How Long Will ISIS Last Economically?

A new CIDOB briefing note of mine deals with some food security issues in Iraq:

How Long Will ISIS Last Economically?

· ISIS is not a mere terror organization, but an insurgency that follows a classic “Clear, Hold, Build” strategy. The aim is state building as the very name ISIS suggests. Holding territory implies provision of services to the governed population such as food, energy and water.

· Oil is the most important revenue stream for ISIS followed by various forms of looting, local taxation, extortion and ransom. Not for nothing ISIS has been likened to a mafia gang. Foreign inflows have also played a role, but have not been as dominant as often assumed.

· Energy infrastructure cuts across territories. Rebels in control of oil and gas fields have sold energy to the Assad regime, which has been in control of the gas grid and power stations. ISIS has been no exception.

· Syria’s oil industry was already ailing before civil war erupted. The more lucrative fields in the south and north of Iraq on the other hand will likely remain out of ISIS’s control.

· Gulf donors have been described as “angel investors” for jihadist groups in Syria who provided the seed financing for their domestic operations. During 2012 and 2013 Gulf countries poured hundreds of millions into the Syrian civil war, often in competition with each other. While it is unlikely that Gulf governments have ever funded ISIS directly, it has benefitted indirectly from this spending spree when fighters who had originally been with other groups joined it and brought their experience and weapons with them.

· Iraq entertains the largest public food program in the world. The Public Distribution System absorbs about a fifth of government revenues and provides basic foodstuffs to more than half of the population in most provinces. ISIS regards dams and food distribution infrastructure like wheat silos as strategic assets. Like refineries and oil installations it has targeted them specifically and has taken a keen interest in taking them over intact.

· ISIS now controls up to 40% of Iraqi wheat production. However, half of Iraq’s wheat supplies are imports, so ISIS’s share of domestic production only is equivalent to about 20% of overall supplies.

· The economic base of ISIS is a Ponzi scheme of looting that is in constant need of expansion. Yet there are signs that expansion is becoming more arduous. The early easy phase of looting is over.

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