Breaking the ISIS economy through forensics

Dr. Theodore Karasik
Dr. Theodore Karasik

Dr. Theodore Karasik

By : Dr. Theodore Karasik

You have to give Russian President Vladimir Putin credit for attracting more attention to ISIS financial streams coming from state actors.

Putin has recently raised the concept of ISIS funding to a whole new level, targeting state-level collusion in helping finance the group’s economic engine.

At the G-20 meeting in Istanbul, Putin said: “I provided examples based on our data on the financing of different Islamic State units by private individuals. This money, as we have established, comes from 40 countries, and there are some of the G-20 members among them.”

There is no doubt that Russia, through its security services, has the means and capability to garner such information much better than its Western counterparts.

Illegal trade

Putin added that the photographic evidence is overwhelming, especially of oil tankers allegedly involved in illegal trade. “I’ve shown our colleagues photos taken from space and from aircraft which clearly demonstrate the scale of the illegal trade in oil and petroleum products,” he said. “The motorcade of refueling vehicles stretched for dozens of kilometers, so that from a height of 4,000 to 5,000 meters they stretch beyond the horizon.”

It took the Russian president’s frustration and fury with Turkey to make ISIS’s economy a front-page issue again.

Dr. Theodore Karasik

After the shoot-down of Russia’s Su-24 bomber by the Turkish air force, Putin again pointed angrily to Turkey’s double-sidedness on allowing ISIS to use Turkish territory for its economic lifeline: “[ISIS] has big money, hundreds of millions – or even billions – of dollars, from selling oil. In addition, they are protected by the military of an entire nation [Turkey].”

Clearly it took the Russian president’s frustration and fury with Turkey to make ISIS’s economy a front-page issue again, with added emphasis on state culpability.

No action on ISIS oil

ISIS’s oil economy is not a new issue. It has been haunting practically everyone, as to why nothing truly is being done about breaking ISIS’s economic system.

ISIS oil production in Syria is focused on the Conoco and al-Taim oil fields, west and northwest of Deir Ezzor, while in Iraq the group uses al-Najma and al-Qayara fields near Mosul. A number of smaller fields in both Iraq and Syria are used by the group for local energy needs.

Last year, ISIS’s practice of pumping oil and selling it on the black market via Turkey to outside buyers – allegedly Syria, Israel, and some Eastern European countries – has already been documented through economic forensics and with a more recent report. The Turkish opposition MP Ali Edibogluan said that ISIS had smuggled $800 million worth of oil into Turkey from Syria and Iraq. He added, “Turkey’s cooperation with thousands of men of such a mentality is extremely dangerous.” He is right.

Operation Inherent Resolve?

Since the inception of the U.S.-led Operation Inherent Resolve, the American alliance targeted ISIS’s mobile oil refineries and other related infrastructure but that approach appeared to be too careful and narrow in terms of rules of engagement.

ISIS simply fixed the damage and continued business as usual, showing its resilience through spare parts and repairs. Tankers continued to move towards Turkey as they were part of the convoys of other goods that transit the Levant delivering local goods ranging from car parts to food products and household goods. The fact that ISIS mixed the oil tanker caravans with normal Levantine ground traffic helped to give it an advantage by using “economic” shields.

But that has changed as the Russians have gone on the offensive against ISIS’s oil economy. About a week ago, Russia started to destroy the mobile infrastructure that allows ISIS to transport and sell oil. The Russian air force destroyed about 500 fuel tankers according to the Spokesman for the Russian General Staff, Colonel General Andrey Kartapolov. This “greatly reduced illegal oil export capabilities of the militants and, accordingly, their income from oil smuggling”, Kartapolov is reported as saying. What did Operation Inherent Resolve do? The American-led alliance destroyed 250 “safe” oil targets. That’s it. Clearly, something is wrong here.

Putin’s assertion that ISIS’s economy is backed by states is notable. ISIS sells Iraqi and Syrian oil for a very low price to Kurdish and Turkish smuggling networks and mafias, who label it and sell it on as barrels from the Kurdistan Regional Government. In addition, Turkish President Recep Tayyip Erdogan’s son Bilal, who is head of BMZ Ltd. shipping out of Ceyhan, is being suggested as a possible conduit. That allegation is embarrassing for the Turkish president during these tense times.

To boot, ISIS uses other tools to boost its economy, including the seizure of crop lands, central banks and hydro-electric plants. According to several Arab officials, Iraq, at least up to recently, was paying the salaries of bank officials in Mosul and funding several water stations along the Euphrates river system. This fact not only helps ISIS but also makes a mockery of Iraq’s fight against the group. This is a local revenue strategy and practice that needs to be stamped out. Don’t be surprised if pressure is put on the government of Iraqi Prime Minister Haider al-Abadi and everyone connected to the Iraqi Central Bank.

Economic forensic analytics

What is needed now, besides kinetic action on ISIS, is a robust, multi-pronged effort in economic forensics.

Economic forensic analytics is the procurement and analysis of electronic, human intelligence, or other relevant data to reconstruct, detect, or otherwise support a claim of financial fraud to support criminal or terrorist activity. Other goals include the detection of errors, inefficiencies, and biases where people tend towards certain behaviors – perhaps favoring specific numbers or number ranges – to influence decision makers or to circumvent actual or perceived international controls and thresholds. The main steps in forensic analytics are data collection, data preparation, data analysis, and reporting. There is a lot of work to be done with coordination, information sharing, and, most importantly, notable and robust action.

Economic forensics requirements will reveal some very unpleasant truths that may affect geopolitics for at least a decade.

Dr. Theodore Karasik

The good news is that there is a start in the economic forensics process particularly involving the ISIS oil trade, as well as in the sale of antiquities. It is a slow process but the more investigators probe the dark underbelly of enablers of the ISIS economy, the better all parties will know who is guilty.

Given that Turkey is indeed caught up in the illicit ISIS economy, drastic measures against the Turkish state or its military need to be implemented, and fast.

Ankara is playing with fire; the Russians know it 100 percent, while the West knows it implicitly, but is afraid to confront Turkey outright because it is a NATO member. All stakeholders in the fight against ISIS need to come clean because economic forensics requirements will reveal some very unpleasant truths that may affect geopolitics for at least a decade. That’s not good news in this tough and volatile neighborhood surrounding the so-called caliphate.

Dr. Theodore Karasik is a Gulf-based analyst of regional geo-political affairs. He received his Ph.D in History from UCLA in Los Angeles, California in four fields: Middle East, Russia, Caucasus, and a specialized sub-field in Cultural Anthropology focusing on tribes and clans.

Disclaimer: Views expressed by writers in the Column section are their own and do not reflect RiyadhVision’s point-of-view.


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