The riches of ISIS 9

The Islamic State is a state, whether the world likes it or not (and its doesn’t). A state is populated territory governed by an authority which is able to enforce its will internally and hold off its enemies. IS/ISIS/ISIL is fully able to do that. It is doing it. (Though being at war, its borders are not yet firmly established.) It does not require recognition by other states, nor to be a member of the ludicrous United Nations.

What is more, it is a rich state.

From the Heritage Foundation:

The army of radical Islamists [IS/ISIS/ISIL] controls production of 30,000 barrels of oil a day in Iraq and 50,000 barrels in Syria. By selling the oil on the black market at a discounted price of $40 per barrel (compared to about $93 per barrel in the free market), ISIS takes in $3.2 million a day. …

The oil revenue, which amounts to nearly $100 million each month, allows ISIS to fund its military and terrorist attacks — and to attract more recruits from around the world, including America.

According to James Phillips, veteran expert in Middle Eastern affairs at The Heritage Foundation:

ISIS sells oil to consumers in territory it controls, roughly the size of Maryland, inside Syria and Iraq. The terrorist group also sells oil to a network of smugglers that developed in the 1990s during Iraqi dictator Saddam Hussein’s rule; that network smuggled oil out of Iraq into Turkey to avoid sanctions imposed by the United Nations.

ISIS also reportedly sells oil, through middlemen, to the Assad regime in Syria that is trying to quell rebellion there. When it comes to making a fast buck, the Middle East has no shortage of “strange bedfellows” willing to do business with each other.

[This is very likely to be true. It is the sort of thing that happens in the Arab Middle East. In Lebanon in the early 1980s, when war and civil war were raging there, I learnt that certain factions bought their weapons from other factions that they were fighting fiercely every day – JB]

Oil is only one of the sources of revenue for the Islamic State.

This is from Business Insider:

ISIS brings in nearly $12 million a month in revenues from extortion and other shady practices in the Iraqi city of Mosul alone in addition to $1 million to $3 million a day selling oil illegally. …

In a recent interview with Der Spiegel, Brookings Doha Center fellow Charles Lister explains how ISIS uses its control of food and water supplies to further its goals:

Money is key here. It is well-known that the IS is almost entirely self-financed. Its money comes from the control and illicit sale of oil and gas, agricultural products like wheat, the control of water and electricity and from imposing taxes within areas it controls. It is literally earning millions of dollars each week, and a great deal of this money is pumped into social services.

ISIS’s advance throughout northern Iraq has put vast quantities of prime farmland under the control of the militant organization. Large portions of five of Iraq’s most fertile provinces are currently under ISIS control.

These provinces are collectively responsible for producing 40% of the country’s wheat crop. The militants have also raided between 40,000 and 50,000 tons of grain from government silos in the north of the country.

Al Arabiya reported that ISIS has transported at least 700 tons of grain from western Iraq into Syria for milling and refining. ISIS then proceeded to sell the grain to the Iraqi government through third-parties in order to raise further funds.

ISIS has expanded this effort recently by making flour using the grain it stole from government mills throughout Mosul.

A source at Iraq’s Agricultural Ministry told Reuters that ISIS has placed close to 30% of Iraq’s entire farm production at risk.

This scarcity and food insecurity has driven up prices and increased the windfall that ISIS receives from its wheat trade.

Control of water resources and hydroelectric power stations provide further funding for ISIS. The control of massive pieces of infrastructure, such as the Tabqa Dam outside of ISIS’s de facto capital of Raqqah, Syria, along with the group’s short-lived seizure of the Mosul Dam in Iraq, further demonstrates ISIS’s capabilities and ambitions. … The dam generates electricity for Aleppo and the surrounding region. ISIS fighters made sure that the dam’s staff was left relatively unmolested, in order to ensure that the dam remained operational.

ISIS collects taxes on a variety of commercial items, such as trucks and cellphone towers Raqqa’s Credit Bank has transformed into a functioning tax authority, with shop owners paying $20 every two months to ISIS in exchange for utilities and security.

ISIS [also engages] in extortion, carjacking, and kidnapping. Kidnappings have become an especially lucrative source of funding for the organization as the group targets foreigners, and attempts to ransom them.

If kidnappings have “become an especially lucrative source of funding” for the Islamic State, it must be because some of their attempts to ransom the captured foreigners have been successful.

ISIS also seized cash and gold from the banks it captured.

Hundreds of airstrikes by the US Air Force will not destroy the Islamic State. Words of condemnation at international summits will not defeat it. The West has allowed the growth of this savage force, has encouraged Islam to believe that it can conquer the Middle East, Europe, and eventually the world. Islam is crowing its triumphalism. It will take iron resolve, a huge commitment of military forces, persistence, and first and foremost the precise defining of the enemy as Islam, if IS/ISIS/ISIL is to be destroyed.

President Obama has poked the nasty thing with a tentative finger, and reluctantly sanctioned some attacking of it from a dizzy height. He will not call the engagement a war. He has sent a few hundred military personnel to Iraq to … what? Advise someone about something?

He’s hoping other nations will do any real fighting that might be necessary. His fervent wish that America will not be perceived (by whom? his political base? the Nobel Peace Prize Committee?) as leading a coalition of states using military force is so desperate that he includes China, and even Iran in his hopes.

Meanwhile the Islamic State is growing, strengthening, flourishing, mass-murdering, and drawing tides of men from all over the world to join its wild jihad.

  • liz

    Yes, if Obama hadn’t pulled out of Iraq, this wouldn’t be happening. He created a monster. And now he doesn’t know how to deal with it.
    Why doesn’t he go over there and talk to his “brothers”? I’m sure they’d listen to him, right before they beheaded him.

    • Don L

      As Jillian indicated below: If only …

  • Don L

    Many decades ago, well before the, now, ubiquitous ATM machines appeared, the financial world was aware of the coming of Electronic Funds Transfer. As a marketing student, money as a utiliy is very important..I did my senior term paper on the changing utility of money: paper-to-electronic impulse. And, I have been amazed how money has radically changed since the mid 70s. ETF, UPC coding and the http://WWW…staggering. Economic expansion inspite of expanding government regs.

    Now, as early as 1956, the CIA was also aware of this coming change and was very excited. As I recall the papers I read, they saw EFT as a surveillance system better than anything they could ever have conceived of…let alone get approval for. Further, banking related unions were in an uproar…what will happen with tellers given ATMs. And, lawyers/lobbyists were running around trying to get regulation that would or wouldn’t consider an ATM a branch or not.

    In fact, the collapse of the savings and loan industry was less about the earlier boom and bust real estate/,com bust…but that Banks beat them to it and precluded S&Ls from growth through ATM expansion…only banks had this privilege. ATMs constituted bank branches. Credit Unions weren’t as susceptible or they too would have disappeared.

    Continuing, to my point: Money today is an electronic impulse. Whether dollars, pesos, yuan or pounds…it all exists in the records of financial institutions. ISIS can be stopped in its tracks if some entity, like the US of A had the desire to wipe out their funds and their backers funds. It merely requires the will and the cajones to do it. Ah, moving large piles of cash…a well placed weapon takes care of that.

    • “ISIS can be stopped in its tracks if some entity, like the US of A had the desire to wipe out their funds and their backers funds.”

      That is very interesting, Don L.

      But … we are talking about the Fertile Crescent. Can you see a way to make the benefits of the agriculture it controls, its reaping the copious crops of the land, stoppable?

      Or its dealings on the international black market? I’ve always liked black markets. They are freedom leaking out from under the iron lid of government control. But in the case of ISIS … How do you visualize illegal transactions being stopped?

      • Don L

        Sooner or later the money enters the banking world. These types of sums are not hauled around in the back of trucks. If they are…hercules away…boom.

        If ISIS is isolated..it is a closed economy that uses up it’s assets without division of labor benefits from outside..no free trade. Farm equipment needs parts that are not available, fertilizer plants are gone…etc. And, slave farm labor always has diminishing output…sooner or later if you aren’t producing…there is nothing left to tax. fertile if it’s yours. Collective farming even with the devoted…and, a few passes with our old friend agent orange (or a nicer cousin) takes care of fertile. They want to kill us…I don’t care if they don’t eat!

        Black market money enters the real world too. Perhaps not kosher in US, but in that part of the world (or anywhere if the 24 hour model is adopted) a loaded 45, with the safety off, press behind the ear gets bankers to tell all. Screw it…water board a bunch of bankers.

        Point is that if you want to stop it…you can. Put the fear of execution into any corp/corp principals from anywhere dealing with them. We want them destroyed…salt the land. Occupy the wells…cap them off or keep them for ourselves…

        Like these mideast christians booing cruz…anti-Israeli drolls..screw the entire part of the world …This isn’t nation building…lay waste and let ’em fend for themselves…they deserve it. Evereytime they make islam noises again…crops can fail. Now, I also said if one had the desire and the cajones…I wasn’t referring to Nobama…obviously.

        • All very good ideas. If only …

          I like the story about Red Adair!

          • Don L

            Sat 9/12/14:

            A bgdr Gen’ Tata (pronounced Tay-Tah; if tah- tah he’d have to become a general to avoid the chiding..Ok, OK) appeared on FOX and expressed the same sentimentys as I – scorched earth. Let Turkey know that denying us use of bases to keep oill flowing only means we destroy the oil…price won’t matter…As opposed to capturing fields for continued use. Their choice. You deny an enemy it’s assets and for ISIS…there are very few.
            And, as he was finishing up…the announced was made about the 3rd beheading. He finalized by strongly arguing that these people have absolutely nothing in common with us…they want to kill us just because of us not being them.

            • liz

              Is that Georgia dialect for tater (as in tater chips)?
              And I agree with him – wipe them out.

            • Don L

              Rim Bam!