1. Complex networks of small-volume oil smuggling arising from Iraqi under-funding of Kurdish authorities, which have allowed ISIS to build cash reserves expected to last two years or so, as reported on by the Financial Times:
Black market oil is often refined at plants in Iraqi Kurdistan that are partly the byproduct of the tensions between Kurdish leaders and Baghdad. In recent years the Kurdistan Regional Government looked the other way as homegrown refineries popped up to supply the local market after Baghdad banned the export of petroleum products without its consent.
This means that the Kurds are potentially helping put money in the coffers of the jihadi group that its own peshmerga forces are fighting. “It’s now possible that Isis could be selling crude [via middlemen] to these knock-off refineries,” says Bilal Wahab, an energy expert at the American University of Sulaymaniyah. “The KRG is unwilling to shut them down because it would have to raise the price of gasoline. It can’t raise the price of gasoline because it can’t pay salaries, and it can’t pay salaries because the central government hasn’t given the KRG its budget in eight months. Yes, it’s illegal. Yes, it’s bad. But it is what greases the wheels of the economy.”
Beheadings, massacres, and general intimidation can keep people docile for a while, but in the end every territorial administration — whether a state or a non-recognized/non-state actor — has to balance that with substantial provision of basic services, governmental functions, and food access. Otherwise people just get hungry enough and angry enough to overthrow you no matter how many gunmen you have on payroll.
Fluid terrorist organizations that move easily between physical locations and do not attempt to run a state can basically do whatever they want and be as vicious as they want. But organizations that set themselves up in a defined physical space (a territory) and attempt to take over or establish a new state (or pseudo-state) quickly find that the administration capacity question is what makes or breaks their ability to remain in control.
ISIS has declared itself to be “The Islamic State” and has carved out an entirely new administrative district, Forat Province, based on the Arabic name for the Euphrates River, which spans part of eastern Syria and western Iraq. They have clearly established themselves in the territorial-control model of terrorist organizations.
Contrary to much of the breathless media reporting focusing on their rapid traversing of desert highways, the expansion of ISIS is far from unstoppable or perfectly stable. Already they have reached the point where they have disrupted local administrative functions so heavily that they need to slow down and resume bureaucratic operations to keep everything spinning smoothly enough for people to remain accepting of their rule in the places they’ve already captured.
According to reporting from Reuters, however, ISIS has actually been making some disturbingly long strides in eastern Syria in terms of rebooting the administrative activities after their initial wave of terror […]
Clearly, the next stage of the war in Syria (and to some extent northern and western Iraq) will be about degrading administrative and economic function of ISIS in their captured territories, not just about destroying their rocket launcher units and humvees.
In Mosul, jihadists have abandoned command centers established after they captured the city in June, moving to private homes in populous districts and keeping a low profile.
The same tactic is being used in Syria after U.S. Defense Secretary Chuck Hagel told lawmakers that plans were being laid to hit targets there, including ISIS “safe havens.”
In Deir al-Zor, jihadists have emptied the main regional arms depot and withdrawn from almost all their positions in Mayadin further east, according to local activist Abu Osama.
Even oil fields have been left abandoned and the families of foreign fighters, who once lived in residential buildings, have been evacuated.
“They are following a tactic of disappearance,” Abu Osama told AFP via the Internet. “They leave spies behind, people who are from the local communities, who relay information to them.”
In the northern province of Aleppo, ISIS fighters have withdrawn from their bases in the town of Al-Bab, one of their main strongholds in the region.
“As the U.S. strikes degrade the visible elements of the [ISIS] military structure – command headquarters, trucks, artillery pieces – I expect [ISIS] to morph back into an insurgency model where … fighters are intermixed with civilian populations,” said Christopher Harmer, analyst at the Institute for the Study of War, a U.S. think tank. “That will make it more difficult for U.S. air strikes to target [ISIS] fighters.”
He said the group had shown itself capable of melting into the civilian population.
“I expect they will continue to use sleeper cells, snipers, car bombs, suicide vests, targeted assassinations. All of these tactics are virtually immune to air power,” Harmer said.