Detailed Description of Points Raised in Each Scenario 23
largely on how effectively it can diversify its sources of revenue over time within the parameters
of the status quo scenario.
The group was largely in consensus that given the status quo scenario, ISIL would con-
tinue to avoid securing external funding or assistance from state or individual sponsors in the
region.
Scenario Two: Negotiated Settlement
The second scenario presents a negotiated settlement in Syria and reconciliation in Iraq. Assad
is removed from power and is replaced by a new ruler. A successful, multilateral agreement
would include a cease-fire among all parties involved except ISIL and Jabhat al-Nusra. Even
with a cease-fire in place, ISIL will continue to control pockets of territory throughout central
and eastern Syria, but it will be far more isolated than before. As part of the reconciliation in
Iraq, Kurdish parties and what is left of the Sunni political establishment agree to cooperate
with the central government, which, in turn, is more solicitous of their demands.
A range of factors could affect the outcome of this scenario. First, ISIL could accelerate
its efforts to secure WMD, as it might feel compelled to initiate a groundbreaking attack that
would improve morale and stave off further losses. Shifts in expenditures to focus on service
provision and shadow governance could be modeled after the Taliban in Afghanistan, and
ISIL might spend money in an effort to appeal to disaffected Sunnis while working to sabotage
the negotiated settlement.
Operational Adaptation
Participants debated whether the Syrian Army and its supporters could seek to move into
Raqqa to attack ISIL’s remaining stronghold several months past the completion of a negoti-
ated settlement. One participant estimated that ISIL’s footprint could be reduced by as much
as 75 percent by this point; accordingly, the group’s war chest would be negatively affected
as well. However, if ISIL were able to resist Syrian advances and hold on to Raqqa as a head-
quarters, ISIL would be able to continue marketing its brand, thus ensuring a (considerably
reduced) inflow of revenue.
Workshop participants also felt that even if a negotiated settlement pacified parts of Iraq
and Syria, ISIL would remain a potent fighting force in areas long held under its control. As
an adaptive organization with an intact, if increasingly isolated, headquarters in Raqqa, ISIL
could continue the process of changing into a hybrid organization—part terrorist group, part
criminal organization. Profit would replace politics as the chief motivation for sizeable parts of
the organization.
Highlighting the workshop participants’ diverse opinions on ISIL’s likely operational
adaptation after a negotiated settlement, some discussed the possibility that in an effort to sur-
vive, ISIL would accelerate its military activity, even as the group becomes more Syrian in its
makeup and its overall numbers diminish. Possible atomization and several rounds of “banner
changes” could also lead the group’s governance capabilities to deteriorate, directly affecting
the amount of money spent on noncombat activities. With less of a need to spend on gover-
nance, ISIL could increase its operational attack tempo and recruit new members that are less
concerned about the caliphate and more focused on violent attacks throughout the region.
24 Financial Futures of the Islamic State of Iraq and the Levant
After 18 months, ISIL expenditures under the scenario of a negotiated settlement could
lead the group to revert to the “Phase One” (latent and incipient) or “Phase Two” (guerilla
warfare) stages of insurgency, influencing how it would spend its money. Furthermore, in a
replay of the attacks it unleashed in late June and early July 2016, ISIL could once again focus
externally, within the Middle East region (e.g., Istanbul, Amman) or in Europe. If ISIL did
choose to follow a retrenchment strategy, it could hoard its existing resources while sustaining
a smaller footprint within Syria.
Iraq-Specific Implications
ISIL expenditures following a negotiated settlement could focus on disrupting Iraqi elections
in the short term. Another possible course of action, particularly if Iraqi Sunnis are embraced
by Baghdad, includes a revolt by Mosul residents and ISIL shifting its operations wholesale
into Raqqa. This would centralize expenditures, as ISIL would be forced to consolidate its
organization and operations.
Another aspect of political accommodation could be increased recruitment of Iraqi Sunnis
into the Iraqi security forces; workshop participants suggested such an increase would increase
the quality of those forces.
Changes in Revenue
Losing territory would translate to less revenue, although ISIL would likely seek to increase its
kidnapping-for-ransom activities in the areas still under its control. As of July 2016, there were
some indications that this was already happening in Anbar Province. ISIL would also seek to
increase its extortion-related revenue stream.
Participants noted that ISIL would still retain the ability to extort money within Syria.
Revenues from oil could be squeezed if the Syrian government was able to mobilize its forces
to retake the Deir Ezzor oilfields from ISIL. Workshop participants spoke about this occurring
in the range of six months after the negotiated settlement.
As a result of a negotiated settlement, workshop participants speculated that at some
point the ISIL brand would have less cachet, corresponding to a diminution in the ability of
the group to earn money. The net effect of a negotiated settlement in Syria would be to squeeze
ISIL’s hold on territory even further, constricting it to isolated pockets throughout the country,
limiting its ability to prey on civilians and other vulnerable groups in society.
Underlying Grievances and Potential for Reconciliation
Within the workshop group, one of the most provocative elements of the scenario was the extent
to which rapprochement in Iraq between Sunnis and the Iraqi government would change ISIL’s
fortunes. A leading expert on the Sunnis was emphatic that if the scenario involved genuine
reconciliation on the part of the government of Iraq, ISIL’s ability to continue making money
in Iraq would be diminished dramatically. The negotiated settlement scenario could poten-
tially lead to a second Sunni Awakening, with Iraqi nationalist groups and former Baathists
shifting away from supporting ISIL, further attenuating the group’s ability to earn money.