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.
19
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