Financial war against the IS
Targeting IS’s oil infrastructure is only the first step in destroying the group
The writer has a Master’s degree in conflict-resolution from the Monterey Institute of International Studies in California and blogs at http://coffeeshopdiplomat.wordpress.com
The Islamic State (IS) is now considered to be the world’s wealthiest terrorist group. This past week, the UN gathered the finance ministers of the countries on the Security Council and developed a plan to restrict IS funding by targeting the group’s profits from oil, human trafficking, kidnapping for ransom and smuggling of antiquities. The UN now requires member countries to increase information-sharing about the group’s activities and to freeze assets and travel of IS members. Other terrorist groups affiliated with the IS will now be marked with the following epithet: “Association with ISIL”.
This resolution in itself will not make an immediate dent in the financing of the IS, but it provides some countries new direction to freeze assets and arrest people. One issue that the resolution doesn’t address is private funding of the IS from within nations that are supposedly allied against the terror group. In total, the IS is worth around $2 billion, on top of earning $3 million a day from oil revenue and other illegal activities; it also receives funding and donations from Saudi Arabia, Qatar and Kuwait. There is no reliable evidence that the Saudi government, a member of the coalition against the IS, funds the group but many of its citizens do provide cash donations channelled through Qatar and Kuwait. Coincidentally, neither of those nations have condemned the IS or taken part in airstrikes against the terrorist group. According to Brookings Institution, funds flow to the terrorist organisation from Qatar to a clearing house in Kuwait from where they are forwarded to Syria and Iraq.
The IS uses oil as its primary currency and relies heavily on the sale of oil from wells and refineries that were seized in Iraq and Syria. Iraq has the world’s fifth-largest crude oil reserves. The group has also tapped into a network of tunnels in operation since the 1990s, which allowed Saddam Hussein to avoid sanctions by smuggling oil worth billions of dollars out of Iraq. To add to the complexity of this conflict, the IS smuggles oil for sale into Turkey’s southern corridor and Syria’s northeastern corridor. The IS controls 80 per cent of Syria’s oil — it sells it to Bashar al-Assad’s regime, anti-Assad rebels, and even indirectly to international aid agencies due to this oil being the only oil available in the conflict-ridden areas.
The current strategy of the US and its allies now entails attacking IS’s ability to produce and sell oil. Until recently, the goal was to keep the infrastructure intact for whoever takes over from the IS, thus the group’s oil distribution system had been untouched so far. The US is now targeting oil refineries and transportation systems, including roughly 1,000 tanker trucks, which the IS uses to smuggle oil and sell on the black market. Targeting IS’s oil infrastructure is only the first step in destroying the group.
Once its financing and infrastructure are sufficiently weakened, its recruitment and retention are expected to suffer as well. This will hopefully lead to reversing its territorial gains and restoring control of the areas to less radical forces. Of course, countries in the Middle East will need to unite against the IS for this scenario to play out. This will not be an easy task with the region suffering from a long history of sectarian strife, and rivalry between Saudi Arabia and Iran.
Published in The Express Tribune, December 28th, 2015.
This resolution in itself will not make an immediate dent in the financing of the IS, but it provides some countries new direction to freeze assets and arrest people. One issue that the resolution doesn’t address is private funding of the IS from within nations that are supposedly allied against the terror group. In total, the IS is worth around $2 billion, on top of earning $3 million a day from oil revenue and other illegal activities; it also receives funding and donations from Saudi Arabia, Qatar and Kuwait. There is no reliable evidence that the Saudi government, a member of the coalition against the IS, funds the group but many of its citizens do provide cash donations channelled through Qatar and Kuwait. Coincidentally, neither of those nations have condemned the IS or taken part in airstrikes against the terrorist group. According to Brookings Institution, funds flow to the terrorist organisation from Qatar to a clearing house in Kuwait from where they are forwarded to Syria and Iraq.
The IS uses oil as its primary currency and relies heavily on the sale of oil from wells and refineries that were seized in Iraq and Syria. Iraq has the world’s fifth-largest crude oil reserves. The group has also tapped into a network of tunnels in operation since the 1990s, which allowed Saddam Hussein to avoid sanctions by smuggling oil worth billions of dollars out of Iraq. To add to the complexity of this conflict, the IS smuggles oil for sale into Turkey’s southern corridor and Syria’s northeastern corridor. The IS controls 80 per cent of Syria’s oil — it sells it to Bashar al-Assad’s regime, anti-Assad rebels, and even indirectly to international aid agencies due to this oil being the only oil available in the conflict-ridden areas.
The current strategy of the US and its allies now entails attacking IS’s ability to produce and sell oil. Until recently, the goal was to keep the infrastructure intact for whoever takes over from the IS, thus the group’s oil distribution system had been untouched so far. The US is now targeting oil refineries and transportation systems, including roughly 1,000 tanker trucks, which the IS uses to smuggle oil and sell on the black market. Targeting IS’s oil infrastructure is only the first step in destroying the group.
Once its financing and infrastructure are sufficiently weakened, its recruitment and retention are expected to suffer as well. This will hopefully lead to reversing its territorial gains and restoring control of the areas to less radical forces. Of course, countries in the Middle East will need to unite against the IS for this scenario to play out. This will not be an easy task with the region suffering from a long history of sectarian strife, and rivalry between Saudi Arabia and Iran.
Published in The Express Tribune, December 28th, 2015.