Erika Solomon
Reuters
ISIS fighters on parade
Once smokers were flogged in Syrian territory ruled by the
Islamic State of Iraq and the Levant, now they are fined about $65.
Local rulers dismantle old state facilities to sell for parts. And
shopkeepers complain Isis fighters no longer spend so freely.
The world's richest jihadi group is not as flush as it once was, say Syrians who live under its rule. It has cut spending on fuel and bread subsidies, while increasingly shaking down locals for cash. Fighters themselves may be feeling the squeeze, too.
"Isis took some kind of financial hit . . . Some fighters' salaries were cut, including my nephew," said a man in the eastern city of Mayadeen, who says an apparent drop in
the group's revenues is making it difficult to cover the cost of its expansion in territory and membership since its lightning offensive last year.
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The world's richest jihadi group is not as flush as it once was, say Syrians who live under its rule. It has cut spending on fuel and bread subsidies, while increasingly shaking down locals for cash. Fighters themselves may be feeling the squeeze, too.
"Isis took some kind of financial hit . . . Some fighters' salaries were cut, including my nephew," said a man in the eastern city of Mayadeen, who says an apparent drop in
the group's revenues is making it difficult to cover the cost of its expansion in territory and membership since its lightning offensive last year.
Read more from the Financial Times:
Bundestag backs Greek bailout extension
Oil set for biggest monthly rise in 6 years
Japan flirts with return to deflation
Claims of belt-tightening are hard to confirm.
Structurally, Isis is a secretive organisation, particularly with its
finances. According to the US state department, it has $500m in liquid
cash assets. But the group does seem to be restricting spending,
potentially making it difficult to function like the caliphate it claims
to be building.
So far this is unlikely to affect its capabilities as a militant organisation. According to the Financial Action Task Force, an intergovernmental body, it costs up to $10m a month to fund its fighters.
"It's harder for them to maintain the fiction of running a state in the eyes of local [people]," said a senior western diplomat who attended recent meetings of the anti-Isis coalition. "But if you are a member of the organisation itself, or a fighting group affiliated with it, then the money is still available."
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Yet some of Isis's most profitable and straightforward sources of income are drying up.
Before the coalition air strikes, Isis enjoyed a monopoly on captured oilfields in Syria and Iraq, where it holds nearly a third of each country's territory. It controlled the entire supply chain, from crude extraction and wholesale export to the refining and sale of fuel products internally.
So far this is unlikely to affect its capabilities as a militant organisation. According to the Financial Action Task Force, an intergovernmental body, it costs up to $10m a month to fund its fighters.
"It's harder for them to maintain the fiction of running a state in the eyes of local [people]," said a senior western diplomat who attended recent meetings of the anti-Isis coalition. "But if you are a member of the organisation itself, or a fighting group affiliated with it, then the money is still available."
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Yet some of Isis's most profitable and straightforward sources of income are drying up.
Before the coalition air strikes, Isis enjoyed a monopoly on captured oilfields in Syria and Iraq, where it holds nearly a third of each country's territory. It controlled the entire supply chain, from crude extraction and wholesale export to the refining and sale of fuel products internally.
Since the coalition began targeting the makeshift
refineries and fuel convoys, Isis passed the refinery business on to
local allies and now relies solely on crude extraction and sales of
about $20 a barrel.
"Without selling the fuel, and only relying on crude, they lose about half of what their oil revenues once were," said a gas plant worker from eastern Deir Ezzor province, who, like all sources contacted in Isis-controlled areas, asked not be named.
Analyst Torbjorn Soltvedt estimates the group's daily revenues from oil has dropped to $300,000 per day. Last year, analysts estimated it made anything between $1m and $2m a day from oil. "I don't think this will lead to their collapse . . . But it might accelerate their implosion," said Mr Soltvedt, of security consultancy Verisk Maplecroft group.
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Opportunities to loot and kidnap for ransom, which Mr Soltvedt said earned Isis around $20m last year and the FATF put at anything up to $45m, have also become rare as the coalition campaign slows Isis' territorial gains.
Isis, which has lost hundreds of fighters since the coalition strikes, also pays families 900,000 Syrian pounds (nearly $4,000) for each son killed, Raqqa residents say. With over a thousand believed killed in the battle for the border town of Kobani alone, such payments could be an added financial burden.
The group has also seen a string of high profile commanders and emirs, or local rulers, fleeing — often with hundreds of thousands, sometimes millions of dollars. In the past two months, at least five Isis officials have been executed for trying to abscond with large sums of money, according to locals and reports by the Syrian Observatory for Human Rights, a Britain-based monitoring group.
"Without selling the fuel, and only relying on crude, they lose about half of what their oil revenues once were," said a gas plant worker from eastern Deir Ezzor province, who, like all sources contacted in Isis-controlled areas, asked not be named.
Analyst Torbjorn Soltvedt estimates the group's daily revenues from oil has dropped to $300,000 per day. Last year, analysts estimated it made anything between $1m and $2m a day from oil. "I don't think this will lead to their collapse . . . But it might accelerate their implosion," said Mr Soltvedt, of security consultancy Verisk Maplecroft group.
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Opportunities to loot and kidnap for ransom, which Mr Soltvedt said earned Isis around $20m last year and the FATF put at anything up to $45m, have also become rare as the coalition campaign slows Isis' territorial gains.
Isis, which has lost hundreds of fighters since the coalition strikes, also pays families 900,000 Syrian pounds (nearly $4,000) for each son killed, Raqqa residents say. With over a thousand believed killed in the battle for the border town of Kobani alone, such payments could be an added financial burden.
The group has also seen a string of high profile commanders and emirs, or local rulers, fleeing — often with hundreds of thousands, sometimes millions of dollars. In the past two months, at least five Isis officials have been executed for trying to abscond with large sums of money, according to locals and reports by the Syrian Observatory for Human Rights, a Britain-based monitoring group.
A former Isis official, who asked to keep his identity
secret because he fled the group, said Isis still has a secret pile of
reserves abroad.
The group has enough income to survive, notably from a network of investments abroad and from taxing local businesses. It also "gets monthly extortion money from local businesses, taxes and the foreign transfers," said Hisham al-Hashemi, an analyst of Islamist militants in Iraq.
"Isis is in no danger of economic crisis," the former offical said. "They have enough to survive six more years of war like this." Recent efforts by Turkey to tighten border controls has made it harder for the human mules who bring money from abroad to get across, according to activists and the ex-Isis member.
In Syria, locals list numerous signs they say show Isis is beginning to feel a strain. Fines are now imposed for unkempt storefronts. A major businessman from Raqqa, Isis's de facto capital in northern Syria, told a local journalist he was forced to pay a $50,000 fine for price gouging, an offence that once carried a $200 fine plus two days in prison.
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Traders say Isis is now selling Assad government infrastructure — such as subsidised bread bakeries and clinics — to private investors.
The group has enough income to survive, notably from a network of investments abroad and from taxing local businesses. It also "gets monthly extortion money from local businesses, taxes and the foreign transfers," said Hisham al-Hashemi, an analyst of Islamist militants in Iraq.
"Isis is in no danger of economic crisis," the former offical said. "They have enough to survive six more years of war like this." Recent efforts by Turkey to tighten border controls has made it harder for the human mules who bring money from abroad to get across, according to activists and the ex-Isis member.
In Syria, locals list numerous signs they say show Isis is beginning to feel a strain. Fines are now imposed for unkempt storefronts. A major businessman from Raqqa, Isis's de facto capital in northern Syria, told a local journalist he was forced to pay a $50,000 fine for price gouging, an offence that once carried a $200 fine plus two days in prison.
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Traders say Isis is now selling Assad government infrastructure — such as subsidised bread bakeries and clinics — to private investors.
A trader from Raqqa said Isis tried to sell equipment in
army bases captured last summer. "They took us into the soldiers' dorms
to buy whatever we want — the soldiers' corpses were still inside, and
body parts everywhere," he said with disgust, before recalling he found
"good bargains" on military bunk beds.
Yet even among Syrians who hate living under Isis rule, there is little joy at these signs of strain. One shopkeeper in Deir Ezzor said his revenue had halved in recent months — a major concern for locals like him, struggling to get by on a few dollars a day. "Isis foreign fighters aren't buying as much," he said. "Syrians have no money any more, our economy collapsed — we're dependent on those fighters. For us, the situation is worse."
Yet even among Syrians who hate living under Isis rule, there is little joy at these signs of strain. One shopkeeper in Deir Ezzor said his revenue had halved in recent months — a major concern for locals like him, struggling to get by on a few dollars a day. "Isis foreign fighters aren't buying as much," he said. "Syrians have no money any more, our economy collapsed — we're dependent on those fighters. For us, the situation is worse."
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