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Blood Money: How ISIS Funds the World’s Most Profi...

Blood Money: How ISIS Funds the World’s Most Profitable Terrorist Revolution

Seldom has the phrase “fighting fire with fire” been more directly applicable to reality. As the war in Syria rages on, bombings and firefights have tragically become an everyday reality, while the chances of a near-term resolution seem increasingly slim. The country’s already brutally violent civil war has only escalated further in recent weeks, as major powers ramp up their airstrikes and the conflict’s belligerents dig in.

The Islamic State in Iraq and Syria, the terrorist group at the center of this firestorm, is bearing the brunt of the bombing. In an otherwise dizzying system of alliances and animosities, ISIS has positioned itself uniquely as the common enemy of all other parties involved – feuding even with ideologically similar actors such as Saudi Arabia, al-Qaeda and the Afghani Taliban.

Despite facing pressure from all sides, ISIS’s resilience seems largely unshaken. Their recent spate of carefully planned terrorist acts, such as the bombing of a Russian passenger jet in Sinai and the attacks in Paris, show the group to be alive and well. The apparent inability of the major players to stamp out the Islamic State seems baffling, especially when considering the staggering amount of money and arms that have been poured into efforts to defeat them. In order to understand (and ultimately defeat) the Islamic State in Iraq and Syria, it is necessary to examine the group’s very lifeblood: its funding.

Da'esh's gains, July 2014 - July 2015. Source: Institute for the Study of War

Da’esh’s gains. Black signifies direct control, support and attack zones are shown in orange and red. Source: Institute for the Study of War

It is no secret that ISIS has attempted to position itself as a permanent, ubiquitous part of life in the territory it occupies. This, their leaders believe, will bring them the legitimacy they need to emerge as a modern caliphate. At the same time, the group is attempting to expand aggressively, orchestrate foreign attacks and pay its tens of thousands of soldiers competitive wages. Such an ambitious revolution takes money, and lots of it.  Judging by their success to-date, then, it might not be so surprising to hear that the group has taken in billions over the last few years making it the richest terrorist group in since the word ‘terrorist’ entered the popular lexicon. Estimates based on the group’s own financial documentation, captured in a raid last year, put the group’s GDP at over $2 billion.

Unlike other similar fundamentalist groups, ISIS benefits from a diversified and highly reliable funding model that includes large-scale smuggling and taxation. It is impossible to pinpoint exactly how much they earn on a regular basis, but what is clear is the difficulty in cutting off such a multifaceted revenue stream. Even with something as seemingly conspicuous as the oil trade, ISIS consistently brings in millions a week, highlighting the group’s impressive level of organization. Over the course of its existence, the group has developed sophisticated trade and production networks to maximize their earnings from the crucial resource.

Illustrating this, ISIS is known to operate over a thousand petrol transport trucks and has actively courted technicians throughout the Middle East, making ‘emirs’ of experienced oilmen who defect to their side. Much of the oil is sold off within captured areas to fuel-hungry locals, rebel groups with no other options, and even indirectly to the Assad regime which ISIS aims to topple. Some of the resource is also understood to be smuggled across the Syrian-Turkish border. Media and international relations circuits been have abuzz with reports of the Turkey’s supposed inaction – or even complicity – in this smuggling operation, which the American government claims is of negligible scale (Russia, however, begs to differ).

A Syrian man pours crude oil into a pit as part of the distillation process. Source: AFP/Getty Images

A Syrian man collects crude oil to be distilled into usable fuel. Source: AFP/Getty Images

An equally (if not more) significant portion of the ISIS’s revenue comes from a combination of unscrupulous activities classically characteristic of organized crime groups. ISIS has hungrily drawn revenue from a motley of criminal sources, including kidnapping and hostage-taking schemes, looting, stolen art and artifact trafficking, and extortion (though their sympathizers would call it taxation). After their capture of Mosul, Iraq’s second-largest city, in 2014, several banks across the city were pilfered of their gold and currency reserves, netting the group over $400 million in one fell swoop. Applying this model to the hundreds of other towns ISIS has captured, along with the 2.5% zakat tax it imposes on all residents, it is not hard to imagine how the group has been able to fill their coffers so quickly.

While the American government’s policy of “not negotiating with terrorists” has been emulated by many governments, a number of countries have also paid dozens of multi-million dollar ransoms to the group. These payments are often made directly or with the Turkish government as an intermediary, and the exact amounts of money  that has changed hands is still subject to speculation. Before the execution of James Foley, an American journalist, the ISIS kidnappers had demanded a ransom of $132 million. France, Germany, Italy, Spain, and others are believed to have secretly paid millions to secure the release of their nationals. As the G8 has publicly repudiated this practice, the transfers have typically been made under the cover of plausible deniability.

But beyond oil, hostages, currency, and gold, the instability of Iraq and Syria have offered ISIS another valuable resource: priceless artifacts from the region’s rich history. The militants’ capture of several ruin-laden towns such as Palmyra, a millenniums-old city and UNESCO world heritage site, has given them access to a treasure trove of ancient pottery, coins, and other relics. These objects are thought to be smuggled out through Turkey and Lebanon and fenced to ostensibly legitimate dealers, thereafter finding their way into auction houses, antique dealerships, and private collections throughout Europe.

ISIS in Palmyra. Photo: al-Furqan Media

ISIS in Palmyra. Photo: al-Furqan Media

Such black market trade, though seemingly mundane, must not be discounted – certain estimates peg the racket as their second biggest source of income. Unfortunately for the group’s many opponents, the antique trade’s lack of documentation standards make it extremely difficult to stem the outflow of these plundered goods. In terms of looted gold and currency, the region is in such a chaotic state that there has been no effective blockade of cities like Mosul, leaving these valuables free to be traded off. And with the integrity of so many of its funding lines remaining intact, ISIS has built up a surplus which it channels into its efforts to construct a fully-integrated state economy.

ISIS’s hydra-like qualities are well-known: for each insurgent killed by an airstrike,  two angry and probably brainwashed fighters enlist as replacements. Sadly, the only substantial international collaboration against the group has taken the form of airstrikes. Turkey’s border remains as porous as ever, and little pressure has been placed on the country’s president, Recep Tayyip Erdoğan, due to his role as a regional power broker. International cooperation would be needed to curb the trafficked art trade, and as difficult a decision as it is, the G8’s policy on refusing to pay ransoms to terrorists would have to be enforced and expanded. As even many of the ransom-paying nations have acknowledged, paying this blood money only encourages and funds further kidnappings.

Curbing the group’s looting is, of course, something that will happen as a consequence of their other sources of strength being cut off. Aside from funding, ISIS draws many benefits from effective PR (aided in no small part by the unfortunate Islamophobia gripping the West) and the strategical disarray of the states involved. The war will have to be won on these fronts as well, but money is central to the equation of the their success. As long as they are able to pay living wages and provide basic services, ISIS’s dream of setting up an Islamic State may not be so fantastical after all.


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