The cracks in Islamic State’s business plan are starting to show

February 20, 2015
File photo of displaced people from the minority Yazidi sect, fleeing violence from forces loyal to the Islamic State in Sinjar town, walking towards the Syrian border

Displaced people from the minority Yazidi sect, fleeing violence from forces loyal to the Islamic State in Sinjar town, walk toward the Syrian border, Aug 11, 2014. REUTERS/Rodi Said/Files

Over the last year, Islamic State has presented the rest of the world with a steady stream of atrocities: An attempted genocide against the Yazidi people in Iraq, massacres and bombings of Shi’ite civilians in Syria, and gruesome executions of journalists and aid workers. Last week the militant group murdered — via mass beheading — 21 Coptic Christian Egyptians in Libya. But despite the bravado of Islamic State’s public statements, the Islamist militant group increasingly appears to have painted itself into a strategic corner.

Islamic State’s expansion so far has been based heavily on extortion and theft. Using revenue from the oil wells it captured in eastern Syria in June 2014, along with money raised by looting in Mosul, supplemented by funding from ransoms paid by governments for its hostages, Islamic State was able to hire lots of fighters very quickly by paying top salaries. But revenues from the oil wells have dropped (due both to U.S. bombing and falling global oil prices), and with the tragic death of American aid worker Kayla Mueller earlier this month, Islamic State has executed what is likely its last foreign hostage, potentially eliminating a key source of its funding.

The result may be that Islamic State has reached an important crossroads. The strategy that it has relied on so far to fuel its expansion is becoming increasingly untenable. If Islamic State is going to hold on to its recent gains, it has some policy changes to make.

All militant groups need a range of resources — from guns and money to recruits and political legitimacy — to accomplish their goals. Broadly speaking, the strategies they use to acquire these resources fall into three categories: theft, barter, or gift. Some militias steal what they need, looting farmers’ crops or kidnapping journalists for ransom. Others rely on barter, offering their services as a fighting force to a state in return for money and weapons. Groups employing the gift option try to convince both local constituents and potential state sponsors to voluntarily provide political and material support for its cause. The vast majority of militant groups use a mixture of all three approaches, though many emphasize one approach.

What’s next for Islamic State?

So far, Islamic State has mostly relied on the first approach — theft. But using this strategy will become increasingly difficult; the resources it has already stolen — oil, cash from local banks, even hostages — aren’t easily renewable. And, as the Islamic State leadership is beginning to find, brutalizing civilians makes acquiring broad local support very difficult.

Another way forward would be for Islamic State to transition to a barter strategy, acting as a mercenary force for a state sponsor that has little interest in its overall project. This kind of quid pro quo relationship led Muammar Qaddhafi’s Libya in the 1970s and 1980s, for instance, to provide funding for everyone from the Irish Republican Army (IRA) to the far-left militant Baader Meinhof group in Germany. Today, however, there are fewer and fewer of these rogue states. Islamic State has so alienated most potentially supportive governments in the region that even those opposed to the regime of Bashar al-Assad in Syria — like Jordan and Turkey — are unlikely to view Islamic State as a reliable partner.

Finally, Islamic State could shift to a strategy based on a gift approach, by trying to build domestic and international support for their political project. To a degree, Islamic State already appears to be trying to do so. The movement’s massive public relations campaign on social media has attracted some funding from sympathetic individual donors in Qatar and Kuwait, but these donations represent a relatively insignificant part of their revenue, and few regional governments appear interested in backing Islamic State, for either power or purely ideological reasons. Iran and Syria (which have supported other militant groups in the past) are openly hostile to Islamic State, and the Gulf monarchies feel threatened by Islamic State’s (ludicrous) claims to have reestablished the caliphate, which challenges the legitimacy of their own regimes.

For a gift strategy to work, Islamic State would need to focus inward. This would mean appealing to the local population in the territory it occupies through improved governance and by softening its authoritarian rule, while simultaneously courting regional allies. This would require limiting its expansionist ambitions, toning down its inflammatory rhetoric, and reframing its core mission to appear less threatening to states like Saudi Arabia.  In other words, it would have to become a radically different kind of entity than it is now.

Whether Islamic State is willing or able to do any of these things remains unclear. Militant groups have successfully reinvented themselves before. Hezbollah and Hamas both enacted internal reforms in the 1990s and 2000s respectively to better attract support both locally and from powerful patron states. Both of these organizations, however, had fairly rational leadership and a degree of internal cohesion that Islamic State has not yet exhibited.

This is partly a side-effect of Islamic State’s rapid expansion; in a relatively short time period it has had to absorb former Baathists, disaffected members of al Qaeda, random thugs, and rebellious European teenagers, none of whom may be interested in curbing their abusive treatment of civilians or moderating their ideology to appear less threatening to neighboring states and achieve longer term strategic goals.

If Islamic State’ leadership is unwilling, or unable, to make these necessary policy changes it may well continue to resort to the violence and extortion it is familiar with, but with ever-diminishing returns.


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Well thought-out piece of analysis..

Posted by WestFlorida | Report as abusive

If one digs a little deeper, they see that IS is really an ultra-fundamental Islamic group which ultimately wants to bring about the apocalypse. That sort of changes how you have to approach the matter. ive/2015/02/what-isis-really-wants/38498 0/

Posted by zeke_voltage | Report as abusive

I suggest a bugzapper strategy. A temporary garrison or fort placed at Dabiq staffed by the “army of Rome” will attract the core ISIS fighters and keep them occupied, drawing away their interests in Iraq, Turkey, and Libya.

Posted by verdegeo | Report as abusive

Islamic State? Please show me the boundaries. Islamic State money? Islamic passports?

Posted by Hermist | Report as abusive

Islamic State is doomed because nothing innovative comes from Islam. It stifles knowledge and curiosity. The only smart Muslims you will meet are Muslims who have left the Muslim world, and found a better place to live.

Name one medical or technological breakthrough that has come from a Muslim university. Anywhere in the world. Just one.

Posted by AlkalineState | Report as abusive

I suggest a bugzapper strategy. A temporary garrison or fort placed at Dabiq staffed by the “army of Rome” will attract the core ISIS fighters and keep them occupied, drawing away their interests in Iraq, Turkey, and Libya.

Posted by verdegeo | Report as abusive

Don’t be ignorant AlkalineState. Do some basic research before posting stuff… 9/muslim.inventions/

Posted by zeke_voltage | Report as abusive

here ya go AlkalineState… 9/muslim.inventions/

Posted by zeke_voltage | Report as abusive

not sure what is their strategy as things go on ..

Posted by silvertip_us | Report as abusive

The locals who suffer these guys without revolt are like most religious sheep. Too afraid to act because despite their religious rhetoric they fear death, and that dominates their thoughts, and so they will suffer torture rather than death. Making them incapable of throwing off tyrants.

Posted by brotherkenny4 | Report as abusive

Although they call themselves a “state”, the Isis people are really just a gang of organized criminals operating under the cover of a religious facade.

Posted by pbgd | Report as abusive

Good report. The road to the apocalypse is not free. Even die-hard ultra-fundamentalists need resources to succeed. Raping, murdering and pillaging in the name of Allah only gets you so far…

Posted by Underwood | Report as abusive

Islamic State can receive private donations through barakat (blessings) “bankers” who send them to another barakat “banker” in IS territories. The main reason for donations are that Sunni Arab Muslims have not had a victorious army since Lawrence of Arabia, 100 years ago. Britain and France drew their borders. They lost to Israel in 1948, 1956, 1967, 1973, and 1982. Afghans and Pakistanis were the main forces against the Soviets. The biggest Sunni-led armed forces were Iraqis under Saddam who marched into Iran and lost to Iran’s Shia militias. Iraq lost in 1991 and 2003. IS gives them a new sense of pride despite its brutality that is similar to France’s Reign of Terror during the French Revolution complete with beheadings. Sunni Arabs want to win a war after 100 years.

Posted by carlmartel | Report as abusive

zekevoltage- there were only muslim inventions in the muslim world becuase if you werent, you were dead. same goes for xian ones. the inventors you refer to never had a choice to be muslim or not.

Posted by 4040 | Report as abusive

Fortunately we are probably not faced with IS or Daash as a long term proposition. The plans from Washington for decades of war with US troops in a combat role appear to be short-circuited by two armed groups beseiging the two capitals of Daash, Raqqa and Mosul. Syrian Kurds and Iraqi Kurds, respectively. The motivation is self defense first, nation second. The wherewithal is primarily ‘gift’ for the Syrian YPG and YPJ, (Peoples Protection Units and Women’s Protection Units) . Primarily national (and that comes down to oil) for the Kurdistan Regional Gov’t and peshmerga army. These dudes and dudettes have quickly shifted the tide from defense to offense much more rapidly than most reports give them credit for.

Posted by PaulSevere | Report as abusive

“Islamic State has executed what is likely its last foreign hostage, potentially eliminating a key source of its funding.”

Until they kidnap the next set of hostages, which is only a matter of time. Since their other sources of revenue are apparently drying up, expect hostage-taking to increase. Unfortunately, there are still enough governments and organizations around the world who will pay ransoms.

Posted by Randy549 | Report as abusive

Those muslim inventions come from a thousand years ago. I wouldn’t count on the Arab world of new antibiotics, more efficient energy technology or next-generation microchips.

Posted by CaycePollard | Report as abusive

ALQuida out, disappeared, ISIS in..bunch of newspeak and Orwellian manipulation

Posted by Jingan | Report as abusive

“A thousand years ago, we invented the crank.”

I rest my case.

Posted by AlkalineState | Report as abusive