The viability of Islamic State

Published in The Middle East, 20 July 2015 However unpalatable to the international community and despite what its critics says, ISIS does indeed look very much like a state, but is it on the path to becoming another failed state?

Just what to call the fundamentalist group that controls a large swathe of territory across Iraq and Syria has been a thorny issue over the past few years. ISIS, ISIL, Daesh and Islamic State are all used in what can be a confusing and very political mix of Arabic and English terms.

The UK Prime Minister David Cameron recently railed against the British media using the term Islamic State in an interview on the BBC in late June, suggesting it was both offensive to most Muslims and lent an unwarranted legitimacy to the terrorist group. In the Middle East, the group’s opponents often take a similar line. The veteran Saudi diplomat Prince Turki bin Faisal al Saud says he doesn’t like to use the organisation’s Arabic acronym Daesh, but instead prefers the similar sounding Faesh, which means obscene.

“They’re definitely not a state, they’re definitely not Islamic and they don’t control Iraq and Syria,” he told an audience at the Chatham House think-tank in March. “So Fahesh is a much better word for them and I wish the media here, particularly the Arab media, would use that word instead of continuing to give them what that they so obviously want to get, which is recognition as being a state and as being Islamic.”

Yet the unfortunate truth for Prince Turki, Cameron and others is that, in most ways you can think of, Islamic State looks very much like a state. It has its own territory, along with a flag, an army and a police force. There are ranks of administrators who run public services and impose taxes on the local population. It also trades with neighbouring countries, albeit via the black market.

Indeed, it is arguably in a better situation that some of the more widely-recognised states dotted around the region, like the rump administration of Bashar al Assad in Damascus, or the self-imploding Libya or Yemen.

Palestinian-born, UK-based writer and journalist Abdel Bari Atwan, author of Islamic State: The Digital Caliphate, suggests that people should accept the reality. “It is a state, a sovereign state,” he says. “They have a state which is bigger than Britain. They impose taxes on them, they have a cabinet, they have administration, institutions, you name it, they’ve got everything other states have.”

The real question is how long that will remain the case. If Islamic State is to have a future, then it will have to survive as an economic force as well as a political, military or religious one. If it cannot then it has little hope of lasting. From the current standpoint, its economic position looks rather more uncertain than its political or military positions.

“If indeed it is a state and has some sort of formal existence, well then it has all of the problems that any state or government or sovereign power would face and one of the critical ones is its financial model,” says David Butter, an associate fellow at Chatham House.

To date, the Islamic State has relied economically on a few major sources of income. Initially it had the ability to tap into the wealth of the states whose territory it was seizing. Civil servants in the parts of Iraq and Syria that it captured still received their salaries from their central governments and these could be taxed. It was also able to impose fees on truck drivers and others travelling through the areas it controlled.

It could also loot the vaults of banks in newly seized towns, the most prominent of which was Mosul which it captured in June 2014 and which provided more than $400 million by some estimates. But bank vaults can only be cleaned out once and the central governments in Baghdad and Damascus are now either unwilling or unable to keep paying a lot of the salaries in areas they don’t control.

Another important source of income has been oil and gas revenues. However, this is also likely to be a declining source of revenue, according to Butter. He estimates that the group was involved in production of up to 70,000 barrels a day of oil in mid-2014, but far less today.

“This trade I think has been severely disrupted since the coalition bombing [which began in September 2014],” he says. “A lot of the refineries have been hit, it’s become more difficult and the fields they’re operating do need maintenance. I suspect it’s going to be increasingly difficult for any sort of high-rated production to be maintained. Added to which, of course, the oil price has halved since October. So I don’t think that this oil bonanza is something that’s going to sustain them in the long term.”

Another source of income has come from the looting of ancient monuments and the sale of those artefacts on the black market. The scale of this trade is impossible to calculate, but it is clear from satellite imagery that illegal digging has been carried out on many sites on a grand scale. Not all of this will have been done by Islamic State – many refugees from Syria travel with small pieces on them as a store of wealth – but the group is certainly involved to some extent.

“The problem is there are hundreds, maybe thousands of illicit archaeological sites,” says Irina Bokova, director-general of the UN heritage body UNESCO. “They dig and then they sell. The scale is huge. I think nobody can say precisely [how big the problem is].”

If its domestic sources of income continue to decline, then Islamic State will need to raise more funds from outside its core territory. This already happens to some extent although, again, it is all but impossible to know how much money is flowing in and how effectively it is being used. Western law enforcement officials are trying to track the flow of funds coming from other countries within the Middle East as well as from Europe, Asia and elsewhere, but they do not have the ability to see what flows through grey market routes such as the hawala networks or one of the many alternative payment systems

The weaknesses of Islamic State’s position can probably only be alleviated in the longer term if it gains some sort of international recognition and is, as a consequence, is allowed to trade normally and establish a properly functioning economy. That helps to explain why politicians in the Gulf and in the West have been so vociferous in their criticism of terms like Islamic State and Daesh and the indirect legitimacy those words bestow. For now the group has no obvious allies that it can turn to for such recognition and without a move towards normality its long-term position looks extremely precarious.

While some might argue that it does not have enough of the ingredients to operate as a viable and sustainable state, it is nevertheless presenting itself as a state and trying to organize itself as a state.

What is without question is the damage – even at this nascent stage – it is able to wreak upon regional safety and security and the certain knowledge this will increase and continue unless and until its empire-building is brought to an end.