How the U.S. Got ISIS’s Finances All Wrong

November 19, 2015, 6:00 PM UTC
Iraqi Kurdish Forces Launch Offensive Against ISIS Near Kirkuk
KIRKUK, IRAQ - MARCH 13: A peshmerga checkpoint is reflected in pools of oil with damaged oil pipeline infrastructure, as Iraqi Kurdish forces push the frontline forward against ISIS forces in the Tal al-Ward district 20 miles southwest of Kirkuk, Iraq, on March 13, 2015. These peshmerga units of the Patriotic Union of Kurdistan (PUK) faction have made significant gains against villages held by ISIS, in concert with an Iraqi government and Shiite militia attack further south to free Tikrit from ISIS control, with a joint aim of squeezing the jihadist militants from Iraq. Since ISIS swept from Syria in June, 2014, Kurdish forces in northern Iraq have expanded their control over oil-rich territories disputed with Baghdad such as Kirkuk and its oil and gas facilities. (Photo by Scott Peterson/Getty Images)
Photo by Scott Peterson via Getty Images

The Obama administration has vastly underestimated how much revenue the Islamic State is pulling in from oil production and other assets.

Up until recently, the U.S. believed that the majority of ISIS’s revenue came from refined oil production, which it thought brought in $100 million per year. However, Bloomberg reports that, based on new intelligence received by Treasury officials this past May, the terror group is generating $500 million a year from oil and much more overall.

The U.S. has mainly been targeting refineries and storage depots, though an international policy analyst, Benjamin Bahney, told Bloomberg that the majority of the group’s oil revenue has increasingly been coming from crude oil rather than refined oil.

What’s more, Bahney, an analyst for Rand Corp., a think tank funded by the U.S. Department of Defense, says that ISIS has diversified its finances beyond oil. The new evidence suggest that it will be very hard for the U.S. to cut off the cash flowing to the terror group.

According to the Treasury Department, the Islamic State seized between $500 million and $1 billion from Iraqi banks last year. Additionally, the group has earned hundreds of millions from extortion, $20-$45 million from ransoming kidnapped victims, and about $5 million from foreign donations. UN agricultural officials and a Syrian economist have also estimated that ISIS could earn about $200 million from selling crops on the black market.

The Islamic State’s biggest budget drain is likely the salaries paid to its fighters, but Bahney estimates that those could be paid twice over using oil revenue alone. He says that the group’s best financial strength is its conservative spending, adding that he believes ISIS has built up a surplus of cash in the past year. “They’re going to be able to keep this going for a while,” Bahney said.