Terrorism, Inc.: The Financing of Terrorism, Insurgency, and Irregular Warfare

by Colin P. Clarke Ph. d.

  31. The CFT in AML/CFT stands for “Combating the Financing of Terrorism,” rather than “counterterrorist the financing of terrorism,” as reported by the State Department in its report.

  32. United States Department of State Country Reports on Terrorism 2013, Bureau of Counterterrorism, released April 2014.

  33. Michael Jonsson, “Following the Money: Financing the Territorial Expansion of Islamist Insurgents in Syria,” Swedish Defense Research Agency, FOI Memo #4947, May 2014.

  34. Remarks of Under Secretary for Terrorism and Financial Intelligence David S. Cohen at The Carnegie Endowment for International Peace, “Attacking ISIL’s Financial Foundation,” October 23, 2014.

  35. Terrence McCoy, “ISIS Just Stole $425 Million, Iraqi Governor Says, And Became the ‘World’s Richest Terrorist Group.’ ” The Washington Post, June 12, 2014.

  36. In January 2015, the Islamic State released its 2015 budget of $2 billion. Damien Sharkov, “ISIS ‘Releases 2015 Budget Projections’ of $2bn with $250m Surplus,” Newsweek, January 5, 2015.

  37. Jamie Detmer, “How to Cut Off ISIS Terror Tycoons,” Daily Beast, September 26, 2014. See also, Richard Barrett, “The Islamic State,” The Soufan Group, November 2014, p. 10.

  38. Remarks of Under Secretary for Terrorism and Financial Intelligence David S. Cohen at The Carnegie Endowment for International Peace, “Attacking ISIL’s Financial Foundation,” October 23, 2014.

  39. Jacob Shapiro, “Bureaucratic Terrorists: Al-Qa’ida in Iraq’s Management and Finances,” in Brian Fishman, ed., Bombers, Bank Accounts & Bleedout: Al Qa’ida’s Road In and Out of Iraq, West Point, NY: Combating Terrorism Center (CTC), 2008, p. 70; see also, Austin Long, “The Anbar Awakening,” Survival, Vol. 50, No. 2, April-May 2008, pp. 67–94.

  40. Tom Keatinge, “How the Islamic State Sustains Itself: The Importance of the War Economy in Syria and Iraq,” RUSI Analysis, August 29, 2014.

  41. The crude then gets sold to refiners for approximately $60 a barrel. Louise Shelley, “Blood Money: How ISIS Makes Bank,” Foreign Affairs, November 30, 2014.

  42. Tom Keatinge, “The Importance of Financing in Enabling and Sustaining the Conflict in Syria,” Perspectives on Terrorism, Vol. 8, No. 4, August 2014.

  43. Howard J. Shatz, “To Defeat the Islamic State, Follow the Money,” Politico, September 10, 2014.

  44. Howard J. Shatz, “How ISIS Funds Its Reign of Terror,” New York Daily News, September 8, 2014.

  45. David E. Sanger and Julie Hirschfield Davis, “Struggling to Starve ISIS of Oil Revenue, U.S. Seeks Assistance from Turkey,” September 13, 2014.

  46. “ISIS Selling Iraq’s Artifacts in Black Market: UNESCO,” Al Arabiya News, September 30, 2014. See also, Justine Drennan, “The Black Market Battleground,” Foreign Policy, October 17, 2014; see also, Janine di Giovanni et al., “How Does ISIS Fund Its Reign of Terror,” Newsweek, November 6, 2014.

  47. Nick Cumming-Bruce, “5,500 Iraqis Killed Since Islamic State Began Its Military Drive, U.N. Says,” New York Times, October 2, 2014.

  48. Williams, Criminals, Militias, and Insurgents, p. 158.

  49. Ibid., p. 159.

  50. David E. Sanger and Julie Hirschfield Davis, “Struggling to Starve ISIS of Oil Revenue, U.S. Seeks Assistance from Turkey,” September 13, 2014.

  51. Michael Jonsson, “Following the Money: Financing the Territorial Expansion of Islamist Insurgents in Syria,” Swedish Defense Research Agency, FOI Memo #4947, May 2014.

  52. Harith Hasan, “Al Qaeda Sinks Roots in Mosul,” Al-Monitor, October 24, 2013.

  53. Patrick B. Johnston and Benjamin Bahney, “Hitting ISIS Where It Hurts: Disrupting ISIS’s Cash Flow in Iraq,” New York Times, August 13, 2014.

  54. Ariel I. Ahram, “Can ISIS Overcome the Insurgency Resource Curse?” Washington Post Monkey Cage, July 2, 2014.

  55. Ben Hubbard, Clifford Kraus and Eric Schmitt, “Rebels in Syria Claim Control of Resources,” January 28, 2014.

  56. Ariel Ahram, “The Dangerous Mixture of Oil and Water in Iraq,” Political Violence @ a Glance, August 18, 2014. See also, Hwaida Saad and Rick Gladstone, “Syrian Insurgents Claim to Control Large Hydropower Dam,” New York Times, February 11, 2013.

  57. Howard J. Shatz, “How ISIS Funds Its Reign of Terror,” New York Daily News, September 8, 2014. Between 2005 and 2010, when the group was known as AQI, it is estimated that no more than 5 percent of its funding came from external donors. Matthew Levitt, “Show Me the Money: Targeting the Islamic State’s Bottom Line,” Homeland Security Policy Institute, October 1, 2014.

  58. Elizabeth Dickinson, “The Case Against Qatar,” Foreign Policy, September 30, 2014.

  59. Scott Bronstein and Drew Griffin, “Self-Funded and Deep-Rooted: How ISIS Makes Its Millions,” CNN.com, October 7, 2014.

  60. Cam Simpson, “The Banality of the Islamic State: How ISIS Corporatized Terror,” Bloomberg Business Week, November 20, 2014.

  61. Benjamin W. Bahney et al., “Insurgent Compensation: Evidence from Iraq,” American Economic Review: Papers & Proceedings, Vol. 103, No. 3, 2013, p. 519.

  62. Charles Lister, “Profiling the Islamic State,” Brookings Institution Doha Center Analysis Paper, No. 13, November 2014, p. 20.

  63. An analysis of ISIS’s weaponry reveals that China, the Soviet Union/Russian Federation and the United State are the top three manufacturing states represented in the sample of ammunition used by ISIS in Iraq and Syria. “Islamic State Ammunition in Iraq and Syria: Analysis of Small-Calibre Ammunition Recovered from Islamic State Forces in Iraq and Syria,” London: Conflict Armament Research, October 2014, p. 5.

  64. “How ISIS Works,” New York Times, September 16, 2014.

  65. C. J. Chivers, “ISIS Ammunition is Shown to Have Origins in U.S. and China,” The New York Times, October 5, 2014. See also, Julia Harte and R. Jeffrey Smith, “Where Does the Islamic State Get Its Weapons?” Foreign Policy, October 6, 2014.

  66. Kirk Semple and Eric Schmitt, “Missiles of ISIS May Pose Peril for Aircrews,” New York Times, October 26, 2014.

  67. Many of the Iraqi soldiers who refused to fight blamed their failure to stand their ground on officers, saying they were deliberately denied the resupply of basic necessities like food and water. C. J. Chivers, “After Retreat, Iraqi Soldiers Fault Officers,” New York Times, July 1, 2014.

  68. Gina Harkins, “5 Things to Know About Islamic State’s Military Capabilities,” Army Times, September 16, 2014.

  69. “Arms Windfall for Insurgents as Iraq City Falls,” The New York Times, June 10, 2014.

  70. Josh Rogin, “ISIS Video: America’s Air Dropped Weapons Now in Our Hands,” Daily Beast, October 21, 2014.

  71. Peter Bergen and Emily Schneider, “Now ISIS Has Drones?” CNN.com, August 25, 2014.

  72. Daniel Trombly and Yasir Abbas, “Who the U.S. Should Really Hit in ISIS,” Daily Beast, September 23, 2014.

  73. Ibid.

  74. Nigel Inkster, “The Resurgence of ISIS,” International Institute for Strategic Studies (IISS), June 13, 2014.

  75. Charles Lister, “Profiling the Islamic State,” Brookings Institution Doha Center Analysis Paper, No. 13, November 2014, p. 17.

  76. Carter Malkasian, “If ISIS Has a 3-24 (II): Trying to Write the Field Manual of the Islamic State,” Foreign Policy, October 7, 2014.

  77. Daniel Byman and Jeremy Shapiro, “Homeward Bound? Don’t Hype the Threat of Returning Jihadists,” Foreign Affairs, September 30, 2014.

  78. Caleb Weiss and Bill Roggio, “Islamic State Assaults City in Syrian Kurdistan,” The Long War Journal, September 18, 2014.

  79. James Dobbins, “Does ISIL Represent a Threat to the United States?” The Hill, October 3, 2014.

  80. Yochi Dreazen, “From Electricity to Sewage, U.S. Intelligence Says the Islamic State Is Fast Learning How to Run a Country,” Foreign Policy, August 18, 2014.

  81. Matthew Levitt, “Show Me the Money: Targeting the Islamic State’s Bottom Line,” Homeland Security Policy Institute, Oc
tober 1, 2014.

  82. Frederic Wehrey, “To Beat ISIS, Exploit Its Contradictions,” CNN.com, June 17, 2014.

  83. John Nagl, “America Needs a More Aggressive Strategy Against ISIL. Now.” Politico, October 12, 2014.

  84. Andrew Shaver, “Turning the Lights Off on the Islamic State,” Washington Post Monkey Cage Blog, October 16, 2014.

  85. Brooke Satti, “Funding Terrorists: The Rise of ISIS,” Security Intelligence, October 10, 2014.

  86. Suliman Ali Zway and David D. Kirkpatrick, “Group Linked to ISIS Says It’s Behind Assault on Libyan Hotel,” New York Times, January 27, 2015.

  87. Sami Yousafzai, “ISIS Targets Afghanistan Just as U.S. Quits,” Daily Beast, December 19, 2014.

  88. Reuters, “300 Chinese are Fighting Alongside ISIS in Iraq, Syria,” December 15, 2014.

  89. See Colin P. Clarke and Phil Williams, “The Islamic State of Iraq and Syria: Sustainable Insurgency or Paper Tiger?” in Lawrence Cline and Paul Shemella, eds., The Future of Counterinsurgency: Contemporary Debates in Internal Security Strategy, Santa Barbara, Calif.: ABC-CLIO, forthcoming 2015.

  90. Daniel Trombly and Yasir Abbas, “Who the U.S. Should Really Hit in ISIS,” Daily Beast, September 23, 2014.

  91. Daniel Byman and Jeremy Shapiro, “Homeward Bound? Don’t Hype the Threat of Returning Jihadists,” Foreign Affairs, September 30, 2014.

  92. Charles Lister, “Profiling the Islamic State,” Brookings Institution Doha Center Analysis Paper, No. 13, November 2014, p. 17.

  93. Ross Harrison, “Confronting the ‘Islamic State:’ Towards a Regional Strategy Contra ISIS,” Parameters, Vol. 44, No. 3, Autumn 2014, p. 39.

  94. Megan A. Stewart, “What’s So New About the Islamic State’s Governance?” Washington Post Monkey Cage Blog, October 7, 2014.

  95. Rod Nordland, “Iraq’s Sunni Militants Take to Social Media to Advance Their Cause and Intimidate,” New York Times, June 28, 2014. For more on the group’s use of social media, see Rita Katz, “Follow ISIS on Twitter: A Special Report on the Use of Social Media by Jihadists,” Insite Blog on Terrorism & Extremism, June 26, 2014.

  96. Jacob Siegel, “Has ISIS Peaked as a Military Power?” Daily Beast, October 22, 2014.

  97. Terence McCoy, “How ISIS Leader Abu Bakr al-Baghdadi Became the World’s Most Powerful Jihadist Leader,” The Washington Post, June 11, 2014.

  98. Tim Arango and Eric Schmitt, “U.S. Actions in Iraq Fueled the Rise of a Rebel,” The New York Times, August 10, 2014.

  99. For more on Shishani, see Will Cathcart, “The Secret Life of an ISIS Warlord,” Daily Beast, October 27, 2014.

  100. “The Anatomy of ISIS: How the ‘Islamic State’ is Run, from Oil to Beheadings,” CNN, September 18, 2014.

  101. Ben Hubbard and Eric Schmitt, “Military Skill and Terrorist Technique Fuel Success of ISIS,” The New York Times, August 27, 2014.

  102. “How ISIS Works,” The New York Times, September 16, 2014.

  103. Ben Hubbard and Eric Schmitt, “Military Skill and Terrorist Technique Fuel Success of ISIS,” The New York Times, August 27, 2014. See also, Ruth Sherlock, “Inside the Leadership of Islamic State: How the New ‘Caliphate’ Is Run,” Daily Telegraph, July 9, 2014.

  104. David D. Kirkpatrick, “ISIS’ Harsh Brand of Islam is Rooted in Austere Saudi Creed,” The New York Times, September 24, 2014.

  105. ISIS has been especially brutal in its treatment of women. Aki Peritz and Tara Maller, “The Islamic State of Sexual Violence,” Foreign Policy, September 16, 2014.

  106. David Motadel, “The Ancestors of ISIS,” New York Times, September 23, 2014.

  107. Daveed Gartenstein-Ross and Amichal Magen, “The Jihadist Governance Dilemma,” The Washington Post Monkey Cage, July 18, 2014.

  108. Lawrence Rubin, “Who’s Afraid of an Islamic State,” Washington Post Monkey Cage, October 2, 2014. See also, Ben Connable, “Defeating the Islamic State in Iraq,” Congressional testimony presented before the Senate Foreign Relations Committee on September 17, 2014, RAND Corporation, CT-418, p. 9.

  109. For more on the falling out between ISIS and Al Qaeda, see J.M. Berger, “The Islamic State vs. al Qaeda,” Foreign Policy, September 2, 2014.

  110. William McCants, “State of Confusion,” Foreign Affairs, September 10, 2014.

  111. David Ignatius, “The Manual That Chillingly Foreshadows the Islamic State,” Washington Post, September 25, 2014.

  112. Aaron Y. Zelin, “The Islamic State’s First Colony in Libya,” The Washington Institute for Near East Policy, Policy Watch 2325, October 10, 2014.

  113. Aaron Y. Zelin, “The War Between ISIS and al-Qaeda for Supremacy of the Global Jihadist Movement,” The Washington Institute for Near East Policy, No. 20, June 2014, p. 6.

  114. Robin Simcox, “ISIS’ Western Ambitions,” Foreign Affairs, June 30, 2014.

  115. Daniel Byman, “The State of Terror,” Slate, June 13, 2014.

  116. Aaron Y. Zelin, “ISIS is Dead, Long Live the Islamic State,” Foreign Policy, June 30, 2014.

  117. Graeme Wood, “What ISIS Really Wants,” The Atlantic, March 2015.

  118. “Islamic State Fighter Estimate Triples,” British Broadcasting Corporation (BBC), September 12, 2014.

  119. Seth G. Jones, “Jihadist Sanctuaries in Syria and Iraq: Implications for the United States,” presented to the Committee on Homeland Security Subcommittee on Counterterrorism and Intelligence, U.S. House of Representatives, July 24, 2014, p. 1.

  120. The United States has been able to identify Americans fighting for ISIS and other Syrian insurgent organizations through analyzing intelligence collected from travel records, family members, intercepted electronic communications, social media postings and surveillance efforts of Americans living overseas who have expressed an interest in traveling to Syria. Eric Schmitt, “U.S. Is Trying to Counter ISIS’ Efforts to Lure Alienated Young Muslims,” New York Times, October 4, 2014.

  121. “It Ain’t Half Hot Here, Mum: Why and How Westerners Go to Fight in Syria and Iraq,” August 30, 2014.

  122. Somini Sengupta, “Nations Trying to Stop Their Citizens from Going to Middle East to Fight for ISIS,” New York Times, September 12, 2014.

  123. Jytte Klausen, “They’re Coming: Measuring the Threat from Returning Jihadists,” Foreign Affairs, October 1, 2014.

  124. “Foreign Fighters Flow into Syria,” Washington Post, October 11, 2014. As of late October 2014, more Tunisian foreign fighters had joined the Islamic State than fighters from any other country outside of Iraq and Syria. David D. Kirkpatrick, “New Freedoms in Tunisia Drive Support for ISIS,” New York Times, October 21, 2014.

  125. Peter Neumann, “Suspects into Collaborators,” London Review of Books, Vol. 36, No. 7, April 3, 2014.

  126. Tim Arango and Eric Schmitt, “Escaped Inmates from Iraq Fuel Syrian Insurgency,” New York Times, February 12, 2014.

  127. Kate Brannen, “Children of the Caliphate,” Foreign Policy, October 27, 2014.

  128. “The Anatomy of ISIS How the ‘Islamic State’ is Run, from Oil to Beheadings,” CNN, September 18, 2014.

  129. Aaron Y. Zelin, “When Jihadists Learn How to Help,” Washington Post Monkey Cage, May 7, 2014.

  130. Benjamin Bahney et al., An Economic Analysis of the Financial Records of al-Qa’ida in Iraq, Santa Monica, CA: RAND Corp., 2010; for more micro-level data on the group’s financial bureaucracy, see Benjamin W. Bahney et al., “Insurgent Compensation: Evidence from Iraq,” American Economic Review, Vol. 103, No. 3, 2013, pp. 518–522.

  131. Howard J. Shatz, “To Defeat the Islamic State, Follow the Money,” Politico, September 10, 2014.

  132. Janine Davidson and Emerson Brooking, “ISIS Hasn’t Gone Anywhere—And It’s Getting Stronger,” Council on Foreign Relations, Defense in Depth, July 24, 2014.

  133. Mariam Karouny, “In Northeast Syria, Islamic State Builds a Government,” Reuters, September 4, 2014.

  134. For more, see Laura Ryan, “ISIS is Better Than Al-Qaeda at Using the In
ternet,” Defense One, October 10, 2014.

  135. Ali Fisher and Nico Prucha, “ISIS Is Winning the Online Jihad Against the West,” Daily Beast, October 1, 2014.

  136. Some of the hashtags promoted by ISIS included #AllEyesOnISIS and #OneBillionMuslimCampaigntoSupportIS.

  137. Lorraine Ali, “Islamic State’s Soft Weapon of Choice: Social Media,” Los Angeles Times, September 22, 2014.

  138. Ezzeldeen Khalil, “Gone Viral: Islamic State’s Evolving Media Strategy,” Jane’s Intelligence Review, October 2014, p. 15.

  139. Josh Kovensky, “ISIS’s New Mag Looks Like a New York Glossy—With Pictures of Mutilated Bodies,” New Republic, August 25, 2014. The name “Dabiq” was chosen for the magazine because Dabiq is a small village in Syria that is believed by some ISIS fighters to be the place where one of the final battles of the Islamic apocalypse will take place. See William McCants, “ISIS Fantasies of an Apocalyptic Showdown in Northern Syria,” Brookings Institution, October 3, 2014.

  140. Harleen K. Gambhir, “Dabiq: The Strategic Messaging of the Islamic State,” Institute for the Study of War, August 15, 2014, p. 2.

  141. James P. Farwell, “The Media Strategy of ISIS,” Survival, Vol. 56, No. 6, December 2014/January 2015, pp. 49–55.

  142. Marc Lynch et al., “Syria’s Socially Mediated Civil War,” United States Institute of Peace (USIP), Peaceworks No. 91, 2014, p. 15.

  143. Scott Shane and Ben Hubbard, “ISIS Displaying a Deft Command of Varied Media,” New York Times, August 30, 2014.

  144. Philipp Holtmann, “The IS-Caliphate: What Should Be Done to Prevent It from Spinning Out of Control?” Perspectives on Terrorism, Vol. 8, No. 5, October 2014, pp. 127–128.

  145. Keith Johnson and Jamila Trindle, “Treasury’s War on the Islamic State,” Foreign Policy, October 23, 2014.

  146. Howard J. Shatz, “To Defeat the Islamic State, Follow the Money,” Politico, September 10, 2014.

  147. Charles Lister, “Cutting Off ISIS’ Cash Flow,” Brookings Institution, October 24, 2014.

  148. Jamie Detmer, “How to Cut Off ISIS Terror Tycoons,” Daily Beast, September 26, 2014.

  149. Ibid.

  150. Michael S. Schmidt, “U.S. Steps Up Fight to Block ISIS Volunteers,” New York Times, October 8, 2014.