ISIS is losing territory and revenue, down 60%, 80% 

Three years after Islamic State leader Abu Bakr al-Baghdadi declared the ‘Caliphate’, the terrorist group known for its extreme brutality has lost more than 60 percent of its territory and 80 percent of its revenue, according to new analysis released today by IHS Markit.

Governance project has failed

The Islamic State’s caliphate spanned an estimated 36,200 km2 on 26 June 2017, roughly the size of Belgium or the U.S. state of Maryland, according to IHS. This marks a 40 percent reduction in territory since the start of 2017, and a 60 percent reduction overall since January 2015, when the jihadist group controlled 90,800 km2 in Iraq and Syria.

Pressure on the Islamic State is intense. US-backed Syrian Democratic Forces (SDF) have advanced into the outskirts of Raqqa, while Syrian government forces are pushing east towards Deir al-Zour, IHS reports.

In Iraq, government forces and Iran-backed militias are preparing to eliminate the last remaining pockets of Islamic State control in Hawija, Tal Afar and al-Qaim once the Mosul operation is complete.

“The Islamic State’s remaining caliphate is likely to break up before the end of the year, reducing its governance project to a string of isolated urban areas that will eventually be retaken over the course of 2018,” said Columb Strack, senior Middle East analyst at IHS.

Islamic State’s economy collapses

As the ‘Caliphate’ shrinks, the Islamic State’s average monthly revenue has fallen dramatically from $81 million in Q2 2015 to $16 million in Q2 2017, a reduction of 80 percent.

This includes a steady decline in all of the group’s financial streams: oil production and smuggling, taxation and confiscation, and other illicit activities. Average monthly oil revenue is down 88 percent, and income from taxation and confiscation has fallen by 79 percent, compared to the initial IHS estimate in 2015.

The Islamic State’s ability to increase the fiscal burden on the population it governs, to compensate for financial losses, appears to have reached its limits, IHS said. “Although the Islamic State still appears to be involved in some commercial activity, especially oil production, there are indications that it is attempting to increase its financial ‘reserves’, accelerating the shift from a highly bureaucratic and centralized quasi-state economy towards funding a future insurgency through a real war-economy,” said Ludovico Carlino, senior Middle East analyst at IHS Markit.

“An attempt to force people living in the Caliphate to pay all transactions with the Golden Dinar – the group’s currency announced last year – is the most evident indicator of this trend.

ISIS Losing: Territory and Revenue Down 60%, 80% - IHS

Source: Business Insider

“Territorial losses are the main factor contributing to the Islamic State’s loss of revenue,” said Ludovico Carlino, senior Middle East analyst at IHS Markit. “Losing control of the heavily populated Iraqi city of Mosul, and oil rich areas in the Syrian provinces of Raqqa and Homs, has had a particularly significant impact on the group’s ability to generate revenue.”

Attacks abroad likely to increase before they decrease

Military defeat and the loss of territory in Syria and Iraq will be insufficient to sway the views of Islamic State supporters. The group’s video productions have declined in frequency, suggesting that it is less capable of disseminating its messages. However, it has already prepared its followers for the loss of territory.

Territorial losses are driving the Islamic State to intensify its campaign of terrorist attacks abroad to compensate.

“Egyptian, Saudi Arabian and UAE efforts at weakening radicals’ influence, and pressuring clerics to develop a new interpretation of Islam that is reconciled with modernity, are likely to drive some Islamist conservatives into embracing violence,” said Firas Modad, senior Middle East analyst at IHS Markit.

“Efforts by Western governments to confront Islamists are likely to have the same effect. Terrorism risks from Islamist groups are therefore likely to increase before they decrease,” Modad said.


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