ISIS Finances

Linking here to an article at CSM on squeezing ISIS financially. We definitely can't do it all militarily.

Air strikes by the United States and Russian militaries show a new focus in international efforts against the self-proclaimed Islamic State in Iraq and Syria: to undercut the group by degrading its ability to use oil as a financial lifeline.

Not a cure-all, but it's part of a strategy.

The leaders of IS “make excellent use of the money they attain…. The more you cut off that money, the more you make it difficult for them to do the funding of all sorts of nefarious projects.”

I had assumed they received money from the Sunni countries in the region as al-Qaeda does. Not so much, tho.

Oil isn’t the Islamic State’s only sizable funding source. Most notable is the extraction of rents (various forms of extortion, fees, and taxes) from populations in IS-held territories.

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Other experts say that the extortion of local populations may be the Islamic State’s No. 1 source of income.

Other activities yield smaller but meaningful income: the sale of antiquities, kidnappings for ransom, human trafficking, gifts from rich supporters. Last but not least is the one-time haul of money looted from banks when IS took over places like Mosul, Iraq – a total that may have reached $500 million to $1 billion in that city alone, experts say.

On the cost side of the IS ledger, payroll of fighters alone may run higher than $300 million per year. The group also has to spend on paying oil-field technicians, and on providing some government services in the regions it controls.

Add it all up, and some analysts see the IS financial model as unsustainable in the long run, without further territorial conquests. That becomes especially true if the opportunity to sell oil can be constrained.

And in other news of making Muslims want to kill us, here's John Kerry. 

Secretary of State John Kerry visited the United Arab Emirates (UAE) today to meet with Foreign Minister Abdullah bin Zayed al-Nahyan. The UAE — a close Western ally with some of the world’s largest oil reserves — is a federation of seven absolute monarchies which base their laws on an extreme interpretation of Sharia (Islamic law). Although it tries to present itself as practicing a semblance of democracy, the roles of the UAE’s president and prime minister are effectively hereditary in nature, passed down to the emirs of Abu Dhabi and Dubai.

The New York Times has described the UAE as “an autocracy with the sheen of a progressive, modern state.”

In his trip Monday morning, Kerry applauded the monarchic, theocratic state for its work in the region.

“We respect what United Arab Emirates has been able to do to be able to accomplish significant progress in Yemen,” Kerry said.

What exactly does Kerry mean by “significant progress”? He means the UAE has helped wage a destructive war on Yemen, the poorest country in the Middle East.

Supporting autocratic bastards who are raining death on a poor country also filled with Muslims is not going to help us.

Defunding ISIS

I had wrongly assumed that the terrorist group ISIS received much of their funding from rich Sunni countries as al-Qaeda does. Or maybe I'm wrongly assuming that as well. In any case:

The extremist Islamist group that controls more than a third of both Syria and Iraq is awash in cash, experts in terrorist financing say.

Recommended: How much do you know about the Islamic State?

The following all add up to bountiful IS coffers, they say, potentially for years to come: extortion and “taxation” of the populations it controls; illicit oil sales; ransom; seizure of bank deposits in the lands it has conquered – as much as $1 billion when it captured Mosul, Iraq, a year ago; and now the sale of small antiquities on a voracious international market.

I'm leaving the quiz in so no one forgets to take it, especially me. 

Now I hear the Right mindlessly say that the Obama Administration is doing nothing to fight ISIS. Of course, what that means is that not enough stuff is blowing up. Or you could just fight smarter, not harder.  

When the Obama administration last year announced its strategy to “degrade and ultimately destroy” IS, it identified the group’s finances as one of five areas the new anti-IS coalition would focus on.

But what the beheading of Khaled al-Asaad and the fresh attention it brought to illicit antiquities sales told experts is that IS remains adept at diversifying its financial resources – and is managing to adjust to the squeezes that the outside world has put on some of its revenue streams.

“We know from experience that ISIS is not likely to just sit there and watch itself wither on the vine. It has shown it can adapt, and it has lots of opportunities,” says Matthew Levitt, a senior fellow and expert in counterterrorism and intelligence at the Washington Institute for Near East Policy, using an alternative acronym for IS.

“Antiquities is an example of that,” says Mr. Levitt, who has followed the group’s financing since he was a Treasury Department official a decade ago looking at the finances of Al Qaeda in Iraq, IS’s precursor. “For a long time they were not focusing on this stuff,” he adds, “and now it’s become very important to them.”

There may be some hope of squeezing them financially.

Yet as successful as IS has been at exploiting the financial resources of the territories it controls, experts and intelligence officials point out that all is not rosy on the extremist group’s ledger sheets.

Oil revenues, once estimated at as much as $1 million a day, are down, in some cases considerably – primarily as a result of airstrikes by the anti-IS coalition. The United States has taken out many of the mobile oil-refining units that the group deployed to turn crude oil from seized oil fields into marketable products to sell outside its territories.

And some of the other income sources like extortion and ransom that the group has relied on in Syria and Iraq are what officials following the group’s finances call “mature” – meaning that those sources are close to tapped out and cannot be relied upon long-term.

“After a while you can no longer squeeze blood from a turnip,” says Mr. Clarke of RAND. For example, IS levies a “jizya” tax on non-Muslim “infidels” such as Christians in some areas rather than expelling or killing them. But those groups’ resources are not bottomless and are drying up, experts say.

What the US success in cutting IS’s oil revenues has demonstrated is that there are things the international forces arrayed against IS can do to dent the group’s revenue streams.

Next month, President Obama will hold a summit of the anti-IS coalition countries on the margins of the United Nations General Assembly in New York. One item on the agenda will be new ways of “degrading” the group’s finances.

Coalition leaders are expected to take up the problem of antiquities smuggling and sales, say some officials following the coalition’s actions, especially given the heightened attention to the issue. Syrian antiquities are showing up on the London antiques market with growing frequency, with individual items fetching up to $1 million, according to reports.

The US Congress is also zeroing in on the role of antiquities in replenishing IS coffers. Recently a bipartisan group of senators proposed legislation, modeled on a bill already passed in the House, that would give the administration the authority it needs to be able to restrict the importation of artifacts smuggled out of Syria.

The one bright spot that officials working to counter IS finances see is that much of the group’s revenue sources within the territories it controls are not renewable. What that means, they say, is that unless IS is able to conquer new territories and take control of new populations, the terrorist group’s finances are likely to deteriorate.

“As the sources of ISIL’s wealth – notably the money stolen from banks and revenues from oil sales – are either no longer replenished or diminish over time, we expect ISIL will increasingly struggle to finance its operations,” said Jennifer Fowler, Treasury’s deputy assistant secretary for terrorist financing and financial crimes, speaking earlier this year at a Washington forum and also using another acronym for IS.

Do go and read it all. There actually is some that I didn't copy and paste. And take the quiz.