Oil facilities in Baiji, Iraq, one of the most intensely contested areas during the Iraqi Army’s battle against ISIS
The Islamic State of Iraq and Syria (ISIS) has become a destabilizing force throughout the Middle East and, increasingly, the globe. Its terror campaigns and plots have left upwards of 19,000 men, women, and children dead in Iraq alone alongside countless more in Africa, Europe, and the remainder of the Middle East. Furthermore, up to eight million additional people toil under the oppressive governance the group has imposed on conquered territory across Iraq and Syria. Beyond the sheer human toll of its violence, ISIS has also seriously challenged the stability of states such as Iraq, Syria, Lebanon, Egypt, and Libya through its military campaigns. For these reasons, the 2016 Worldwide Threat Assessment of the US Intelligence Community has deemed ISIS to be the “preeminent terrorist threat” on Earth.
Since 2014, heads of state around the world have grappled with various approaches towards addressing the threat of ISIS’ territorial encroachment and terror campaigns. Russian President Vladimir Putin, for example, has deployed Russia’s military power unilaterally as a check to ISIS’ expansion in Syria, with the use of airstrikes, armored vehicles, and military advisors. On the other hand, Turkish President Recep Erdogan has chosen a more conservative route, authorizing airstrikes only as a response to the January 2016 bombing in Istanbul. President Obama, for his part, along with various European heads of state, has created a coalition force both to conduct surgical strikes against key ISIS strongholds and to support rebel forces such as the Kurdish Peshmerga and the Free Syrian Army. Thus, the policy consensus among anti-ISIS actors seems to favor the use of military force in some form or another.
However, while it is undeniable that the problem of ISIS requires, at least in part, a military solution, it is also important to target the economic foundations upon which the group has built its global operation. As early as a year ago, according to The Economist, ISIS had been showing signs of economic weakness through its failures as a governing entity: not only was it lagging behind in its ability to fund basic public services, but it was resorting increasingly to extorting bribes in place of taxes and using barbaric violence to keep its own fighters in line after disputes over salary. These difficulties have only worsened over the past year with ISIS’ failure to escape American financial influence through the creation of its own currency, which has forced the group to rely on American dollars. The implications of a failing economy are immense — if ISIS is unable to procure proper funding for its operations, it will lose not only legitimacy as a caliphate and as a governing entity, but also functionality as an effective fighting force, which may lead the group to collapse on its own.
As Richard Rosecrance explains in his book The Rise of the Trading State: Commerce and Conquest in the Modern World, a state-like entity such as ISIS can derive its income only from two sources: Either through conquest, which it has already done by holding and exploiting occupied territories, or through commerce, which it has begun to pursue through the sale of cheap crude oil on the black market. Therefore, from an economic standpoint, ISIS’ current decline can be hastened by implementing a two-pronged strategy of denying sources of both conquest-based and commerce-based income.
ISIS’ conquest-based income can be classified into two categories: the acquisition of new territories and the exploitation of currently held territories. With regards to the former, current policy measures from governments worldwide have been keeping this source in check — a March 2016 estimate from US-led coalition forces found that due to continuously applied military pressure, ISIS has lost about 40 percent of its territory in Iraq and 20 percent in Syria, which both includes access to lucrative farmland and oil fields as well as control over taxable populations and businesses. An extension of current military campaigns could stem further ISIS expansion and make inroads in retaking previously conquered territory.
With regards to the exploitation of currently held territories, it is important to understand that human beings are the most important resource on these lands — not only does ISIS derive the vast majority of its recruits from its occupied territories; it has also created a tax system that draws over $900 million in revenue from indigenous workers and businesses. However, as International Business Times reported in June 2015, over 3.3 million people have already fled ISIS within Iraq alongside several million more who have sought international refuge. People are braving the horrible conditions and steep financial costs of being smuggled over long distances in order to escape the violence and oppression of ISIS. Thus, despite opposition from right-wing politicians such as France’s Marine Le Pen, Germany’s Pegida Group, and the United States’ Donald Trump, opening up national borders to refugees and migrants would starve ISIS economically by creating avenues of flight for people caught up in the group’s wake, which would reduce the human capital available for both recruitment and taxation.
Lastly, ISIS’ commerce-based income has been based solely on its recent forays into the black market for crude oil. Because ISIS controls a slew of Iraqi oil fields as well as Syrian refineries, it has been able to produce almost 30,000 barrels of oil a day, which equates to $50 million a month in income. An escalation of the current U.S. military campaign specifically targeting ISIS’ oil fields and shipping lanes could further disrupt this source of revenue, as estimates have shown that airstrikes in 2016 have denied ISIS over a third of its potential oil income.
Even with the recent progress of coalition forces, the threat of ISIS still looms large. However, a concerted and sustained approach of denying conquest-based and commerce-based income holds a real chance at limiting the group’s functionality as a governing entity and a fighting force.
Tony Zhou is a freshman in the College of Arts & Sciences at Cornell University, majoring in Economics and Philosophy and minoring in International Relations.
Image Attribution: “Power Plant in Bayji, Iraq” by Jim Gordan, USACE, licensed under Public Domain
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