A New Revenue Stream for ISIS?

ISIS convoy of trucks

Image courtesy of Reuters

A New Revenue Stream for ISIS?
| published December 15, 2014 |

By Thursday Review staff


ISIS, also known as the Islamic State in Iraq and the Levant, is looking for ways to diversify its sources of income. Under pressure from airstrikes led by U.S. military forces, ISIS militants need cash to purchase weapons, vehicles, and to maintain political and military control of the vast areas it now controls in northeastern Syria and northern Iraq.

As has been widely reported, ISIS draws a large stream of revenue from its control of oil facilities in Iraq and in Syria. By some estimates, ISIS draws in millions each week from the sale of oil from drilling sites and refineries under its self-proclaimed authority. One of the largest oil facilities in the world is at Baiji, but after months of intense fighting (which resulted in the Iraqi army reclaiming it), the refinery and distribution center is badly damaged, and may take months—if not years—to reach full capacity.

ISIS has also raided cash and precious metals from banks and financial institutions in those cities and towns which were along it path during the Islamic militant army’s rapid advance through northern Iraq. At that time, the Iraqi army and U.S.-trained Iraqi security forces melted away—retreating hastily, and in most cases abandoning weapons and equipment, and even shedding uniforms. Without an effective security force present—and with even local police intimidated by the heavily-armed ISIS—there was little to stop ISIS commanders from ordering cash and gold removed from local banks. That stolen cash could be used immediately, and the gold and silver is being sold on the black market to buyers willing to dismiss scruples about the source of the glittery bargain swag.

ISIS also collects tribute money from local merchants in almost every town where it maintains civilian control. Under the guise of tax collection, ISIS simply mandates that shopkeepers and merchants give up a percentage, generally on a weekly basis. This money is put to use quickly in the form of printed propaganda and video marketing tools designed to recruit new fighters, convert the unbelievers (those who are not simply shot or beheaded outright), and generally instill a kind of re-education for locals as to the rules and ways of the Islamic State.

But with oil prices plummeting around the world, and with demand in the U.S. levelling off—or, by some estimates, even showing signs of declining—ISIS can no longer count on the oil revenue it was receiving just a few months ago. Off-market and black market demand for oil, likewise, has dwindled to a mere trickle. As an indirect result of the oil price decline, a reverse multiplier-effect has hit those areas of Iraq and Syria where ISIS once collected tribute money from local merchants and vendors.

This has caused no less than a cash recession for ISIS—still in need of weapons, ammunition, and replacement equipment.

But ISIS believes it has also stumbled upon another, new source of high dollar revenue—the ransoming of the remains of those it has executed, especially westerners.

ISIS militants have apparently demanded that they be paid a cash tribute of more than $1 million for the return of the body of James Foley, the American photojournalist beheaded on camera by ISIS fighters in August 2014. Foley’s death was an outrage to most in the west, and may have prompted the White House toward some of the more aggressive military actions now being used in the skies of Iraq and Syria. Foley’s killing was followed weeks later by the videotaped beheading of American journalist Steven Sotloff.

ISIS has already established a reputation for extracting ransom money for garden-variety forms of kidnapping. At least a dozen Europeans held captive by ISIS have been released after cash was paid through intermediaries. But now, the militant group may have calculated that the need for closure faced by most western families will facilitate the payment of large sums of cash in exchange for the remains of loved ones.

The proposed Foley deal, though not confirmed by any agency of the U.S. government, may be the first salvo in a series of such offers. ISIS leaders may be calculating that if the family and friends of Foley are willing to pay for the return of his body, others may be willing to pay as much—or more. Officially, U.S. policy states that the government will not negotiate with terrorists or with terror groups—and ISIS surely fits that characterization.

According to several media sources, ISIS militants have agreed—if needed—to provide DNA samples to an intermediary, possibly in Turkey or Jordan, where scientific identification of the remains can be verified. The Foley family has declined to comment on the report to journalists or media outlets, but some Pentagon and State Department officials said that such transactions would be contrary to U.S. policy.

Foley was working in northern Syria when he was kidnapped on the street by ISIS in November 2012. His death was videotaped as part of an effort by ISIS to punish the United States and President Barack Obama for the introduction of airstrikes over northern Iraq this past summer.

Related Thursday Review articles:

Will James Foley’s Death Raise the Stakes in Iraq?; R. Alan Clanton; Thursday Review; August 20, 2014.

Battling ISIS: Will Air Power Be Enough?; R. Alan Clanton; Thursday Review; November 17, 2014.