22 May 2019

This Is How ISIS Insurgents Survive Financially

In December 2017, the Iraqi Army declared victory over the Islamic State of Iraq and Syria (ISIS); the US-backed Syrian Democratic Forces did so on March 23, 2019. However, this was not the end of ISIS, as it soon recast itself as an insurgency (not a state) and started operating in almost all the territories it had lost to Iraqi security forces.

Now, ISIS has several thousand active insurgents operating in rural villages in Iraq’s northern and central provinces, from Nineveh to Al-Anbar. The group’s capacity to reorganize and operate is based on a sophisticated financial system that generates revenue by conventional rebel armed groups’ mechanisms and also by new ways of forced donation and kidnapping.
When it was a functional state and controlled one-third of Iraq’s territory, ISIS had very basic and dysfunctional economy. It had poor infrastructure and no formal trade relations with neighboring cities or countries. It also had no legal protection for investments, property rights, or any sign of economic sustainability. It was acting as a criminal group with no financial future.

Hamed Al-Jboory
Hamed Al-Jboory

Is research fellow at ICPAR and covers armed groups’ conflicts in Iraqi provinces of Anabr, Slahadin, and Kirkuk.

Although the insurgency’s financial system is quite modest and simple, it did allow ISIS to efficiently recruit Arab Sunnis given the 41.2 percentunemployment rate in their areas. The poor economy made ISIS’s financial resources more effective than the actual volume of money it can get. The high unemployment shows how low is the opportunity cost of joining ISIS in these areas today.


Kidnapping for ransom is one of ISIS’s most common methods of generating revenue. Mohammed, a retired army officer with two sons, used to drive oil tankers between Nineveh and Salahadin. Early this year, his sons were kidnapped by ISIS insurgents on the road between Makhmour to Kirkuk. After one month, the militants freed them for 40,000 USD ransom. 
The negotiations between the family and the ISIS insurgents were carefully done in an organized manner until the hostages were freed and the ransom was received. The careful communications and security measures the insurgents were able to employ during the negotiations, all over Nineveh and Salahadin, showed the group’s wide network and coordination. 
Similar kidnapping cases have been reported to Iraq’s National Security Services (NSS) almost every two days in the liberated areas, according to a high-ranking officer working in NSS who spoke on condition of anonymity.
The insurgents use mountainous areas like Makhol (in Salahadin), Hamrin (in Diyala and Kirkuk), Pallkana (in Tuz-Khurmatu), and Qara Chukh (in Nineveh). They also operate in Al-Anbar and the Jazeera Desert in Nineveh in addition to several river basins and marshlands close to population centers. In the cities, they operate as a covert network of small mobile groups, whereas in rural areas, they usually avoid direct confrontation with Iraqi security forces and use hit-and-run strategies.  

Forced Donation 

Forcing businesses to donate has been another main revenue generator for ISIS in Iraq since 2013. When businesses do not cooperate, they are targeted. On January 1, 2019, a group of ISIS insurgents raided a construction block factory in Khanaqin in Diyala Province, and destroyed the factory and its machinery. According to a local security official, this was a retaliation to punish the factory owner because he refused to donate.
Even in the past, forcing small and middle-sized businesses to donate money was a key revenue generator when ISIS was functioning as a state, or sometimes even before its founding as a state. It started in late 2013 in northern Salahadin, where the militants forced restaurant owners working on the Kirkuk-Baghdad highway in Tuz-Khurmatu to donate. 
Nowadays, the insurgents focus mostly on rural areas. They tax farmers based on their boats and farming projects, and they call it zakat (Islamic taxation). But in reality they do not tax people according to zakat procedures in Islamic Sharia (laws). For example, in the village of Albu-Jabr in southern Kirkuk, the militants forcefully seized flour from villagers. “They just randomly took as much as they could get in the late evening when they raided the village,” one of the residents told us under condition of anonymity. 


ISIS’s wealth is estimated to be between 50 and 300 million USD in cash. In Iraq, where the group has about 3000 active fighters, ransoms and forced donations allow them to expand and have a sustainable source of revenue to continue operations. The NSS officer estimated the organization’s monthly revenue as roughly 100,000 USD.
 About a quarter of this revenue is taken by the militants who generate the revenue, with the rest going to the organization.  
The revenue is limited, and they use the money to buy basic food items and low-level military ammunition like explosives and small weapons; however, the funds allow ISIS to stay active and expand its insurgency operations.
For Policy Makers
ISIS’s access to money is a serious threat to both the Iraqi and Kurdish governments. Disrupting the group’s financial system could be possible by employing some political, security, and economic measures. However, the governments’ inaction will allow the insurgents to revive or maybe create several versions of ISIS in the near future. 
To address this security concern, current security forces should be trained in counter-insurgency operations. Most of the Iraqi forces fighting the insurgents have not had any counter-insurgency training, especially Hashd Al-Shabi, Hashd Al-Ashayari, and Peshmerga forces. Therefore, they are not efficient in fighting the insurgents.
Moreover, the insurgents are mostly operating in the post-ISIS areas and disputed territories between Kurdistan and the Iraqi federal government. The economic situation in these areas is dire. The devastated economy, local people’s grievances, and lack of job opportunities make the Sunni Arab areas fertile grounds for insurgent groups.     
In 2014, many political and security issues were blamed for the emergence of ISIS, especially marginalizing Sunni Arabs. Allowing these issues to come up again will expose Iraq to major security problems in the near future.

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