]
  • donations by or through non-profit organizations
  • material support provided by foreign fighters
  • fundraising through modern communication networks[12]

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

The United States Department of State's Rewards for Justice offers US$5 million for information leading to the disruption of the sale and/or trade of oil and antiquities by IS.[14]

Oil revenues

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

Exporting oil extracted from captured oilfields has brought in tens of millions of dollars for the Islamic State.[15][16][17] A US Treasury official estimated in 2014 that IS earned US$1 million a day from the export of oil, much of which was sold illegally in Turkey.[18] The same year, Dubai-based energy analysts put the combined oil revenue from IS's Iraqi-Syrian production as high as US$3 million per day.[19] An accurate estimate of the Islamic State's true revenue from oil is difficult, as black market sales are difficult to trace.[20]

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). Despite controlling large amounts of oil reserves and production facilities, IS lacked the "resources and technical capacities" to effectively utilize them.[21] IS earned US$2.5 million a day by selling 50,000–60,000 barrels of oil daily.[18][22] Foreign sales relied 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 also helped IS to export oil and import cash.[4][22][23]

In 2015, after the fall of Tikrit, IS lost control of three large oil fields.[24] Air strikes by the US-led coalition fighting IS and in the wake of the terror attacks in Paris, destroyed hundreds of trucks the Islamic State had been using to transport its oil.[25][26] A study by the Center for Development and Strategy showed this was the preferred method of reducing IS's revenue, while minimizing total impact.[27]

Other energy sales include selling electric power from captured power plants in northern Syria; some of this electricity was sold back to the Syrian government.[28]

Sale of antiques and artifacts

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See also: Destruction of cultural heritage by the Islamic State

Sales of artifacts may be the second largest source of funding for IS.[22] More than a third of Iraq's important sites were under IS'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 Stony Brook University, has said that IS is "looting... the very roots of humanity, artefacts from the oldest civilizations in the world".[22] It is difficult to accurately measure the revenue from artifacts, as they are primarily sold on the black market, but National Geographic estimates it may be in the tens of millions USD. As well as selling artifacts themselves, IS taxes traffickers smuggling them across IS's territory.[29]

Taxation and extortion

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IS extracts wealth through taxation and extortion.[18][30] Regarding taxation, Christians and foreigners are at times required to pay a tax known as jizya. The rate of jizya is determined by the income of the person, and it also serves as a protection contract involving harsh restrictions on non-Muslims. This tax has a historical foundation in the Quran and the original caliphate as a way to bring non-Muslims under the control of the spreading Empire.[31]

The Islamic State has issued several taxes in an effort to control the assets acquired by its fighters in battle. According to the Quran, one-fifth of the ghanima, or the spoils of war taken by Islamic State's fighters, must be given to the state, and IS is believed to be collecting this tax, known as khums, in Mosul. All fighters for Islamic State also pay tax on property taken as spoils of war. As well as these spoils of war, property taken peacefully, known as fay', is subject to a 20 percent tax. These taxes serve the dual purpose of bringing in revenue for the state while maintaining strict control over its fighters.[32]

While frowned upon, professions other than fighting jihad are necessary for the running of the state. Those who take up these professions must pay zakat, usually a 2.5% tax on an individual's total assets. Islamic State has also put in place the 'ushr tariff on imports and exports from their territory. All of these taxes imposed by Islamic State have some form of Quranic or historical basis except for the fay', giving the administration freedom of interpretation that could explain its higher rate.[33]

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.[34] The Iraq government indirectly finances IS, as it continues to pay the salaries of the thousands of government employees who continue to work in areas controlled by IS, which then confiscates as much as half of those Iraqi government employees' pay.[35] 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]

Illegal drug trade

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Political scientist Colin P. Clarke of the RAND Corporation, writing after the end of the 2016–2017 Battle of Mosul in July 2017, stated that with IS's territorial losses causing declines in the organization's revenue from taxation of the local populations it once controlled, as well as from extortion from oil, gas, phosphate, and cement production, that the group would likely seek new revenue streams from drug trafficking.[36]

Agriculture

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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, and the UN Food and Agricultural Organization believes that 40% of Iraq's wheat-producing land is under IS control.[37][13] It is believed that IS confiscates wheat and barley crops as zakat, as well as farming equipment that is then rented back to farmers. The organization maintains strict control over the production and distribution of crops, effectively setting prices.[37]

Donations from Arab States of the Persian Gulf

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Further information: Response of Saudi Arabia to the Islamic State

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 IS, 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 IS, are believed to be channelling their resources to support these organisations.[38][39] 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 IS and al-Qaeda-linked groups now comes from Qatar rather than Saudi Arabia.[40]

In August 2014, a German minister Gerd Müller accused Qatar of having links to IS, stating "You have to ask who is arming, who is financing ISIS (IS) troops. The keyword there is Qatar". Qatari foreign minister Khalid bin Mohammad Al Attiyah stated: "Qatar does not support extremist groups, including [IS], in any way. We are repelled by their views, their violent methods and their ambitions."[41][42][43][44]

Website The Daily Beast in June 2014 accused wealthy donors in Saudi Arabia and Qatar of having funded IS in the past.[45][46] Iran and Iraqi Prime Minister Nouri al-Maliki have accused the governments of Saudi Arabia and Qatar of funding the group.[47][45][48] Ahead of the pro-Iraq, anti-IS conference held in Paris on 15 September 2014, France's foreign minister acknowledged that a number of countries at the table had "very probably" financed IS's advances.[49] According to The Atlantic, IS may have been a major part of Saudi Arabian Bandar bin Sultan's covert-ops strategy in Syria.[50]

There are sources,[which?] however, that stress that there is no evidence that IS has direct support from the Saudi government, and that such support would contradict the Saudi state's other actions regarding the group.[51][52][48] Saudi Arabia considers IS 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 IS and retake territory in Syria and Iraq.[53][54] Saudi Arabia has also developed its own counter-propaganda efforts in response to IS's recruitment.[55]

Unregistered charity organisations act as fronts to pass funds to IS; they disguise fundings for IS'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.[22]

Julian Assange claimed in an interview that Hillary Clinton's Clinton Foundation and IS both receive funding from the same sources in the Middle East.[56]

References

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  1. ^ Khalaf, Roula; Jones, Sam (17 June 2014). "Selling terror: how Isis details its brutality". Financial Times. Retrieved 18 June 2014.
  2. ^ Matthews, Dylan (24 July 2014). "The surreal infographics ISIS is producing, translated". Vox. Retrieved 25 July 2014.
  3. ^ 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.
  4. ^ a b Chulov, Martin (15 June 2014). "How an arrest in Iraq revealed Isis's $2bn jihadist network". The Guardian. Retrieved 17 June 2014.
  5. ^ 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.
  6. ^ 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.
  7. ^ 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.
  8. ^ "U.S. Official Doubts ISIS Mosul Bank Heist Windfall". NBC News. 24 June 2014. Retrieved 22 July 2014.
  9. ^ 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.
  10. ^ Sly, Liz (October 2015). "They freed a Syrian town from ISIS. Now they have to govern it". Washington Post.
  11. ^ "Inside the Islamic State kidnap machine". BBC News. 2015-09-22. Retrieved 2016-10-09.
  12. ^ "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant" (PDF). Financial Action Task Force. February 2015. Retrieved 19 April 2015.
  13. ^ a b c Simpson, Cam; Philips, Matthew (19 November 2015). "Why ISIS has all the money it needs". Bloomberg Business. Retrieved 19 November 2015.
  14. ^ "Trafficking in Oil and Antiquities Benefitting the Islamic State of Iraq and the Levant (ISIL)". Rewards for Justice. Archived from the original on 2019-08-01. Retrieved 2020-01-04.
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  16. ^ Gardner, Frank (9 July 2014). "'Jihadistan': Can Isis militants rule seized territory?". BBC News. Retrieved 17 August 2014.
  17. ^ Karouny, Mariam (4 September 2014). "In northeast Syria, Islamic State builds a government". Reuters.
  18. ^ a b c Bronstein, Scott; Drew Griffin (7 October 2014). "Self-funded and deep-rooted: How ISIS makes its millions". CNN.
  19. ^ Leigh, Karen (2 August 2014). "ISIS Makes Up To $3 Million a Day Selling Oil, Say Analysts". ABC news. Retrieved 8 October 2014.
  20. ^ "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL)," 14.
  21. ^ "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL)," 13.
  22. ^ 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.
  23. ^ Solomon, Erika (28 April 2014). "Syria's jihadist groups fight for control of eastern oilfields". Financial Times. Retrieved 17 June 2014.
  24. ^ "ISIS revenues hit after it loses 'large oil fields' in Iraq". Al Arabiya. Agence France-Presse. 9 April 2014. Retrieved 10 April 2015.
  25. ^ "U.S., allies target 283 Islamic State vehicles, oil facility - statement". Reuters. 23 November 2015. Archived from the original on December 8, 2015. Retrieved 30 November 2015.
  26. ^ Gordon, Michael R. (16 November 2015). "U.S. Warplanes Strike ISIS Oil Trucks in Syria". nytimes.com. Retrieved 16 November 2015.
  27. ^ Harary, David (November 16, 2016). Environmental Decisions in the Context of War: Bombing ISIL's Oil (PDF). Buffalo, NY: Center for Development and Strategy. Retrieved 16 November 2016.
  28. ^ Fisher, Max (12 June 2014). "How ISIS is exploiting the economics of Syria's civil war". Vox. Retrieved 17 June 2014.
  29. ^ ----- "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL)," Financial Action Task Force, 2015, 16-17.
  30. ^ 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)
  31. ^ Revkin, Mara, "The Legal Foundations of the Islamic State," The Brookings Project on U.S. Relations with the Islamic World, July 2016, 16; Gordon, Matthew S. The Rise of Islam. Indianapolis: Hackett Publishing Company, 2005.
  32. ^ Revkin, 20.
  33. ^ Revkin, 20-21.
  34. ^ Lister, Tim (13 June 2014). "ISIS: The first terror group to build an Islamic state?". CNN. Retrieved 14 June 2014.
  35. ^ Peritz, Aki (4 February 2015). "How Iraq Subsidizes Islamic State". The New York Times. Retrieved 25 February 2015.
  36. ^ Clarke, Colin P. (July 24, 2017). "ISIS Is So Desperate It's Turning to the Drug Trade". Fortune. Meredith Corporation. Retrieved August 29, 2018.
  37. ^ a b "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL)," 15.
  38. ^ "Qatar and ISIS Funding: The U.S. Approach". The Washington Institute. August 2014. Retrieved 8 May 2015.
  39. ^ "Islamic State: Where does jihadist group get its support?". BBC. 1 September 2014. Retrieved 8 May 2015.
  40. ^ "Qatar Is a U.S. Ally. They Also Knowingly Abet Terrorism. What's Going On?". New Republic. 6 October 2014. Retrieved 8 May 2015.
  41. ^ "German minister accuses Qatar of funding Islamic State fighters". Reuters. 20 August 2014. Retrieved 8 May 2015.
  42. ^ "Qatar allows money to flow to Islamic State, other terrorists: report". Washington Times. 10 December 2014. Retrieved 8 May 2015.
  43. ^ "Who funds ISIS? Qatar and state-sponsoring allegations". Security Observer. 23 December 2014. Archived from the original on 3 June 2021. Retrieved 8 May 2015.
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  45. ^ a b Rogin, Josh (14 June 2014). "America's Allies Are Funding ISIS". The Daily Beast. Retrieved 21 September 2015.
  46. ^ 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.
  47. ^ Parker, Ned; Ireland, Louise (9 March 2014). "Iraqi PM Maliki says Saudi, Qatar openly funding violence in Anbar". Reuters.
  48. ^ 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.
  49. ^ Stanglin, Doug (15 September 2014). "As summit strategizes on ISIL, French jets fly over Iraq". USA Today.
  50. ^ Clemons, Steve (23 June 2014). "'Thank God for the Saudis': ISIS, Iraq, and the Lessons of Blowback". The Atlantic. Retrieved 9 October 2014.
  51. ^ Carey, Glen; Almashabi, Deema (16 June 2014). "Jihadi Recruitment in Riyadh Revives Saudi Arabia's Greatest Fear". Bloomberg News. Retrieved 17 June 2014.
  52. ^ Black, Ian (19 June 2014). "Saudi Arabia rejects Iraqi accusations of Isis support". The Guardian. Retrieved 19 June 2014.
  53. ^ Lister, Charles (October 14, 2014). "Cutting off ISIS' Cash Flow". Brookings Institution. Retrieved 29 January 2016.
  54. ^ "ISIS / Caliphate - Funding and Strength". globalsecurity.org/. Retrieved January 29, 2016.
  55. ^ "Saudi Arabia launches TV programme to counter ISIL recruitment". [arabianbusiness.com]. 27 August 2015. Retrieved 27 August 2015.
  56. ^ "Clinton foundation received money from ISIS funders: Assange". Business Standard. Retrieved 5 November 2016.
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