A group calling itself the “Niger Delta Avengers” has launched numerous attacks on oil infrastructure in Nigeria since February. These attacks have caused the already-vulnerable African economy to spiral further toward a recession. Read more →
Oil prices continue to plummet, owing to an oversize inventory and the prospect of still more crude coming onto the market from Iran. But that doesn’t seem to have turned off the spigot of revenue flowing to extremist groups.
At one point last year, the Islamic State (also known as ISIS) was believed to be raking in $3 million a day in black-market sales of oil the group pumped from territories in Syria and Iran it took over during a swift campaign. ISIS once controlled several Iraqi oil fields, but thanks to a counteroffensive involving U.S. airstrikes and an American-backed campaign by the Iraqi security forces, the group now has only one, according to Agence France-Presse.
But ISIS’s oil operations have only been scaled back, not thoroughly halted. According to a story in The New York Times this week, ISIS has transformed from a simply bloodthirsty terrorist group, the successor to al-Qaeda, into a fully functioning government. It has a complex economy that relies not just on stolen oil, but other revenue sources, including kidnapping, extortion and an assortment of taxes and levies.
That complexity is evident in the way ISIS pumps and transports oil: Based on a BBC2 program called “The World’s Richest Terror Army” that aired this spring, ISIS even sells the oil it gets from fields in eastern Syria back to the Syrian government, even though the group is a sworn enemy of Syrian president Bashar al-Assad.
ISIS sells some of its oil to the people it governs — some 8 million in the territory it controls — and smuggles more of it across the Turkish border. According to a story in U.K.’s Independent, around the time of the BBC special in April:
A Syrian source involved in oil smuggling for Isis explained how oil brought in one of the group’s biggest streams of revenue. “Isis controls the oil wells in our region of Deir Ezzor, which is rich in oil,” he said. “My family, friends and members of my tribe by oil from Isis and smuggle it to the refineries and then to civilian markets.” The US treasury estimates Isis is still earning $2 million a week by smuggling oil in spite of a sustained bombing campaign by the US-led coalition.
The documentary reveals that militants have developed ways of pumping oil hundreds of metres across the border and floating it in barrels down rivers in order to export it into areas not held by Isis.
ISIS is far from the only extremist group that finances its activities through oil, one way or another. According to the Institute for the Analysis of Global Security, Saudi Arabia — a U.S. ally that also hates ISIS — is home to many financiers of global terrorism:
This Gulf monarchy is a … state in which no taxes are imposed on the population. Instead, Saudis have a religious tax, the zakat, requiring all Muslims to give at least 2.5 percent of their income to charities. Many of the charities are truly dedicated to good causes, but others merely serve as money laundering and terrorist financing apparatuses. While many Saudis contribute to those charities in good faith believing their money goes toward good causes, others know full well the terrorist purposes to which their money will be funneled.
Oil not only underwrites terrorism, it gives oil-exporting nations in the Persian Gulf an outsize influence on the world stage. The United States and other Western countries devote inordinate amounts of resources and attention to dealing with the Middle East and its many internecine struggles, at the expense of other parts of the world.
Also, the task of defending the flow of oil from the region routinely falls to the United States, and using less oil would absolve us of the need to send in troops and keep up military bases to protect supply routes.
“As long as we keep buying oil from the Middle East, our enemies can continue to fund terrorism,” oil and gas tycoon T. Boone Pickens wrote in TIME earlier this month. “For too long we have spent the lives and limbs of thousands of young men and women fighting in the Middle East, and we still bear most of the cost of protecting the about 17 million barrels that flow through the Strait of Hormuz every day even though only about 10% of that oil comes to us.”
Some say we can drill our way to oil independence, but the reality is, the U.S. still needs about 19 million barrels of oil a day to function, and the “shale revolution” only restored U.S. production to a peak of about 10 million barrels. The rest has to come from somewhere.
If the U.S. used more alternative fuels for vehicles, instead of primarily oil-based gasoline and diesel, we could reduce our dependence on oil — and shrink the influence of the countries that supply it.
To learn more about the connections between oil and terrorism, visit our National Security page.
Islamic State, or ISIS, continues to earn millions from ill-gotten crude oil sold on the black market, according to a story by the Reuters news service.
ISIS is “still extracting and selling oil in Syria and has adapted its trading techniques despite a month of strikes by U.S.-led forces aimed at cutting off this major source of income for the group, residents, oil executives and traders say.”
This report largely contradicts a story last week by Bloomberg, which has done extensive reporting on ISIS’ finances.
(Photo credit: Shutterstock)
Islamic State, or ISIS, is the world’s most well-financed terrorist network, owing to at least $1 million a day in illicit oil revenues. But David S. Cohen, under secretary for terrorism and financial intelligence at the U.S. Treasury Department, expects to make a dent in ISIS’ finances “long before 36 months,” referring to the timeline President Obama laid out last month for the U.S.-led military campaign designed to “degrade and destroy” the group.
Read more in The New York Times.
The U.S.-led airstrikes against Islamic State in Iraq and Syria (ISIS) might not have eradicated the extremist group, as President Obama vowed to do. But at least the operation has interrupted the flow of oil money to the militants, according to an analysis in Bloomberg BusinessWeek.
Based on details from an IEA report, the magazine says:
Though the airstrikes have failed to keep Islamic State from advancing in the field, they have apparently succeeded in dismantling its sophisticated oil network, reducing the movement’s ability to make gasoline and diesel for its tanks and trucks and cutting off a vital source of funding. A report from the International Energy Agency in Paris has just estimated that Islamic State controls only about 20,000 barrels of daily oil production, down from about 70,000 as of August. Most of it remains in Iraq.
As BusinessWeek reported in September, at the time, when ISIS had seized oil fields and refineries in swaths of territory in Syria and Iraq, the group was bringing in up to $2 million a day from stolen oil.
