The Islamic State (or
ISIS) is “the best-funded terrorist organization we’ve confronted,” but “we
have no silver bullet, no secret weapon to empty ISIS’ coffers overnight.”
These were the words of David Cohen, the undersecretary for terrorism and financial
intelligence at the U.S. Department of the Treasury in a speech yesterday, in
which he outlined the U.S. government’s assessment of ISIS finance and a
strategy to counter it.
According to Cohen,
ISIS’ principal source of finance is still derived from its control and sale of
oil, which he assessed was still bringing in $1 million a day. Additional funds
come from kidnap for ransom, extortion networks, criminal activities, and
donations from external individuals, the latter being of least significance in
terms of scale. In order to counter this broad base of financial incomes, Cohen
explained that U.S. strategy is focused on disrupting ISIS revenue streams,
restricting ISIS access to the international financial system, and targeting
ISIS leaders, facilitators and supporters with sanctions.
Despite vastly
underestimating ISIS’ potential in the months and years leading up to the
organization’s 2014 offensives in Syria and Iraq, the Treasury’s, and by
extension the U.S. government’s assessment of ISIS finance and how to combat it
does seem largely in tune. It is indeed right that external financial donations
are of minimal significance to ISIS. Since
as early as 2005, ISIS predecessor organizations
Al-Qaeda in Iraq (AQI), Majlis Shura al-Mujahideen, and the Islamic State in Iraq
(ISI) all consistently sought to develop internal structures dedicated to
maintaining financial self-sufficiency and an independence from potentially
vulnerable external donors. In the current climate, however, a diminished
capacity to earn from the sale of oil may elevate the importance of external
sources of funding for ISIS to sustain its internal durability.
ISIS Donors Abroad
For this reason, it is
more important than ever to now focus on existing ISIS donors abroad —
particularly in the Gulf — in order to diminish their potential to expand
in scale when the need may arise. As Cohen made clear, initiatives in Saudi
Arabia and the United Arab Emirates appear to have made some headway, while in
Kuwait and Qatar, Cohen assessed that despite new legislation aimed at
countering terrorist financing, both countries remain "permissive
jurisdictions" for such activities and that "both countries have more
work to do." At this point, it is unclear whether new legislation —
introduced in Qatar in mid-September and in Kuwait, in January — has been
slow to make an impact, or is simply not powerful or as far-reaching as is
necessary. Whatever the case, it remains evident that more needs to be done by
Qatar and Kuwait to enforce their laws.
No Gulf state has an
interest in facilitating or turning a blind eye to terrorist financing, as the
recipients of such funds are explicitly hostile to them. In fact, ISIS has
periodically singled out Qatar and its Ministry of Foreign Affairs in
particular, as being kuffar (nonbelievers) for its role in
apparently providing humanitarian aid through member groups of the Islamic
Front in northern Syria — a body ISIS labels sahwat, in
reference to the tribal militias who rose up against the ISI in Iraq in the
mid-to-late 2000s.
Extortion and illicit
taxation systems are also a significant source of income for ISIS, and
potentially one of the most sustainable. Prior to capturing Mosul, ISIS was
already earning $12 million a month in
the city alone. This is now being replicated, though in a more organized
manner, across ISIS-controlled territory and covertly in other areas under its
partial influence. However, it should be recognized that this ‘extortion’ and
taxation is not always done unilaterally and solely in ISIS self-interest. For
example, a sophisticated ISIS taxation systemon the main highway between
Jordan and Baghdad has been developed which replaces the government’s import tax by charging reduced rates for the
transport of goods into the Iraqi capital. The trucking business across western
Iraq is primarily controlled by Sunni tribes, and therefore, by imposing lower
taxes ISIS earns a steady income but offers its tribal guarantors an
opportunity to increase their earnings. Similar systems are in place
elsewhere in western Iraq and eastern Syria, with an overriding emphasis place
upon this dual focus of earning money while retaining a ‘buy-in’ from tribes
that ISIS existentially relies upon for its societal survivability.
The sustainability of
ISIS extortion and taxation makes it a tough nut to crack in terms of
counter-terrorist financing. As Undersecretary Cohen stressed, truly eroding
this source of ISIS income means breaking its hold over territory. But this is
simply not going to happen without genuinely capable local ground forces
following up targeted coalition strikes. Iraqi Army units are still losing and
retreating under ISIS attack in Anbar province, while quite remarkably,
US-backed rebels in Syria still complain of having had no coordination with
coalition action.
ISIS Oil Income
Disrupting ISIS’ oil
income is more of a challenge that might meet the eye. Thus far, a great deal
of focus has been placed on an erroneous assessment that ISIS is deeply reliant
on selling its oil to foreign customers (in Turkey, Iraqi Kurdistan, Jordan and
elsewhere). Instead, while this market focus does exist, it is decreasing.
Since the summer, ISIS has been increasingly focused on establishing a durable
internal market for its oil produce, thereby ensuring a reliable source of fuel
for its own fleets of vehicles but crucially creating a source of dependence
between civilians and its capacity to provide them cheap oil. In this respect,
the fact that recent coalition strikes have targeted oil at its source —
rather than its means of transport or sale, for example — may prove deeply
damaging to the international community’s efforts to counter ISIS.
In recent discussions
with nearly two-dozen armed groups in Syria, this was highlighted as a critical
error in strike targeting (not to mention wider frustrations within the
opposition regarding strikes). Winter is only weeks away and oil to fuel
generators, bakeries and other key local facilities will be short in supply, to
say the least — both within and outside ISIS territory. Should ISIS have
proven incapable of transporting oil to civilians, it would likely have been
forced to shoulder the blame, but with the oil wells and makeshift refineries
themselves now destroyed, ISIS will try (and may likely succeed) in shifting
the blame on ‘the Crusaders.’ “You’ve given them a real gift,” were the words
of one prominent rebel leader.
While ISIS has long
focused on financial self-sufficiency and independence, Al-Qaeda is founded on
a different model, whereby regional affiliates find themselves within a
decentralized structure held together in part by established individual donors
and financial networks. Al-Qaeda’s affiliate in Syria, Jabhat al-Nusra, is no
different in this respect, with its principal source of income deriving from
external donors, while ransoms, a minimal internal taxation system, and
activity in local black markets also contribute.
The prominence of
external funding — from individuals (many in the Gulf) and internal
Al-Qaeda networks around the world — makes for a more identifiable
counter-terrorist finance target. An intensified identification and sanctioning
of individuals suspected of involvement in facilitating the collection and
transfer of money to Jabhat al-Nusra appears to have rubbed a serious dose of
salt in a wound caused by the group’s loss of oil fields in eastern Syria to
ISIS earlier this year. While an apparently dwindling source of income has seen
Nusra expand its kidnap-for-ransom operations, the group has also accelerated a
process of internal change whereby it is thinning out its forces and
increasingly adopting a more ‘typical’ Al-Qaeda nature.
Combating Jabhat
al-Nusra
According to rebels in
Idlib, Hama, and Aleppo, Nusra is currently selling off heavy weapons in
northern Syria, both to earn much needed income, but also to transform into
more of a light rapid reaction force capable of redeploying to other battles
with ease. Its senior leadership is becoming less Syrian and the influence of
veteran Al-Qaeda commanders is increasing. Foreign fighters are receiving a
heightened public profile, while an overt emphasis on the group’s ‘Syrian-ness’
has reduced notably. While Nusra has dedicated provincial commands in Aleppo,
Hama, Idlib, Homs, the Qalamoun, Damascus and Deraa (the latter incorporates
Quneitra), its presence in its Idlib stronghold and to some extent also in
Deraa is becoming increasingly self-interested and unilateral in nature.
This shift in Nusra’s
internal structure and public operational posture may be part of its natural
evolution, but it appears to have been accelerated by diminished finance.
Moreover, the initiation of coalition strikes against its externally focused
‘Wolf’ unit in Aleppo has likely consolidated this radicalizing shift.
Ironically therefore, counter-terrorist measures may be creating more of an
enemy in Jabhat al-Nusra than was there before.
Countering terrorist
finance is an intensely complex and challenging effort. In the short-term, it
can bring a combination of positive and negative consequences, but in the
long-term, if done right, it can cripple a terrorist organization’s capacity to
operate and grow. ISIS and Jabhat al-Nusra are two entirely different beasts in
this regard, and they should be treated as such.
In controlling such
vast amounts of territory and resources, ISIS is more vulnerable in the
immediate term, but its potential capacity to shift blame onto the
international community for its reduced capacity to provide must be borne in
mind. Though necessitating a gargantuan effort in minimal time, the provision
of large quantities of diesel fuel and oil for generators into opposition areas
of northern Syria should be an immediate policy priority. In the long-term,
rolling back ISIS will only come from a meaningful offensive by well-resourced
and capable indigenous ground forces. In Syria, home to ISIS’ capital city,
this appears to be a very long way away, unfortunately.
Jabhat al-Nusra,
meanwhile, still retains extremely significant popularity within the opposition.
It remains extraordinarily difficult to get Syrian rebels, including defected
secular nationalist officers, to condemn Nusra’s role within the armed
opposition against the Assad regime. This has been very subtly changing though,
thanks to Nusra’s internal evolution. Should financial pressure continue to be
enforced, a process of gradual seclusion may accelerate over time.
It remains extremely
difficult, nigh on impossible for external actors to totally defeat terrorist
organizations. Instead, such groups tend to eventually destroy themselves from
within. Countering their sources of finance can expedite this process, but only
when done gradually and when based on a genuinely accurate assessment of the
organization and its surrounding dynamics — both the fish and the sea, to
use Mao’s famous words.
By Charles Lister, Visiting
Fellow, Foreign
Policy, Brookings
Doha Center
Source: http://www.brookings.edu/
Comments