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What Keeps ISIS Running: the Funding and Support of a Terror Organization

May 11, 2015

Money is power, and that is no different for politicians or businessmen- or terrorists. Behind the phenomena of fundamentalism and political violence is the ever-present element of economic interest. The world we are living in today, and the neoliberal system that has taken a hold of almost every market economy in the planet has created a variety of actors that, first and foremost, seek their own economic benefit. Terrorism, one of the biggest global threats of the twenty-first century, represents the largest enemy that the Western world wishes to defeat. One of the most effective ways to do so would be by cutting off the flow of all economic and military resources to terrorist organizations.

However, groups like Al-Qaeda, and more recently the Islamic State (ISIS), seem to be very well-funded with a constant flow of resources. How is this possible? Where are these funds coming from? And in reality, who is interested in keeping groups like ISIS alive?

Although the US seems to have endorsed a campaign to dismantle terrorist financing after 9/11, today ISIS represents the wealthiest terrorist organization in the world at a worth close to $2 billion.[1] ISIS (whose official Arabic name is ad-Dawlah al-Islāmiyah fīl-ʿIrāq wash-Shām), more recently known as IS (Islamic State), has been able to raise millions of dollars locally and from donors abroad. IS is a large, sophisticated and well-organized terrorist group that has a small army of foreign and local fighters, established oil refining and even collects taxes.

However, for all these operations to function, IS incurs in a substantial amount of expenses that include military equipment, training, safe houses, surveillance equipment, roads, civilian bus services, food, technology (it owns its own high tech media centre Al-Hayat, used for producing torture videos and a propaganda magazine called Dabiq), etc. It pays salaries, rent and medical expenses to its members, and always has to guard against internal corruption. In order to know where the all money for these expenses is coming from, it is important to follow the money trail.

To a certain degree, the Islamic State is self-financing. It raises most of its money from the territories it feeds off of, namely Syria and Iraq, and with them, it has taken control of important resources like dams, granaries and oil installations. IS’ most important revenue source is the smuggling of oil from the dozen oil fields it controls in these nations. As reported by the U.S. Treasury Department last year, an estimate of their revenue ranged from $1 to $2 million a day. The Islamic State is also imposing strict taxes on its citizens, charging for services such as electricity and telephone access (paid in cash to IS’ own revenue agency, Al Hisba), and imposes customs on imported goods.

Furthermore, IS has become increasingly organized in order to take advantage of local moneymaking opportunities. An significant source of income for IS has been hostage-taking and kidnappings for profit (by 2014, their extortion network in Mosul was generating $12 million per month)[2]. The organization has also resorted to bank robbery, selling illegal drugs, looting museums and selling artifacts illicitly, peddling crude oil on the black market to Turkey, and even owning Internet cafes. But smuggling oil and ransacking banks can hardly sustain an entire State that controls such a vast area. Therefore, a significant amount of resources must be coming from outside Syria and Iraq.

The Islamic State group's flag over a bridge in Mosul
The Islamic State group’s flag over a bridge in Mosul

Individual donors from the Persian Gulf have been funneling money into IS, who nowadays represent the most effective force in fighting Bashar al-Assad’s regime in Syria. The Director of the Center for Research into the Arabic World at the University of Mainz, Günter Meyer, stated “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”. The Gulf States’ motivation to fight against the regime of al-Assad has led them to financially and morally support IS.

The United States has gone so far as to call Qatar a “permissive environment for financing terrorist groups”. Qatar’s security strategy has basically been to support diverse regional and international groups in order to strengthen its political position in the region. This country has supported Islamist organizations such as Hamas, the Taliban, and most recently ISIS, and has consistently allowed private fundraising for Islamist groups abroad.

However, in order to be able to paint a comprehensive picture of IS’ funds, it is important to look beyond Arab borders. Although personally I am not a faithful supporter of conspiracy theories, I do believe it is crucial to consider the interests countries like the U.S. have in the region, and the role they might be playing in IS’ financial prosperity. Internal players such as (neo) conservatives, weapon manufacturers, and oil companies are all looking for profit, and this is a fact that cannot be ignored when analyzing any issue in the Middle East.

At large, the interest of Western countries (namely the U.S.) in the Middle East has always been about oil, pipelines and control of the resource. The current state of insecurity and chaos in the Middle East is a direct consequence of American conservative aspirations to dominate oil resources and defend an ever expansionist Israel. Since the invasion of Iraq in 2003, the US has deliberately armed and funded Sunni extremist groups, linked to al-Qaeda, in Iraq in order to push back against Shiite militias.

Militant Islamist fighters waving flags, travel in vehicles as they take part in a military parade along the streets of Syria's northern Raqqa province June 30, 2014.  REUTERS/Stringer
Militant Islamist fighters waving flags, travel in vehicles as they take part in a military parade along the streets of Syria’s northern Raqqa province June 30, 2014. REUTERS/Stringer

Presently, countries like Turkey and the US want to get rid of a Syrian regime that is not aligned with these nations’ interests. But why is the loyalty of Syrians important to them? The answer, again, is oil. In 2011, a $10 billion construction deal was signed between Iran, Iraq and Syria for a natural gas pipeline to be built by 2016. This pipeline, known as Pipelineistan, would start in Iran, cross Iraq and Syria, and possibly extend to Lebanon. Their key export target market? Europe. With Syria immersed in a civil war, no global investor would actually gamble their own money in such a project, however, in a post-al Assad scenario, all options are open and possible. Most of the oil will come from Iraq, but the final destinations could be Turkey or Lebanon exporting directly to Europe. In a nutshell, it is the best interest of Turkey and Western countries to topple the Syrian regime, through whatever means possible, in order to assure the flow of petrol through Syria.

More specifically, in a confession made by Yousaf al Salafi, commander of IS in Pakistan, published in The Express Tribune earlier this year, he stated that he had been receiving funds through the US. When Al Salafi was arrested he revealed that “he was getting funding – routed through America – to run the organization in Pakistan and recruit young people to fight in Syria”. Within these operations, he also admitted that he was getting around $600 per recruit sent to Syria.

IS is also a leader in technology, particularly social media, not only to reach sympathizers but also to attract donors. Israeli cyber intelligence has acknowledged that IS is using the digital currency bitcoin for fundraising from US territories. Jimmy Gurule, former Under Secretary of the Treasury Department, stated that “Bitcoin is currently not regulated…potentially the terrorists could have found a chink in the armor, or could have found a gap in our regulatory system that they may be exploiting”. In addition, it has been recently discovered that many of those digital donors live in the United States. As such, the US indeed claims to be at war with IS, however it appears to be incapable of stopping large amounts of money flowing from within its own borders into the hands of the terrorist organization.

Displaced people from the minority Yazidi sect, fleeing violence from forces loyal to Islamic State
Displaced people from the minority Yazidi sect, fleeing violence from forces loyal to Islamic State. REUTERS

Moreover, the Syrian regime itself it believed to be involved in funding IS. As stated by the activist group Raqqa is Being Slaughtered Silently[3] in their latest report earlier this year, “one of ISIS’s most important financial resources is selling electricity and gas to Assad regime through ISIS controlled dams…Secret deals are being wrapped up between ISIS and Assad regime, where the regime conducts reform workshops in regions in exchange with ISIS providing them with electricity. Profits are divided in half between them”.

If we ever hope to constrict any sort of terrorist funding, a traditional campaign against terrorist financing will not be enough. It is important to make the society aware of the danger it represents to carry on supporting direct and indirect measures of funding, and push our governments to cease all trade, operations, commerce or donations of any kind with the countries where these groups are based. It is only through a severe economic chocking strategy that these radical groups will likely disappear. For instance, earlier this year Jacqui Lambie, an Australian senator, openly questioned her government regarding what she believes is halal money” funding IS. That is, she believes Australian certifiers are suspected of misusing money paid for halal certification to fund IS’ activities; hence, she is pushing for new legislation in order to control the cash flow IS is receiving to fund their caliphate. At the same time, the local governments must engage in a serious effort to seize the natural resources IS has taken a hold of, in order to control the economy it now runs.

Without addressing all dimensions of this financing, groups like IS will continue to exist and grow in a system that has consistently permitted them to run economies and consolidate their power. If we as civil society do not actively push our governments to take action, countries like the US will continue enabling the growth of ISIS, utilize it as impetus to inject more money and weapons that will inevitably end up in IS’ hands, and use this as an excuse to further intervene in the region.

Edited by Kari Megeed


[1] Charles Lister. “Profiling the Islamic State”. Brookings Doha Center. 13 (Nov. 2014). p. 5.

[2] C. Lister. op. cit. p. 22.

[3] Raqqa is Being Slaughtered Silently is an activist group (citizen journalism) which secretly documents the acts of violence and oppression ISIS has brought to the Syrian city of Raqqa.

Comments (23)

  1. As says:

    Nice article, regarding the the taxes applied by ISIS, all countries applies taxes to given examples(electricity,water, imported goods). I wish to know where is the Siryan rebel army supported by US( made public)?, seems interesting how Rebel army has disapeared while ISIS was emerging, seems quite extrange how once are dissapearing while a black flag is rising, with governments complicity.