Islamic State Financing and U.S. Policy Approaches (CRS Report for Congress)
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| Release Date |
April 10, 2015 |
| Report Number |
R43980 |
| Report Type |
Report |
| Authors |
Carla E. Humud, Analyst in Middle Eastern and African Affairs; Robert Pirog, Specialist in Energy Economics; Liana Rosen, Specialist in International Crime and Narcotics |
| Source Agency |
Congressional Research Service |
Summary:
Countering the financial resources of the Islamic State, which has seized significant territory in Iraq and Syria and threatened to conduct attacks against the United States and its citizens, has become a significant national security priority for policymakers, including Members of Congress. By undermining the financial strength of the group, also known as ISIL or ISIS, policymakers seek to reduce its capability to conduct terrorist attacks, as well as to ultimately "degrade and ultimately destroy" the group. This effort includes a comprehensive look at how the group generates revenue.
While IS funding streams remain fluid, the group's largest revenue sources appear (based on open-source information) to include oil sales, taxation and extortion, and the sale of looted antiquities. Oil sales initially provided the majority of the group's revenue, but gradually declined as a percentage of overall IS profits due to an extensive campaign of airstrikes by the United States and coalition partners against oil and gas facilities used by the group.
U.S. officials have noted that the Islamic State's financial strength depends not only on its income but also on its expenses, and the extent to which it is able to devote its resources to military operations. U.S. officials have stated that the Islamic State's decision to hold and govern territory is a financial burden for the group, and thus a vulnerability that the United States could potentially exploit by diminishing the group's ability to generate and utilize revenue. If the Islamic State cannot afford the expenses associated with governing its territory, some argue that the resulting public backlash would undermine its ability to rule.
Along with military strikes, the United States, in cooperation with regional allies, has implemented a series of financial measures designed to block the Islamic State's access to the international financial system. Without such access, the Islamic State will likely struggle to fund external operations, including facilitating the movement of foreign fighters. However, significant challenges remain, as the Islamic State has thus far been able to limit its direct exposure to the international financial system by generating and spending money largely within territory under its control. U.S. efforts are centered on identifying new ways to target the group's finances by focusing both on the Islamic State and on others who conduct business with the group.
To date, the Administration has not requested new authorities specifically to counter IS financing. As the 114th Congress continues to consider and evaluate U.S. policy responses to address the Islamic State, a focus of concern may center on whether U.S. counterterrorist financing tools are capable of diminishing IS sources of funds. Key questions may include whether current U.S. efforts are effective, sufficiently resourced, or require new legislative authorities to respond to the financial threat that the Islamic State presents.
For additional information on the Islamic State and the U.S. response, see CRS Report R43612, The "Islamic State" Crisis and U.S. Policy, by Christopher M. Blanchard et al.
