ISIS is struggling to fund its war machine

Inside a lucrative ISIS oil field turned prison
Inside a lucrative ISIS oil field turned prison

It's getting harder for ISIS to finance its war machine, due to its shrinking territory and crippled oil business.

ISIS' monthly revenue has fallen by 30% in recent months, according to information and analysis firm IHS. In March, the group collected only $56 million, a significant reduction from estimated monthly revenue of $80 million in mid-2105.

The decline in revenue is now seriously constraining the ISIS' ability to fund its reign of terror, according to the U.S. State Department and several scholars who track the group.

Already, ISIS has been forced to cut its fighters' salaries in half. Additional pressure is now forcing ISIS to ration medical supplies, according to counterterrorism analysts.

It's a major change for a group that became the world's richest terrorist organization by taxing the people on its territory, selling oil on the black market, smuggling stolen archeological artifacts, and demanding kidnapping ransoms.

CNN last month reported that ISIS was struggling financially, but it was unclear to what extent. Now there's evidence ISIS is taking major steps to compensate.

Lost land, new taxes

ISIS has ceded 22% of its territory to Kurdish, Syrian and Iraqi forces over the past 15 months, according to IHS. During that time, the population living under ISIS rule has fallen from 9 million to 6 million.

"There are fewer people and business activities to tax. The same applies to properties and land to confiscate," said Columb Strack, a senior analyst at IHS.

Tax revenue, which provides roughly half of the group's funding, has fallen by 23% since last summer, IHS reports. As a result, ISIS is desperately finding new ways to squeeze money out of the people still living in its territory.

We already know the group imposes a 10% income tax, 15% business tax, 2% sales tax and 5% fee on cash withdrawals from banks. There's also a mafia-like protection insurance, called jizyah, that Christians are forced to pay.

New rules require anyone who repairs a broken satellite dish to pay ISIS a special fee. People must also pay a religious fine if they are unable to accurately answer questions about the Quran, IHS analysts said.

ISIS is so strapped for cash it has also started giving people accused of violating Sharia law the option of paying a cash fine instead of suffering severe physical punishments, IHS reports.

"This new stance represents a strong indicator of the financial difficulties the group is going through," Ludovico Carlino, senior analyst at IHS, wrote in his latest report.

More air strikes, less ISIS oil

The U.S.-led coalition bombing campaign is also hurting ISIS' oil business, according to IHS.

Revenue from crude sales is down 26% from last year, IHS reports. And daily production in the region has dropped from 33,000 barrels last summer to 21,000 barrels.

Crude oil sales account for 42% of ISIS' revenue, but experts said the group has not raised the price it charges smugglers at the wellhead.

Carlino said ISIS cares more about quick sales -- even if that means lower revenue. Plus, many people inside its territory -- who buy ISIS oil -- are running short of spending money.

The terrorist group is also having trouble recruiting engineers and repair its oil and gas equipment, according to Jean-Charles Brisard, chairman of the Center for the Analysis of Terrorism.

"These reasons also explain why ISIS is dedicating large resources to expand itself, notably in Libya," Brisard said.

Even though Libya is 1,400 miles southwest of the ISIS stronghold between Iraq and Syria, experts say the terrorist group is now shifting resources to take advantage of poorly policed coastlines in the region.

The new potential ISIS business there? Drugs.

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