A new analysis by the U.S. intelligence community shows that ISIS is now the richest terror group in the world, thanks to a 2014 raid on an Iraqi bank that may have netted hundreds of millions of dollars. Officials who doubted initial reports of a $400 million theft have revised their estimates upward.
But the cost of running a caliphate and fighting a ground war is high, say analysts, so ISIS may be facing a cash crunch, even though the group is supplementing its windfall with oil revenues, donations and money extorted from Christians and hostages.
Michael Sheehan, executive chairman of the Combating Terrorism Center at West Point, says ISIS is all about holding territory, which is expensive, and that support for terror attacks in the West is a lower priority, even if they grab headlines.
"I am not sure they are really achieving anything by these very infrequent one-off attacks," he said. "They are in the news for a few days and life goes on."
A U.S. counterterrorism official said that encouraging attacks by "fan boys" in Paris and Tunis allows ISIS to reap cheap publicity without expending the precious revenues needed to protect its caliphate in Iraq and Syria. All the terror attacks require, said the official, "is an idea and a hashtag."
ISIS now pays its fighters -- and bureaucrats -- from money it stole from the Central Bank of Iraq when its fighters overran Mosul and took control of the local branch last June. Just after the raid, the governor of Nineveh Province told the New York Times that ISIS fighters emptied the vaults in all the other banks in town as well, and estimated the total take at $400 million.
An executive with the Iraqi Central Bank gave a lower figure, $85 million, and U.S. intelligence officials also said privately the number was grossly inflated. But officials now think the number should be revised. According to one analyst, the total really is in the "hundreds of millions," even if $400 million is too high.
That would make ISIS the richest Islamist terror group in history, with a significantly higher bank balance than al Qaeda prior to 9-11.
Although the U.S. intelligence community initially believed Al Qaeda had $300 million, information gathered after 9-11 from captured al Qaeda operatives and Bin Laden relatives showed the group had no war chest and Bin Laden was broke. The group distributed money as quickly as it was raised.
ISIS is also spending money quickly, said the U.S. analyst, and is burning through its Mosul haul. "They are using it to pay the salaries of fighters and to some extent to administer the caliphate and pay civilian employees," he said. Money is also sent to the survivors of ISIS fighters killed in combat. ISIS has between 20,000 and 31,000 fighters, according to U.S intelligence estimates.
It's uncertain how much of the bank money is still available, said the analyst, or where it is being kept. Some reports have the funds still in bank vaults under heavy guard. However, the analyst said the Islamic State is facing a financial crisis as its costs rise and other sources of income start to dry up.
He noted that the money seized from the banks now tops ISIS funding sources, followed by, in order, the sales of oil products smuggled through Turkey, extortion and ransom, and to a lesser degree donations and "taxes."
When ISIS took control of large swaths of Syria and Iraq last summer, the International Energy Agency estimated it had access to 3 million barrels of oil and could ship up to 30,000 barrels a day.
Both those numbers have been reduced dramatically by air strikes from the U.S., Saudi Arabia and the United Arab Emirates, say U.S. and IEA sources. Recent strikes have targeted the terror group's oil storage depots and makeshift refineries. Turkish authorities have also begun stopping oil shipments across the border.
The dramatic drop in world oil prices has also undercut the ISIS strategy of selling oil at far below the going rate. Last year, ISIS was believed to be shipping around 25,000 barrels a day across the border, and was selling it on the black market for as little as $25 a barrel, which was then one-quarter of the market price. But with the price per barrel now less than $50, ISIS oil becomes less attractive to rogue traders.
"They have difficulty in moving product and the oil, mostly crude, is lousy," said one analyst.
There have been donations from rich Arabs, and the flow continues, though it's not on the scale of what al Qaeda received prior to 9-11. Two countries cited as failing to follow their own laws in thwarting donations, Qatar and Kuwait, have promised to tighten up controls, but one high-ranking Qatari official has been quoted as saying, "we can't guarantee it won't happen again."
Various "tax" payments, ranging from local trash fees to "road taxes" to insure safe passage, make up the smallest source of funds for the Islamic State. One particularly gruesome levy, according to the Iraqi government, is a $200 "tax" levied against Christians who want to avoid crucifixion.
Extortion and ransom are "mature industries," that there are fewer and fewer wealthy Syrians and Iraqis who they can kidnap and extract large sums. "And with their economy in shambles, the tax base is narrowing," noted one analyst. "Running caliphates ain't cheap."
Mounting terror attacks outside the caliphate, on the other hand, might not cost much. The 9-11 Commission published a little-known monograph on terrorist financing. It put the cost of 9-11, a two year operation, at $400,000 to $500,000; the 1998 bombings of U.S. embassies in Africa at $10,000; and the 2002 Bali bombings at approximately $20,000. An NBC analysis of the first World Trade Center bombing in 1993 showed it cost just $20,000.
Said one former treasury official, "Unfortunately, terrorism isn't necessarily a rich man's sport."