Chronicle of the Middle East and North Africa

Islamic State and its financial resources

 financing the islamic state jewerly looted
Jewelry looted from archeological sites in Deir el-Zour and displayed for sale by the Islamic State group in Syria. Photo AP


The Islamic State (IS), surprised the world when, in 2014, it occupied Mosul, Iraq’s second-largest city, and other large areas of Iraq and Syria. Eventually, it maintained control over these areas for long periods of time. IS was able to create a territory that has operated almost autonomously, which has attracted thousands of jihadists from around the world and has become a global terrorist safe haven.

The world has been busy trying to monitor and identify the immense wealth controlled by IS and the money that it used to finance its control over ground and combat operations. David Cohen, U.S. undersecretary of the Treasury for terrorism and financial intelligence, in 2014 called the IS “the world’s best-funded terrorist organization.”

In an effort to dry out the group’s source of financing in order to liberate territories under its control and to fight terrorism, several draft resolutions have been presented to the UN Security Council. Two of them were approved: the Russia-proposed Resolution 2199 of 2015, which provides for eliminating Islamic State’s financing sources, and Resolution No. 2253 of 2015, proposed by Russia and the United States. The resolution primarily aims to dry out the sources of financing IS and Al-Qaeda aligned (at the time) al-Nusra Front.

IS’s Budget

IS, even before it broke away from its mother organization of Al-Qa’ida, has been looking for different sources of funding other than donations. Since 2004 in Iraq, the organization collected tributes by force, particularly in the city of Mosul, to supplement voluntary donations. The London-based Al-Hayat newspaper in 2012 cited Zuhayr al-Jabali, adviser to the minister of national reconciliation, saying that the sums of money that IS obtained had amounted to nearly $5 million per month. The same newspaper quoted Salim al-Husayni, an expert on militant groups, saying that the organization worked as part of “integrated institutions that cover most of the areas of life, and that it is imposing itself as a state authority, as against the weak performance of the official state authority.” Later, and before the fall of Mosul, press reports said that financing the organization from the city of Mosul has reached only $8 million a month.

In a rare case, Shaykh Abu-Sa’d al-Ansari, a Friday speaker in Mosul, announced the first annual budget of IS for the year 2015, saying that it is estimated at $2 billion. However, Muwaffaq al-Rubay’i, member of the Security and Defense Commission in the Iraqi parliament and former national security adviser, downplayed the amount as exaggerated. Cohen, however, confirmed the group’s budget figure.

Many studies and reports have agreed that IS sustains itself by using diverse and sophisticated financing strategies. The Annual Global Terrorism Index and research on the financing of IS for the year 2015 conducted by the Center for the Analysis of Terrorism, CAT, agree that the mechanisms and sources include oil and gas and other natural resources, taxation and imposition of zakat in the areas controlled by the organization. Additional revenue come from criminal operations, including extortion, kidnapping for ransom, human trafficking and trading in antiquities plundered from areas under the group’s control.

Black Gold

The Islamic State controlled scores of oil fields in Syria and Iraq. Oil trading is considered to be one of the group’s most important sources of financing. Oil barrels are sold to local traders, who in turn distribute and sell oil in Iraq and Syria or transport it to neighboring countries. The price of a barrel of oil differs from one place to another depending on several criteria; the price of a barrel of oil ranges between $15 and $45.

At times during 2015, IS’s oil production reached 40,000 barrels per day, according to reports. The organization has also devised a mechanism for importing oil illegally, mainly by using the same networks used for smuggling and transporting oil during the economic embargo imposed on Iraq before 2003, which had significantly facilitated the organization’s illegal oil trade traffic. Despite the international coalition and Russian airstrikes launched to minimize the organization’s control of oil fields, the Islamic State’s oil revenues in 2015 were estimated at around $600 million.

Natural Resources

Oil was not the only source of income and financing from natural resources for IS, especially because the organization employed everything that was under its control. According to the CAT report, the organization also controlled some of natural gas fields in Syria and Iraq, and the report estimated the organization’s revenues of natural gas at $489 million in 2014 and $450 million in 2015.

The Islamic State also derived income from phosphate and cement, among other resources. The organization has seized control of productive companies and mines as well. The financial value of phosphate production in 2015 totaled $250 million, and about $100 million came from cement production. However, the earnings from phosphate and cement are expected to drop because of lack of production technologies and transportation means, like the ones available for oil, especially after the organization lost control of large areas in the past period.


The international coalition intensified its attacks against IS in an attempt to tighten the financial blockade and dry out the organization’s financial resources by striking oil wells and cash reserve hideouts. As a result, the group’s financial resources have decreased significantly since the start of the coalition’s attacks in 2014. But the organization seeks to make up for its financial losses by imposing more taxes through different ways in the areas that fall under its control.

IS uses the so-called “tax policies.” A report issued by Tomas Reuters in 2014 showed that IS has implemented taxes on a slew of goods and commercial activities, including on telecommunication companies, cash withdrawals from bank accounts, a 5 percent tax for social welfare and other public purposes imposed on all salaries, a road tax, a custom tax each truck entering Iraq, a tax on looting archeological sites and a protection tax for non-Muslim communities (known as jizyah or tribute). The report estimated that the organization collects approximately $360 million per year. Meanwhile, a report issued by The New York Times in 2015 cited officials estimating that the organization annually collects between $800 million and $900 million in taxes.

Criminal Operations

In addition to the Islamic State’s reliance on natural resources, the organization works to diversify its sources of income, including taxation and the imposition of zakat in areas under its control. IS also resorts to criminal acts, including extortion, as well as direct and indirect taxation and the imposition of traffic fees, with a total estimated value of $360 million per year. Other sources of criminal revenue include human trafficking, trading in antiquities and kidnapping for ransom, with the last being considered an important source of financing for IS and Al-Qa’ida since 2004. Estimates differ on IS’s earnings from kidnapping operations, but these figures remain very large overall. A 2014 UN report, for example, pegged it at between $35 million and $45 million a year.

In addition to the aforesaid, the organization, following its occupation of large areas of Iraq in 2014, was able to reach Iraqi banks in the governorates of Nineveh, Al Anbar, Salah ad Din, and Kirkuk and embezzle at least half a billion dollars.

Foreign Donations

Foreign donations did not have a significant impact on Islamic State’s wealth because it remained financially independent by diversifying its sources of income and collecting funds through independent means. This was not surprising because the organization, even before breaking into Mosul, and ever since it was part of Al-Qa’ida in 2005, has had developed mechanisms for self-sufficiency in terms of financing. Therefore, foreign donation remained insignificant when compared with other resources. Jean-Charles Brisard, an international adviser and expert on terrorist organizations, confirmed that foreign donations make up as little 2 percent of IS’s annual revenues, and 5 percent at most.

Various reports have claimed that foreign sources of financing come mainly from rich Arabian Gulf countries, religious personalities, NGOs based in the Arabian Gulf and foreign fighters who joined the organization and brought money with them. According to estimates, the organization received $50 million from foreign financing in 2015.

However, with the decline of the organization and its loss of large areas in Iraq and Syria, especially after the attacks launched by the international coalition and Russia against its sources of financing, IS is expected to seek to raise the percentage of foreign financing, in addition to raising taxes, in order to curb the deficit.


Controlling large swaths of areas to be annexed to the “caliphate state” was not only aimed at matching IS’s slogan, “Baqiyah wa Tatamaddad,” [The group shall survive and will even expand] with its actions on the ground, but at the strategic goal of controlling more areas was to maintain financial self-sufficiency and continue to use diverse resources available in captured areas. IS was able to develop a qualitative economic system that relies on diverse sources of income, as mentioned above, and significantly minimize its reliance on foreign donations that even the mother organization of Al-Qa’ida used to rely on. This posed a serious challenge to the international community’s effort to fight the financing of terrorism, and it also alleviated pressure applied on the organization because of the different leanings and goals of the donors.

However, with the organization losing large areas in both Iraq and Syria, given the latest campaign announced by Iraqi Prime Minister Haydar al-Abadi in October 2016 to liberate Mosul, the financial resources of the organization will be decreasing significantly, particularly from oil, gas and other natural sources. However, the organization continues to rely on different criminal activities through complicated networks that the organization uses, which complicates the world community’s mission to besiege the organization financially and forever.