Although airstrikes have hit ISIL hard, coalition must retake territory to attack other ISIL funding.
Once famous for being the richest terrorist group in the world, the Islamic State, variously known as IS, ISIL and Daesh, now faces considerable money problems. Coalition airstrikes, economic downturns in both Iraq and Syria and historically low global oil prices have combined to hit the group where it hurts the most — the bottom line.
Coalition successes in countering ISIL financing owe primarily to two main efforts. The first is an air campaign against the group’s oil revenue named Operation Tidal Wave II. The campaign, which began last October, has starved ISIL of tens of millions of oil dollars it was making by controlling the majority of Syria’s oilfields. While Operation Tidal Wave II was not the first coalition effort to target ISIL oil, from which the group was making an estimated $50 million per month prior to the operation, the campaign has reduced ISIL oil revenue by an estimated 30% according to coalition estimates.
The second effort has targeted ISIL's cash directly, going after the banks where the group stores its cash in Iraq. Airstrikes have destroyed much of the money in ISIL’s Bayt al-Mal, or “general treasury,” the locations where ISIL holds its money. After conducting two airstrikes on ISIL-controlled banks in Mosul in January that destroyed between “tens of millions” and "a billion" dollars of bulk “Daesh cash,” according to coalition spokesman Col. Steve Warren, the coalition struck again. Airstrikes decimated four more major ISIL cash storage and distribution facilities on Feb. 14, including the Iraqi Central Bank branch in Mosul — the same bank from which ISIL reportedly stole an estimated $400 million dollars after the group seized the city in June 2014.
These airstrikes on ISIL’s Bayt al-Mal in Iraq complement coalition actions against ISIL oil assets in Syria since the group controls only a small share of the country’s oil revenue in Iraq. There, the group relies instead on extortion, taxation and other financial schemes to generate the revenue needed to finance attacks and to impose strict sharia law over civilians across large swaths of territory.
In addition to these two coalition initiatives to erode ISIL’s major financial pillars, the struggling economies of Iraq and Syria have also hindered ISIL’s ability to generate revenues. Citing economic hardship, the Iraqi government has discontinued salaries to thousands of government employees located in ISIL-controlled territory, whom ISIL tax at high rates. Moreover, historically low oil prices have reduced the profitability of ISIL’s oil operations. The difficulty of producing and smuggling cheap oil across borders has led ISIL to sell most of its oil locally in Iraq and Syria at steeply discounted prices.