U.S. Treasury Struggling to Disrupt ISIS Funding

President Obama’s plan to “degrade
and destroy” ISIS is not going so well.

Despite recent military setbacks
for the terrorist group, the U.S.-led airstrikes don’t appear to be

stemming the flow of new recruits. Nor do they promise to
dislodge ISIS from Mosul and Raqqa anytime soon. Giving
weapons and
humanitarian aid to the group hasn’t helped the
president’s cause much, either.

Now it appears another pillar of Obama’s counterterrorism
strategy is crumbling down. In a September
10 speech, Obama promised that “we will redouble our efforts to
cut off [ISIS] funding.” But Bill Gertz of the Washington
Free Beacon reports that the
times, they are a-changing for terror funding:

Analysts say the counterterrorism financing effort will be hard
to carry out because of the group’s recent gains on the ground and
its decreasing reliance on foreign Islamist donors.

In other words, gone are the days when counterterrorism agents
could dam up the financial support streaming from international
donors into decentralized terrorist financial networks:

Since June, when IS began its drive to take over Iraq, terrorist
funding for the group has shifted mainly to non-traditional means,
as nations began cracking down on bank-based financing.…As IS
continues to control territory, its reliance on foreign financing
diminishes, and it is gradually becoming self-sufficient.

Instead, ISIS is starting to look an awful lot like,
well, a
state, with an increasing amount of its revenue coming from
internal sources. These include oil sales, ransoming hostages,
the taxation extortion of
conquered territory, and other criminal
activities.

All told, it’s estimated that ISIS commands anywhere between
$1.5 billion–$2 billion. Oil revenues alone are estimated to bring
$1 million–$2.8 million into ISIS coffers daily.

David Cohen, the undersecretary for terrorism and financial
intelligence at the U.S. Department of the Treasury, recently
said that the government is trying to cut off ISIS’ oil
revenues through sanctions, anti-smuggling initiatives, and the
like. Recent airstrikes against ISIS-controlled oil refineries are
considered a relatively easy way to disrupt one of the group’s
primary revenue streams.

But the Brookings Institution has
pointed out that these efforts could lead to the opposite
of the desired result. A key ISIS strategy for garnering support is
to develop local dependence on the group’s resources—especially
oil. A winter with a short supply of oil could play right into the
hands of ISIS anti-U.S. propaganda. One prominent Syrian rebel
leader said, “You’ve given them a real gift.”

For its own part, ISIS is learning the hard way that taking
territory is one thing—managing it, another. Even if its revenues
remain as high as they’ve been, the group is facing the same
problem plaguing governments the world over: living within its
means.

Cohen said IS efforts to control territory also are a financial
burden and estimates of its Iraqi-controlled territory in the past
cost the Iraqi government over $2 billion.

“That far outstrips ISIL’s revenue, and does not include the
price-tag for the territory it seeks to dominate in Syria,” Cohen
said. “What this means is that ISIL cannot possibly meet the most
basic needs of the people it seeks to rule.”

Such are the pitfalls of statehood. Heavy-handed repression and
a rapidly deteriorating economic
situation in places like Mosul might decrease the group’s
popularity and make its position untenable. If ISIS is as bad at
governing as it is good at conquering territory, perhaps it’d be
best to sit tight and watch it implode all on its own.