Sound The Trumpet : U.S. Official: 'Islamic State' a Petrostate

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“U.S. Official: 'Islamic State' a Petrostate”
by DW
October 24th, 2014

The "Islamic State" has amassed wealth at an unprecedented pace, according to a US Treasury official. IS earns about $1 million a day from black market oil sales alone.

David Cohen, US treasury undersecretary for terrorism and financial intelligence, said the "Islamic State" (IS) pulls in 790,000 euros daily, selling up to 50,000 barrels produced in captured refineries.

Speaking to the Carnegie Endowment for International Peace in Washington, DC, Thursday, Cohen said the group took in at least $20 million in ransom payments this year from kidnappings. He said IS gets several million dollars a month from wealthy donors, extortion rackets and other criminal activities, such as robbing banks.

"With the important exception of some state-sponsored terrorist organizations, ISIL is probably the best-funded terrorist organization we have confronted," Cohen said, using the acronym for IS's former name.

IS had initially tried to oust Syrian President Bashar al-Assad while fighting alongside secular rebels and Islamists, but other groups, including al Qaeda central command, turned against the faction because of its brutality. On its own, the group enjoyed a series of successes when it launched attacks in Syria and Iraq during the summer. Since then, the United States and several other nations have launched airstrikes, targeting the group's oil assets and killing more than 500 members.

'Looting and selling'

IS gets only a small share of funding from deep-pocket donors and therefore does not depend primarily on moving money across international borders. The IS obtains most of its revenue through criminal and terrorist activities, Cohen said. For example, in Mosul, Iraq, IS reportedly goes door-to-door, business-to-business, demanding cash at gunpoint, he said.

"They rob banks," Cohen said. "They lay waste to thousands of years of civilization in Iraq and Syria by looting and selling antiquities. They steal livestock and crops from farmers. And, despicably, they sell abducted girls and women as sex slaves."

When the group went on its march in June, it headed straight for northern Iraq's main oil refinieries

Most of the group's money, however, comes from the old-fashioned petroeconomics of extracting oil and selling it to smugglers, who, in turn, transport it outside of IS territory for quick sales. Some estimates have put IS's oil income at three times that of the US Treasury Department, which has found that the group sells oil at substantially discounted prices to a variety of middlemen, including some from Turkey, who then transport the oil for resale.

"It also appears that some of the oil emanating from territory where ISIL operates has been sold to Kurds in Iraq, and then resold into Turkey," Cohen said, adding that the Syrian government has also allegedly arranged to buy oil from IS, proving that the thirst for petroleum and the money it brings in can bridge the more philosophical gaps between sworn enemies in the multifront, multinational war.

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