Posts Tagged ‘Iraq’

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Money and the Islamic State of Iraq and Syria

August 11, 2014

In 2007, the Islamic State of Iraq was seen as “the richest of the insurgency groups” in Iraq with $1 billion to 1.5 billion “collected in revenue by the group through foreign donations, enforced taxation and confiscation of the property and funds of Iraqis.” But the U.S. surge and ISI missteps significantly damaged the jihadist group’s ability to raise funds.

Seven years and three names later, ISIS amassed a $2 billion comeback and took control of large swathes of territory in northern Iraq including Mosul and 35 percent of Syria.

ISIS’s financial recovery has been marked by a slight shift away from reliance on local extortion networks (although those are still in effect), improved organizational and financial management by ISIS leader and self-proclaimed caliph Abu Bakr al-Baghdadi, and the departure of U.S. troops in 2011.

The most important elements of ISIS’s funding are sadaqa (voluntary donations) from Arab donors in the Gulf; sales and tolls collected on sales of oil from fields under its control; and increasingly through money made by controlling key infrastructure.

Here’s a rundown of ISIS’s main funding channels:

Sadaqa from private donors

Fundraising is aided by contemporary marketing methods

Oil

  • ISIS controls 60 percent of Syrian oil including the lucrative Omar field
  • In Iraq, ISIS controls Butmah and Ain Zalah oil fields, the refinery in Baiji, and oil and gas resources in Ajeel in northern Iraq
  • ISIS sells or collects a portion on black market sales to Turkey, Iran, and in Syria itself
  • Revenue estimates for ISIS range from $1 million to $3 million daily

Dams

  • In addition to oil, control of key infrastructure such as the dams in Mosul, Fallujah, and Tabqa present increasingly significant revenue potential for ISIS.
  • Professor Ariel Ahram notes this is already occurring at Tabqa, where ISIS is involved in selling electricity.
  • New York Times reporter Tim Arango says that possession of the Mosul dam can enable ISIS to “use it as a method of finance” through extortion schemes to continue their operations.

Other sources

  • Isis has seized arms from Iraqi depots, including U.S. weapons given to Iraqi forces, plus weapons smuggled from Turkey and Croatia
  • The collection of ransom money has sustained ISIS throughout its existence
  • Antiquities smuggling

Incidently, little is being done by the Gulf states to curtail the flow of donations to ISIS because they either want an independent Sunni state carved out of Iraq or to replace Iraq’s Shia-led government with Sunnis. Washington should designate Saudi Arabia and Qatar as state sponsors of terrorism, but it won’t because of diplomatic considerations.

Without interdicting the donations and the contraband oil, U.S. airstrikes will have limited effect on ISIS’s coffers.

This piece is also published at Terror Finance Blog.

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Ex-MI6 chief cites ISIS’s Saudi, Qatari donors

August 5, 2014

Iranian cartoon about Saudi funding of jihad

Richard Dearlove, the former head of the British spy agency MI6, made these comments last month about support for the Islamic State of Iraq by Saudi and Qatari donors:

They [Sunnis in the Middle East] are deeply attracted towards any militancy that can effectively challenge Shia-dom. How much Saudi and Qatari money – now I’m not suggesting direct government funding, but I am suggesting maybe a blind eye being turned – is being channeled towards ISIS, and reaching it? For ISIS to be able to surge into the Sunni areas of Iraq in the way that it’s done recently has to be the consequence of substantial and sustained funding. Such things simply do not happen spontaneously.

Indeed. As Money Jihad has previously observed, ISIS didn’t wake up one day and luck their way into seizing Mosul.  Video clips of Mr. Dearlove’s remarks are available on the Media Research Center’s website here.

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A million a day for ISIS and a grain of salt

July 20, 2014

Is a million dollars a day enough to sustain ISIS’s operations without dipping into its own reserves? Perhaps. There may be about 10,000 ISIS foot soldiers. Paying, feeding, clothing, and transporting that many men is expensive. But if each jihadist were getting a proportionate share of $100 a day, that still well exceeds the median Iraqi income of $15 a day, which probably helps with recruitment efforts.

That being said, such a rapid influx of money does not automatically translate into the ability to spend the money—either wisely or at all. Remember the movie “Brewster’s Millions” where Richard Pryor was challenged to spend $30 million in 30 days? It’s harder than it looks.

But it’s still ominous. From the Telegraph on July 11:

Iraq oil bonanza reaps $1 million a day for Islamic State

Exclusive: Islamic State strengthens grip on northern Iraq by raising millions from sale of oil through Kurdistan to Turkey and Iran

Islamic State jihadists are raising as much as $1 million a day from the sale of crude oil recovered from conquered oilfields in Iraq that is then smuggled on to Turkey and Iran.

Oil industry experts believe the group formerly known as Islamic State of Iraq and al-Sham (Isis) is able to command $25 a barrel for crude its fighters are moving in tankers from the oil plains south of Mosul.

Middlemen based in the Kurdistan region of Iraq are able to turn a handsome profit on the supplies by selling its abroad for refining into the more valuable petroleum and diesel products.

The specialist Iraqi Oil Report said the centre of the $1million trade was the town of Tuz Khurmatu on the fringes of the Kurdish region. Traders there are buying convoys of tankers supplied by Islamic State…

The swift advance of Islamic State after last month’s conquest of Mosul gave it control over the path of the Kirkuk/Ceyhan oil pipeline, the country’s biggest, and the Baiji oil refinery, again the most important refinery in Iraq…

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ISIS finds taxing more durable than looting

July 13, 2014

Taking a cut from oil refineries and water works is more lucrative and enduring than demolishing infrastructure and selling the spare parts, argues Prof. Ariel Ahram in an incisive piece about Al Qaeda in Iraq from the Washington Post’s “Monkey Cage” blog (hat tip to El Grillo):

…Most researchers point particularly to the “lootability” of resources – whether they are easily seized and can be sold on the international market at a significant mark up – to explain the onset and intensity of resource wars. Control over these goods motivates people to take up arms while the revenue from selling them fund the fight. Jeremy Weinstein shows how resource “rich” rebel movements are prone to attracting opportunists and thugs, who are ill-disciplined and prone to manhandling civilians. Rebel groups with access to lootable resources are liable to splinter and metastasize, becoming more like criminal operations than political movements.

But not all resources are lootable and not all lootable resources have the same centrifugal effects on rebel behavior. As Philippe Le Billon and Eric Nicholls have shown, unlike diamonds or drugs, dams and oil rigs are better targets for extortion than physical appropriation. After all, these structures are far more valuable assembled and operational than broken down for spare parts. Moreover, dams and rigs require a cadre of experts, technicians and engineers to run effectively. And, as Mancur Olson famously pointed out, opportunities for extortion create incentives for building sustainable, long-term rule, which are distinctly different from simply predation. According to New York Times reporter Thanassis Cambanis, IS  left the staff at the Tabqa Dam unharmed and in place, allowing the facility to continue operations and even selling electricity back to the Syrian government. Similarly, oil fields under IS  control continue to pump. Indeed, IS  has shrewdly managed these resources to help ensure a steady and sustainable stream of revenue. As one IS fighter told the New York Times, while Assad’s loyalists chant “Assad or burn the country,” IS retorts “We will burn Assad and keep the country.” Beside revenue from oil and water, IS  collects a variety of commercial taxes, including on trucks and cellphone towers. It has also imposed the jizya (poll tax) on Christian communities under its control…

It sounds as though ISIS has matured beyond the traditional jihadist outlook of a spurned lover (“If I can’t have you, no one will”). It has realized that nine-tenths of the battle is in “staying power,” and that it will be far easier to govern if there is infrastructure in place to keep the economy and society operating after all the dust settles. This strategic thoughtfulness suggests, once again, that state sponsors such as Saudi Arabia, Turkey, and Qatar are coaching ISIS’s leaders, or that Saddam’s old flag officers are mixed in ISIS’s shura council, or both.

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ISIS gets men and $800 million from Turkey

July 8, 2014

Jihadist recruits and millions of dollars have slipped through the sieve-like border between Turkey and Iraq, says Middle East expert Daniel Pipes. This is purposeful not negligent. Pipes argues that this is because Prime Minister Recep Erdogan’s twin interests in toppling Assad in Syria and fighting the Kurds in Iraq are both served by an ascendant Al Qaeda in Iraq and Syria (ISIS).

Again, ISIS didn’t wake up one day and seize Mosul by chance. The combination of funding, number of foot soldiers, and strategy leaves almost no doubt that state sponsorship is involved.

Via Algemeiner on Jun. 22:

…Ankara may deny helping ISIS, but the evidence for this is overwhelming. “As we have the longest border with Syria,” writes Orhan Kemal Cengiz, a Turkish newspaper columnist, “Turkey’s support was vital for the jihadists in getting in and out of the country.” Indeed, the ISIS strongholds not coincidentally cluster close to Turkey’s frontiers.

Kurds, academic experts and the Syrian opposition agree that Syrians, Turks (estimated to number 3,000), and foreign fighters (especially Saudis but also a fair number of Westerners) have crossed the Turkish-Syrian border at will, often to join ISIS. What Turkish journalist Kadri Gursel calls a “two-way jihadist highway,” has no bothersome border checks and sometimes involves the active assistance of Turkish intelligence services. CNN even broadcast a video on “The secret jihadi smuggling route through Turkey.”

Actually, the Turks offered far more than an easy border crossing: they provided the bulk of ISIS’ funds, logistics, training and arms. Turkish residents near the Syrian border tell of Turkish ambulances going to Kurdish-ISIS battle zones and then evacuating ISIS casualties to Turkish hospitals. Indeed, a sensational photograph has surfaced showing ISIS commander Abu Muhammad in a hospital bed receiving treatment for battle wounds in Hatay State Hospital in April 2014.

One Turkish opposition politician estimates that Turkey has paid $800 million to ISIS for oil shipments. Another politician released information about active duty Turkish soldiers training ISIS members. Critics note that Turkish Prime Minister Recep Tayyip Erdoğan, has met three times with someone, Yasin al-Qadi, who has close ties to ISIS and has funded it.

Why the Turkish support for wild-eyed extremists? Because Ankara wants to eliminate two Syrian polities, the Assad regime in Damascus and Rojava (the emerging Kurdish state) in the northeast.

Regarding the Assad regime: “Thinking that jihadists would ensure a quick fall for the Assad regime in Syria, Turkey, no matter how vehemently officials deny it, supported the jihadists,” writes Cengiz, “at first along with Western and some Arab countries and later in spite of their warnings.”

Regarding Rojava: Rojava’s leadership being aligned with the PKK, the (formerly) terrorist Kurdish group based in Turkey, the authoritative Turkish journalist Amberin Zaman has little doubt “that until recently, Turkey was allowing jihadist fighters to move unhindered across its borders” to fight the Kurds…

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ISIS raises cash in Indonesia for Iraqi jihad

July 1, 2014

Time reports that it’s legal to raise money for terrorism in Indonesia. Al Qaeda in Iraq and Syria (ISIS) is taking advantage of this by fundraising openly around the capital. It seems that loyalties and the center of gravity is shifting internationally away from “traditional” Al Qaeda core leaders like Zawahiri toward the ascendant ISIS. From (h/t El Grillo and Terrorism Watch):

…Indonesia has a different approach to jihadism than its neighbors. Though terrorist attacks are punishable by death, it is not illegal to raise money for or join a foreign jihadist group. In contrast, in late April, Malaysia arrested 10 militants — eight men and two women — who planned to travel to Syria to take part in the war. In March, Singapore said it was investigating the departure of a national to join the Syrian jihad.

Emboldened by Indonesia’s more tolerant attitude, ISIS supporters there have become more visible and openly solicit funds. Theyheld a collection in February at an Islamic state university on the outskirts of Jakarta and held a rally in the capital’s central business district in March. On June 15, a Sunday morning when one of the main streets in the Central Javanese city of Solo is transformed into a weekly car-free zone for strolling families, militants from Jamaah Ansharut Tauhid, a JI splinter cell, paraded in ISIS insignia, waved ISIS flags and wreaked havoc on a music performance.

They are also quite active on Twitter, Facebook and YouTube. Iqbal Kholidi, who tracks and observes Indonesian ISIS supporters on social media, has culled photos of them training and posing with the signature black flags from across the country — in Jakarta, Central Java, South Kalimantan and Poso, Central Sulawesi…

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5 Qataris who fund Al Qaeda

June 30, 2014

In addition to institutional and charitable support by Qatar, Al Qaeda and its offshoots (including jihadists in Syria and Iraq) receive substantial financial support from private Qatari donors and bundlers. Here’s a quick who’s who:

Qatari fundraiser for ISIS

Abd al-Rahman al-Nuaymi

Abd al-Rahman al-Nuaymi
The U.S. Treasury Department describes al-Nuaymi as “a Qatar-based terrorist financier and facilitator who has provided money and material support and conveyed communications to al-Qa’ida and its affiliates in Syria, Iraq, Somalia and Yemen for more than a decade. He was considered among the most prominent Qatar-based supporters of Iraqi Sunni extremists.” Al-Nuaymi transferred $600K to Al Qaeda in Syria in 2013, and sent $2 million monthly to Al Qaeda in Iraq for an undisclosed period of time. He is also described as an interlocutor between Qatari nationals and Al Qaeda in Iraq leaders.

Salim Hasan Khalifa Rashid al-Kuwari
Treasury says al-Kuwari “provides financial and logistical support to al-Qa’ida, primarily through al-Qa’ida facilitators in Iran. Based in Qatar, Kuwari has provided hundreds of thousands of dollars in financial support to al-Qa’ida and has provided funding for al-Qa’ida operations, as well as to secure the release of al-Qa’ida detainees in Iran and elsewhere.”

Abdallah Ghanim Mafuz Muslim al-Khawar
According to U.S. officials, “Al-Khawar has worked with Kuwari to deliver money, messages and other material support to al-Qa’ida elements in Iran. Like Kuwari, Khawar is based in Qatar and has helped to facilitate travel for extremists interested in traveling to Afghanistan for jihad.

Khalifa Muhammad Turki al-Subaiy
The UN describes al-Subaiy as “a Qatar-based terrorist financier and facilitator who has provided financial support to, and acted on behalf of, the senior leadership of Al-Qaida (QE.A.4.01). He provided assistance to senior Al-Qaida leader Khalid Sheikh Mohammed prior to Sheikh Mohammed’s capture in March 2003. Since that time, he has provided financial support to Al-Qaida senior leadership in South Asia.” Al-Subaiy served a brief prison sentence in 2008 before being released by Qatar.

Yusuf Qaradawi
The Egyptian-born, Qatar-based spiritual father of the international Muslim Brotherhood sits atop a massive terrorist funding network including the “Union of Good” umbrella network of charities that funds Hamas. Qaradawi was also a sharia adviser for Al Taqwa which provided banking services to Al Qaeda.

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ISIS’s original piggy bank was Saudi Arabia

June 26, 2014

Could the Islamic State of Iraq (ISIS) terrorists truly have funded their ascendancy solely through extortion against local businessmen in northern Iraq? True, that has helped ISIS, and Money Jihad has covered these extortion operations several times (here, here, etc.). But we have also seen repeatedly that successful and multifaceted terrorist groups tend to rely on state sponsorship, whether it’s the Taliban’s seed money from Pakistan, Hezbollah’s support from Iran, or IHH’s money from Turkey.

As Money Jihad has always said, Saudi Arabia didn’t just fund 9/11—it funded the Iraq insurgency. The same elements Saudi Arabia funded during Operation Iraqi Freedom continue to be funded by Saudi Arabia today. Iraq says that this is the case. German security expert Günter Meyer says it is the case as well. The only person denying it is some flunky quoted in this article who lives in a bubble and works in John Kerry’s State Department. It is difficult to characterize Jen Psaki’s quote as anything other than a lie.

This analysis from Deutsche Welle (h/t El Grillo) is important to read for anybody wanting to understand what’s really fueling ISIS’s rise—and it didn’t just start with seizing a bank in Mosul:

Who finances ISIS?

During its conquest of the northern Iraqi city of Mosul, ISIS fighters looted more than 500 billion Iraqi Dinar, worth about $420 million (308 million euros) at current exchange rates. ISIS is a rebel army composed of Sunni jihadis that calls itself the “Islamic State of Iraq and greater Syria.” Its aim is to establish a theocratic Sunni caliphate in the region.

Iraqi officials estimate that the group now has about $2 billion in its war chest. What remains controversial is where the bulk of its money comes from.

Iraq’s Shiite-dominated government accuses Saudi Arabia of supporting the ISIS jihadis. On Tuesday (17.06.2014), Iraqi Premier Nouri al-Maliki said “we hold Saudi Arabia responsible” for the financial and moral support given to ISIS.

The USA, which is Saudi Arabia’s most important ally, has rejected the Iraqi Premier’s accusation. Jen Psaki, a speaker for the US State Department, said on Tuesday evening that al-Maliki’s accusation was “inaccurate and humiliating.”

Money from the Gulf States?

“There is no publicly accessible proof that the government of a state has been involved in the creation or financing of ISIS as an organisation,” said Charles Lister, Visiting Fellow at the Brookings Doha Center in Qatar, a subsidiary of the US think-tank Brookings Institution.

Others take a different view. Günter Meyer is Director of the Center for Research into the Arabic World at the University of Mainz. Meyer says he has no doubt about where ISIS gets its funding. “The most important source of ISIS financing to date has been support coming out of the Gulf states, primarily Saudi Arabia but also Qatar, Kuwait and the United Arab Emirates,” Meyer told Deutsche Welle. The Gulf states’ motivation in financing groups like ISIS was to support their fight against the regime of President Bashar al Assad in Syria, according to Meyer. Three quarters of the Syrian population are Sunni Muslims, but Syria is ruled by an elite drawn mostly from the Alawite minority. The Alawites are an offshoot of Shiite Islam.

Recently, however, the government of Saudi Arabia has recognized the dangers of this policy. “Saudi citizens now compose the largest contingent of foreign fighters in ISIS. When those fighters come home, there’s a danger that they might turn against the Saudi regime,” Meyer said. But there are reasons to believe that financing for ISIS continues to flow out of Saudi Arabia, “less from the Saudi government than from rich Saudis”.

Money from oil and extortion

Additional key financing sources for ISIS, according to Meyer, are the oil fields of northern Syria. “ISIS was able to get those oil fields under their control. They use trucks to bring oil over the border into Turkey. That’s an important source of funding for them.”

The view of Charles Lister at the Brookings Doha Center is that ISIS is largely able to fund itself. “ISIS has made an effort to establish networks in society that generate a continuing flow of money.” As an example, Lister points to the systematic extortion conducted by ISIS in the recently conquered city of Mosul.

“The exortion affects small businesses and big companies, construction firms, and if the rumors are true, even local government representatives,” Lister told DW. “In addition, it’s suspected that the organization levies taxes in the areas that it completely controls – for example Raqqa in northeastern Syria.”…

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ISIS steals $429 million in Mosul; IB Times cites Money Jihad in comparison of richest terror groups

June 12, 2014

Al Qaeda in Iraq and Syria (ISIS) has taken control of Mosul in a major setback for Iraqi and regional security.  Mosul’s central bank was seized in the process, and the International Business Times is reporting that ISIS gained control of the $429 million stored in the bank.  IB Times cited Money Jihad‘s research into the richest terrorist organizations in the world as evidence that the seizure catapults ISIS to the top of the list.

Mosul Seized: Jihadis Loot $429m from City’s Central Bank to Make Isis World’s Richest Terror Force

The Islamic State of Iraq and al-Shams (Isis) has become the richest terror group ever after looting 500 billion Iraqi dinars – the equivalent of $429m (£256m) – from Mosul’s central bank, according to the regional governor.

Nineveh governor Atheel al-Nujaifi confirmed Kurdish televison reports that Isis militants had stolen millions from numerous banks across Mosul. A large quantity of gold bullion is also believed to have been stolen.

Following the siege of the country’s second city, the bounty collected by the group has left it richer than al-Qaeda itself and as wealthy as small nations such as Tonga, Kiribati, the Marshall Islands and the Falkland Islands.

ISIS soars to upper echelon of well-funded jihadist groupsThe financial assets that Isis now possess are likely to worsen the Iraqi governement’s struggle to defeat the insurgency, which is aimed at creating an Islamic state across the Syrian-Iraqi border.

The Islamist militants took control of Mosul after hundreds of its fighters overwhelmed government  military forces in a lightening attack on Monday, forcing up to 500,000 people to flee the city and Iraqi prime minister Nouri al-Maliki to call a national state of emergency.

The militants freed up to 1,000 inmates from Mosul’s central prison, according to senior police officials. They are also in control of Mosul airport and local television stations…

An organized counter-offensive will be necessary to take back control of northern Iraq out of ISIS’s blood-soaked hands.  If more commitment had been made by the Obama administration on perfecting a status of forces agreement with Iraq prior to the departure of American troops, this may have been prevented.

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Illicit transfer news: recommended reading

March 13, 2014
  • Eight have been arrested in raids over zakat raised in Britain to fund terrorism in Syria… more>>
  • Is a millionaire bitcoin trader copping a plea over money laundering allegations?  More>>
  • By sea, land, and air—Iran’s history of busted arms smuggling operations is exposed… more>>
  • Speaking of Iranian weapons trafficking, Iraq has been a helpful facilitator to their neighbor lately… more>>
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Al Qaeda debuts new currency

March 2, 2014

Osama Bin Laden bill

Reportedly, Al Qaeda in Iraq (ISIL) is circulating its own one hundred “Islamic” pound note in western Iraq with a picture of the Twin Towers burning on 9/11 and a portrait of Osama bin Laden.

The new bills are quite a curious development considering that Islamists normally regard paper currencies as unclean “infidel” currencies invented by non-Muslim imperialists.  Islamists prefer gold dinars and silver dirhams such as those used by Muhammad according to traditional Islamic texts.

ISIL may have chosen a denomination of 100 because of the popularity of U.S. $100 bills in Iraq, where they are nicknamed “ghosts” because of Iraqi perceptions of Benjamin Franklin’s sprectral appearance.

Presumably, the new currency is more of a publicity stunt than an actual, working currency that could be used to pay the wages of their fighters.  The money would seem to have limited usefulness to ISIL’s men and their families, because it cannot be exchanged or used to purchase goods beyond ISIL’s territorial control.

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