ISIS fish farms supplement income

That and poultry, which in Iraq means chicken and pigeons.  The Islamic State of Iraq and Syria (ISIS) is charging a 10 percent, or ushr, customs duty on imports.  The New York Times ran this story with a headline suggesting that ISIS was resorting to the fish farms to make up for lost oil revenues.  But in the text of the article, sources admit that Syrian oil refineries are still ISIS’s primary source of money.  Keep that cork in the champagne bottles, fellas.

Hat tip to El Grillo for sending the report, which is actually from Reuters:

BAGHDAD — Islamic State earns millions of dollars a month running car dealerships and fish farms in Iraq, making up for lower oil income after its battlefield losses, Iraqi judicial authorities said on Thursday.

Security experts once estimated the ultra-radical Islamist group’s annual income at $2.9 billion, much of it coming from oil and gas installations in Iraq and Syria.

The U.S.-led coalition has targeted Islamic State’s financial infrastructure, using air strikes to reduce its ability to extract, refine and transport oil and so forcing fighters to reportedly take significant pay cuts.

Yet the militants, who seized a third of Iraq’s territory and declared a caliphate in 2014, seem to be adapting again to this latest set of constraints, in some cases reviving previous profit-turning ventures like farming.

“The terrorists’ current financing mechanism has changed from what it was before the announcement of the caliphate nearly two years ago,” a report by Iraq’s central court of investigation said, quoting Judge Jabbar Abid al-Huchaimi.

“After the armed forces took control of several oil fields Daesh was using to finance its operations, the organization devised non-traditional ways of paying its fighters and financing its activities,” the report added, using an Arabic acronym for Islamic State.

Fishing in hundreds of lakes north of Baghdad generates millions of dollars a month, according to the report. Some owners fleeing the area abandoned their farms while others agreed to cooperate with Islamic State to avoid being attacked.

“Daesh treats its northern Baghdad province as a financial center; it is its primary source of financing in the capital in particular,” Huchaimi said. Islamic State carries out frequent bombings in Baghdad against security forces and Shi’ite residents.

SELLING CARS, RUNNING FACTORIES

Fish farms have supplied militants with income since 2007 when Islamic State’s al Qaeda predecessor fought U.S. occupation forces but the mechanism only came to the authorities’ attention this year, the report said.

The militants also tax agricultural land and impose a 10 percent levy on poultry and other duties on a range of imports into their territory, it added.

“Recently there has been reliance on agricultural lands in areas outside the control of the (Iraqi) security forces through taxes imposed on farmers.”

New revenues are also being generated from car dealerships and factories once run by the Iraqi government in areas seized by the militants.

Those have helped offset the losses from lower oil income, though perhaps only partially. The U.S.-based analysis firm IHS said last week that Islamic State revenues had fallen by around a third since last summer to around $56 million a month.

“In the recent period, Daesh has gone back to using government factories in the areas it controls – like Mosul – for financial returns,” Huchaimi said, but added that oil smuggling from Syrian refineries remains the group’s primary source of international financing…

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Sharia bank conducts fraud, predatory lending

“Ethical finance” swindles 300 herdsmen and farmers

A sharia lender and his associates are under investigation for defrauding 300 Nigerian farmers and ranchers.  As Shariah Finance Watch wisely notes, countries with growing sharia finance sectors are often the same countries experiencing an increase in violent jihad.  SFW continues:

And as has also often been the case, that push has been associated with fraudulent activity.

The Nigerian Economic and Financial Crimes Commission (EFCC) is investigating the whole affair as detailed below, but what it looks like is a classic Shariah finance scam in which people are fooled into taking out “interest free” loans and are charged hefty fees for those loans.

In other words, these Shariah-compliant loans may not charge interest, but they are anything but “free.” In fact the charges customarily exceed what interest charges would be, but, because they are not interest, they get around Shariah usury laws. This is a scam that has not been limited to Nigeria. Many financial institutions across the world identify their Shariah loans as “interest free,” which amounts to fraud…

OPERATIVES from the North-East zonal office of the Economic and Financial Crimes Commission (EFCC) in Gombe have commenced investigations into allegation of fraud levelled against a branch manager of a first generation bank, a traditional ruler and Sharia court judge over agricultural loans and illegal detention of about 300 herdsmen and farmers in Shira and Giade Local Government areas of Bauchi State.

The commission moved to investigate the allegation following a petition written to it by communities in the two local government areas, which it received on October 24, 2012, on agricultural loans amounting to millions of naira, which was allegedly disbursed to the herdsmen and farmers in the two council areas by the Shira branch of the bank.

Read it all at Shariah Finance Watch.

For newer readers, this case should serve as an example of the unintended consequences of the Islamic prohibition on interest.  Money has a “time value;” in other words, money now is worth more than money later.  But this basic economic fact is denied by the religious edict of Islam.

Western economists refer to that difference between money now and money later as interest.  Islamists refer to it as riba, which means the same thing in Arabic as scum, asthma, or other types of unnatural growth or swelling.

But it is Islamic economics itself that is unnatural.  The result is all kinds of exotic loan structures and predatory policies designed to eliminate the appearance of charging interest.  But without charging interest, there is little incentive for bankers to provide capital to borrowers.  The sharia bankers create their own incentive by adding complicated fees and repayment schedules to loans.

The result here?  Confused farmers and goatherds.  So much for “ethical” finance.

You grow it, we tax it

Jaish Muhammad terrorists from South Punjab, Pakistan, have been collecting the ushr (the Islamic tax on harvests) from farmers for many years according to a recent news blurb.

We have written about the oppressive nature of Islamic tax law with respect to Muslim farmers before here, here, and here.  Ushr has also been imposed by jihadist groups Lashkar-e Islam in Pakistan, by Amn Tehreek in Pakistan,  and by the Taliban in Afghanistan.

Recall that the Pakistani government also has an ushr tax on top of whatever the local militants can bleed out of the farms.  From The Friday Times, “Nuggets from the Urdu Press,”  (h/t Rantburg) on June 11:

Hand it over, dirt farmer!

Jaish collecting “ushr”

Reported in the illicit publication with an ABC Certificate Al Qalam outlawed terrorist organisation Jaish Muhammad was collecting ushr in South Punjab under the auspices of Al Rehmat Trust also said to be banned. The newspaper informed that ‘ushr’ – a tax on farms legally only collectible by the state – was being collected for past ‘many years’ and its campaign was at its peak in April.

Pakistan’s ushr loopholes

Pakistan’s “fastest growing blog” (The News Blog) ran a story on Feb. 16 about the urgency of bringing their agriculture sector under the tax man’s heel. 

The author of the post entitled, “Shouldn’t the agriculture sector also be brought into the tax net?” wrote that the government’s efforts to increase tax compliance “is a step that is long overdue. Given that the feudal landowners remain among the richest citizens of Pakistan, it is an irony that they have, for decades, remained outside the tax net.”

The commenters echoed the statements in the post, saying things like, “Every one should pay taxes out of their income, tax law is the same for all citizen of Pakistan, no matter, who you are. Landlord, Army General, richest man of Pakistan.”

The commenters are obviously people with more first-hand experience than myself, and I was a little surprised by the drift of the comments given that Pakistan’s farmers are already subject to both Islamic and secular agriculture taxes.  The revelation that owners of vast real estate are able to avoid the ushr while small farmers cannot is yet another indictment of Pakistan’s Zakat and Ushr Ministry and local tax committees.

However, I believe the problems associated with the Pakistan’s Islamic ushr tax are broader than administrative uniformity.  Rich and poor farmers alike are evading the ushr because it is inherently unfair.  It imposes a 10 percent tax on crops and livestock after expenses, but as I have noted before, Pakistani farmers do not get to deduct actual expenses.  They have a standard deduction that assumes lower operating costs than most farmers actually have.

In a competitive global economy where some countries subsidize their agriculture sectors, a 10 percent tax is bad enough.  Then factor in the unfair deduction and you’ve got an even worse tax.  The ushr cannot be reformed and should be abolished entirely.

The problems experienced by Pakistan are precisely what happens when “modern” countries Islamize their tax code and replicate strictures developed centuries ago in the Arabian desert.

10% ag tax “a relic of barbarism”

In the 800s, Islam enshrined the 10 percent ushr tax rate on farm yields in the Hadith.  The tax may have been appropriate for the Middle East in the Ninth Century, but it hasn’t worked out so well since then.

As I have pointed out on Money Jihad several times, my concerns about the ushr are its use to fund jihad (especially as ushr collections on poppy yields by the Taliban in Afghanistan today), its imposition by religious fiat rather than by the consent of the governed, its excessive penalties for non-payment, the difficulty it presents for making accurate assessments of crop yields after expenses, its discriminatory impact against farmers, and its overall anachronistic nature.

As it turns out, the America South had its own brief flirtation with a harvest tax during the Civil War.  Beset with increasing war debts, the Confederate Secretary of the Treasury Christopher Memminger proposed a 10 percent in-kind tax on agriculture.  The Confederate Congress added various rates for income and ad valorem taxes to constitute the Tax Act of April 24, 1863.  Given the legislation’s focus on the crop tax, the act was usually called the “Tithe Tax.”  The following is a remarkable passage from Richard Cecil Todd’s 1954 book, Confederate Finance: