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

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Figure

 

1.   ISIL’s Territorial Losses Between January 2015 and July 2016

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ix

Summary

The Islamic State of Iraq and the Levant (ISIL) has been described as the wealthiest terrorist 

group in history. From seizing control of banks to extortion to trafficking oil and oil-related 

products, ISIL has diversified its revenue streams to amass a significant war chest, which it uses 

to fund its organization. Policy options to combat ISIL include efforts to cut off the group’s 

revenues. Further, the ways in which ISIL generates and spends money can reflect changes in 

its strengths, weaknesses, and strategy. Therefore, understanding how ISIL’s financial activities 

affect and are affected by internal and external factors is critical to developing a full analytic 

picture of ISIL—and ultimately to countering it.

Although international coalition efforts have indeed decreased ISIL’s revenues, the group 

is continuing to generate income and conduct attacks. Given the group’s resilience, and the 

global effort against it, considering ISIL’s financial trajectory under a variety of conditions is a 

worthwhile endeavor. Accordingly, the RAND Corporation conducted a short-term study to 

explore the future of ISIL’s finances. To that end, RAND held a small workshop at its Arling-

ton office in June 2016. The participants were eight professionals with expertise in the Middle 

East, ISIL, counterterrorism, and economics. Participants’ identities and comments in these 

proceedings are kept anonymous. RAND followed human subjects protections in the work-

shop and in this report in accordance with U.S. federal policy and Department of Defense 

regulations governing human subjects protections. Participants’ comments are based on their 

professional experiences and do not represent the policies and positions of their agencies, the 

U.S. Department of Defense, or the U.S. Government. 

Using a set of three scenarios constructed by the project team, workshop participants 

determined how each scenario would influence ISIL’s revenues and expenditures. The work-

shop did not model the behavior of Jabhat al-Nusra (now Jabhat Fatah al-Sham) or other insur-

gent groups under the three scenarios.

To examine how ISIL finances might evolve, the RAND team asked the workshop par-

ticipants to analyze each scenario’s effect on ISIL’s finances at six, 12, and 18 months from 

the start of each scenario. Discussion of these three scenarios—(1) status quo, (2) a negotiated 

settlement in Syria and political accommodation in Iraq, and (3) ISIL’s total loss of territory 

through combat means in Syria and Iraq—served as the basis for the workshop discussion and 

this report’s analytical findings. 

This report remained faithful to the workshop findings: The authors have not infused 

their own analysis into the document beyond points of clarification. In addition, an earlier ver-

sion of the report was sent to all workshop participants for their comments to ensure the report 

accurately reflects what transpired within the workshop itself.

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

The Scenarios

Workshop participants considered three scenarios. The first scenario presented the status quo, 

in which all current counter-ISIL actions continue into the future without any major changes 

to the military campaign or the actions of the Iraqi and Syrian governments. Specifically, ISIL 

remains under pressure in areas of both Syria and Iraq, but maintains its capital in Raqqa as 

well as control of significant swaths of territory, including Mosul and areas to its south. It also 

maintains the ability to conduct terrorist attacks throughout the region.

The second scenario presented a negotiated settlement in Syria and reconciliation in Iraq. 

Bashar al-Assad is removed from power and replaced by a new ruler. A successful multilateral 

agreement includes a cease-fire among all parties involved, with the exception of ISIL and 

Jabhat al-Nusra (rebranded Jabhat Fatah al-Sham in July 2016). Even with a cease-fire in place, 

ISIL will continue to control pockets of territory throughout central and eastern Syria but will 

be far more isolated than before the settlement. 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.

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

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

remains fractured and ineffective, but the Kurdistan Region is still part of Iraq. Some ISIL 

elements may remain scattered throughout Syria and Iraq. Although they will not control ter-

ritory, they will remain capable of conducting terrorist attacks. 

Given time and resource constraints, the authors chose to focus on these three scenarios. 

The scenarios were arrived at in consultation with U.S. government officials and were designed 

to be analytically distinct. Any campaign against ISIL likely will involve elements of all three 

scenarios, but separating them allowed for a more focused discussion of the implications of 

each. Focusing on three scenarios allowed the participants to cover both the breadth and depth 

necessary to tease out important nuances without getting bogged down in small details. All 

scenarios assumed growing military pressure on ISIL, given agreement between RAND and 

U.S. government officials that this was the most likely trajectory of the conflict. 

Major Points of Agreement and Disagreement

One benefit of the workshop format was our ability to identify points of agreement and dis-

agreement among the subject-matter experts. The main points of agreement suggest how ISIL 

will evolve financially, regardless of the actions of the counter-ISIL coalition. The main points 

of disagreement highlight the uncertainties regarding ISIL’s financial evolution, which could 

serve as collection priorities to gain visibility into how ISIL will evolve.

Several areas of agreement between subject matter experts emerged in the workshop. 

First, ISIL is a highly adaptable and resilient organization, and its revenues from extortion 

and taxation will likely persist even in the absence of territorial control. Second, due in large 

part to the group’s ability to adapt under pressure, ISIL will persist as a terrorist organization 

over the course of any timeframe relevant to planning. Third, a military victory against ISIL 

that does not also address the underlying political factors behind the group’s rise will be only 

a temporary victory, as the group’s remnants will attempt to reconstitute (perhaps under a new 

name), or an alternative group will move or form to take its place. Finally, the longer a military 

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