Hitting Islamic State’s oil supply won't stop the terror

22 November 2015 9:22 am

Weeks before the Paris attacks that killed 129 people, US war planes resumed sorties above Syria and Iraq. The US was targeting new oil fields and other parts of a vast petroleum infrastructure that fuels—and funds—Islamic State, one of the richest terrorist armies the world has known.

At the same time, Reuters reports that Russia is conducting mass strikes on terrorist positions in Syria, hitting oil refining assets under the control of Islamic State militants. Russia has told Associated Press that Russian warplanes destroyed 15 oil refining and storage facilities in Syria and 525 trucks carrying oil during this week's bombing blitz, depriving IS of $1.5 million in daily income from oil sales.

‘But is it really that effective?

According to Bloomberg, the US failed to cut off Islamic State's oil because it had grossly overestimated the damage they’d inflicted during airstrikes on the militants’ oil production apparatus last year, while underestimating Islamic State’s oil revenue by $400 million. According to U.S. Department of the Treasury officials and data they released in the wake of the Paris mayhem, the terrorist group is actually taking in $500 million from oil a year.

But even if they weaken oil, Islamic State has money coming in from other sources beyond crude—from selling sex slaves to ransoming hostages to plundering stolen farmland—that can likely keep it fighting for years. As Bloomberg points out, $500 million buys a lot of $500 black-market AK-47s.

Daniel Glaser, the assistant secretary for terrorist financing at the U.S. Treasury Department, told the Foreign Policy blog that the Islamic State had a massive one-time cash infusion from the dozens of banks it seized in Mosul, Iraq, in 2014. The group’s biggest ongoing source of money, doesn’t come from oil but from extortion. Forcing the 8 million people under its thumb to pay extortion fees nets the Islamic State hundreds of millions of dollars a year, Glaser said. It provides militants with funds for everything from garbage pickup to heating oil to road tolls.

Valérie Marcel, an associate fellow on energy at Chatham House in London, said as long as the group controls territory in Iraq and Syria, it will be able to keep generating revenue.

“As soon as they expand territory, their potential for taxes, theft, tolls, and oil revenue increases,” Marcel told Foreign Policy. “They need territorial expansion to maintain their revenue. Controlling territory is the bottom line.”

Stars and Stripes identifies sales of antiquities, renting and auctioning off the properties of people who have been killed or fled newly occupied areas and captured territories rich in phosphate, cement and sulphur are other lucrative sources of revenue.

Two years after the death of Bin Laden, Islamic State has redefined terrorism. Behind the medieval savagery is an organisation built around meticulous and modern planning. Structured like a multinational corporation, it has an army of accountants and management personnel producing reports documenting everything from the minutiae of daily life in the caliphate, to annual reports celebrating the murderous toll of their war.

As Cam Simpson writes in Bloomberg. the group’s leaders portray themselves as akin to seventhâ?€¯century warriors thundering forth on horseback to expand their religious empire by sword.

“But in many important ways they have much less in common with -medieval warriors than they do with modern ¬bureaucrats, and a successful attempt to defeat them may require understanding their logistics, their financing, and their management structure as much as their extreme theology,’’ Simpson writes.

“It may sound bizarre for a group calling itself a caliphate, but the foundation of its management model, as identified by experts, is more akin to that of General Motors than it is to a ¬religious dynasty from the Dark Ages. After decades, we may have arrived at the ultimate professionalization of terror.”

And that means one thing: the Islamic State will prove more difficult to stop that any of their predecessors. Islamic State has corporatised terror. They’ve built their war machine on a model based on western capitalist planning.