Destroying Islamic State Finance. An Examination of the Main Economic Sanctions Against the Terrorist Organisation

Essay, 2016
11 Pages, Grade: A-



Sources of Revenue for the Islamic State

Sanctions adopted against the Islamic State

ISIS’s Sources of revenue: What is being done, and what more can be done.


Hostage Taking


Other Sources


It is well documented how the Islamic State was able to take and contain hold of significant amount of territories in Iraq and Syria. The failures of the Iraqi government and the uprising against the Syrian government helped lead to Islamic State victories on the battlefield. Before those battles even began, though, there was a significant amount of financial and material resources in the hands of the Islamic State. This paper identifies how the Islamic State gets its revenues, examines the main economic sanctions that have taken place against the terrorist organization, then goes through their individual sources of revenue and analyzes what has been done and what more the international community can do in order to stop the Islamic State from taking in such large amounts of money.

Sources of Revenue for the Islamic State

The Islamic State gathered its financial resources through a variety of ways. The diversity of the group’s financial sources makes it significantly harder for them to be shut down economically than if it was just from one source. One of the biggest sources of revenue for the Islamic State is oil. The territory the group has captured in the Iraq and Syria consists of many oil fields across the areas (Swanson). Nations are able to stop the Islamic State from selling this oil on a large scale, such as to nation states or big oil companies, however, it is much harder to prevent it from getting to the black market. Military efforts at destroying refineries and other oil and gas facilities have made it harder for the Islamic State to profit from oil as much, however, this is still a big revenue source for them (Swanson). Another source of revenue for the terrorist group is taxing the local population (Swanson). The Islamic State levies taxes on a variety of things ranging from goods, utilities, electricity, water, and others (Swanson). There is also a fee on the non-Muslim communities in the area (Swanson). The ability to tax the local population is a huge advantage to the Islamic State, one that most terrorist groups are not able to do. Kidnapping is unfortunately also a big source of revenue for the Islamic State (Swanson). A 2014 October UN report cited that the group made between $35 million and $45 million in 2013 from kidnapping and ransom (Swanson). Refusing to pay for hostages is a policy some western nations have tried to follow, but telling that to the families of kidnapped victims is not so easy. Oil, taxation, and kidnapping are the main sources of revenue for the Islamic State, unfortunately though they are not the only sources.

The terrorist organization also profits of donations from wealthy individuals sympathetic to their cause (Swanson). They do this through sources that are hard to track down, such as unregistered charitable organizations (Swanson). This shows how strong the network of supporters of the Islamic State is, they have people not only willing to go there to fight, but they also have people willing to support them financially. Antiquity sales from historic sites also produced large amounts of revenues for the group (Swanson). The recent fall of Palmyra to the Syrian government has greatly depleted their ability to continue doing this, however, they have already collected significant amounts of revenue from ancient historic sites that date back to the Roman Empire. At its height, it was said to have 4,500 cultural sites under its control (Swanson). During their advancements across Iraq, the Islamic State seized at least half a billion dollars in cash by seizing branches of state-owned banks (Swanson). Renting and auctioning off properties from people that have been killed by the Islamic State or fled, has also become a source of revenue for the Islamic State (Swanson). Areas held by the Islamic State have significant amounts of agricultural products, including grain and wheat that the group uses to sell on the black market (Swanson). Unfortunately, human trafficking and selling young girls into marriage or sexual slavery is another way the Islamic State gets its revenues (Swanson). Between oil sales, taxation, kidnapping, donations, antiquities sales, seizing bank assets, renting of properties, human trafficking, and selling agricultural products, it is not a surprise this is one of the richest terrorist organizations the world has ever seen (Windrem). The ability of the Islamic State to diversify their revenues have made it harder to cut them off financially, yet there are actions that the international community has attempted to try to stop the Islamic State.

Sanctions adopted against the Islamic State

One of the main tools the international community tries to use to stop the financing of the Islamic State is sanctions. Sanctions have taken form through UN sanctions, as well as from individual nation state sanctions such as by the U.S. The cumulative effect of these have actions have had an effect on the terrorist group, however, it has not been enough to stop their actions completely. The Security Council of the UN has adopted a series of resolutions aimed at hurting the terrorist group’s finances. The UN has sanctioned individual members of the Islamic State. In August 2014, the Security Council passed resolution 2170, which put in place travel restrictions and freezes on bank assets of six members of the Islamic State (“Security Council Adopts Resolution 2170 (2014)”). In February of 2015, the UN Security Council approved measures targeting funding sources of the group. It banned all trade in looted antiquities from Iraq and Syria and called on states to end ransom payments (“UN News - Security Council Approves Resolution Targeting Sources of Financing for ISIL”). In December of last year, the UN adopted a legally binding resolution aimed at preventing terrorist groups from using the international banking system (Sengupta). The UN Security Council has been a source of international legitimacy in the fight against the Islamic State, proving that this conflict has global support, yet individual nations can engage in sanctions as well.

Individual nation state must play a greater role in sanctions as well. UN sanctions show that there is support across the international community for economic actions taken against the Islamic State, yet this support does not appear as well when looking at individual countries actions. Some countries, such as the U.S., have engaged in economic sanctions. In September 2015 the U.S. treasury announced sanctions on 25 members of the terrorist organization, freezing their assets (Korte). This is designed to prevent the terrorist organizations financial leaders from using the international finance system. In the same statement, the State department identified 10 individuals and five groups as foreign terrorist organizations (Korte). Other nations, however, need to take stronger economic sanctions against the group as well. The UN is a good outlet, but other states should also use their treasury department as well to cut off individual members of using any part of the finance systems. While these sanctions have had some effect on the Islamic State and has brought global attention to the cause, more still needs to be done to deplete them of their financial assets. Since the Islamic State has a wide variety of ways of collecting money, these sources needed to be examined individually to come up with ways to degrade each of their sources of revenue.

ISIS’s Sources of revenue: What is being done, and what more can be done.


One of the main sources of revenue for the Islamic State is oil (Van Heuvelen). In order to degrade Islamic State’s funding through oil, a variety of actions need to be taken. The U.S. and coalition partners have begun a campaign, called Operation Tidal Wave II, designed specifically to step up airstrikes against Islamic State oil facilities and production areas (Gordon and Schmitt). These actions have degraded the terrorist group’s oil revenues but it takes time to be able to effectively measure the damage. A campaign designed specifically at the oil sites is a step in the right direction due to how important it is for the Islamic State. These military strikes have in large part been carried out by the U.S. Another event that was of great significance was the raid carried out by special forces that killed the Abu Sayeef, the leader in charge of oil assets for the group (Van Heuvelen). During the raid, they captured valuable intelligence that allowed the U.S. to better understand how the Islamic States runs its oil sites and where its credible targets are (Van Heuvelen). Raids against leaders of the Islamic State and along with attacks against oil sites are part of the solution. While these efforts have been effective, they do not have the robust international support that is needed to destroy the Islamic State.


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Destroying Islamic State Finance. An Examination of the Main Economic Sanctions Against the Terrorist Organisation
International Relations, State, and Strategy
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destroying, islamic, state, finance, examination, main, economic, sanctions, against, terrorist, organisation
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Mark Barnes (Author), 2016, Destroying Islamic State Finance. An Examination of the Main Economic Sanctions Against the Terrorist Organisation, Munich, GRIN Verlag,


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