U.S. Treasury Struggling to Disrupt ISIS Funding


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President Obama's plan to "degrade and destroy" ISIS is not going so well.

Despite recent military setbacks for the terrorist group, the U.S.-led airstrikes don't appear to be stemming the flow of new recruits. Nor do they promise to dislodge ISIS from Mosul and Raqqa anytime soon. Giving weapons and humanitarian aid to the group hasn't helped the president's cause much, either.

Now it appears another pillar of Obama's counterterrorism strategy is crumbling down. In a September 10 speech, Obama promised that "we will redouble our efforts to cut off [ISIS] funding." But Bill Gertz of the Washington Free Beacon reports that the times, they are a-changing for terror funding:

Analysts say the counterterrorism financing effort will be hard to carry out because of the group's recent gains on the ground and its decreasing reliance on foreign Islamist donors.

In other words, gone are the days when counterterrorism agents could dam up the financial support streaming from international donors into decentralized terrorist financial networks:

Since June, when IS began its drive to take over Iraq, terrorist funding for the group has shifted mainly to non-traditional means, as nations began cracking down on bank-based financing.…As IS continues to control territory, its reliance on foreign financing diminishes, and it is gradually becoming self-sufficient.

Instead, ISIS is starting to look an awful lot like, well, a state, with an increasing amount of its revenue coming from internal sources. These include oil sales, ransoming hostages, the taxation extortion of conquered territory, and other criminal activities.

All told, it's estimated that ISIS commands anywhere between $1.5 billion–$2 billion. Oil revenues alone are estimated to bring $1 million–$2.8 million into ISIS coffers daily.

David Cohen, the undersecretary for terrorism and financial intelligence at the U.S. Department of the Treasury, recently said that the government is trying to cut off ISIS' oil revenues through sanctions, anti-smuggling initiatives, and the like. Recent airstrikes against ISIS-controlled oil refineries are considered a relatively easy way to disrupt one of the group's primary revenue streams.

But the Brookings Institution has pointed out that these efforts could lead to the opposite of the desired result. A key ISIS strategy for garnering support is to develop local dependence on the group's resources—especially oil. A winter with a short supply of oil could play right into the hands of ISIS anti-U.S. propaganda. One prominent Syrian rebel leader said, "You've given them a real gift."

For its own part, ISIS is learning the hard way that taking territory is one thing—managing it, another. Even if its revenues remain as high as they've been, the group is facing the same problem plaguing governments the world over: living within its means.

Cohen said IS efforts to control territory also are a financial burden and estimates of its Iraqi-controlled territory in the past cost the Iraqi government over $2 billion.

"That far outstrips ISIL's revenue, and does not include the price-tag for the territory it seeks to dominate in Syria," Cohen said. "What this means is that ISIL cannot possibly meet the most basic needs of the people it seeks to rule."

Such are the pitfalls of statehood. Heavy-handed repression and a rapidly deteriorating economic situation in places like Mosul might decrease the group's popularity and make its position untenable. If ISIS is as bad at governing as it is good at conquering territory, perhaps it'd be best to sit tight and watch it implode all on its own.