Daesh and Sources of Funding

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Daesh has grown to become one of the greatest threats to international peace and security, but how is this multinational terrorist organization funded? This episode of 10 minutes provides the answers.

TIME CODE: 00:00_05:00

Narration: Daesh has undermined stability in Iraq, Syria and the broader Middle East through its terrorist acts and crimes against humanity, and has posed an immediate threat to international peace and security. This terrorist group persecutes individuals, kidnaps civilians, forces displacement of communities and minority groups, kills and maims children, rapes women and engages in numerous other atrocities. It has recruited thousands of foreign terrorist fighters to Iraq and Syria from multiple countries across the globe and has leveraged technology and other resources to spread its violent extremist ideology and to incite terrorist acts. For all that ideology and a lust for violence and power that might motivate those who fight for Daesh, MONEY is what keeps the group going. As with any group, this terrorist group has bills to pay and mouths to feed; weapons, vehicles, employee salaries, propaganda videos, international travel - all of these things cost money. But even for this world's richest terrorist organization money doesn't grow on trees. So where does Daesh get all its money?

On Sunday 15 November, 2015, Leaders of the Group of 20 issued a statement calling for better coordination to cut off funding channels to terrorist organizations, including exchanging information and freezing terrorist assets. And while the US says these efforts have disrupted terrorist networks and saved lives, Daesh seems to be an entirely different animal. The recent terrorist attacks in Paris, which Daesh has claimed responsibility for, suggest the terrorist organization hasn't been hurting for funding. According to David Cohen, the Treasury Department's Undersecretary for Terrorism and Financial Intelligence, “As for disrupting the revenue that ISIL generates from extortion and other local criminal activities, we recognize that Treasury’s tools are not particularly well-suited to the task."

It turns out that Daesh’s methods of financing are very different from other prominent terrorist organizations, and much more difficult for the international community to shut down. The group often avoids international finance, instead generating and spending funds within its own territory or immediately along its porous borders. Unlike many terrorist groups, which finance themselves mainly through wealthy donors, Daesh has used its control over a territory that is roughly the size of the U.K. and home to millions of people to develop diversified revenue channels. In fact, the group earns revenue primarily from five sources; (1) illicit proceeds from occupation of territory, such as bank looting, extortion, control of oil fields and refineries, and robbery of economic assets and illicit taxation of goods and cash (2) kidnapping for ransom; (3) donations including by or through non-profit organizations; (4) material support such as support associated with foreign terrorist fighters and (5) fundraising through modern communication networks. Estimates of the precise amount that Daesh earns from these activities tend to vary a lot and fluctuate over time, but what is certain is that the group is heavily diversified —if one funding source is shut down, the group can turn to others to generate revenue.

Daesh’s main methods of generating money appear to be the sale of oil and antiquities, as well as taxation and extortion. And the group's financial resources have grown quickly as it has captured more territory and resources.

TIME CODE: 05:00_10:00

Narration: According to estimates by the Rand Corporation, Daesh’s total revenue rose from a little less than $1 million per month in late 2008 and early 2009 to perhaps $1 million to $3 million per day in 2014.

The oil fields that Daesh has captured in Syria and Iraq have been a major source of funding for the terrorist group. It is estimated that the group makes between $1 million and $2 million each day from oil sales produce about 44,000 barrels a day in Syria and 4,000 barrels a day in Iraq. The terrorist group mostly refines oil in small, mobile refineries, then ships it by truck to the Turkish border, where oil brokers and traders buy or barter for it. Russian President Vladimir Putin has recently pointed out that there is “no doubt” that oil from “terrorist-controlled” territory in Syria is making its way across the border into Turkey. Speaking with AFP Putin said: "We see from the sky where these vehicles [carrying oil] are going. They are going to Turkey day and night." President Putin has also accused Ankara of shooting down a Russian warplane on near the Syria–Turkey border on 24 November 2015 to protect supplies of oil from Daesh to Turkey.

Since Daesh controls an expansive territory, it can levy taxes on the people who live there. It levies taxes on things including goods sold, utilities such as electricity and water, cash withdrawals from bank accounts and non-Muslims communities.

A report by Thomson Reuters estimates that this system of extortion and taxation could generate as much as $360 million per year for the terrorist organization.

Daesh has reportedly kidnapped hundreds of individuals, including local Iraqis, Syrians and members of ethnic minorities, as well as Westerners located in the region. A U.N. report from October 2014 cited estimates that Daesh had generated $35 million to $45 million in the previous year through kidnapping for ransom alone.

Although Daesh isn't primarily financed by wealthy donors the way that other terrorist organizations are, these contributions are still a substantial source of revenue. Some estimates say that Daesh received up to $40 million in 2013-2014 from businessmen, wealthy families and other donors in Saudi Arabia, Qatar, Kuwait and the United Arab Emirates.

As Daesh has gained territory, it has taken control of museums, private collections and archaeological sites, this has given the terrorist group an expansive supply of precious art and historical artifacts. Some of these antiquities are destroyed, but others are resold for a profit, often flowing to markets in Turkey and Jordan, and from there to Europe and other countries.

Estimates put the total volume of trade in antiquities at more than $100 million a year making both those stolen from collections and those that were newly excavated the group's second-large source of revenue after illicit oil sales.

Daesh’s control of an expansive territory obviously gives the group a valuable source of funding and flexibility. However, some have argued that having territory might also be seen as a weakness for the group. Maintaining a state of 8 million to 10 million people, waging war around its borders, and financing and carrying out international attacks are costly and difficult tasks. Without adequate funds to provide services to the local population, people in Daesh territory might turn against the group leaving Daesh with less and less to tax and to sell. 

   

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