While remaining one of the biggest threats to the world, ISIS has suffered a loss of territory and is in financial decline.
Abu-Bakr al-Baghdadi, ISIS’s founder and spiritual leader, knew exactly what he was doing when he chose to make his first (and only) public appearance on video in the A-Nur Mosque in Mosul in July, 2014. During his notorious sermon at the Friday prayer in the ancient, mosque’s marbled pulpit, the father of ISIS proclaimed the establishment of the first Islamic caliphate since 1924. Al-Baghadi, a long-time terrorist in the blood-soaked arena of the Middle East, with a deep sense of history and a killer instinct for public relations, scored a complete knockout in the fight for minds with a triumphant narrative.
Within days, his image at the mosque burned itself into the collective consciousness as the most symbolic event of ISIS’s sweeping victory in Iraq, and evincing the vicious terrorist organization’s apex of power – the same murderous organization destined in the years to come to sow fear and dread among millions across the globe; and to write a new, dark chapter in the short history of the 21st century.
But what marked the organization’s peak of power became precisely three years later a symbol of its crushing defeat. In late June, 2017, nine long months after coalition forces led by the Iraqi army (and backed by American arms, equipment, intelligence and money) began the campaign to liberate Mosul, Iraqi troops notched an impressive achievement in recapturing the A-Nur mosque – the icon of ISIS’s victory. In an attempt to prevent a picture perpetuating its jarring loss (and with a keen awareness of public relations), ISIS members rushed just moments before their withdrawal to spike the holy, historic mosque with hundreds of kilograms of explosives and razed it to the ground. Indeed, the image of the Iraqi army within the iconic symbol was partly blunted and the Iraqi Prime Minister Haider al-Abadi settled for a Twitter post in which he declared “the end of the fake Daesh state”.
The final declaration of the total liberation of Mosul would come some two weeks later and mark another milestone in the shocking collapse of the Islamic state. Al-Baghdadi was killed in or escaped from Raqqa, ISIS’s capital and center of operations, and the infamous terrorist organization now holds only 55% of the city.Elimination of the organization’s infrastructure in Iraq and Syria, and seizure of the territories that it has held, are only a matter of time. And if its ultimate defeat still lies far in the future, at this point even its leadership knows that its end in its current configuration is closer than ever.
ISIS continues to suffer heavy casualties and staggering losses each day and, in the years since its leaders proclaimed the founding of the Islamic caliphate, it has lost control of the vast territories in Iraq and Syria which, at its peak in late 2014, extended over some 100,000 square kilometers – bigger than South Korea. At its greatest power, more than 11 million people lived under its repressive regime.
As opposition to ISIS gained momentum, however, and as the major powers increased their intervention in the fighting, its strength and standing steadily began to crumble. In less than three years, the Islamic state has lost approximately 64 percent of its territory and its forces have withdrawn from an expanse the size of Ireland, leaving it in possession now of only some 36,000 square kilometers. Nine million civilians have been freed in recent years from the grip of ISIS’s imams, who today govern about 2 million people – a reduction of about 80 percent.
Now that it has lost much of its domain and controls far fewer people, the fundamentalist organization finds itself in financial turmoil – from which it might not recover. Three years ago, at the very peak of its military and political power, estimates of ISIS’ annual revenues reached some $3 billion. For an organization founded just a few years earlier, such a meteoric ascent, from no income to billions in the till, constitutes a unique economic achievement for its members. In a comprehensive study published by Forbes Israel that ranked “The World’s 10 Richest Terrorist Organizations”, ISIS held first place and was also rated the richest in the history of terror in its modern guise.
In the blink of an eye, the Islamic state changed from a supporting limb of Al-Qaeda, which was aided by contributions and outside assistance, into a financial empire–a sophisticated and well-oiled economic system rolling up billions. The core of the organization’s quick wealth derived from a single unsurprising source – oil. In the wake of its lightening conquests across Iraq and Syria, the Sunni organization took control of many oil and gas fields; by some estimates, it controlled at its peak some 60 percent of Syria’s oil reserves and seven important gas and oil fields in Iraq, including the nation’s largest refinery. Through the smuggling network for pirate oil efficiently developed to perfection during the decades of the international embargo on Saddam Hussein, ISIS leaders sold an estimated tens of thousands of barrels of oil a day on the black market, lining their pockets with an estimated daily income of two to three million dollars, which grew to nearly $1 billion yearly – and that alone from the sale of oil.
ISIS’s quick route to wealth, however, soon became its weak point, indeed, the principal cause of the decline in its assets. The increased intensity of the battle against it, and day after day of grueling ground combat, eventually led to the loss of control over the oil and gas fields as well as valuable mineral deposits. The massive aerial pounding inflicted by coalition forces (attacks intentionally concentrated on prime installations) magnified the pressure and in the end quickly throttled the revenue streams of the organization’s biggest profit-maker.
As if that weren’t enough, the sudden plunge in oil prices, which went from near $110 per barrel early in 2014 to less than $30 a barrel in 2016, took still another bite out of its dwindling income. ISIS’s intake from the sale of oil and gas, which in 2014 averaged $130 million per month, fell sharply. A UN Security Council reportindicated that ISIS’s oil revenues fell to $40 million per month in 2015 and about $20 million in 2016. However, according to data recently published by the IHS Markit research firm, the organization now brings in only $4 million per month – a drop of 97 percent in revenue since 2014.
Income from oil and gas was not the only source of capital in ISIS’s diverse financial system. Taxes, ransom payments, protection pay-offs, bank heists and plundered antiquities also became an important component of the ISIS treasury, while the criminal mentality of the organization, which has operated very much as a mafia for all intents and purposes, has represented a methodical, effective tool in the realization of this goal. As the sole administrative authority in the villages and towns under its thumb, ISIS has collected taxes and protection money from subject populations; from taxes imposed on the use of public utilities (roads, electricity, water, telephones and so on), and merchandise (autos, telephones, fuel, food) to pay-offs directly extorted from business owners for “protection.” Out of necessity, the organization converted the largest bank in the Syrian city of Raqqa into the Islamic state’s central bank, which serves as a clearing house for the collection and payment of taxes and duties imposed on residents. According to estimates, revenues in the form of taxes and protection payments amounted to hundreds of millions of dollars annually.
The loss of nearly three quarters of the population once under its control until a few years ago, however, naturally has contributed to the reduction in revenue from this source. Today ISIS governs about two million people and income from protection money and taxes dropped more than 70 percent. Today, according to figures from IHS Markit, the organization is struggling to bring in $8 million per month—a negligible sum compared to the tens of millions of dollars that flowed into its coffers each month just a year or two ago.
Apart from the large energy holdings it seized and its extortion rackets for tax collection and protection money, ISIS also captured extensive farming tracts, factories, power stations, dams and other strategic facilities, which boosted its wealth and economic strength. What’s more, the organization held sprawling lands in the five most fertile agricultural regions of Iraq, commanding 40 percent of the nation’s wheat harvest and other crops. All in all, farming experts estimate ISIS controlled 30 percent of the local agricultural market. All this it lost when it abandoned those vast areas in the face of coalition advancement.
According to UN Security Council report, ISIS continues to rely mainly on income from oil, extortion and “taxation” – which together account for as much as 70 to 80 percent of the group’s income. In sum, the murderous terrorist organization’s revenues, it is estimated, have fallen more than 90 percent in just three years, from some $3 billion in 2014 to only about $200 million today.
As this article goes to press, the organization stands beaten and destitute. The pressure on it from the coalition and the big powers continues to grow. Some optimistic experts now predict that the Islamic state will cease to exist by the end of the year. But even if “the end of the fake ISIS state,” as al-Abadi has termed it, is closer than ever – the idea itself is very much alive and still beats strong in a multitude of hearts. The terrorist state that it built has in truth no real borders and its great achievement (all too tragically) is measured not by the territories that it captured but by the minds that it conquered, and even if the jihadist organization has been defeated, the idea of jihad is far from beaten.
Quite possibly, ISIS will reinvent itself as al-Qaeda did before it. It is even possible that in its stead another organization, in another place, will arise and seek to realize its vision. The Islamic state that arose is a dying entity whose days are numbered, but the organization’s spirit and fanatic ideology, which swept millions of believers into action, sadly will continue to inspire and motivate its supporters in a bloody, worldwide struggle. From that perspective, the imminent victory over ISIS is just one battle in a long, grinding war.
Online Degrees & Certificates For Intelligence Professionals
American Military University’s online degrees and certificates in intelligence are taught by experienced professors. Many serve as leaders in intelligence, military or homeland security sectors and they impart real-world expertise in the online classroom. Our students also connect with an expansive network of intelligence students and professionals who are equally dedicated to service, professionalism, and the continual assessment and enhancement of the intelligence cycle.