Middle East

Daesh turns to selling fish, cars to offset oil losses: report

A Daesh militant waves his group's flag as he and another celebrate in Fallujah, Iraq, west of Baghdad, June 28, 2015.(Militant website via AP)

BAGHDAD: Daesh (ISIS) earns millions of dollars a month running car dealerships and fish farms in Iraq, making up for lower oil income after its battlefield losses, Iraqi judicial authorities said Thursday. Security experts once estimated the ultraradical Islamist group’s annual income at $2.9 billion, much of it coming from oil and gas installations in Iraq and Syria.

The U.S.-led coalition has targeted Daesh’s financial infrastructure, using airstrikes to reduce its ability to extract, refine and transport oil and so forcing fighters to reportedly take significant pay cuts.

Yet the militants, who seized a third of Iraq’s territory and declared a caliphate in 2014, seem to be adapting again to this latest set of constraints, in some cases reviving previous profit-turning ventures like farming.

“The terrorists’ current financing mechanism has changed from what it was before the announcement of the caliphate nearly two years ago,” a report by Iraq’s central court of investigation said, quoting Judge Jabbar Abid al-Huchaimi.

“After the armed forces took control of several oil fields Daesh was using to finance its operations, the organization devised nontraditional ways of paying its fighters and financing its activities,” the report added.

Fishing in hundreds of lakes north of Baghdad generates millions of dollars a month, according to the report. Some owners fleeing the area abandoned their farms while others agreed to cooperate with Daesh to avoid being attacked.

“Daesh treats its northern Baghdad province as a financial center; it is its primary source of financing in the capital in particular,” Huchaimi said. Daesh carries out frequent bombings in Baghdad against security forces and Shiite residents.

Fish farms have supplied militants with income since 2007 when Daesh’s Al-Qaeda predecessor fought U.S. occupation forces but the mechanism only came to the authorities’ attention this year, the report said.

The militants also tax agricultural land and impose a 10-percent levy on poultry and other duties on a range of imports into their territory, it added. “Recently there has been reliance on agricultural lands in areas outside the control of the [Iraqi] security forces through taxes imposed on farmers.”

New revenues are also being generated from car dealerships and factories once run by the Iraqi government in areas seized by the militants.

Those have helped offset the losses from lower oil income, though perhaps only partially. The U.S.-based analysis firm IHS said last week that Daesh revenues had fallen by around a third since last summer to around $56 million a month.

“In the recent period, Daesh has gone back to using government factories in the areas it controls – like Mosul – for financial returns,” Huchaimi said, but added that oil smuggling from Syrian refineries remains the group’s primary source of international financing.

The Iraqi report, based in part on the confessions of captured Daesh suspects, described how funds were funneled to Beit al-Mal, the group’s “finance ministry,” in the northern city of Mosul and then distributed to its provinces.

“The organization distributes money to areas outside its control through hawala [transfer] offices first in Irbil and from there to Iraq’s other provinces,” Huchaimi said.

The report said that in addition to salaries, Daesh fighters may receive rent allowances, financial rewards for up to four children and occasional bonuses like one worth $1,000 distributed after the militants captured Mosul in 2014.

 
A version of this article appeared in the print edition of The Daily Star on April 29, 2016, on page 8.

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