Carving out a caliphate costs money. Through extortion, finance, and the spoils of war has the Islamic State of Iraq and Syria (ISIS) been able to afford its military and political dominion in northern Iraq and parts of Syria. The vast revenues ISIS has managed to accrue mean it is perhaps the best-funded terrorist organisation in modern history. Its well-defined finance arm has shown ISIS to be a well organised, almost professionally run, jihadist group.
Money has a way of spreading through an organisation’s activities, allowing it flexibility across a broad range of operations. This flexibility manifests itself in the capabilities ISIS possesses: extraordinarily effective military tactics, the spread of terror to new areas, and carrot and stick political control. Militarily, ISIS has amassed a big arsenal of weaponry, taken from Iraqi and Syrian troops, but maintained and supplied by ISIS itself. Vehicles to transport troops and supplies around have been thick on the ground. Recording technology is purchased to film executions, promoting panic in regions ISIS has yet to attack. It also spreads itself around, not just intimidating local populations but also bribing them: handing out bread in the street, attempting a secondary campaign to garner support from those who agree with it. Few of those things would be possible without the funding ISIS has acquired.
There are three stages to how ISIS raises money: extracting the resources, both natural and human, available in the Middle East; extortion, including blackmail and hostage-taking, mainly targeted on hostile states; and financial arrangements and relationships with supportive states. No-one is surprised to learn that there is money in the Middle East. ISIS has shown itself extremely capable of identifying these resources and exploiting them. This has so far involved selling poorly refined oil and raiding banks. The modus operandi to date has been to raid an oil well in northern Syria, control, extract, transport to the most basic refineries imaginable, and then sell off on the black market, primarily in Turkey. The biggest monetary boost yet has come from another type of resource: the reserves of the Central Bank of Iraq taken during the loot of Mosul. That looting was worth 500 billion Iraqi dinar, worth about $420 million. Targeting these operations is exceptionally difficult, as they are focussed within the influence sphere of ISIS.
Extortion is the next powerful revenue raiser for ISIS. This targets soft western governments who, bowing to weak will and public demand, have surreptitiously been paying ransoms for hostages. This has led not just to tensions between non-paying governments – such as Britain and the USA – and the payers in Europe, but to the direct targeting of European aid workers and journalists. Blackmail, intimidation and thug tactics against other religious sects have long raised revenue for terrorist organisations. Extortion on the international stage is a source of funding which is easy to cut off; we need to pressure our leaders to remain strong-willed in the face of an horrific dilemma.
Pernicious and many-tentacled finance operations provide the final source of funding for ISIS. State funding for terrorism is still a powerful force for chaos across the Middle East. Destabilising, and themselves unstable, states such as Qatar are suspected of providing much money. Major international action needs to be taken in order to stop this foul practice. The money raised by ISIS through these various means gives it the strength that has so shocked and confounded the west. One of the first aims of any coalition of nations in combating the threat of ISIS must be to curtail its income raising opportunities, otherwise it will adapt, and we will be left fighting another unwinnable war.