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

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Acknowledgments

The authors thank the Counter-ISIL Finance Futures Workshop participants for their partici-

pation and candid contributions and Leah Hershey of RAND for her administrative support. 

We also thank government officials involved in the counter-ISIL finance effort for productive 

discussions and for supporting this work, and our two reviewers, Jeffrey Martini and Phil  

Williams, for their thoughtful comments, which improved the manuscript significantly. All 

errors are the responsibilities of the authors.

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xv

Abbreviations

AQI

al-Qa’ida in Iraq

CIFG

Counter–ISIL Finance Group

CJTF-OIR

Combined Joint Task Force – Operation Inherent Resolve

FATF

Financial Action Task Force

ISIL

Islamic State of Iraq and the Levant

KFR

kidnapping for ransom

PMU

Popular Mobilization Units

WMD

weapons of mass destruction

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1

CHAPTER ONE

Introduction

Countering the finances of the Islamic State of Iraq and the Levant (ISIL) is a major line of 

effort among U.S. and international actions to degrade and destroy the group. The group has 

taken over large swaths of Iraq and Syria, established affiliates, sown terror around the world, 

enslaved people, killed thousands, and helped destabilize the Middle East and North Africa.

Internationally, the Counter-ISIL Finance Group, chaired by Italy, Saudi Arabia, and the 

United States, leads the effort to degrade ISIL’s finances. Nationally, a large number of agen-

cies are involved. Counterfinance efforts have led to notable successes, for example, cutting 

presumed oil revenues from $500 million in 2015 to a projected $250 million in 2016. These 

successes have been accompanied by, and both caused and been caused by, military and ter-

ritorial gains against ISIL (Figure 1.1).

However, a simple, but important, question remains: How do these efforts affect ISIL, 

particularly its ability to raise money and use it to fund its operations? A key part of that ques-

Figure 1.1

ISIL’s Territorial Losses Between January 2015 and July 2016

SOURCE: Columb Strack, “Islamic State Caliphate Shrinks a Further 12 Percent in 2016,” IHS Jane’s 360, July 11, 2016.

RAND CF361-1.1

Capital cities

Key towns/cities

ISIL-controlled areas

(no change)

ISIL territorial gains

in 2016

ISIL territorial losses

in 2016

ISIL territorial losses

in 2015

Country borders

Major rivers

Territory controlled by 

other actors

Unpopulated desert areas

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

tion is whether and how ISIL can compensate for losses in one revenue stream by increases in 

another stream. Considering ISIL’s evolution under a range of projected conditions can help 

inform efforts to counter it and shape expectations about future successes and failures. 

In June 2016, the RAND Corporation convened a small, half-day workshop in Arlington, 

Virginia, to consider potential ISIL financial trajectories in the short to medium term and dis-

cuss the resulting policy implications. RAND brought together eight experts from across several 

distinct, but interrelated, disciplines. The group included political scientists, economists, policy 

analysts, and former high-ranking military and intelligence community officials with decades of 

experience studying terrorism, counterterrorism, insurgency, and threat finance. Many partici-

pants also had direct experience in deployed environments, particularly Iraq and Afghanistan, 

in a military or civilian capacity. Participants’ identities and comments in these proceedings are 

kept anonymous, in part to ensure a candid discussion. RAND followed human subjects pro-

tections in the workshop and in this report in accordance with U.S. federal policy and Depart-

ment 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.

In preparation for the workshop, RAND provided participants with two documents. The 

first presented a brief, detailed analysis of the current state of ISIL’s finances. It included sections 

on ISIL revenues, expenditures, coalition countermeasures, and a discussion of the group’s ability 

to sustain its operational and organizational capabilities. Appendix B reproduces this document.

The second document described three scenarios. The participants were asked to judge 

how ISIL’s revenue and expenditures might be affected six, 12, and 18 months from the start 

of each scenario. The scenarios were designed to serve as jumping-off points to elicit discus-

sion and reveal possible future trajectories. RAND developed the scenarios in consultation 

with U.S. government officials, then worked within the research team to arrive at sufficient 

variation between each scenario. Workshop participants were instructed to take the starting 

points of each scenario as given so that discussion of what followed from the scenarios could be 

maximized. The workshop did not model the behavior of Jabhat al-Nusra (now Jabhat Fatah 

al-Sham) or other insurgent groups under the three scenarios.

Each scenario presented was analytically distinct: One featured the status quo, one fea-

tured a political settlement, and one featured a military victory over ISIL. Any campaign 

against ISIL likely will involve elements of all three scenarios, but separating these elements 

allowed for a more-focused discussion of each scenario’s implications. Given the time and 

resource constraints of the workshop participants, the authors chose to focus on only these 

three scenarios, allowing participants to tease out important nuances without getting bogged 

down in small details. All scenarios assumed growing military pressure on ISIL, as RAND and 

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

These scenarios are reproduced below as they were sent to workshop participants (with 

minor adjustments for clarity). The footnotes have been added for this report to account for 

events since the workshop.

Scenario One: Status Quo

ISIL holds onto Mosul or Raqqa for at least the next 18 months. ISIL is under pressure in 

areas of both Syria and Iraq, but maintains its capital in Raqqa as well as control of significant 

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