How Islamic State Became Self Financing

Image: How Islamic State Became Self Financing Oil tankers transport petrol sold by the Islamic State to Kurdish businessmen in Iraq's northern city of Kirkuk. (Marwan Ibrahim/AFP/Getty Images)

Thursday, 28 Aug 2014 07:41 AM

By Elliot Jager

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The Islamic State has become a mostly self-financed terror group by pirating oil, exacting tribute from 8 million people under its control, looting banks and taking Westerners captives, making it among the richest terrorist organizations in the world, The Wall Street Journal reported.

The Sunni group, which evolved out of al-Qaida in Iraq, and once depended on donors from the Arab and Muslim world, now sustains itself illicitly through an methodical system of extortion, according to the Journal. Christians and other non-Muslims must pay a tax if they want to live within the areas controlled by the group.

A gray market that relies on Shiite, Kurdish, Iranian, and Syrian businessmen — supposed enemies — moves oil, wheat, and other valuables from areas controlled by the Islamic State to markets beyond. The group controls the trade of up to 70,000 barrels of oil a day. Turkey says it is trying to better control its border with Syria to block some of this traffic, the Journal reported.

The extortion is targeted down to the local level. Rather than wait for crops to be harvested the Islamic State "demanded to be paid in gold, silver or any other precious material for the annual crop we were about to plant," a farmer told the Journal.

How much, specifically, it takes in from the assorted components of its racketeering operation is difficult to estimate. "They are remarkably creative in their financing efforts and they can operate independently of outside sources," said Douglas Ollivant of the New America Foundation. Cutting off financing is difficult because "the whole region is a cash economy," the Journal reported.

Founded by Abu Musab al-Zarqawi, a Palestinian-Jordanian who developed the self-financing model, the group evolved into the Islamic State under the leadership of Iraqi-born Abu Bakr al-Baghdadi. Zarqawi was killed by the U.S. in 2006. Al-Qaida chief Ayman Zawahiri broke with Baghdadi leaving the Nusra Front as its affiliate in the region, the Journal reported.

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