Thursday, August 28, 2014

How Has ISIS Become the World's Richest Terrorist Group?

WSJ writes:

The Islamic State runs a self-sustaining economy across territory it controls in Syria and Iraq, pirating oil while exacting tribute from a population of at least eight million...

That illicit economy presents a new picture of Islamic State's financial underpinnings. The group was once thought to depend on funding from Arab Gulf donors and donations from the broader Muslim world. Now, Islamic State—the former branch of al Qaeda that has swallowed parts of Iraq and Syria—is a largely self-financed organization.

Money from outside donors "pales in comparison to their self-funding through criminal and terrorist activities," a U.S. State Department official said, adding that those activities generate millions of dollars a month...

Interviews with Syrians and Iraqis with relatives living in Islamic State-controlled towns offered a snapshot of how institutionalized the group's domestic fundraising and illegal trade has become—and how difficult it may be to rein in.

At least eight million Syrians and Iraqis live under full or partial Islamic State control, according to estimates by the Syrian opposition and local Iraqi officials.

Earlier this year, as Islamic State militants swarmed northern Syria, one farming family got a knock on the door that would strip them of their livelihoods.

The militants, who introduced themselves as Islamic State members, said they were administering the town and had a list of how many acres of land and other assets the family owned, said one family member. They also said they had a list of the town's Christian families and the tribute they had to pay to be able to stay living there.

"They demanded to be paid in gold, silver or any other precious material for the annual crop we were about to plant," said the family member, who has since fled. He said farmers were forced to pay tribute based on land in their possession rather than the success of their crop—a hardship, coming in drought year...

In Syria, the insurgents control eight oil and gas fields in the provinces of Raqqa and Deir Ezzor, according to Syrian rebels who once controlled the fields...

Western officials said it has also become clearer, through recent kidnappings, that the group is methodically using hostages to raise revenue. Given the small number of detainees released, they say, that revenue is likely much less reliable than that from the local economy.

The other source of external funding, wealthy donors and radical Sunni individuals in the Gulf, has sharply fallen as their governments recognize the severity of the Islamic State threat to the region, they said.


  1. Sounds like they have the government idea down pat.

    1. Absolutely!

      If they last long enough they'll introduce elections: "We're free now. Wallah!"

    2. hahahahahahahahaha

  2. So says the War Street Journal? Then it MUST be true. /s

  3. "The other source of external funding, wealthy donors and radical Sunni individuals in the Gulf, has sharply fallen as their governments recognize the severity of the Islamic State threat to the region, they said"

    Oh right, the wealthy Sunnis perhaps Saudis in the Gulf were funding the ISIS and now that their governments are concerned about the ISIS, they no longer donate. Its not surprising to see the War Street journal carrying water for the State Department.

  4. Hayek's "The Pure Theory Of Capital" states that "under dynamic conditions the relevant fact is only that resources are non-permanent, and not that they have been produced". In a state of perpetual war this idea is even more pertinent, cost of constant conflict mandates an even more productive investment of resources.

    Considering the fact that the ISIS ideology is intolerant to the ethics of a productive market they can never truly realize a "self-sustaining economy". In other words, the Islamic State can never be productive.

    Maintenance of a war machine is capital intensive and can be sustained only if the income from the existing means of production leads to an even more productive employment of resources. If we accept that now they have limited access to donations and to other illegal income streams then the most effective means to throttle their enterprise would be to ensure that they have little access to international markets.

    Without productive trade and the employment of resources at their disposal they can never maintain their income streams at the levels needed for running a war state. We cannot imagine how they will evolve in future but for now in terms of resilience even a USSR model can run circles around ISIS.