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The Economic Sources of ISIS (Islamic States of Iraq and Syria)

Grila Ezati
2015-12-07 20:44:31

 

The threat of the Islamic State of Iraq and Syria (ISIS) has become the top global security issue. ISIS in 2014 controlled the Iraqi province of Mosul, which has several million inhabitants and considered near one third of Iraqi land.  ISIS also has control over some parts of Syria, which provided the group with strong land-based and populated bases. The group not only recruited many fundamentalists around the world but it also has threaten the national security of other countries particularly countries that made a military coalition against ISIS. According to Dr. Robin Niblett CMG, the group took the responsibility of the recent terrorist attack on Paris of 13 November 2015, which had over 100 casualties (Niblett 2015). The long term fighting of ISIS is to eliminate its mentality, yet in a more realistic approach of fighting ISIS, it is more effective to find and hit the economic sources of the group. This Paper will illustrate how the economy of ISIS works, addressing its sources of income and its potential partners. The paper also displays ways to weaken the economy of ISIS.

What are the sources of ISIS that makes it become the wealthiest terrorist organization in the world? In which ways world’s economies can hit the economy of ISIS?

Oil field production sites:

Controlling several large oil fields in both Iraq and Syria is the largest economic source of ISIS. When a terrorist group attacks some target places, they usually try to get control over major oil fields in order to develop their economy. Thus, military attacks are carefully designed to improve the economy of ISIS by controlling more oil fields. According to Luay Al-Khatteeb, founder of the Iraq Energy Institute and visiting fellow at the Brookings Institution, stated in his article entitled The UN Strikes Back at ISIL's Black Economy, “ISIL's estimated total revenues from its oil production are around $2 million a day!”;  According to Al-khateeb, ISIL is able to smuggle more than 30,000 barrels of crude oil per day through its neighboring borders at a price of between $25 to $60 per barrel, based on the amount of middle men participated (Al-Khatteeb). This shows that ISIS could get daily cash through smuggling oil. Surely, ISIS for selling oil avoids using banks, which make the business harder but far from the inspection of World Bank system. For illicit sale of oil, ISIS needs to do some steps in order to get the amount of money they want. At first, ISIS starts to refine the oil and control the routes. Then, the oil is transported by tankers to other countries such as Jordan, Iran, and Syria. As it has been explained by Matthew Reed, Vice President of Foreign Reports, in his interview in the article entitled Explaining The Islamic State’s Oil Industry, “There is plenty of refined fuel being smuggled across the Syrian-Turkish border--not a lot of oil” (Reed). From this way, ISIS could use the oil to finance their terror operations. Therefore, the lack of cooperation between the regional countries in the Middle East and also the corrupted commerce systems existed in these countries, have facilitated the existence and the financial maintenance of ISIS.  

Controlling agricultural lands:

Another resource that ISIS has been able to raise economic revenue from is taking control over some lands that are very suitable to growing the strategic crops, such as cotton, corn, and wheat. In their article, Here's How The World's Richest Terrorist Group Makes Millions Every Day, Amanda Macias and Jeremy Bender explained, Paraphrase based on the report of Al-Arabia news channel, the area captured by ISIS produces near %40 of Iraq’s wheat; plus, the group has obtained between 40,000 to 50,000 tons of grains from the controlled governmental silos (Macias and Bender 2014). The Islamic state is involved in fighting with militants over the territory that is very fertile. It is clear that most Iraqi population is familiar with work in farm lands, so ISIS for cultivation corps can provide cheap labors too. Farmers earn lots of money from agricultural products each year. And sometimes agricultural boom could be seen annually due to fertility of the land. Yet, now many farmers due to the war near these lands and provinces were forced to escape and leave their lands for ISIS. This gives an opportunity to ISIS to capture agricultural lands and start improving their economy by selling the products of agriculture. Macias and Bender have discussed that the expansion of Jihadist through the north part of Iraq has given them the opportunity to control large and useful fertile lands, and make money through this as well (Macias and Bender).

Putting heavy tax on citizens:

Putting taxes on different goods is another way that ISIS develops its economy. ISIS tries to act as an efficient state, so they have enforced people to pay taxes for specific activities and jobs. According to what Raqqa residents told the Newsweek in the article written by Janine Di Giovanni, Leah Mcgrath Goodman, and Damien Sharkov, “ISIS applies a “tax” to all goods imported to or exported from the city” (Di Givoanni, Goodman, Sharkov, 2014).They are collecting so much money each month from taxation. Maggie Fick wrote in her article that the Islamic state puts “taxes” on people, such as businessmen, employees, and farmers. Also, they kidnap westerners, and sell oil to the native traders (Fick, 2014). As ISIS controls a place, they make citizens to pay tax. For instance, when they invaded Mosul, they have forced citizens to pay tax. They are threatening the inhabitants by telling them if they don’t pay the required tax, they are going to lose their life. So, they are obliged to pay tax to ISIS.

 

ISIS has become one of the richest extremist groups in the world and their territories have expanded in Iraq and Syria. However, ISIS funds itself through smuggling oil, depending on the resources that they get from looting, and from the regions that they controlled. Some countries support ISIS indirectly because it has become a good market for their weapons, and it made selling and buying oil easier for those countries. In other words, ISIS has boosted their economies and market. As it is mentioned in the article written by Fernanda Uro Aboites,The most important source of ISIS financing to date has been support coming out of the Gulf States, primarily Saudi Arabia but also Qatar, Kuwait and the United Arab Emirates”(Aboites 2015). Most Middle East countries suffer from having a corrupted economy that makes it easy for ISIS to build and maintain its economy in this corrupted region. Economically speaking it is important to understand who should put more resources to eliminate ISIS and who will benefit from the elimination of ISIS the most. In another word, although ISIS militarily and politically has chosen a very expansionist strategy towards non-Middle Eastern countries, it is passive towards significant countries like Turkey and Iran. Even the group economically has tried to be realist and pragmatist, looking for mutual benefits with some actors within its neighboring countries.

 

 

 

 

 

 

 

 

Sources:

Aboites, Fernanda Uro. "What Keeps ISIS Running: The Funding and Support of a Terror

Organization." Egyptian Streets. N.p., 11 May 2015. Web. 28 Nov. 2015. <http://egyptianstreets.com/2015/05/11/what-keeps-isis-running-the-funding-and-support-of-a-terror-organization/>.

 

Al-Khatteeb, Luay. "The UN Strikes Back at ISIL's Black Economy." The Brookings Institution.

N.p., 23 Aug. 2014. Web. 28 Nov. 2015. <http://www.brookings.edu/research/opinions/2014/08/23-un-strikes-back-at-isil-black-economy>.

 

"Explaining The Islamic State’s Oil Industry, Interview With Foreign Reports’ Matthew Reed."

Musingsoniraq.blogspot.com. N.p., 9 Nov. 2015. Web. 28 Nov. 2015. <http://musingsoniraq.blogspot.com/2015/11/explaining-islamic-states-oil-industry.html>.

 

Fick, Maggie. "Special Report: Islamic State Uses Grain to Tighten Grip in Iraq." Reuters.

Thomson Reuters, 01 Oct. 2014. Web. 28 Nov. 2015. <http://www.reuters.com/article/2014/10/01/us-mideast-crisis-wheat-special-report-idUSKCN0HP12J20141001#6hIrgqSbZTGhbIsy.97>.

Giovanni, Janine Di, Leah Mcgrath Goodman, and Damien Sharkov. "How Does ISIS Fund Its     Reign of Terror?" Www.newsweek.com. N.p., 6 Nov. 2014. Web. 28 Nov. 2015.

<http://www.newsweek.com/2014/11/14/how-does-isis-fund-its-reign-terror-282607.html>.

 

Macias, Amanda, and Jeremy Bender. "Here's How The World's Richest Terrorist Group Makes

Millions Every Day." Business Insider. Business Insider, Inc, 27 Aug. 2014. Web. 28 Nov. 2015. <http://www.businessinsider.com/isis-worlds-richest-terrorist-group-2014-8>.

 

Niblett, Robin. "Paris Attacks Come at a Dangerous Moment for Europe." Chatham House. N.p.,

14 Nov. 2015. Web. 28 Nov. 2015. <https://www.chathamhouse.org/expert/comment/paris-attacks-come-dangerous-moment-europe?gclid=CKrDpofWsskCFYWfGwodh4kImw>.