The Islamic State of Iraq and Syria is well funded for a terrorist group, a Treasury official said Thursday, but it lacks the financial strength to fulfill its ambition of becoming a state and the U.S. is making gains in cutting off its revenues.
Under Secretary for Terrorism and Financial Intelligence David Cohen said that the terrorist group has seen its most important revenue stream, sales of oil from wells it controls, significantly choked off since the U.S. began airstrikes.
“We have seen a decrease in what we estimate to be the revenues of the oil sales from a million dollars a day to several million dollars a week,” Cohen told members of the House Financial Services Committee during a hearing on Capitol Hill.
Cohen reiterated Thursday that Islamic State is unusually financially independent for a terrorist group because it has its own revenue streams and is not reliant on outside donors. The Treasury is working to use financial means to cut off Islamic State’s revenues through black market oil sales, exploitation of people in the areas of Iraq and Syria it controls, ransoms, and theft.
Despite its diverse sources of funding, Cohen said, the terrorist group does not have the financial capability to sustain the state or caliphate that it aspires to in the Middle East.
The Islamic State’s “territorial ambitions are a financial burden. Attempting to govern territory, subjugate millions of people, and deliver some modicum of services is expensive,” Cohen said in testimony prepared for the hearing.
“[The Islamic State] cannot possibly meet the most basic needs of the people it seeks to rule, despite its baseless attempts to function as the sovereign government in territories where it operates,” he added.
Nevertheless, representatives at the hearing expressed concern about the group’s rapid rise and unusual financial strength, and Republican members faulted the urgency of the Obama administration’s response.
Jeb Hensarling, the Texas Republican who is chairman of the committee, called the estimated half a million dollars used by terrorists to carry out the Sept. 11, 2001, attacks attacks “pocket change” in comparison with Islamic State’s funding. “Unlike al Qaeda and other terror groups with which we are familiar and rely mainly on private donations and state sponsorship to fund their activities, [Islamic State] is almost entirely internally financed and apparently is sitting on assets of almost $2 billion,” Hensarling warned.
Rep. Steve Pearce, R-N.M., criticized the Obama administration for not taking direct military action against the group’s oil exports. “We just sit here and let them get $2 million a day while the American people live in fear?” Pearce asked, saying the U.S. could easily destroy oil trucks or other parts of the transportation system for oil from Islamic State-held oil fields.
Other members of Congress asked why the terrorist group was allowed to build up oil wealth in the first place.
Cohen responded that black market sales of oil smuggled out of fields now controlled by the Islamic State had been going on for a long time, but were not previously a top concern of the Treasury.
“What changed was when [the Islamic State] came in and took over some of these fields, it became [the Islamic State] that was the beneficiary” of black market sales, Cohen said.
