BEYOND SYRIA IRAQ

KATHERINE BAUER
area from which the province and its predecessors profited. It is important
to note that, despite Sinai’s reliance on core funding, its funding needs are
relatively small. Sinai Province does not control territory and only boasts
about a thousand fighters. Its financial demands are small enough that
the core should be able to sustain it without putting heavy strains on its
own finances
CONCLUSION
While coalition efforts have yielded tangible successes, continued efforts
to detect and disrupt Islamic State financing will be crucial in the ongoing
fight. Three areas in particular will determine the coalition’s success on the
financial front.
The first is the Islamic State’s use of banks and exchange houses just outside
IS-controlled territory to get access to the formal financial sector. U.S.
officials have said exchange houses are likely important points for such access.
In December 2015, the Central Bank of Iraq banned from its currency auctions
more than one hundred exchange houses suspected of being used by
the Islamic State. Regional regulators can take similar action by identifying
and taking out of commission both formal and informal financial institutions
that are being exploited by the Islamic State.
The second area is the detection and disruption of funds transfers to
Islamic State provinces outside Syria and Iraq. Although the provinces have
preexisting methods of financing themselves, identifying external funding
streams serves as a valuable source of intelligence for mapping out ties
between the core and provinces, while exposing them will make it harder to
send and receive funds.
The last area important to the coalition’s success on the financial front is
the ongoing targeting of oil infrastructure under IS control and attempts to
rebuild it. This would not only help to contain the Islamic State; it would
also pressure the Assad regime, IS’s primary external partner for oil sales.
NOTES
1. The Center for the Analysis of Terrorism estimated in its May 2016 report, “ISIS
Financing 2015,” that the total revenue of the Islamic State was $2.9 billion in 2014
and $2.4 billion in 2015.
2. Patrick B. Johnston et al., Foundations of the Islamic State: Management, Money and
Terror in Iraq, 2005–2010 (Santa Monica, CA: RAND Corporation, 2016).
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