ISIS Might Not Be So Broke After All

Why the terror group could have plenty cash for years to come

Illustration: R. A. Di Ieso
Jun 09, 2016 at 4:26 PM ET

They’re being crushed on the battlefield, and losing men and morale. But Islamic State militants are a long ways still from going belly up.

The jihadists banked a staggering ten-figure sum last year even as they suffered a string of defeats in its final months. New estimates show that ISIS generated more than $2 billion in 2015, with the terror group turning increasingly to extortion and taxation to make up for plummeting sales in oil and other natural resources. The findings, published by the European Center for the Analysis of Terrorism (CAT), suggest that while ISIS’ longterm prospects are grim, an imminent financial collapse is unlikely. The terror group also stands to generate oodles of cash for years to come, staving off extinction.

Analysts beyond the walls of the French terrorism think tank agree.

“ISIS is not bankrupt; it’s a bit constrained,” said Howard Shatz, a senior economist at the RAND Corporation who has studied the militant group’s finances, management and organization. “They’re very good at controlling their expenses and finding ways to raise money.”

More ISIS’ Bulging Cash Cow: Shakedowns, Not Oil And Artifacts

With a diverse portfolio of racketeering income and natural resources, ISIS netted as much as $2.4 billion in 2015, according to CAT’s latest estimates. That figure is $500 million less than what the $2.9 billion tallied by the center in 2014, a decrease that analysts and U.S. officials attribute to mounting military pressure. A surge in airstrikes targeting the terror group’s vast oil reserves helped plunge its oil sales 45 percent in those two years, from $1.1 billion to $600 million. Territory relinquished by ISIS militants across Syria and Iraq also cost them millions in phosphate, cement and agriculture sales.

To compensate for these heavy losses, the terror group has apparently doubled down on its elaborate system of graft and coercion against those who live in the self-declared caliphate. Shakedowns, confiscations and an array of punitive taxes and fees more than doubled to $800 million in 2015, up from $360 million the year before, according to the report. Leaked financial documents reviewed by Vocativ show that ISIS militants regularly seize homes and livestock from local inhabitants, and have levied harsh fines against those accused of tiny infractions, such as smoking or failing pop quizzes on the Quran.

All told, extortion and criminal enterprises accounted for 37 percent of ISIS revenue in 2015, up from 17 percent the year before, the center found.

“The big increase in revenue from taxation and in criminal fundraising doesn’t bode well for the economy under their control,” said Jacob Shapiro, a terrorism expert and professor of politics and international affairs at Princeton University.

More There’s Only One Way To Bleed ISIS Dry

Still, Shapiro told Vocativ that the terror group’s revenue sources, though dwindling and unsustainable, could keep the militants afloat for as many as five years.

Such longevity may seem startling, given the ongoing setbacks faced by ISIS. Aided by a U.S.-led coalition, Syrian and Iraqi forces are recapturing towns and villages ISIS once used to tax and extort. The Iraqi government has launched an aggressive offensive to retake Fallujah, which ISIS has controlled since 2014. U.S. and Russian-led forces are advancing toward Raqqa, the jihadist’s de-facto capital in Syria.

The pressure has taken its toll on the militant group. ISIS quietly slashed the salaries of its fighters by half late last year, a move that may slowly chip away at morale. Dozens of foreign jihadists who poured into Syria during the terror group’s meteoric rise are now desperately seeking ways to return home, according to reports. In a brutal turn of events, ISIS has taken to executing many of its own as it tries to root out potential spies.

Yet the money continues to flow into ISIS coffers, all but ensuring a long and bloody showdown. Just last month, U.S. Treasury officials said that the militants stand to make $250 million in oil sales this year. Though far less than what it earned two years ago, that figure still makes the group one of the best-funded terrorist organizations in the world, counter-terrorism experts concede.

“As long as they have cells in any area, as long as they can infiltrate places, they will find ways to make money,” Shatz, the RAND Corporation economist, said.