It sounds like ISIS is in dire financial straits
A Kurdish Peshmerga fighter near a wall where the black flag commonly used by ISIS militants has been painted over, in the northern Iraqi town of Zumar on October 26, 2014. Reuters
The terrorist group ISIS, while dealing with a consistent loss of territory in Iraq and Syria and unfulfilled plans for Libya, has shed benefits and raised taxes as it starts running out of money.
An ISIS memo found earlier this year saying the group had cut salaries for fighters by 50% was widely circulated as evidence of the group's financial problems.
But Adam J. Szubin, the acting under secretary for terrorism and financial intelligence at the US Treasury Department, explained that's not the extent of the measures ISIS has taken to rein in its spending.
"Overall, ISIL is significantly constrained in terms of its funding," he told the CTC Sentinel, a publication of the Combatting Terrorism Center at West Point.
Szubin noted that ISIS is cutting benefits as it tries to deal with a cash crunch.
"We received information earlier this year indicating that ISIL stopped paying death benefits to families of ISIL personnel," Szubin said. "That's a core benefit that a group like ISIL needs to promise to the families of those going on suicide or likely suicide missions in order to maintain their operational tempo."
ISIS is also relying more on taxation for revenue.
"We've seen them significantly increase taxation rates and increase the categories of activity they're now taxing," Szubin said. "While they had once held off from taxing the poorest civilians on humanitarian grounds, they are now taxing across the board."
And the group is increasing rates and dipping into pensions, according to Szubin.
"Where the rates might have once been 3% or 5%, we see those doubling, and we see them going after everything from income to remittances to picking up pension payments," Szubin said. "Every aspect of life is being taxed, including real estate."
Szubin also disputed the notion of across-the-board salary cuts for ISIS fighters, speculating that its highly skilled workers are probably still being paid the same while its foreign fighters are likely suffering the most from the cutbacks.
"I have no doubt that ISIL continues to pay its chemical engineers and the people who are advanced on the weapons side, people who are helping it on the gas-refinery side, the same salaries they used to pay them," Szubin said. "The 50% pay cut is probably for the foreign fighters or those who are in the second or third ring, and it's a pretty significant pay cut."
Defections from ISIS are thought to be increasing as salaries decrease.
In its propaganda, ISIS paints a picture of a thriving "caliphate," the name is uses for the territory it controls, but many foreigners who have traveled there have returned to the West disillusioned and with stories of extreme poverty and hardship in ISIS areas. And local fighters — especially in Syria, where a civil war is raging — will sometimes choose to join whichever militia or group has the most resources.
"They have been able to attract unprecedented numbers of foreign fighters to come join their cause based on two things," Szubin explained. "One was battlefield success and this narrative that they were moving towards establishing a caliphate. They no longer have that. The last six months have been nothing but loss of territory followed by loss of territory."
The second reason ISIS was able to grow so quickly was the competitive salaries the group offered.
"Secondly, they were paying better than the going rate, more, for example, than a civil servant could be expected to receive in a place like Iraq and more than other militia groups were paying," Szubin said.
ISIS is also seeing its oil revenues plummet as the US targets tanker trucks. The military has also seen some success in targeting cash storehouses.
Despite ISIS' financial woes, it doesn't look like a total collapse is imminent. But the group is struggling both financially and militarily, and it no longer looks to be growing.
"I do think they're feeling financial strain across the board," Szubin said. "If you look at a number of the military fronts, they're feeling strain there. I think they're feeling it in terms of the public narrative. And they're feeling strain in terms of the internal support by Sunni populations who have soured even further on ISIL. They are back on their heels."
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