Why is ISIS Minting It’s Own Currency?

The media was fascinated this week by reports that the Islamic State (ISIS) is moving to produce its own currency, which is intended to be produced in gold, silver and copper denominations. Vox.com did an “explainer” on the subject, and CNN brought on former U.S. Treasury official Jimmy Gurelé to discuss the move. Gurelé noted:

“The difficulty, of course, with that kind of money is you can’t just put that money in shoe boxes and place it under your mattress. It has to enter into the financial system at some point in time. So I think the Treasury needs to be focusing on banks — banks in Qatar for example, and in Kuwait — that may be the recipients and handling money for ISIS.”

Which is true, if ISIS viewed itself as either a traditional terrorist organization looking to employ violence for political change, or if it was an insurgency attempting to establish a modern, western style nation-state. But they aren’t, and analyzing their behavior from these perspectives is ultimately a waste of time.

The primarily motivator for ISIS behavior is strict adherence to and imposition of shariah law, and in particular to the law as it was practiced by the Salaf Al-Salih, the original companions of the Mohammed. Given this, a reversion to a precious metal standard makes complete sense for a number of reasons, not the least of which is that many other shariah requirements involve payments which are calculated in traditional Caliphate coinage- the gold Dinar and the silver Dirham- or by the traditional measurement by weight-the daniq. These requirements include the imposition of Jizya (tribute) and kharaj (land) taxes upon non-believers, calculations for Zakat (annual tithe) etc.

For example, the medieval Shafi’ jurist Abu al-Hasan Ali Ibn Muhammad Ibn Habib al-Mawardi in his “The Ordinances of Government” one of the most respected works on the Caliphate and how it is to be organized notes that, “The tribute [Jizya] and the land tax [Kharaj] are two God-sanctioned payments that must be made to Muslims by the unbelievers,” although no one set amount is agreed upon by shariah jurists, either medieval or modern. Al-Mawardi writes:

Abu Hanifa (founder of the Hanafi School of jurisprudence) classifies those liable to it (the jizya) into three groups: the rich, who pay forty-eight dirhams; the average, who pay twenty-four dirhams; and the poor, who are charged twelve dirhams. In this way he sets an upper and lower limit to it, allowing no room for discretion by those in authority, while Malik (founder of the Maliki school) leaves the matter entirely up to them. Al-Shafi’i sets the minimum at one dinar, nothing less than which may be taken.

When ISIS took control of Raqqa, the group set about instituting the jizya in just such a manner as described by Al-Mawardi. According to the UK Telegraph:

Christians are obligated to pay Jizya tax on every adult male to the value of four golden dinars for the wealthy, half of that for middle-income citizens and half of that for the poor,” their decree said. “They must not hide their status, and can pay in two installments per year.” Four dinars would amount to just over half an ounce of gold, worth £435 at current prices.

And while it is tempting to view the Islamic State as engaged in some kind of brutal “renaissance faire”, playing at living life in the manner of medieval Muslims, they are certainly not alone in their desire to institute the jizya. For example, during the reign of the Muslim Brotherhood in Egypt, prior to its overthrow, reports were made that Muslim Brotherhood members were extracting the Jizya in some areas. The Washington Times reported at the time:

According to Fr. Yunis Shawqi, who spoke yesterday to Dostor reporters in Dalga, all Copts in the village, “without exception,” are being forced to pay the tax. “[The] value of the tribute and method of payment differ from one place to another in the village, so that, some are being expected to pay 200 Egyptian pounds per day, others 500 Egyptian pounds per day,” Mr. Shawqi said, according to the translator. In some cases, families not able to pay have been attacked. As many as 40 Christian families have now fled Dalga, Mr. Ibrahim reported.

Hamas has also threatened to establish the Jizya if it should succeed in establishing a Palestinian state, and protection rackets demanding the jizya from Christians under threat of violence are well known throughout the Middle East.

In addition to the jizya, the desire to return to a traditional, shariah compliant, currency system based on gold and silver is also far more pervasive then one might otherwise assume.

For example, the former prime minister of Malaysia Dr Mahathir Mohamad has been a leading advocate for the Islamic world to return to the gold dinar and silver dirham system. In addition to Malaysia, Iran , and Indonesia have hinted at accepting a return to such a currency standard, and firms focused on providing gold dinars are in place in South Africa, The United Kingdom, Pakistan, and the United States. The dinar movement is only one aspect of a far wider effort to establish shariah compliant finance, a topic about which our sister blog Shariah Finance Watch, covers in far greater detail.

The point of drilling down on this relatively minor point regarding the Islamic State’s currency, is that ISIS behaves in matters both large and small in a manner widely understood to be consistent with shariah law, and efforts to establish the shariah take place both violently, as ISIS has done, as well as non-violently, while the end objective remains the same.