ISIS’s dirty secret

How Islamic State managed to get supplies, electricity and food, despite being under a ‘state of siege.’

By SETH J. FRANTZMAN
Updated: MAY 12, 2017 23:21
A MEMBER of the Iraqi Federal Police inspects yesterday a factory used by Islamic State to manufacture mortar shells in western Mosul. (photo credit: REUTERS)
A MEMBER of the Iraqi Federal Police inspects yesterday a factory used by Islamic State to manufacture mortar shells in western Mosul.
(photo credit: REUTERS)
The WIDO brand saw blade hung on a display shelf in Mosul’s Jadida neighborhood. It fits a 9-kg. circular saw that is sold from a company in Suzhou, eastern China. It struck me as odd, during a reporting trip to Mosul in early May, that somehow it had made its way all the way to Iraq, through the front lines of the Iraq Army and past the 68-nation US-led coalition fighting Islamic State, to a tool shop in Mosul.
As Islamic State faces defeat in Iraq and Syria, it is still supplying itself with weapons. Its drones still photograph its bomb-laden trucks as they strike Iraqi lines. It still publishes the Hollywood- quality videos online.
How is this possible? Why is an extremist group that is under siege in Mosul, confined now to just several neighborhoods a few square miles across, not starving like the defenders of Leningrad in World War II? When I was in the liberated areas of western Mosul in late April and early May, there were many shops that were fully stocked while under Islamic State control. They were abandoned just days before and were left like a museum of life under the extremists. It’s not the Upper West Side, but they looked little different from shops in a lower-middle-class neighborhood in Amman or Cairo.
In one hardware store, there was a box of SEGA Fix adhesives, imported from Turkey. There were lawnmowers from FERM B.V. in the Netherlands. People in Iraq don’t often have lawns, so this product didn’t seem to be a big seller. Of more serious concern were the bags of potassium nitrate at an Islamic State bomb factory in Hamdaniyeh. These were produced in the Russian Federation.
A report by Conflict Armament Research (CAR) in December 2016, titled “Standardization and Quality Control in Islamic State’s Military Production,” sheds light on how Islamic State obtained its supplies. “Production dates spanning a range of years, suggest that ISIS forces have made repeated acquisitions of identical products from the same sources – almost exclusively from the Turkish domestic market.”
The report called it a “robust supply chain extending from Turkey, through Syria, to Mosul.” The researchers concluded that there was a “major acquisition network in Turkey” operated by Islamic State and that there was a “direct line of supply.”
The manufacturing dates on the packaging are interesting. Some were produced before 2011, such as Toros potassium nitrate, which is used to make rocket propellant. But other quantities of sorbitol were made by French company Tereos in 2015, at the height of the war on Islamic State. Sugar from the Chekka refinery in Lebanon was made in November 2015. Any product with transaction or manufacture dates after August 2014 was imported by Islamic State once the international coalition against it was being formed. Yet CAR found products such as grease packaging produced by the Turkish company Petrol Ofisi in September 2015.
Islamic State supply lines closely mirror its supply of foreign fighters. A 2015 report by the Institute for Economics and Peace estimated that 30,000 fighters had traveled to Syria and Iraq to join Islamic State. Around 7,000 had come in the first six months of 2015. Monitoring groups could not always track which fighters joined Islamic State and which joined other jihadist groups, but Islamic State was the major destination. The Soufan Group estimated that 31,000 fighters came to Syria and Iraq and that up to 5,000 were from Europe as well as 6,000 Tunisians, thousands from Russia and thousands from Turkey.
The network of fighters who mostly came via Turkey and crossed the porous border to Syria began to decline in 2015 when Turkey began constructing a border wall, and Islamic State lost power along the border as the Kurds began to push it back from Kobani. But the supply lines continued to operate, as other avenues were found to smuggle goods.
Besides the infusion it got from its supply lines, Islamic State also thrived off the fact that the Iraqi government continued to pay pensions and salaries of state employees within areas run by Islamic State.
In July 2015, that stopped. “All such payments have been halted, depriving whole cities’ pensioners, civil servants, doctors, teachers, nurses, police and workers... of both their income and some of their last official links to Baghdad,” wrote Reuters.
This revelation paints a picture of a “war” on Islamic State that was only half a war. Imagine if, during the US Civil War, the Union government had kept paying all the civil servants in the US South, despite their being in open war and rebellion against the North.
How many millions or billions of dollars flowed into Islamic State area coffers through taxes (estimated at 50%) on civil servants’ salaries paid by Baghdad between the summer of 2014 and 2015? The Iraqi budget is a bit opaque, but the Rawabet Center for Research in Security Studies claimed 727 billion Iraqi dinars went to education in 2015. If we add to that salaries from the electricity sector (1,910b. dinars) and other departments, it adds up to over a trillion dinars.
The percent of Iraq’s population held by Islamic State at its high point was around 15%. So 150b. dinars might have accounted for salaries in its area, which is around $150 million.
A similar situation persisted in Syria where Damascus cut off salaries in 2015. In many ways, Islamic State replaced the existing financial institutions and even replicated them, handing out subsidies for agricultural yields, for instance. The Associated Press reported in February 2016, relying on expert reports by Middle East Forum fellow Aymenn Jawad al-Tamimi, that Islamic State was cutting salaries to its own fighters and began to rely on US dollars in its economy. But people in ISIS-land were still receiving remittances from abroad, even in 2016.
Electricity also functioned in Islamic State areas, thanks to the central governments in Syria and Baghdad, which kept paying for it and not bombing the generators. Even more bizarre is that when the Iraqi Army liberated eastern Mosul, Islamic State cut off the power lines leading to eastern Mosul from its western Mosul Lazakah power station. Islamic State was the one generating power for residents. At the height of the Mosul siege, it held the keys to electricity, and people under its control had better access than those in the liberated zone.
Islamic State was also extracting tens of thousands of barrels of oil a day, according to a report in the Financial Times. Through October 2015, when the coalition began targeting Islamic State oil supplies, it was earning up to $1.5m. a day. Via “a highly organized system, Syrian and Iraqi buyers go directly to the oil fields with their trucks to buy crude,” the report said. As with the oil, the coalition air strikes didn’t begin seriously concentrating on Islamic State boats and barges plying the Euphrates until the fall of 2016.
Islamic State was able to conduct trade, import supplies for weapons and run an effective economy even up to its last moments under siege in Mosul. Only now, confined to less than 11 square kilometers, is it finally feeling the pinch. But other Islamic State areas continue to function.
Despite a 68-nation coalition, the various armies fighting Islamic State – including Iraq and the Kurdish Peshmerga, the Syrian regime, Syrian rebels, Turkey and the Syrian Kurdish YPG – never fought a total war against Islamic State or its economy. Through 2015, Islamic State areas were benefiting from government salaries paid by Baghdad and Damascus.
The argument behind not targeting the supplies was that millions of civilians would starve. But the Islamic State war effort benefited from this. ISIS was also able to carry out its crimes in the open, such as trading in thousands of Yazidi women.
In the modern history of warfare, there has rarely been an example of an enemy entity having such open borders to trade, even via the states at war with it.
ISIS was able to prolong its resistance because it was never subjected to a total war onslaught, and its enemies – particularly the coalition which had the resources – were tepid in targeting it and seeking to destroy it quickly and effectively.