ISIS: Funded by Sex, Oil, and Crime

ISIS: Funded by Sex, Oil, and Crime

We’ve discussed previously the vast sources of funding that ISIS controls. Whether those funds come from their control (and smuggling) the region’s oil supply, or from the home governments and families of hostages, the steady stream of cash flowing into ISIS coffers enables its members to step out of the shadows and fight not only for territory, but for the hearts and minds of the people they threaten to savage.

From Yahoo News:

“With the important exception of some state-sponsored terrorist organizations, ISIL is probably the best-funded terrorist organization we have confronted,” Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen said on Thursday in a speech to a Washington,D.C., think tank. At a subsequent briefing at the White House, Cohen declined to provide an estimate of the group’s net worth today.

From mid-June until President Barack Obama unleashed airstrikes in Iraq and Syria against it, the Islamist organization scored $1 million per day from smuggled oil, Cohen said at the Carnegie Endowment for International Peace. He declined to say how much the airstrikes, which began on Sept. 23, have sliced into the group’s oil revenue.

Their sources of funding go beyond what we’ve seen highlighted in the news. In addition to oil smuggling and kidnapping, ISIS enjoys healthy profits from local extortion schemes, the plundering of antiquities, and sex trafficking. A report from the American Foreign Press details how ISIS makes these schemes work: through use of legitimate, existing economic structures. For example, their oil smuggling scheme is so intricate that at one point, Syria was buying its own oil; the oil had been harvested on Syrian territory controlled by ISIS.

This means that ISIS presents challenges similar to those presented by an established government:

Unlike terrorist groups that operate in extremely remote areas, plotting in the shadows, mindful that a U.S. drone might be nearby, IS has bases, headquarters and camps in Syria and Iraq that make for inviting targets of U.S. missiles and bombs.

It also aims to win over the hearts and minds of the local populace by providing services like water or electricity, and “that is expensive,” Cohen said.

Planned Iraqi government spending this year for the areas now under IS control “was well over $2 billion,” he noted.

“I don’t mean to suggest that ISIL is intending to deliver anything like the services the Iraqi government was intending to deliver, but that gives you an idea of sort of the scale of the expenses,” he said.

Whether through fear, or the providing of services that would normally be provided by the government, ISIS isn’t just stocking up on commodities—it’s stocking on influence. Although recent airstrikes have chipped away at the group’s ability to raise revenue from oil smuggling, simply putting “boots on the ground” won’t be enough to destroy the network ISIS has managed to build. The United States has managed to convince both the Turks and the Kurds to stop buying smuggled oil, but convincing other countries to cut off revenue in the form of ransom payments (which add up to about $20 million per year) has been difficult.

U.S. officials, however, are confident that we can push back on ISIS by making it impossible for ISIS to maintain it’s (twisted) relationship with the locals. Sanctions and bank blacklists could help to dry up their funding and make it impossible to provide basic services:

Despite the group’s wealth, however, it still does not have enough money to pay for basic services to Iraqis in territory it has captured, and could face local opposition, Cohen said.

“A terrorist organization’s financial strength turns on its ability to continue to tap into funding streams, its ability to use the funds that it has, and also its expenses,” he told reporters later at the White House.

Iraq had earmarked some $2 billion for the local services in the provinces now under IS’s control. The militants have nowhere near enough funds to meet the shortfall, Cohen said.

ISIS’ influence has taken a hit, but actually degrading-and-destroying the group and its extensive network will take more than American bombs; it’s going to take international cooperation.

And that, unfortunately, could be our biggest obstacle.

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