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Funding ISIS: The Business Of Terror

By William Esposito, April Lenhard and Harrison Doyle


Since its inception in 2004, the Islamic State of Iraq and Syria (known in shorthand as "ISIS", or "ISIL" for Islamic State of Iraq and the Levant) has grown from a minor league player to a threat greater than Al-Qaeda, in the words of the White House and Congress. As the insurgents bounded across northern and central Iraq and eastern Syria, stories of bank heists, oil theft, and even the seizure of MiG aircraft and American weaponry inflated the image of ISIS as the wealthiest terror network in history. Among the first targets of the Obama administration's aerial campaign over Syria was an ISIS finance center. The rapid transition from apparent backbencher amateurs to well-funded professionals begs the question-how did they get this far? And, more importantly, who financed this growth?

Traditionally, terrorist and insurgent groups have financed themselves through a vast array of illicit activities, from the drug trade and human trafficking to counterfeiting and money laundering. Al-Qaeda, ISIS' forerunner, was no exception. Yet, Al-Qaeda partially broke the mold when it became particularly proficient at manipulating its Islamist message to solicit private donations and skim from Islamic charities. According to the Council on Foreign Relations, Al-Qaeda's "financial backbone" was built on the donations made to them through charities, nongovernmental organizations, mosques, websites, fund-raisers, intermediaries, facilitators and banks, many of which initially funded the Mujahedeen fighters during the Soviet Union's Cold War invasion of Afghanistan.

Utilizing this network after the fall of the USSR, Al-Qaeda continued to launder money through major regional banking centers in the Middle East, particularly in Dubai, Kuwait, Bahrain and Lebanon. While ISIS has similarly employed illicit trades and charitable contributions to fund its operations, it differs in its startling and successful evolution, deeply embedding itself into the Mesopotamian economy.

As ISIS has expanded, so too have its methods and sources of funding. By combining classic illegal activities like extortion and ransom kidnapping, Al-Qaeda-style charity tactics (successful among wealthy Gulf Arabs), and integrating with the local trade in oil, crops, and antiquities, ISIS has created a vast leviathan of an organization, with most sources estimating daily revenues up to three million dollars. That figure is in contrast to the seven to ten million dollars spent daily by the United States to combat the group.

Big Money

Unlike popular insurgencies, terror groups frequently alienate themselves by brutalizing the populations they control. It is not surprising, therefore, that the familiar illicit activities to which ISIS resorts for funding are inherently predatory: robbery, kidnapping, and local extortion. Yet with such complex geographical control, the group is capable of preying on local economies in a far more lucrative fashion than smaller radical competitors. Among the most common forms of fundraising in this vein is simple mafia-style protection extortion. A farmer in an ISIS-controlled area, for example, may pay ten to twenty percent of their total profits to the militants. A businessman may pay $100 a month for the privilege of keeping his shop open. Minorities are forced to pay for 'protection', and arbitrary road checkpoints are set up where drivers can pay the 'toll' by relinquishing their wallets. Ransoms are an inconsistent form of income but extremely profitable, especially from targeted European countries who have a track record of previous negotiations and payment. The theft and sale of antiquities should not be understated, either-a lesson learned after the US invasion of Iraq. The looting of a single archaeological site can yield tens of millions of dollars in sales. According to one official, ISIS has stolen antiques over 8,000 years old, smuggling and subsequently selling over twenty six million dollars-worth of plundered artifacts recovered from just one site. Finally, there is the time-honored classic of bank robbery, which has easily added tens of millions of dollars to the Islamic State's ever-diversifying financial portfolio.

In the case of ISIS, however, oil is by far the most profitable financier. While most sources estimate that ISIS-controlled oil fields yield around 60,000 barrels of oil per day, others have speculated that ISIS may have achieved volumes as high as 180,000 barrels from Syria alone. Crude oil is smuggled out through a long-established chain of middlemen, crossing porous borders into refineries in Kurdistan, Iraq, Syria, and Turkey (or refined by ISIS itself), bringing in millions. As a consequence, the US, UAE, and Saudi Arabia have heavily targeted eastern Syria and annihilated more than three quarters of the oil refineries known to be controlled by ISIS-all in an effort to stem the flood of cash.

Further Funding

While million dollar business deals grab the headlines, the reality of ISIS' financial success goes much deeper, from its media image to a wide range of personal networks. The Islamic State's funding efforts have succeeded in large part because of their advertising campaign. The group's unprecedented use of social media platforms has bolstered their prestige and influence both domestically and abroad, and has led to an influx of money, weapons, and volunteers. One phone application, called the "Dawn of Glad Tidings," gives its users updates regarding ISIS' advances in the field, as well as images of carnage and graphic videos-all of which serve as propaganda to help propagate the idea that ISIS has become an unstoppable force. From professional graphics to highly adaptable technical tactics, ISIS has developed a digital persona well exceeding that of Al-Qaeda's grainy cave videos.


About the Authors

William Esposito is the Former Deputy Director of the FBI and a senior consultant at Security Management International. April Lenhard and Harrison Doyle are both junior associates at Security Management International.

 


 

This is only a partial version of the article published in the latest Journal of Counterterrorism & Homeland Security Int'l.
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