The ISIL Business Model

By RASHI NARAYAN

By now, everyone is mostly familiar with the Islamic State of Iraq and the Levant, otherwise known as ISIL. However, many are unaware to how they actually stay afloat. How is this terrorist organization able to fund its estimated 31,000 fighters and take over massive tracts of territory? ISIL has a few main “commodities” in order to finance its organization: oil, extortion, smuggling, and human trafficking. Understanding the economics of ISIL is crucial in understanding how to dismantle the organization.

Let’s first look at the territory ISIL controls. Syria is extremely rich in oil and ISIL owns many of Syria’s eastern oil fields including the biggest oil field, Omar. As ISIL takes over more territories, it also takes over more oil fields. The group now has approximately eight oil fields. How much is this vast supply of oil worth? ISIL can make up to $3 million from oil revenues daily. ISIL is able to smuggle barrels of oil through the very porous Turkish border and sell them to middle for an average of $40 per barrel. That is half the cost of the $85 per barrel international benchmark, set by Dated Brent.

With the much cheaper black market oil, ISIL is able to gain many customers, including the Assad regime in Syria and Iraqi Kurds. However, oil is only one part of ISIL’s income.

The vast terrorist organization also uses extortion and smuggling to make $12 million in revenues per month. The group has ransomed off its mostly European hostages for around $20 million this year– according to the US Treasury Department. Additionally, ISIL loots bank branches, extracts payments from those who pass through, conduct business in, or simply seek to live in the territory where it operates, as well as demands protection money from minorities for right to live in occupied territories. With this “tax” and ransom system, ISIL is able to supply an ample amount of fear while meeting its demand for large sums of money.

The last of ISIL’s “commodities” is not a commodity whatsoever. ISIL profits from selling young girls and women into the sex trade. The group takes its victims from captured territories and sells them as sex slaves to ISIL officers. It is unclear how much ISIL has profited from these crimes against humanity, though they have certainly stolen everything from their victims.

As the US has spent around $1 billion– according to United State Central Command– trying to destroy ISIL, it has only put a dent in the wealthy terrorist group. It begs the question: is military intervention the most  efficient option? In my opinion, it must be coupled with an effort to shut the extremely porous Turkish border. Closing the border– and limiting the smuggling of oil and other goods– will limit a large percentage of ISIL’s income, as it would shut down the black-market oil trade and other smuggling ventures. Doing so would limit ISIL’s ability and help aid in the ultimate goal of its destruction.

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