ISIS funds itself through oil and an extortion racket

ISIS, unlike many other jihadist groups, doesn’t depend on foreign funders to survive. In Syria, it’s built up something like a mini state: collecting the equivalent of taxes, selling electricity, and exporting oil to fund its militant activities.

Max Fisher has a basic breakdown of how ISIS managed to do this, which includes extorting money from humanitarian workers and selling electricity to the Syrian government that it’s currently fighting. There are two important takeaways here. As Fisher explains, these clever revenue bases have made ISIS much more effective on the battlefield than other militant groups:

This money goes a long way: it pays better salaries than moderate Syrian rebels or the Syrian and Iraqi professional militaries, both of which have suffered mass desertions.

Holding energy infrastructure has been a goal of ISIS. Check out this ISIS map from a few years ago showing the territory it had hoped to hold in Iraq and Syria:

Now, ISIS would probably have a harder time exporting Iraqi oil than the Syrian oil it’s currently selling. The oil deposits in the area that ISIS holds aren’t that extensive, and they’re also not as developed as the current infrastructure ISIS controls in Syria.

In fact, the group’s oil revenue appears to have slowed down fairly significantly as the conflict has gone on. Since it’s hard to hide or move oil infrastructure, the United States and its allies have had a fairly easy time bombing ISIS-held infrastructure. Moreover, ISIS also doesn’t have enough trained domestic technicians to keep the oil pumping at full capacity, and can’t sell all of what it does produce, as it needs some oil to keep the lights on in its territory.