Without money wealth, IS, the latest evolution of al-Qaeda in Iraq, could not have expanded so rapidly. It only announced itself in its current form in March 2013 when it expanded into Syria from Iraq (after parting ways with al-Qaeda). It has since has fought to take over swathes of land in the two countries.
By June 2013 it had taken control of Raqqa, a city in Syria, and in June 2014 it took over Mosul, Iraq’s second city. By then in control of an area that is home to 6m-8m people, it declared a caliphate at the end of that month. Fighters have flocked to join the group. By September 2014 it was estimated to have 30,000 men (and some women, in a female police force), including 15,000 foreign fighters.
Unlike other terrorist groups, including al-Qaeda in Iraq, IS largely funds itself rather than relying on rich supporters (despite various versions of a intrigue theory in the region that America, Iran or Israel bankrolls the group).
Although IS receives donations, especially from Gulf-based financiers, they are a relatively insignificant contributor to its coffers. Instead the bulk of its money comes from oil revenues from fields under its control in western Iraq and eastern Syria.
American officials estimated that it was making $2m a day from oil before air strikes started but in December an official said the strikes, some of which have been against oil facilities in Syria, meant the group’s oil revenues had “significantly” dropped. Controlling so much land also helps IS make money from extortion and taxing people in the areas it controls. Like other jihadist groups, it has learned that kidnapping can be profitable. IS earned at least $20m last year from ransoms paid for hostages, including several French and Spanish journalists.
The group cannot be defeated without cutting off its funds. That is why the coalition says it aims to attack the sources of its revenue as well as stopping the group from advancing militarily.
America and its adjuvant have carried out air strikes on IS-controlled oil refineries in Syria. America and Britain, which have a strict policy against paying ransoms for hostages, are pressuring European countries to stop paying up (something they deny doing).
Several countries have applied sanctions against IS leaders as well as those known to raise funds for the group. But officials are keen to emphasise it will be a long fight. For now, IS still seems to be able to pay for everything it needs.
According to an analysis of Islamic State documents from Mosul, property confiscated by Islamic State can be rented to locals, become bases for Islamic State fighters or members, or be re-evolved as new structures.
Foreign fighters: Some foreign fighters who travel to join the Islamic State bring with them hard currency – though this appears to be a relatively limited funding source for the Islamic State.
Agriculture: Islamic State now controls some of the most fertile parts of Iraq and Syria, which produce a lot of wheat and barley. According to Thomson Reuters, if those crops were sold at a 50 percent discount on the black market, that could still generate more than $200 million in annual income for the Islamic State.
Other crops are simply taken from farmers – one Syrian refugee interviewed by The Washington Post said the Islamic State took 10 percent of her family’s wheat crop. Some of the wheat is milled in Islamic State-owned flour mills, according to reports, and subsequently sold to local people and bakeries.
Phosphate, cement and sulfur: The area that Islamic State has captured is rich in natural resources including phosphate, cement and sulfur. Thomson Reuters estimates that phosphate resources might generate as much at $50 million a year for Islamic State at discounted prices, while sulfuric acid and phosphoric acid might generate $300 million.
Human trafficking: Many reports have documented Islamic State’s practice of selling women and girls into marriage or sexual slavery, including many women from the Yazidi and Shia-Tukoman minorities.