Financial Futures of the Islamic State of Iraq and the Levant: Findings from a rand corporation Workshop

16    Financial Futures of the Islamic State of Iraq and the Levant

it akin to an opportunistic, disaggregated movement.

1

 ISIL’s financial portfolio has evolved in 

the face of strain in the past, with the group seeking to make up for shortfalls in certain rev-

enue streams in previously untapped markets.

Participants noted that ISIL may be able to adapt and survive, despite financial and oper-

ational setbacks, by transforming into an al-Shabaab–type organization that holds no territory 

but organizes and conducts hit-and-run and ambush attacks, or by transforming into a hybrid 

criminal-terrorist group similar to al-Qa’ida in Iraq (AQI). In 2006, AQI changed its name to 

the Islamic State of Iraq and retained an important resource base in Mosul, where its extor-

tion rackets, contract skimming, and other criminal activities continued to provide a valuable 

revenue stream. This all occurred in the face of a ferocious military and political campaign 

against the group that involved the Sunni Awakening, an increase of U.S. troops and a change 

in coalition strategy, sophisticated targeting operations, and ongoing military activities by a 

multinational coalition with Iraqi security forces. 

Regardless of organizational structure or future territorial control, participants concluded 

that ISIL’s ability to appropriate resources, tax, and extort local populations will allow the 

group to retain modest levels of revenue. Its need to spend these revenues to pay for the costs 

of governing local areas and for fighter salaries varied significantly based upon the scenario 

discussed. 

ISIL Will Persist as an Insurgent and Terrorist Organization for Years to Come 

Similar to the collective observation that ISIL is highly adaptable, workshop participants 

agreed that ISIL would continue to exist as some form of terrorist or terrorist hybrid orga-

nization well past the 18-month timeframe discussed in the workshop. Participants agreed 

that even significant degradation of ISIL’s finances would not destroy the group. Regardless 

of whether ISIL loses territory through the current trajectory of combat operations or a major 

military defeat, participants said that ISIL would continue to survive in the medium term, 

particularly if underlying grievances of the Iraqi and Syrian populations were not addressed. 

Participants also agreed that the political will to assuage grievances of Sunni populations was 

absent in both Iraq and Syria at the present.

Additionally, participants largely agreed that if the structural factors that led to the rise 

of ISIL persisted—including the security vacuum resulting from the Syrian civil war and con-

tinued marginalization of Sunnis in Iraq—then another group would likely emerge to replace 

ISIL in the event of its fracture or defeat. Such a group could be as extreme and violent as ISIL 

itself, or perhaps even more extreme and violent, as underlying political grievances continued 

unabated. 

Finally, participants noted that the United States and its partners must continue to 

degrade ISIL’s operational capabilities in the long term, no matter what form the group takes. 

This would require a long-term commitment from coalition members to support a persistent 

and aggressive military- and intelligence-led counterterrorism campaign, modeled after a simi-

lar effort against core al-Qa’ida in Pakistan. 

1  

Andrew Liepman and Colin P. Clarke, “Demystifying the Islamic State,” U.S. News & World Report, August 23, 

2016; Patrick B. Johnston, Jacob N. Shapiro, Howard J. Shatz, Benjamin Bahney, Danielle F. Jung, Patrick Ryan, and  

Jonathan Wallace, Foundations of the Islamic State: Management, Money, and Terror in Iraq, 2005–2010, Santa Monica, 

Calif.: RAND Corporation, RR1192-DARPA, 2016. 

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Major Themes in ISIL’s Financial Futures    17

The ISIL Brand

ISIL dedicates significant resources to media and propaganda efforts to portray itself as the 

leader of the global jihadist movement. The group portrays its governance apparatus as sophis-

ticated and well resourced and its external attacks as part of a transnational network of adher-

ents capable of waging global jihad. ISIL’s brand, like the organization itself, has proved resil-

ient in the face of setbacks, and the group remains popular among a niche demographic of 

hardcore adherents and sycophants.

Workshop participants agreed that even if ISIL’s current image is discredited, the group 

would likely attempt to reconstitute itself, perhaps under a different name, while continuing to 

exploit the population for money and resources. With less territory, ISIL will have less money, 

but it will try to change its messaging and tailor its activities to retain its brand—continuing to 

conduct attacks locally, within the region, and further abroad. However, participants doubted 

whether such a gambit would ultimately succeed at saving the brand in the long term. 

Stalemate Signals ISIL Victory

The workshop participants overwhelmingly felt that a medium- to long-term stalemate in Iraq 

and Syria will allow ISIL to gain an advantage by building its finances, its brand, and its opera-

tional capabilities, all while cementing its role as a powerful political entity. This agreement 

was particularly strong during the discussion of the status quo scenario. Experts on counterin-

surgency have noted that an insurgent group wins by not losing.

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 This observation generated 

widespread agreement about ISIL’s durability and staying power without a combined political 

and military victory against the group. Moreover, ISIL’s ability to survive, even while conduct-

ing fewer attacks and occasionally reverting to a quasidormant phase, would create an indelible 

impression of strength among local populations in areas of contested governance. 

Areas of Disagreement

The workshop also elicited differing opinions on the likelihood and timeliness of certain devel-

opments in ISIL’s finances. Some of these disagreements were substantive in nature—a portion 

of the group believed that some outcomes were likely to happen and another portion did not. 

Other disagreements were temporal in nature—some participants expected the effects of a 

scenario to occur earlier, while others argued that these changes would develop at a later stage. 

The following questions produced particular areas of disagreement across all scenarios—

status quo, political progress against the group, or combat victory against the group. 

•  Will ISIL seek and acquire external state sponsorship (or accept an unsolicited offer of 

external state sponsorship)? Will that financing actually significantly affect ISIL’s future?

•  Will ISIL attempt to construct a closed economy in territory that remains under its control?

•  Will ISIL shift its strategic priority from violent jihad toward governance in pursuit of a 

more balanced civil-military strategy, as Jabhat al-Nusra did? Will such a shift increase 

ISIL’s longevity by making it the “least bad” option among potential factions claiming to 

represent the Sunni population in Iraq and Syria?

2  

Eliot Cohen, Conrad Crane, Jan Horvath, and John Nagl, “Principles, Imperatives, and Paradoxes of Counterinsur-

gency,” Military Review, March–April 2006, pp. 49–53.

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