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ISIS / Caliphate - Funding and Strength

In the past Baathists were secular nationalists, ideologically at odds with the Islamic Group's aim of establishing a Muslim caliphate. But after the first Gulf War, Saddam's "Return to Faith" campaign brought the two together, and after the second Gulf War the Sunni resistance to the American presence in Iraq consisted of a group representing a merger of these two tendencies.

By early 2017 the business model of Islamic State was failing, and the terror group would soon likely collapse financially, according to a detailed analysis of IS finances by the London-based International Center for the Study of Radicalization, and accounting group Ernst & Young. Available open source evidence suggested the group's annual revenue has more than halved from $1.9 billion in 2014 to a maximum of $870 million last year.

Islamic State isn’t just a terrorist organization, it is a quasi-state, which means it has territory, it has a population, and most of its income comes from that territory. It taxes people, it extracts oil, and it also loots and confiscates the property of people who’ve fled. ecause its income is intrinsically linked to the territory it controls, by 2016 the group was weakening. The Global Coalition, an association of 68 countries fighting Islamic State, said that by early 2017 the group had lost 62 percent of its mid-2014 "peak" territory in Iraq and 30 percent in Syria.

The sources and extent of ISIL’s funding and power remain unclear. More than 8 million Iraqis and Syrians live in areas controlled by that state. The militants relied heavily on local Sunnis, including former Baathists who felt marginalized after years of repressive Shi’ite rule. And that could prove to be their Achilles heel. They need popular support among the Iraqi Sunnis, and they can’t survive in Iraq without that. There is a debate within the Iraqi Sunni community about whether to align tactically with the Islamic State in some places, in the near term, in order to achieve near-term political goals, and then turn on the Islamic State on down the road, or whether to turn on the Islamic State now.

David Kilcullen, the architect of the Iraq War troop surge in 2006 who currently heads CAERUS, a security and intelligence strategy firm in Washington, said in September 2014 that ISIS had overshadowed al-Qaida. “It is much more capable militarily, it’s much richer, it controls territory, it controls key infrastructure and it is really a much more dramatic threat than we have seen from al-Qaida.... They have literally made millions of dollars by kidnapping and ransom. They are now the richest terror group in the world, north of $500 billion worth of resources”.

There are numerous credible reports that the Saudi government and members of the royal family directly and indirectly funded the global propagation of an exclusivist religious ideology, Wahhabism, which allegedly promotes hatred, intolerance, and other abuses of human rights, including violence. The concern is not about the propagation of Islam per se, but about allegations that the Saudi government’s version of Islam promotes abuses of human rights, including violent acts, against non-Muslims and disfavored Muslims.

Iraqi Prime Minister Nuri al-Maliki's office on 17 June 2014 issued a statement accusing Saudi Arabia of giving ISIL "financial and moral support." State funding by Saudi Arabia was complicated to prove but private giving was not. There were many private donations coming out of Saudi Arabia and other Gulf states.

Jaish al-Islam (Army of Islam), a coalition of over 50 rebel groups formed in September 2013, is dominated by Liwa al-Islam, a large rebel group formerly of “FSA” branding led by Saudi-backed Zahran Alloush. Jaish al-Islam is arguably the strongest of the seven rebel groups fighting under the Islamic Front umbrella. Saudi Arabia came to understand the Islamic State group is a serious threat to their country as well – that it isn’t a mainstream Sunni movement. Saudi Arabia's primary role in the Sunni world is a major element in the US plan to create a broad coalition against the militant group.

Prince Bandar was alleged to be the Saudi point man behind the funding of ISIS. There have been claims that Saudi Arabia condoned funding for ISIS. As it brandished its anti-Shia credentials, ISIS was reported to have received lavish financial support from the United States’ main allies in the region: Saudi Arabia. Business Insider reported, “Saudi citizens continue to represent a significant funding source for Sunni groups operating in Syria”. One senior Qatari official affirmed, “ISIS has been a Saudi project.” Some observe that since the tribal and communal leadership in Sunni majority provinces was much beholden to Saudi and Gulf paymasters, they would be unlikely to cooperate with ISIS without their consent.

Irish journalist Patrick Cockburn, author of “The Jihadis Return: ISIS and the New Sunni Uprising,” who has been a Middle East Correspondent since 1979, noted “Saudi Arabia has created a Frankenstein’s monster over which it is rapidly losing control.... The foster parents of ISIS (as the Islamic State group was previously known) and the other Sunni jihadi movements in Iraq and Syria are Saudi Arabia, the Gulf monarchies and Turkey”. The US magazine The Atlantic agreed, saying the Islamic State group’s success in Iraq was due, in part, “to the support they have received from two Persian Gulf countries: Qatar and Saudi Arabia.”

There is a strong overlap between the official, Wahhabi orthodoxy of the Saudi state and that of the ISIS leadership. But ISIS has declared war against the Saudi kingdom, calling for “Muslims to rise up against Saudi Arabia’s ruling family”. The jihadis of the Islamic State would relish the opportunity to take the regime down. ISIS claims that the regime is a decadent usurper which doesn’t uphold the values it claims to defend.

It was unlikely the Saudi state is funding ISIL, which are at odds. But the Saudis are reportedly funding its rivals in Syria, such as the Army of Islam. In a speech in 2014, the former head of British intelligence, Sir Richard Dearlove, claimed that the regime was tacitly in favor of the movement’s attacks on Shia Muslims: “maybe a blind eye was being turned”, he said, to funding that had been “channelled to” the Islamic State.

Turkey became the primary route for foreign jihadists to join Syria's civil war because of the country's easy visa policies for travel, its porous 910-kilometer border with Syria, and its modern transportation infrastructure. Ankara, which grew hostile to Syrian President Bashar al-Assad after his deadly crackdown on protesters in 2011, also allowed foreign militants who sought to oust him to freely operate, according to news reports. Ankara denied turning a blind eye to their presence. But pro-government media coverage of the Syrian conflict remained a powerful jihadist recruiting tool especially among religious followers of the ruling AK party, which has its roots in political Islam. In September 2014 Turkish officials said they had denied entry to more than 6,000 potential recruits and have deported 1,000 others. On 02 December 2015 US Secretary of State John Kerry said that President Erdogan was in "complete agreement" with plans to close a 98 kilometer (60 mile) stretch of Turkey's border that abuts areas controlled by the Islamic State.

Turkey's prime minister said 20 September 2014 that the 49 Turkish hostages seized by Islamic State militants in Iraq in June had been freed. Turkey had cited the hostages as a roadblock to participating in a NATO coalition to defeat the militants. Prime Minister Recep Tayyip Erdogan said the Turkish hostages were freed in "a successful operation." Erdogan in his statement paid tribute to Turkey's intelligence service, saying through patience and dedication they had performed a rescue operation.

The June 2014 ISIL campaign seemed to derive from the Koranic invocation "Make war ... upon such of those to whom the Book has been given until they pay tribute offered on the back of their hands, in a state of humiliation" (9:29). The prominent Arab historian Philip Hitti suggested that campaigns of the early Muslim "seem to have started as raids to provide new outlets for the warring spirit of the tribes now forbidden to engage in fratricidal combats, the objective in most cases being booty and not the gaining of a permanent foothold." Destructive raids pillaged villages, markets, and encampments, gradually weakening neighboring societies, eventually resulting in permanent conquest.

It is apparent that this organization has been well-funded for years, but the soruce of funding was less apparent. From 2006 to 2009, they raised roughly $2 billion by extorting payoffs from employees at the Beiji oil refinery in northern Iraq After raiding Mosul’s central bank and stealing an estimated $429 million in June 2014, one report speculated that the ISIL may be sitting on nearly $1.5 billion in assets. And having overrun Mosul and other Iraqi cities, it acquired a lot of cash and gold bullion and military hardware. Current reporting suggested that the ISIL continued to pay competitive salaries and death benefits to its members in a more reliable fashion than the Iraqi Army [see Mitchell Hartman, “ISIL Gets Rich in Attack on Iraq’s Cities,” Marketplace, June 13, 2014].

There are also concerns about the amount of money IS has generated through kidnappings and ransoms — at least $20 million in 2014. The group earns millions by selling captive women and children into the sex trade, according to research by Luay al-Khatteeb, a visiting fellow at the Brookings Institution’s Doha Center in Qatar. In August 2014, United Nations officials said IS militants may have forced 1,500 Christian and Yazidi religious refugees into sexual slavery.

IS and other militants also plundered Syria’s medieval Christian cemeteries, archeological sites and museums, looting antiquities such as Byzantine mosaics. In July, the United States’ Smithsonian Institution and Penn Museum co-sponsored a Syrian training session to safeguard precious artifacts that are part of the country’s cultural heritage. The militants also traffic in goods from stolen cars to appliances to jewelry. Islamic State militants have peddled excess weapons and ammunition – including drones, Hellfire missiles and machine guns – left behind by fleeing or captured Iraqi Army troops and sometimes supplied by the United States and its allies.

Islamic State militants impose taxes, tolls and fines to ensure a regular flow of money. They require drivers to pay 'road taxes' in territories it controls. The shakedown generates several million dollars for the group each month. In Syria's north-central city of Raqqa, and rural parts of the northeast governate of Hasakah, Islamic State militants charge each household the equivalent of $13.50 a month for water and electricity, along with a $4 "protection fee".

The US Department of Defense claimed to have inflicted considerable damage on Islamic State’s oil revenues. “Recently, Operation Tidal Wave II has been putting significant damage on ISIL’s ability to fund itself,” a Combined Joint Task Force Operation Inherent Resolve spokesman, Army Col. Steve Warren, told Pentagon reporters on 13 November 2015.

Since the start of Operation Tidal Wave II, the coalition conducted a massive strike on Omar Airfield, Warren said. “We’ve stepped up our attack [and], focused our targeting on other oil facilities to include Tanak and several others,” he added. “ISIL needs those funds to pay their fighters, to recruit new fighters and to conduct their various maligned activities,” Austin said. “You know, we said from the outset of this campaign that to defeat ISIL, we’re going to have to take away its ability to resource itself.”

By January 2016 Islamic State fighters appeared to be getting only 50 percent of their cash allowance due to the “exceptional circumstances”. The Islamic State’s Treasury Ministry, operating from the terrorists’ stronghold of Raqqa in Syria, issued the document in December 2015 that was been recently translated by a research fellow at the Middle East Forum, Aymenn Jawad Al-Tamimi.

After providing some reflections on the Koran and a short piece about the “jihad of wealth” and the “jihad of soul,” Abu Muhammad al-Muhajir, Islamic State (IS, formerly ISIS/ISIL) “Treasury Minister”, got to the point. “On account of the exceptional circumstances the Islamic State is facing, it has been decided to reduce the salaries that are paid to all mujahideen by half, and it is not allowed for anyone to be exempted from this decision, whatever his position.”

US forces killed Abd ar-Rahman Mustafa al-Qaduli, an Islamic State finance minister also responsible for the terrorist group's external affairs, Secretary of Defense Ash Carter said 25 March 2016. "We are systematically eliminating ISIL's Cabinet," Carter said, using an acronym for the terrorist group. Carter would not say whether Qaduli, also known as Hajji Iman, was killed in Iraq or Syria, nor would he say whether the IS leader was killed in a raid or an airstrike.

While senior Daesh commanders are said to have clashed over allegations of corruption, mismanagement and theft, some fighters have not been paid at all, the Washington Post reported 02 April 2016, citing US counterterrorism officials. "Cash shortages already have forced the group to put many of its Iraqi and Syrian recruits on half-pay, and accounts from recent defectors suggest that some units haven't received salaries in months," the media outlet detailed. Civilians and businesses living in cities under Daesh's control "complain of being subjected to ever-higher taxes and fees to make up the shortfall."

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Page last modified: 28-02-2017 18:43:18 ZULU