BEYOND SYRIA IRAQ

WHAT MAKES THE PROVINCES TICK?
Financing
■ KATHERINE BAUER
PREPARED STATEMENT
IT IS NOW WELL KNOWNthat the Islamic State has effectively exploited local
resources as well as the people under its control to become one of the bestfinanced
terrorist organizations of all time. With the announcement that
the Islamic State was recognizing franchises in eight countries across the
Middle East, Africa, and Asia has come concern that the so-called IS core
in Syria and Iraq would share both this wealth and its fundraising expertise
with its new affiliates. Evidence of such transfers exists, but it is limited.
Nonetheless, some of the IS provinces were partially motivated to affiliate
themselves with the Islamic State based on the perception (and sometimes
the promise) of additional resources. Furthermore, the provinces are
unlikely to be able to recreate the dynamics that allowed the Islamic State to
enrich itself so quickly after taking territory. Their potential reliance on support
from the core is an additional liability for an organization that is already
experiencing financial constraints.
ISLAMIC STATE CORE FINANCING
Since the Islamic State took over vast swaths of territory in Syria and Iraq in
the spring and summer of 2014, it has posed an unprecedented and nontraditional
counterterrorist financing challenge, due both to the size of its budget—
reportedly close to $2 billion in 2014 1 —and its ability to derive the vast majority
of its revenues from the territory it controls. Traditional counterterrorist
financing tools, such as targeted financial sanctions, are important for shaping
the counter-IS financing narrative and for exposing support networks, but they
have been largely ineffective against the Islamic State’s territory-based financing
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