Financial Futures of the Islamic State of Iraq and the Levant: Findings from a rand corporation Workshop

ISIL’s Finances    9

paid by non-Muslims living in Muslim lands and is similar to other forms of “revolutionary” 

taxes collected by a number of other insurgent groups.

12

 

Through summer 2016, it remained unclear whether Syria or Iraq provided ISIL with 

more tax revenue. Mosul has been a major source of taxation revenue for ISIL, with the bulk of 

funding coming from the commercial, reconstruction, and oil sectors.

13

 ISIL also extorts indi-

viduals and groups moving through border crossings into and out of its territory and between 

Syria and Iraq.

14

 The group has even gained revenue from the Syrian government, as was the 

case in February 2013, when ISIL militants seized the Tabqa Dam and sold electricity back to 

the Assad regime.

15

Other Sources of Revenue

ISIL has a diversified funding portfolio. ISIL controls significant resources within Syria and 

Iraq’s industrial and agricultural sectors, and although ISIL has mostly lost access to state-

owned banks in northern and western Iraq, these banks did provide the group with at least 

$500 million.

16

 ISIL has also earned money through kidnapping for ransom; the U.S. Treasury 

estimated that ISIL made $20 million to $45 million in 2015. ISIL also raises money through 

the sale of antiquities; exchange rate arbitrage (indirect participation with exchange houses 

and banks during Central Bank of Iraq currency auctions, in which dollars can be bought at 

below-market rates and then resold at market rates); and everyday activities, such as running 

fish farms and selling used cars. ISIL has maintained a minimal reliance on foreign donors, 

although accusations have surfaced of wealthy sympathizers and individuals from Qatar and 

Kuwait donating money to the group.

17

How Much Money Does ISIL Make?

There is no consensus on how much money ISIL makes. Assistant Secretary of the U.S. Trea-

sury Department Daniel L. Glaser did comment that ISIL’s revenue from oil had been halved 

from $500 million in 2015 to approximately $250 million.

18

 Even with that decrease in oil rev-

enue, ISIL still may have earned $350 million per year from extortion.

19

 It is believed that ISIL 

12  

Michael Jonsson, “Following the Money: Financing the Territorial Expansion of Islamist Insurgents in Syria,” Swedish 

Defense Research Agency, FOI Memo #4947, May 2014.

13  

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

York Times, August 13, 2014.

14  

Ben Hubbard, Clifford Krauss, and Eric Schmitt, “Rebels in Syria Claim Control of Resources,” January 28, 2014; Raja 

Abdulrahim, “In Syria’s Mangled Economy, Truckers Stitch Together Warring Regions,” Wall Street Journal, May 24, 2016. 

15  

Ariel Ahram, “The Dangerous Mixture of Oil and Water in Iraq,” Political Violence @ a Glance, August 18, 2014; 

Hwaida Saad and Rick Gladstone, “Syrian Insurgents Claim to Control Large Hydropower Dam,” New York Times,  

February 11, 2013.

16  

Glaser, 2016b.

17  

Scott Bronstein and Drew Griffin, “Self-Funded and Deep-Rooted: How ISIS Makes its Millions,” CNN.com,  

October 7, 2014.

18  

Glaser, 2016a.

19  

Glaser, 2016b. Note that Glaser has also been cited as saying that ISIL earned $360 million, rather than $350 million, 

annually from extortion and taxation (Torbati, 2016).

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10    Financial Futures of the Islamic State of Iraq and the Levant

seized control of between $500 million to more than $1 billion from bank vaults across Syria 

and Iraq, although substantial portions of ISIL bulk cash reserves may have been destroyed by 

Coalition airstrikes over the past year.

20

 Figures from IHS assert that ISIL’s monthly revenue 

has been diminished by as much as 30 percent over the past year, from roughly $80 million 

per month to $56 million per month (equivalent to $960 million per year and $672 million 

per year, respectively).

21

 This includes a 26-percent drop in revenue earned from oil and gas, a 

23-percent drop in revenue earned from taxation and extortion, and a 67-percent drop in rev-

enue earned from sources listed as “other,” which IHS defines as drug smuggling, sale of elec-

tricity, and donations.

22

 Likewise, Combined Joint Task Force – Operation Inherent Resolve 

(CJTF-OIR), the command heading the multinational counter-ISIL coalition, has said that 

Tidal Wave II air operations, starting in October 2015, reduced ISIL’s oil production from 

45,000 barrels per day to 34,000 barrels per day—a 24-percent decrease. IHS also claims that 

43 percent of ISIL’s overall revenue comes from oil, while 50 percent comes from taxation and 

extortion, which seems to be close to the yearly $250 million and $360 million figures.

How ISIL Spends Its Money

In some ways, ISIL spends its money much in a similar manner as other terrorist and insur-

gent groups. Some of its money goes to paying fighters’ salaries and some goes for weapons 

procurement. Yet unlike other terrorist and insurgent groups, ISIL must earmark funding for 

maintaining the vast infrastructure of its caliphate and providing basic services to those living 

within its territory. Details are hard to come by, but there have been several credible reports, 

especially in the Financial Times and New York Times.

23

 The rest of this section draws from 

those accounts.

The group has a central budget in Mosul, as well as regional budgets. Reports consistently 

state that the majority of the spending supports the war effort. A Financial Times report noted 

that monthly expenses included $20 million for the core fighting force, $15 million to $20 

million for auxiliaries and local fighters, tens of millions for munitions, and $10 million to $15 

million for its security sections. The report noted that at one point, compensation amounted to 

$600 million per year, about two-thirds of the group’s expenditures at that time.

24

20  

Matthew Rosenberg, Helene Cooper and Nicholas Kulish, “ISIS Expands Reach Despite Military and Financial Set-

backs,” New York Times, April 12, 2016. Immediately after ISIL took over Mosul and the seizure of banks became known, 

there was at least one media report that ISIL had not, in fact, taken the bank money (Borzou Daraghi, “Biggest Bank Rob-

bery that ‘Never Happened’—$400m ISIS Heist,” Financial Times, July 17, 2014). However, since then, U.S. Treasury 

officials and the media have reported consistently that these seizures did happen, and other reports to the contrary have not 

emerged.

21  

IHS Inc., “Islamic State Revenue Drops to $56 Million, IHS Says,” April 18, 2016.

22  

IHS Inc., 2016. Recent developments suggest that ISIS may be profiting from the taxation of drugs being smuggled 

through territory it controls in Libya. For more, see Rukmini Callimachi and Lorenzo Tondo, “Scaling Up a Drug Trade, 

Straight Through ISIS Turf,” New York Times, September 13, 2016. 

23  

Sam Jones and Erika Solomon, “ISIS Inc.: Jihadis Fund War Machine But Squeeze ‘Citizens,’” Financial Times,  

December 15, 2015; Ben Hubbard, “ISIS Promise of Statehood Falling Far Short, Ex-Residents Say,” New York Times, 

December 1, 2015b; Ben Hubbard, “Offering Services, ISIS Digs in Deeper into Seized Territories,” New York Times,  

June 16, 2015a.

24 

Jones and Solomon, 2015.

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