Report: Islamic State Annual Revenue Down Nearly 30 Percent

Efforts to cut into the Islamic State’s finances appear to be working.

According to a new report from IHS Inc., a consultancy that provides security advice to governments and businesses, the terror group’s monthly revenue has dropped by almost 30 percent in the last year, from $80 million in March 2015 to $56 million in March 2016.

Fifty percent of the group’s revenue comes from confiscation and taxation, IHS found, while around 43 percent comes from oil revenue. Drug smuggling, donations, and the sale of services like electricity make up the remainder.

IHS attributes the loss in revenue to gains made by the global anti-Islamic State coalition, U.S. airstrikes, and, to a lesser degree, advances made by Russian-backed troops.

“The Islamic State has lost about 22 percent of its territory in the past 15 months,” said Columb Strack, senior analyst at IHS. “Its population has declined from around 9 million to around 6 million. There are fewer people and business activities to tax; the same applies to properties and land to confiscate.”

The IHS report backs recent claims by the Pentagon. On April 13, U.S. military spokesman Col. Steve Warren said the Islamic State “has lost more than 40 percent of the territory it once controlled in Iraq and in Syria.” Speaking from Baghdad, where he is based, Warren said the Islamic State has “not been able to take hold of any key terrain for almost a year now.”

That’s the good news. The bad news, according to the report, is that those still living under Islamic State rule continue to pay taxes and penalties without protest. It found “there is no indication as of yet that this increased burden of taxation has triggered even localized discontent among the population living in the Islamic State’s caliphate.”

The true size of the Islamic State’s economy is difficult to gauge. According to a 2014 Thomson Reuters study, the terrorist group has more than $2 trillion in assets under its control, with an annual income of $2.9 billion.

Much of this money is raised through taxes the group imposes on those who live within its territory. This includes an $800-per-truck levy on vehicles entering Iraq from Jordan and Syria, a 5 percent tax collected for social welfare and salaries, a $200 road tax on drivers in northern Iraq, a 50 percent tax for the ability to loot Raqqa’s archaeological sites, and a 20 percent tax at similar sites in Aleppo, according to the Thomson Reuters study. Additionally, non-Muslims must pay a religious protection fee known as jizya.

These payments could generate up to $30 million each month, according to Thomson Reuters. A 2015 report by the New York Times, supported with data from the Rand Corp., put annual tax and extortion revenue higher, at $600 million in 2014. That same study estimated that oil generated only $100 million that year, though many other civilian and military experts estimated oil-related revenues to be much higher.

Traditional economic sanctions imposed by the U.S. Treasury Department’s Office of Foreign Assets Control are ineffective against the Islamic State, Elizabeth Rosenberg, a sanctions expert at the Center for a New American Security, recently told Foreign Policy. That, she said, is because the militants do not have a traditional banking system to target.

President Barack Obama has repeatedly cited disruption of Islamic State finances as a key to stopping the group. It’s one front where the United States seems to be making gains.

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