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

Detailed Description of Points Raised in Each Scenario    25

Scenario Three: Total Territory Loss by Combat Means

The third scenario presents a strictly military solution. Through combat operations, ISIL is 

expelled from Mosul and Raqqa. Assad remains in power in Syria, and the Iraqi government 

remains fractured and ineffective, but the Kurds are still part of Iraq. Some ISIL elements may 

remain scattered throughout Syria and Iraq. Although they will not control territory, they will 

remain capable of conducting terrorist attacks.

Scenario Three as discussed was slightly different than the Scenario Three originally 

planned by the RAND team. The original scenario included the passage below: 

Through combat operations, ISIL is expelled from Fallujah, Mosul, and Raqqa. Assad 

remains in power in Syria, and the Iraqi government remains fractured and ineffective, but 

the Kurds are still part of Iraq and Baghdad is at least making earnest efforts toward inclu-

sion of the Sunnis. Some ISIL elements may remain scattered throughout Syria and Iraq, 

others may return to their countries of origin, and yet others may flee to ISIL strongholds 

in places like Libya to regroup and continue fighting. While ISIL holds little to no territory, 

it is capable of periodic terrorist attacks against soft targets in major population centers, 

such as markets in Baghdad, and of running a variety of criminal schemes to raise money.

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Before discussion started, participants noted that as written, Scenario Three was too close 

to Scenario Two because of the phrase about Sunni inclusion. They agreed that in a combat 

victory scenario, efforts toward reconciliation would probably depend on U.S. or coalition 

follow-on action and likely would not be carried out independently by the Iraqi government. 

Accordingly, the RAND team revised Scenario Three to remove the mention of political inclu-

sion of the Sunnis. 

The key variables for the third scenario center on ISIL’s ability to sustain its operations 

with a limited budget. With ISIL no longer laying claim to a functioning caliphate, how does 

the group differentiate itself from Jabhat al-Nusra and al-Qa’ida? Moreover, what entity or 

entities would emerge to replace ISIL in its lost territories?

Operational Adaptation and Structural Change

According to some workshop members, a total loss of territory by combat means would sub-

stantially degrade ISIL senior leadership. ISIL’s ability to conduct high-level attacks would be 

limited, especially if continuing counterterrorism targeting focused on eliminating the rem-

nants of the group’s leadership. However, participants believed that ISIL would still be fighting 

to retake territory in an attempt to reconstitute the organization even a year after its total loss 

of territory. Participants suggested that territorial loss by combat means would leave ISIL with 

a dwindling financial surplus to rely on, forcing the group to demonstrate strategic patience to 

survive. 

Tactical adaptations could allow ISIL to coexist in the short term and further entrench 

itself in the region over the long run. Ultimately, military victory with an underground ISIL 

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Note that the text of this scenario as cited here was prepared in advance of the June 2016 workshop underlying the find-

ings of this report, and the text remains unchanged from that point in time by design. Therefore, ISIL’s territorial losses as 

of June 2016 were slightly below the estimates cited in the main body of this report, which has since been updated to reflect 

current conditions, including the recapture of Fallujah.

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

is not a favorable trade-off for the coalition, but one that regional governments might still be 

willing to accept, no matter how myopic it might be. 

Workshop participants also concluded that even after losing large swaths of territory in 

both Syria and Iraq, ISIL would still spend money on sustaining its fighters and conducting 

attacks, especially at the local level, even after 18 months. Furthermore, from an expendi-

ture standpoint, participants argued that after losing territory, ISIL might attempt to shift its 

spending away from infrastructure, since it will have less territory to control, and focus increas-

ingly on expanding presence in ungoverned territory and conducting hit-and-run attacks. 

In the short to medium term, ISIL will require less revenue, since the onus will have 

shifted from provision of services to military operations. As resource levels change and ISIL 

focuses on raids and other classic insurgent tactics, its expenditures will be dominated by 

weapons and ammunition purchases and by the other operational demands of low-intensity 

conflict. 

Significant Changes in Revenues

Workshop participants said that total loss of territory would likely lead to continuing losses of 

revenue over the medium term, forcing ISIL members to use cash reserves and restricting new 

sources of funding through extortion. Participants did project that after a total territory loss 

by combat means, ISIL could experience an increase in revenue from outside sources, although 

bringing money back into Iraq and Syria would likely pose a challenge. 

Approximately a year after total territory loss, ISIL revenue could increase due to criminal 

activity. If grievances are still widespread within the Sunni populations of both Iraq and Syria, 

ISIL will still be able to operate and make money. 

ISIL Governance

Workshop discussion included statements that if ISIL is able to maintain a semblance of its core 

organization, it may seek to regroup and expand into northern Syria, where its revenues would 

be focused on establishing a shadow state. In this part of the country, ISIL would be forced 

to contend with other rebel groups, including Jabhat al-Nusra, and could be forced to spend 

more money on governance as it competes with other nonstate actors for political legitimacy.

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