The Islamic State sells oil from territory it controls in Syria and Iraq to Turkish middlemen, Iraqi Kurds and even the Syrian government of President Bashar al-Assad, according to the Obama administration’s point man on terrorist financing.
Before the United States began targeting refineries in militant-occupied areas of Syria last month, the Islamic State was making about $1 million a day from oil sales, Treasury Department Undersecretary David S. Cohen said Thursday.
Its total income of “millions of dollars per month” from oil, kidnapping ransom and extortion in occupied areas, and the speed with which it has amassed funds, make the Islamic State unlike any other terrorist entity the United States has confronted, Cohen said.
The group also differs from other organizations, including al-Qaeda, in that a “relative small share” of its income is derived from sympathetic individuals in the Arab world. The administration in the past has criticized countries in the Persian Gulf, in particular, as cooperating with or turning a blind eye to such donors.
Today, Cohen said, the Islamic State does not “depend principally on moving money across international borders,” making it far more difficult to use international tools to stem the flow of funds. He spoke at the Carnegie Endowment for International Peace and at a White House briefing for reporters.
“As with the rest of the campaign against ISIL, our efforts to combat its financing will take time,” he said, using one of several acronyms that refer to the Islamic State. “We have no silver bullet, no secret weapon to empty ISIL’s coffers overnight.”
While most attention has been focused on the hundreds of airstrikes the United States and partner nations have conducted against Islamic State targets in Iraq and Syria in recent months, the administration has sought to emphasize that its strategy also includes efforts to undermine the group’s finances.
Oil sales have been a particular concern. “As of last month, ISIL was selling oil at substantially discounted prices to a variety of middlemen, including some from Turkey, who then transported the oil to be resold,” Cohen said. “It also appears that some of the oil emanating from territory where ISIL operates has been sold to Kurds in Iraq and resold into Turkey.”
The Assad government in Syria, he said, has also “made an arrangement to purchase oil from ISIL.”
While the United States has no control over Assad, Cohen’s office and other diplomatic emissaries have had extensive conversations in recent weeks with Turkey and Iraq’s Kurdish regional government. Both, he said, “are committed to preventing ISIL-derived oil from crossing their borders.”
At the same time, Cohen said, middlemen, traders, transport companies and others who operate “in the legitimate economy” and use the international financial system are vulnerable. “We are hard at work identifying them and . . . we have tools at hand to stop them,” he said.
The $1 million-a-day assessment of militant oil income predates U.S. airstrikes against oil refineries and other facilities in Islamic State-controlled territory in Syria.
Cohen said he did not have an assessment for oil income after the airstrikes began.
The Islamic State has also made at least $20 million this year alone in kidnapping for ransom, Cohen said. France and other European countries have reportedly sanctioned massive payments for their nationals who have been released by the militants, while the United States and Britain have adopted policies of nonpayment.
Two American journalists and two British aid workers have been beheaded since late August.
Cohen also noted that “scores of bank branches are located in territories where ISIL operates” in Iraq and Syria and said that the international community is working to limit the group’s ability to conduct transactions through banking systems in those countries and internationally.