Here's how ISIS makes — and spends — its money
Undated file photo from ISIS (Islamic State of Iraq and Syria) or Islamic State group or Daesh (Daech), taken in Ninive area, Iraq, in 2015 and published by the group on their web pages.
Image: Balkis Press/Sipa USA /Associated Press
![Here's how ISIS makes — and spends — its money Headshot_2015_JasonAbbruzzese_1](https://2img.net/h/rack.3.mshcdn.com/media/ZgkyMDE1LzA3LzE0LzBjL0hlYWRzaG90XzIwLjJjY2VlLmpwZwpwCXRodW1iCTkweDkwIwplCWpwZw/55e4dc96/541/Headshot_2015_JasonAbbruzzese_1.jpg)
By Jason Abbruzzese2 hours ago
Kidnapping, theft, drug running, oil sales and taxes.
Soldiers, weapons, bribes and hospitals.
Those are many of the ways that ISIS is making and then spending cash, as it wages a war while trying to establish a working government within the areas of Iraq and Syria that it controls.
The Islamic State now operates a basic economy within those areas that includes the sale of the Middle East's greatest natural resource along with a variety of illicit businesses. This provides much-needed cash for its war effort but is also a step toward the group's stated effort of restoring a new caliphate, a country it hopes will be ruled under their extreme interpretation of Islam.
ISIS might be the richest terrorist organization the world has ever seen, but its financial management isn't so hot at the moment: it's spending almost as much as it's making.
An analysis by IHS Global Strategies found that ISIS brought in about $80 million per month in the later part of 2015, but has been recently cutting expenditures to its fighters and other areas. The report is based on a combination of data found on social media and other open sources.
Intelligence analysts are learning more about the inner workings of ISIS, and much of its structure resembles a relatively modern despotic regime. A leaked document acquired by the Guardian shows that the organization has been working on building out its internal infrastructure while also waging war.
Just how it makes and spends money is an important element to understand and defeating ISIS, with allies already targeting some of its most lucrative operations. Let's take a look at where that money comes from and where it's going.
The plentiful supply of oil in the Middle East provides the Islamic State with a large chunk of its income — around 43% of its total revenues, according to IHS analysts.
Many of the areas in Syria and Iraq that have come under ISIS control produce oil, and the economies require oil and gas to keep going, as a State Department official explained in a briefing last week.
The one problem here is that ISIS isn't exactly welcome to participate in the public oil market between countries. Just who is buying this oil — outside the lands controlled by ISIS — is a tough question. Russia recently accused Turkey of buying some, although that claim has yet to be verified. Turkey's prime minister said he would resign if any proof appeared.
To turn oil into cash, the organization is using a variety of smugglers and middlemen that buy from the Islamic State and sell elsewhere. This black market is also helping them get cash from other sources like the shipment of drugs and antiquities (further discussed later in this article).
In an effort to choke off the group's cash flow, oil reserves and facilities under the control of ISIS have been among the targets of Russia's attacks in the area.
This photo made from the footage taken from Russian Defense Ministry official web site Monday, Nov. 23, 2015 shows fuel tanks hit during the attack of Russian warplanes in Syria. Russian warplanes on Monday attacked oil extraction, transport and refinement facilities in areas controlled by Islamic State militants.
Image: Russian Defense Ministry Press Service/Associated Press
Importantly, oil is the biggest export of ISIS, providing it with a more continuous cash flow that other areas like bank robberies, which are one-time
ISIS charges a tax on all goods and services, and in some ways has more reach than a traditional government. About 50% of its revenue comes from taxes, according to IHS.
Ludovico Carlino, senior analyst at IHS, noted that the Islamic State's involvement in the black market also meant that it could take a cut of this area.
“Its business model, which is heavily focused on intermediaries and taking percentage cuts, also means that the Islamic State is able to make profits from areas and sectors where it is not directly involved,” Carlino said in a report.
These taxes are collected under the concept of Zakat, which is one of the five pillars of Islam. It is a non-voluntary tithe collected by the caliphate on Muslims that have a certain income.
ISIS is reportedly taking a far larger percentage than the usual 2.5% of a person's wealth, citing wartime needs. Others have reported that the taxes are much less than the bribes necessary to do business un Syria's president, Bashar al-Assad.
ISIS participates in a variety of criminal enterprises that produce cash.
Among them is straight-up bank robbery. The U.S. Treasury told CNN that ISIS stole as much as $1 billion in 2014, an important chunk of cash that helped the organization in its earlier days.
Kidnapping is also a lucrative practice. The international community first became aware of ISIS after a series of hostage executions were spread online. Those hostages, including U.S. citizens James Foley and Steven Sotloff, had been held for ransom before their deaths. Other countries did pay ransoms for their citizens.
A Japanese national held by Islamic State militants in Syria appears in a new purported message on Jan. 27 2015 stating he has left than 24 hours to live.
Image: YouTube
ISIS continues to take hostages and then demand ransoms usually in the tens of millions of dollars.
ISIS has also reportedly been using the black market to smuggle drugs, antiquities and even people.
ISIS pays its soldiers and often provides a stipend for their families.
Reports on how much each soldier makers are varied, but there had been claims that ISIS paid around $1,000 per month, which is a good wage in that region.
But with income from smuggling and oil sales falling, ISIS has reportedly had to cut its pay for soldiers.
Just as ISIS is good at smuggling things out, they're smuggling weapons in.
When ISIS first began, it was able to seize plenty of weapons caches in the area, including U.S.-made Hummer military vehicles. That's in addition to a variety of other armaments that have been passed around the region such as Soviet tanks.
Undated file photo from ISIS (Islamic State of Iraq and Syria) or Islamic State group or Daesh (Daech), taken in Ninive area, Iraq, in 2015 and published by the group on their web pages.
There are also reports that some countries, Turkey in particular, had sent arms to Islamist rebels in late 2013. Countries in the area have denied allegations of selling weapons to ISIS.
Granted, it's not that tough to find weapons nearby. Amnesty International released a report on Tuesday claiming that a massive flow of weapons to the region over decades has led to the current situation.
“The vast and varied weaponry being used by the armed group calling itself Islamic State is a textbook case of how reckless arms trading fuels atrocities on a massive scale,” said Patrick Wilcken, a researcher on arms control, security trade and human rights at Amnesty International.
Propaganda has been one of the hallmarks of the Islamic State, and the group spends plenty to make sure its message is spread far and wide.
A video of propaganda by "Dash" or "Islamic State" or "ISIS" is seen online on November 18, 2015. It shows young children being trained to sports, weapons and to Quran recitation in an undisclosed area somewhere between Syria and Iraq.
Image: Balkis Press/Sipa USA/Associated Press
IHS found that the terrorist group spent around 3% of its overall budget on producing a variety of media including pamphlets and video.
"They do spend a lot of money in the media apparatus, to publish pamphlets, print books and produce high-quality media for their propaganda machine," Carlino said.
ISIS is also attempting to fulfill the role of local and national government. That means building roads, keeping schools open and running hospitals.
This can be expensive, but functioning cities can also prove a return on investment through taxes.
It's also a message to people under its reign that the group is serious about a caliphate. The hope of being seen as such has been evident in its shift in propaganda away from violence and toward a vision of a utopian society.
http://mashable.com/2015/12/08/isis-makes-its-money-like/?utm_campaign=Feed%3A+Mashable+%28Mashable%29&utm_cid=Mash-Prod-RSS-Feedburner-All-Partial&utm_source=feedburner&utm_medium=feed#BPfW0siACEq5
![Here's how ISIS makes — and spends — its money ISIS-Soldier](https://2img.net/h/rack.0.mshcdn.com/media/ZgkyMDE1LzEyLzA4L2NjL0lTSVNTb2xkaWVyLjk4ODEyLmpwZwpwCXRodW1iCTk1MHg1MzQjCmUJanBn/c3001505/842/ISIS-Soldier.jpg)
Undated file photo from ISIS (Islamic State of Iraq and Syria) or Islamic State group or Daesh (Daech), taken in Ninive area, Iraq, in 2015 and published by the group on their web pages.
Image: Balkis Press/Sipa USA /Associated Press
![Here's how ISIS makes — and spends — its money Headshot_2015_JasonAbbruzzese_1](https://2img.net/h/rack.3.mshcdn.com/media/ZgkyMDE1LzA3LzE0LzBjL0hlYWRzaG90XzIwLjJjY2VlLmpwZwpwCXRodW1iCTkweDkwIwplCWpwZw/55e4dc96/541/Headshot_2015_JasonAbbruzzese_1.jpg)
By Jason Abbruzzese2 hours ago
Kidnapping, theft, drug running, oil sales and taxes.
Soldiers, weapons, bribes and hospitals.
Those are many of the ways that ISIS is making and then spending cash, as it wages a war while trying to establish a working government within the areas of Iraq and Syria that it controls.
The Islamic State now operates a basic economy within those areas that includes the sale of the Middle East's greatest natural resource along with a variety of illicit businesses. This provides much-needed cash for its war effort but is also a step toward the group's stated effort of restoring a new caliphate, a country it hopes will be ruled under their extreme interpretation of Islam.
ISIS might be the richest terrorist organization the world has ever seen, but its financial management isn't so hot at the moment: it's spending almost as much as it's making.
An analysis by IHS Global Strategies found that ISIS brought in about $80 million per month in the later part of 2015, but has been recently cutting expenditures to its fighters and other areas. The report is based on a combination of data found on social media and other open sources.
Intelligence analysts are learning more about the inner workings of ISIS, and much of its structure resembles a relatively modern despotic regime. A leaked document acquired by the Guardian shows that the organization has been working on building out its internal infrastructure while also waging war.
Just how it makes and spends money is an important element to understand and defeating ISIS, with allies already targeting some of its most lucrative operations. Let's take a look at where that money comes from and where it's going.
The money
Oil
The plentiful supply of oil in the Middle East provides the Islamic State with a large chunk of its income — around 43% of its total revenues, according to IHS analysts.
Many of the areas in Syria and Iraq that have come under ISIS control produce oil, and the economies require oil and gas to keep going, as a State Department official explained in a briefing last week.
The one problem here is that ISIS isn't exactly welcome to participate in the public oil market between countries. Just who is buying this oil — outside the lands controlled by ISIS — is a tough question. Russia recently accused Turkey of buying some, although that claim has yet to be verified. Turkey's prime minister said he would resign if any proof appeared.
To turn oil into cash, the organization is using a variety of smugglers and middlemen that buy from the Islamic State and sell elsewhere. This black market is also helping them get cash from other sources like the shipment of drugs and antiquities (further discussed later in this article).
In an effort to choke off the group's cash flow, oil reserves and facilities under the control of ISIS have been among the targets of Russia's attacks in the area.
![Here's how ISIS makes — and spends — its money Oil-Syria](https://2img.net/h/rack.2.mshcdn.com/media/ZgkyMDE1LzEyLzA3L2U1L09pbFN5cmlhLmZjOTY2LmpwZwpwCXRodW1iCTEyMDB4OTYwMD4/44b9c24e/c38/Oil-Syria.jpg)
This photo made from the footage taken from Russian Defense Ministry official web site Monday, Nov. 23, 2015 shows fuel tanks hit during the attack of Russian warplanes in Syria. Russian warplanes on Monday attacked oil extraction, transport and refinement facilities in areas controlled by Islamic State militants.
Image: Russian Defense Ministry Press Service/Associated Press
Importantly, oil is the biggest export of ISIS, providing it with a more continuous cash flow that other areas like bank robberies, which are one-time
Taxes
ISIS charges a tax on all goods and services, and in some ways has more reach than a traditional government. About 50% of its revenue comes from taxes, according to IHS.
Ludovico Carlino, senior analyst at IHS, noted that the Islamic State's involvement in the black market also meant that it could take a cut of this area.
“Its business model, which is heavily focused on intermediaries and taking percentage cuts, also means that the Islamic State is able to make profits from areas and sectors where it is not directly involved,” Carlino said in a report.
These taxes are collected under the concept of Zakat, which is one of the five pillars of Islam. It is a non-voluntary tithe collected by the caliphate on Muslims that have a certain income.
ISIS is reportedly taking a far larger percentage than the usual 2.5% of a person's wealth, citing wartime needs. Others have reported that the taxes are much less than the bribes necessary to do business un Syria's president, Bashar al-Assad.
Drugs, robbery and kidnapping
ISIS participates in a variety of criminal enterprises that produce cash.
Among them is straight-up bank robbery. The U.S. Treasury told CNN that ISIS stole as much as $1 billion in 2014, an important chunk of cash that helped the organization in its earlier days.
Kidnapping is also a lucrative practice. The international community first became aware of ISIS after a series of hostage executions were spread online. Those hostages, including U.S. citizens James Foley and Steven Sotloff, had been held for ransom before their deaths. Other countries did pay ransoms for their citizens.
![Here's how ISIS makes — and spends — its money Goto](https://2img.net/h/rack.3.mshcdn.com/media/ZgkyMDE1LzEyLzA4L2FlL0dvdG8uYmEwOTMuanBnCnAJdGh1bWIJMTIwMHg5NjAwPg/f222c1d5/733/Goto.jpg)
A Japanese national held by Islamic State militants in Syria appears in a new purported message on Jan. 27 2015 stating he has left than 24 hours to live.
Image: YouTube
ISIS continues to take hostages and then demand ransoms usually in the tens of millions of dollars.
ISIS has also reportedly been using the black market to smuggle drugs, antiquities and even people.
What they're spending on
People
ISIS pays its soldiers and often provides a stipend for their families.
Reports on how much each soldier makers are varied, but there had been claims that ISIS paid around $1,000 per month, which is a good wage in that region.
But with income from smuggling and oil sales falling, ISIS has reportedly had to cut its pay for soldiers.
Weapons
Just as ISIS is good at smuggling things out, they're smuggling weapons in.
When ISIS first began, it was able to seize plenty of weapons caches in the area, including U.S.-made Hummer military vehicles. That's in addition to a variety of other armaments that have been passed around the region such as Soviet tanks.
![Here's how ISIS makes — and spends — its money ISIS-Armor](https://2img.net/h/rack.3.mshcdn.com/media/ZgkyMDE1LzEyLzA3LzdlL0lTSVNBcm1vci40ZGMyOS5qcGcKcAl0aHVtYgkxMjAweDk2MDA-/bafaced0/ad2/ISIS-Armor.jpg)
Undated file photo from ISIS (Islamic State of Iraq and Syria) or Islamic State group or Daesh (Daech), taken in Ninive area, Iraq, in 2015 and published by the group on their web pages.
There are also reports that some countries, Turkey in particular, had sent arms to Islamist rebels in late 2013. Countries in the area have denied allegations of selling weapons to ISIS.
Granted, it's not that tough to find weapons nearby. Amnesty International released a report on Tuesday claiming that a massive flow of weapons to the region over decades has led to the current situation.
“The vast and varied weaponry being used by the armed group calling itself Islamic State is a textbook case of how reckless arms trading fuels atrocities on a massive scale,” said Patrick Wilcken, a researcher on arms control, security trade and human rights at Amnesty International.
Media/propaganda
Propaganda has been one of the hallmarks of the Islamic State, and the group spends plenty to make sure its message is spread far and wide.
![Here's how ISIS makes — and spends — its money ISIS-Propaganda](https://2img.net/h/rack.3.mshcdn.com/media/ZgkyMDE1LzEyLzA3LzViL0lTSVNQcm9wYWdhLjcyYzFjLmpwZwpwCXRodW1iCTEyMDB4OTYwMD4/c2a7810e/8fe/ISIS-Propaganda.jpg)
A video of propaganda by "Dash" or "Islamic State" or "ISIS" is seen online on November 18, 2015. It shows young children being trained to sports, weapons and to Quran recitation in an undisclosed area somewhere between Syria and Iraq.
Image: Balkis Press/Sipa USA/Associated Press
IHS found that the terrorist group spent around 3% of its overall budget on producing a variety of media including pamphlets and video.
"They do spend a lot of money in the media apparatus, to publish pamphlets, print books and produce high-quality media for their propaganda machine," Carlino said.
State building
ISIS is also attempting to fulfill the role of local and national government. That means building roads, keeping schools open and running hospitals.
This can be expensive, but functioning cities can also prove a return on investment through taxes.
It's also a message to people under its reign that the group is serious about a caliphate. The hope of being seen as such has been evident in its shift in propaganda away from violence and toward a vision of a utopian society.
http://mashable.com/2015/12/08/isis-makes-its-money-like/?utm_campaign=Feed%3A+Mashable+%28Mashable%29&utm_cid=Mash-Prod-RSS-Feedburner-All-Partial&utm_source=feedburner&utm_medium=feed#BPfW0siACEq5
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