Despite bombings and financial sanctions the Islamic State
is still coming up with ways to bring in cash. The Wall Street Journal and
Financial Times just documented IS’s deals with Iraqi money exchangers and
Syrian oil traders to keep money flowing into the caliphate. It’s yet to be
seen whether that’s enough to sustain itself, but it shows that it will still
take a lot more to cut off the group’s sources of funding.
Erika Solomon from the Financial
Times reported on how the Islamic State is offering bulk oil deals in an
attempt to avoid coalition air strikes. IS is issuing 1,000 barrel petroleum
licenses to oil traders in Syria. A Syrian trucker said that three businesses
had been given these offerings that involve the al-Omar field. This was in
direct response to coalition air strikes that have been hitting tanker trucks
at oil fields and IS’s storage facilities. By making these large deals IS can be
assured of sales and arrange times and places for deliveries to avoid a large
number of trucks cuing up at the Omar field, which might invite an air strike. It
also keeps their oil flowing to local markets in Syria and Iraq, which the
group has come to rely upon. For the traders they can buy a large quantity of
oil from IS instead of waiting for small purchases with everyone else.
The Wall Street Journal added another piece
on money exchangers who continue to operate in IS controlled territory. These
businesses play a crucial role in sustaining the caliphate as they deliver cash.
At the center of this network is allegedly Abu Omar, a Mosul based businessman
who also operates in Irbil, Sulaymaniya and Hit. After Mosul was taken in June
2014 he agreed to handle the organization’s money affairs. He and other
exchanges reportedly bring in cash into the caliphate through three main
routes. One is from Istanbul through Kurdistan to Mosul. Another is from Amman
to Anbar and Baghdad, and the third is from Turkey’s Gaziantep to Raqqa, Syria.
Allegedly Peshmerga and Hashd accept bribes to allow these businesses to
delivery cash into IS areas. At the end of 2014, the U.S. warned the Central
Bank of Iraq about these companies and how they were buying U.S. dollars at the
Bank’s auctions to support IS. The Central Bank responded
by handing out fines to banks and then banned 142 money exchangers in December
2014 from the auctions. The problem was that Iraq has no real regulators so all
these businesses had to do was set up a front company and they could get right
back into buying dollars. Baghdad cannot crackdown on the money exchanges or
auctions for two main reasons. First, many of Iraq’s traders rely upon
exchanges rather than banks to provide cash for their transactions, so they
can’t be shut down without crippling the economy. Second, Iran, Syria, Iraqi
organized crime rings, and the nation’s ruling parties are all involved in
buying dollars from the Central Bank to either gain access to hard currency or
to sell on the open market for a profit. That is a powerful group of actors,
which banking officials do not want to confront. That means there will be no
real reform of the auctions or effective measures taken against the exchanges
to limit the Islamic State’s access to dollars and cash.
One of the defining features of the Islamic State is its
resilience. Faced with powerful enemies the group is still working on counter
moves. It is attempting to create new oil contracts to deal with air strikes.
It has also continued to bring in cash through money exchangers, which keeps
its economy going. Western reports have IS struggling. It has allegedly cut the
salaries of its fighters, imposed fuel rationing, and is facing rising prices.
As one of its key phrases says however, the group is enduring these setbacks
and attempting to find ways to overcome them. They highlight the fact that the
caliphate is being hurt, but there is still a long way to go before it is
defeated.
SOURCES
Solomon, Erika, “Isis oil: deal with traders nets jihadist
badly needed funds,” Financial Times, 2/26/16
Wall Street Journal, “Why ISIS’s secret banking network
prospers despite air strikes,” 2/25/16
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