With gold and extortion, will Daesh be able to make a comeback after collapse?

Shaimaa Hafez

Since the Islamic State (ISIS/IS/Daesh) emerged more than four years ago, the organization has had its special methods to obtain funding for its operations, a matter that enabled it to survive through the years.

In a bid to secure endeavors for a comeback after many defeats, Daesh is pursuing new ways to maximize benefit of its funds.

In addition to relying on suspicious funds of smuggling oil and antiquities, as well as abductions, and ransoms, Daesh has adopted new ways to accumulate money, evading the traditional channels of the banking sector.

Matthew Levitt, a researcher from the “Washington Institute for Near East Policy” told the London-based Asharq Al-Awsat in an interview in 2015 that in the past, Daesh communicated donor agencies through “Twitter”, and bought pre-paid cards, then sent them via Skype to operatives in Syria, where they were sold. The IS also used the Bitcoin, since is hard to track down.

According to an investigative survey published by the Financial Times in 2015, Daesh’s main revenue streams were taxing and extorting those who lived in the territory the group controlled. They equaled the return the organization  obtained from smuggling crude oil.

Thus, the IS managed to collect up to USD six billion, which made it one of the richest terrorist groups in history, European reports said.

The group’s wealth came from three main streams; gas and oil sales, which hit USD 500 million in 2015; taxation and extortion, USD 315 million in 2015; and looting banks in Mosul back in 2014, stealing some to USD 500 million.

Although Daesh has lost nearly 98 percent of the territory it once controlled, the group is ripe for a comeback in areas of Iraq and Syria.  It is in dire need for new ways to secure funding for a possible return.

A recent study published by the US Foreign Policy” magazine under “ISIS’s New Plans to Get Rich and Wreak Havoc,” stated that the terrorist organization has lost almost all its territory but “has found new ways to make vast sums of money.”

“The group, however, no longer relies on territory for its economic survival. In part, that’s because its surviving leadership may have smuggled as much as $400 million out of Iraq and Syria. The group’s extended network will seek to launder this money through front companies in the region, especially in Turkey. Some cash could be converted to gold and stockpiled for sale in the future,” the magazine stated.

Major General Najim Al-Jubouri

Commander of Nineveh Operations Major General Najim Al-Jubouri, told Radio Sawa in 2016 that the IS foreign fighters used to buy amounts of gold after the collapse of the organization, in preparation for quitting Iraq.

Meanwhile, even as the Islamic State has far less money coming in, the group’s expenses are minimal compared to what they were just over a year ago, the Foreign Policy said.

It noted that with “such a drastically reduced operating budget, the cash it has hoarded will provide the group with more than enough money to survive as a clandestine terrorist movement with the ability to wage a prolonged campaign of guerrilla warfare throughout Iraq and Syria.”

Daesh has also “buttressed financial holdings with a diversified funding portfolio. It has developed a knack for raising money through a range of new criminal activities, including but not limited to extortion, kidnapping for ransom, robbery and theft, drug smuggling, and trafficking in antiquities.

These activities do not require holding territory, but there are risks involved for individual insurgents, who could, at least in theory, be caught.”

The study also said that in the near future, the group can also “reinvigorate revenue streams that have become dormant by extorting populations living on the periphery of where government control extends.

In addition to extortion, another way the Islamic State can continue to make money without holding physical territory is by extorting the reconstruction of Mosul and other devastated cities.

Oil and exploiting reconstruction efforts 

Yet between 2006 and 2009, they were still able to raise substantial sums of money by extorting local and regional oil distribution networks, the magazine said.

This same process could very likely repeat itself over the next several years as the international community seeks to help Iraq and Syria recover from a decade of civil war.

“Reconstruction aid to war-torn parts of Iraq and Syria, while well intentioned, could provide an attractive target for the Islamic State and potentially help fund its comeback, something the groups could accomplish even without holding large swaths of territory,” the Foreign policy said.