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

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

•  Will ISIL increase or decrease its efforts to obtain weapons of mass destruction (WMD) 

and use them to conduct mass-casualty attacks?

These disagreements are similar to disagreements analysts had about the future of the 

Islamic State of Iraq, ISIL’s predecessor, in 2010 and 2011.

Furthermore, workshop participants disagreed on the role that a variety of factors would 

play in ISIL’s financial future. These included: 

•  The level of involvement by wilayats, or provinces (sometimes composed of fran-

chise groups), outside the core ISIL area of Iraq and Syria.

 Some participants saw a 

mutually beneficial relationship between core ISIL and some of the more robust fran-

chise groups, such as those in Libya, Sinai, and South Asia, while others believed the 

relationship between core and periphery was weak and largely based on ISIL’s brand. The 

strength of these connections has a significant effect on the ability of ISIL’s wilayats to 

raise revenue for any ISIL core that remains in Iraq and Syria or to host group leadership 

in the event of defeat in Iraq and Syria.

•  How closely ISIL’s brand is tied to the idea of a caliphate with territorial holdings. 

Participants disagreed over whether the loss of Raqqa and Mosul would result in a per-

manent tarnishing of ISIL’s brand. (ISIL is attempting to manage its losses; before his 

summer 2016 death, ISIL spokesman Abu Muhammad al-Adnani had begun noting 

ISIL’s roots as a guerilla insurgency in an attempt to show that ISIL objectives were not 

directly tied to territorial control.) More of the participants believed that territorial losses 

would destroy the ISIL brand, but other groups would rise and the dream of the caliphate 

would not disappear.

•  How long it will take for ISIL’s brand to lose its appeal in the event of military or 

political progress against the group.

 Some workshop participants said that if ISIL were 

to lose Mosul and Raqqa, it would quickly lose its brand. Others argued that this decay 

would be a much lengthier process, and that ISIL would continue to exploit local griev-

ances and increase its emphasis on terrorist attacks to try to retain its brand. 

It is important to note that even though participants attended the workshop to focus 

on financial issues, they also discussed nonfinancial issues, such as ISIL’s potential quest for 

WMD, ISIL’s relationship with its provinces, and ISIL’s branding issues. Each of these non-

financial issues has some relationship to ISIL financing—some stronger, some weaker—and 

were thus germane to the overall discussion and workshop agenda.

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CHAPTER FOUR

Implications for the Counter-ISIL Effort

The discussion of the three scenarios offered a number of implications for the counter-ISIL 

effort. Countering funding requires disrupting illicit markets and networks, feeds into coun-

tering ISIL governance, and undermines ISIL legitimacy. Workshop participants discussed all 

these aspects and included actions to counter specific means of raising money within ISIL ter-

ritory, using financial information to damage the group, degrading its ability to raise money 

across its territory, and ensuring that it does not shift to raising money from beyond its territory. 

Coalition forces have demonstrated the ability to conduct precise, intelligence-led strikes 

on ISIL’s oil operations and its bulk-cash sites in Iraq and Syria. To cripple the group’s main 

sources of wealth, it will remain necessary to continue these operations. 

In the short term, a lack of opposition forces capable of reclaiming and holding all of 

ISIL’s territory means that ISIL continues to control important non-oil economic resources, 

including portions of Iraq and Syria’s agricultural, manufacturing, and financial sectors. ISIL 

will seek to compensate for losses in certain revenue streams by increasing revenue generation 

in other areas, and these other resources should be considered for targeting or sanctioning. This 

is particularly true with respect to an increase in taxation and extortion of the local population. 

Coalition forces will need to dedicate more resources in training Iraqi and other law enforce-

ment entities, beyond advising, assisting, training, and equipping their military efforts. These 

forces can focus on combating ISIL’s renewed efforts to earn revenue through taxation and 

extortion.

ISIL supply chains for the trade of goods and services with non-ISIL elements, any inter-

mediaries that facilitate that trade, and end purchasers who know they are dealing with ISIL 

should be identified and considered for sanctioning and targeting. Gaining visibility on eco-

nomic resources and supply chains may require redirection of intelligence resources or new 

intelligence resources. The goal would be to sustain operations against ISIL trade networks and 

disrupt the economic sectors that ISIL uses to finance itself. Consideration of any necessary 

new authorities should begin early.

If the coalition can degrade ISIL finances to the point at which the group struggles to 

pay salaries, this may rupture internal cohesion between fighters and leadership and hamper 

recruitment. ISIL’s predecessor group, ISI, had trouble with embezzlement, and ISIL also may 

have such problems with its own fighters. Highlighting these financial failures through effec-

tive messaging could worsen public perceptions of ISIL’s solvency and trustworthiness, espe-

cially among members, prospective members, or sympathizers. Declassifying any recently cap-

tured ISIL documents citing financial strain would further reinforce this message and aid 

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