The success of the Islamic State hinges on the group’s ability to expand the amount of territory it controls as well as in the number of adherents who swear allegiance to it, which is currently estimated to be from 20,000 to 200,000 in Iraq and Syria alone. There are thought to be at least 35 official terrorist groups that have pledged allegiance or support IS including Boko Haram of Nigeria, al-Murabitoun of Mali, and Ansar Bait al-Maqdi of Egypt.
Hisham al-Hashimi told al- Monitor, “IS distributed up to $6 million a month to groups like Boko Haram and Ansar al- Sharia.”
Abu Hajjar who oversaw Islamic State finances prior to his 2014 arrest reportedly told Iraqi officials that IS exported, “$2 billion in international investments to Libya, Indonesia, Nigeria, South Africa and Yemen, money that is now being spread among external allied IS branches.”
The Islamic State is able to “move millions” through online transfer systems such as Hawala, which was the “primary method used by al Qaeda to send and receive cash.” Business Insider also reports that many branches of international banks are controlled by the Islamic State, giving the group the ability to send and receive money though EFTs. However, as a former U.S. counter- terrorism official told the L.A. Times, “You can literally drive a car with $10,000, $20,000 or a million dollars from XYZ country to Syria. Not a whole lot we can do.”
Such funding is vital to groups such as Boko Haram because the Islamic State‘s “financial support … can help guarantee their survival.” Along with money, groups that pledge allegiance to IS are reportedly given “training” and “strategic support,” further enhancing the appeal.
This strategy of expansion deepens IS roots throughout the Muslim world, making the task of defeating IS harder. Senior researcher Martin Ewi from the Institute for Security Studies in South Africa comments on the issue, “If the groups are committed, when the leadership of the current IS organization is removed, these groups can easily reorganize themselves.”
The Islamic State sees value in investing “in people, not infrastructure” because infrastructure “can be an easy target for attacks.” This further explains the action of sending money to groups in exchange for support.
How is Islamic State able to fund such large sums of money to different affiliates?
As The New York Times reports, IS funds come from four main sources: extortion and taxation in Iraq, stolen money from state owned Iraqi banks, oil, and kidnapping ransoms. Just in 2014, ISIS gained $600 million in extortion and taxes, $500 million in stolen funds from state banks, $100 million in oil, and $20 million in ransoms. And an estimated $875 million was the total amount of assets attained by IS when the group captured the city of Mosul in June of last year.
In 2014, the Islamic State seized hundreds of oil fields, and now holds 60% of all of Syria’s refineries. These refineries have been a large target for “United States- led airstrikes” since September 2014. However, as the numbers above show, oil is but a fraction of the group’s income. The Islamic State uses much of the oil in production “for its own fuel,” and was apparently already selling oil at a discounted price “among local markets” before prices fell to “about $2 million per week.” Most of IS oil is sold in the black market, and buyers may not know its origin. The issue of fallen oil prices and stolen refineries, which has cost the Syrian government $3.8 billion dollars, has Syria worried and Iraq uncertain of their abilities to fight against the Islamic State.
IS also receives donations from “sympathetic private individuals” including from areas like Saudi Arabia, Qatar and Kuwait.
The terrorist regime “keeps costs low” by stealing military equipment and infrastructure when it can, and pays low salaries, according to The New York Times.
Funding affiliated groups for their allegiance is a strategic and successful route for the terror group to take. However, it is important to remember that the offer of money from IS is not the only reason many terror groups join in this larger alliance of terrorist groups. Each group shares the same ideology and seek the same “legal, religious, and political ends.”
Islamic State’s ability to raise funds is a major challenge for those fighting against IS, and a deep analysis of IS’s finances followed by an in depth strategy on how to cut off IS funding would be a critical step towards defeating “the world’s wealthiest terrorist group.”