Author: Abishek Parasrampuria, Chief Financial Correspondent

Bardo National museum in Tunisia, Shia’s mosques in Sana, Metrojet Flight 9268 with its 224 passengers and most recently the November Paris attacks all have something in common: ISIS. While it has successfully orchestrated more than twenty-five terror attacks in less than two years one thing that continues to baffle many is how could a rebel group possibly secure the funds to carry out mass murders on a global scale?

No Morgan Stanley investment manager would ever lend them a hand, nor any Swiss bank –no matter how morally flexible- would open a checking account in their name. How then could ISIL then successfully raise, manage and transfer funds from the Middle East to North Africa to Europe to fund its fanatical regime. While many conspiracy theories have emerged as they normally do whenever the mind has idleness to kill, I feel that the following are worth considering:

Donations and Support

Numerous articles have been published, most not quite subtly, giving their own versions of the countries and individuals secretly funding ISIS to topple the existing balance of power. As a matter of fact there is some evidence indicating the existence of both private and public enterprises operating in Saudi Arabia, Qatar, Jordan and Syria.

The last one particularly is worth considering as the desire to oust Bashar al-Assad from Syria could have played a significant factor in motivating high-net-worth individuals who believed ISIS as capable enough of overthrowing the existing regime.

Al-Assad doesn’t exactly bear Gandhi’s reputation for peace; he’s been accused of holding 200,000 political prisoners, killing 600 medical practitioners and supporting the Shia insurgency (Al-Assad is an Alawite, which itself is a branch of Shia Islam) in Iraq during the US invasion. He’s also responsible for numerous crimes against Sunni’s, hence the very idea of establishing a Sunni caliphate (ISIS are chiefly Sunni, they believe Shia’s are apostates and must be exterminated for a purer form of Islam to exist) could attract influential states and numerous individuals who share the same religion; Sunni Islam is after all the largest Islamic religious branch within the Muslim population.

Oil

Oil is a major form of revenue, not only for Kuwait, Libya and Saudi Arabia but also ISIS, which from controlled territories produces between 55,000-65,000 barrels a day, earning north of $1 million every 24 hours. Up to 11 oil fields are already under its jurisdiction from conquered territories in Iraq and Syria (hence insuring continuous supply) coupled with the fact that it sells at approximately 50% the market price makes it an extremely attractive seller. There is overwhelming reason to believe that oil is smuggled from ISIS controlled Syria and Iraq to Turkey and Iran. Middlemen have also managed tosell oil in bordering countries as well as numerous Kurdish communities overtaken by the terror group.

Of course the Obama administration were quick to realize this as well as the fact that without the necessary funds ISIS would disseminate almost immediately. After a series of coordinated attacks since September beginning, ISIS’s oil capacity has estimated to have been reduced from a hundred loaded trucks, which moved over twenty thousand barrels of oil per day from Iraq’s Ajeel oil field down to ten for the transportation of a mere two thousand barrels a day.

Antiques and Human trafficking

The group has also earned north of fifty million dollars from smuggling antiquities out of Iraq to be sold in Turkey, and millions more from human trafficking by selling women and children as sex slaves. There are various horrifying instances when ISIS members paid young girls as sex slaves in exchange for services. For instance a Jihadi fighter in Iraq forced a dentist to accept a Yazidi girl in exchange for medical treatment. The dentist was more than happy to provide the services for free but was told he would have to accept the payment as it was Sharia and furthermore would be shot if he didn’t. When he tried to return the girl to her family she wasn’t accepted, which is a story for thousands of the minority currently residing in Iraq.

Expenditure

While considering the incomes we must also have a look at the expenditures. By far the largest cost incurred is on salaries, which after considering various estimates I would say should be between $5 million to $8 million each month. Other areas of expense include media coverage, building police-state institutions and of course phony courts that carry out sentences in the name of justice. You would be quick to notice that there’s hardly any investment in permanent infrastructure by ISIS due to its nomadic movements and the fact that it’s increasingly becoming vulnerable to air strikes. However, the looting of military equipment, confiscation of land, property and wealth along with its excellent money management enables it to keep costs relatively low.

Other revenue sources

Extortion or protection money also forms a major part of its revenue along with the ransom earned from kidnapping hostages and theft of precious materials from the towns seized.

“It’s cash-raising activities resemble those of a mafia-like organization,” a U.S. intelligence official said, when asked his take on ISIS’s dealings. “They are well-organized, systematic and enforced through intimidation and violence.”

The group traditionally starts revenue accumulation by imposing taxes on nearly every facet of economic activity. Those disagreeing to pay often receive death threats, which unlike the ones issued by the CIA are actually

carried out, hence ensuing immediate payments henceafter. An analysis by the Council on Foreign Relations estimated the group was earning about $8 million a month from extortion in Mosul (The second largest Iraqi city) alone.

However, as mentioned oil was and is the chief form of revenue, which currently is under threat from not only the US and Russian air force but also that of France and Germany especially after the November 2015 Paris attacks. ISIS thankfully doesn’t possess any nuclear armaments or weapons of sufficient sophistication to counter this threat, but they certainly did seem to have the financial innovation to make sure their incomes aren’t harmed, as early as April 2014. Even before the coordinated air strikes, ISIS had started taking hostages of value, hostages who if executed in public would have an extremely disparaging impact on the image of their country. For instance four French journalists: Didier Francois, Edouard Elias, Nicolas Henin and Pierre Torre crossed the border from Syria to Turkey around mid-April 2014. Francois Hollande thanked all those who had helped in “securing” this release without elaborating further. It is painfully clear no successful military rescue operation was implemented or that ISIS suddenly had a change of heart and felt compassionate for the four poor French men who couldn’t be home for Easter. Hence, there is a definite possibility of a ransom payment initiated by the French government that two European intelligence agents reported to be around $40-$55 million. These payments were mostly channeled through financial intermediaries in Qatar, which is thought to play a central role in the brokering payments on behalf of hostages.

ISIS, in my opinion, has become the most dangerous regime since the Nazis, not only because of their barbarity and continued conquests but also because of their organization, co-ordination and depth of financial literacy, some of which were examined briefly in the course of this article.