Roosevelt Institute | Cornell University

Contextualizing the Economic Forces Supporting ISIS

By Alex PundykPublished October 24, 2014

An amassing Islamic State of Iraq and Syria has drawn widespread dissent from the allied nations of NATO and the fear and fascination of "infidels" around the world. To assess ISIS as a state competing on a global scale, we must determine its financial sources, assess its political goals, and contextualize its economy. We may then decide the political responses warranted by such rampant radicalism, and escalating violence.

By Alex Pundyk, 10/24/14

In the most fundamental sense, ISIS has become an extraordinarily effective terrorist organization. Sweeping propaganda campaigns that lure impressionable children, prisoner beheadings staged with villainous theatricality, and the irreconcilably violent nature of its all-encompassing tirade present genuinely terrifying threats to regional stability and even challenge notions of domestic safety across continents. Yet perhaps the most substantively alarming aspect of the accumulating power generated by ISIS, is the financial pipelines- so to speak- that provide critical support and contribute to the momentum of the organization. The expanse of any armed conflict can be viewed simply by determining the resources available to acting forces, and there exists a direct correlation between resource availability and state capability. The profound and steady revenue yielded by ISIS primarily as a result of its pirating crude oil sources in Syria and Iraq, but additionally by securing private investments, enables the entity to command with assets greater than those of typical militant terrorist groups. But what exactly is the rate of fund accumulation, what are the political goals outlined by ISIS as a result of such funds, and how must the United States and NATO act in response?

To begin, we must evaluate the most lucrative means by which ISIS acquires funds: possessing, trading and extorting seized oil. As Middle East correspondent Deborah Amos claimed during an interview with NPR, "[ISIS has become] the wealthiest militant group in the world…[by using] extortion schemes, kidnapping for ransom and selling crude oil". Amos urges that ISIS has eclipsed preceding terrorist groups such as Al-Qaeda by demonstrating an unrivaled control of the "black market" and "corrupt officials". In Iraq alone, ISIS moves an estimated 25,000-40,000 barrels of oil a day, which contributes a majority of the daily earnings of nearly $1.2 million. In addition to the routine exploitation of oil, are the vast and influential endowments bestowed upon ISIS from the hands of Qatari and Saudi Arabian incubators. In an NBC News report, James Stavridis, Dean of the Fletcher School of Law and Diplomacy at Tufts, compared the Arab financiers to the "angel investors" who support "tech start-ups, except they are interested in starting up groups who want to stir up hatred". Most of these corrupt ventures reported are sourced from Qatar, a nation with whom the U.S. Department of State claims to share "extensive economic ties" and mutual support for progress, stability and prosperity in the region. In this sense, we begin to observe underlying political conflict as a result of double-dealing and tacit support for ISIS.

Having identified the economic influences that support its militaristic might, we turn to the political goals proclaimed by ISIS. According to Abu Bakr al-Baghdadi, top leader of ISIS, the unambiguous objective pronounced in a June 2014 public address, is to establish a new Islamic caliphate across the Middle East. Such a far-reaching revision of territory, culture and governmental structure would trigger a dizzying tripwire of political action and consequence. But before turning to this point of discussion, we must first compare the relative opposing force that confronts ISIS. As a simple means of comparison, and in order to make clear the disparity of state capability, we turn to the annual defense budget of the United States. The Department of Defense secured for the fiscal year of 2014, a $526.6 billion budget; conservative estimates offer that ISIS is on track to generate roughly $438 million in total revenue. In short, the United States has access to a budget at least one hundred times greater than that of ISIS. Needless to say, the dominant financial power paired with technological advantages allows the United States overwhelming resources for counter-measures. When considering the fabric of alliances afforded by NATO, we bring the discussion back to the long-standing history of regional tripwires. As the conflict ignites the Middle East, fighting threatens expansion into various territories. War looming on the border of Turkey and the possibility of invasion has been expressly declared a trigger for collective action by the 28 states comprising NATO. Though unilateral measures to combat ISIS would clearly highlight the United States and NATO's resource advantages, the precise use of such resources would be critical to the nature of the entire conflict. 

In a more nuanced evaluation of the conflict, we note that engaging in warfare, and its resultant perception, hinge entirely upon the need to establish and communicate clear political motives. Well-understood purpose of engagement is the crux of the justification of militaristic force as a means to a specific political outcome. In threatening Turkish invasion, ISIS has created a trigger for NATO and the United States to respond with reciprocated violence. Although well funded, the still small economy of ISIS leaves NATO and the United States clear military superiority. But the fearful eyes of the world may turn away from the menacing ISIS, and shift to a glare of contempt upon American and NATO actions if the military force used to quell the regime is not carried out carefully, and within the rights expressed by an overarching and well-communicated political objective. Right now, America appears far from making such a case. Despite the fact that ISIS poses a real threat in American domestic politics, it remains uncontested due to the Obama Administration's staunch reluctance to implement ground forces in Iraq and Syria. It is however, interesting to superimpose the parallels of this conflict with the history of American involvement in Korea, Vietnam, and more recently Afghanistan and Iraq. If the United States repeats its history of uncalculated aggression by trudging an aimless, destructive and costly path and failing to resolve the issues at hand, its will deserve the criticism of having a shortsighted, one-dimensional foreign policy. Such a policy will also allow ISIS to continue to play on the world stage, with all the risks included therein.