ISIS Political Economy: Financing a Terror State

Journal of Money Laundering Control, Vol. 19, Iss 2, pp. 189-207, 2016

20 Pages Posted: 23 May 2016

See all articles by Dimitrios Stergiou

Dimitrios Stergiou

University of Peloponnese, Department of Economics

Date Written: May 18, 2016


In this paper I attempt to highlight the financial aspects of the Islamic State (ISIS) phenomenon. A ‘sui generis’ State Scale Entity, from an Al-Qaeda branch, evolved according to David Cohen the US Treasury Undersecretary to ‘the best funded terrorist organization we’ve confronted’. Primarily self-funded, beginning June 2015 occupied half of the territory of Syrak (Syria-Iraq) attempting to revive the ‘Caliphate’ that historically ended with the dissolution of the Ottoman Empire in the 1920’s. Its sources of finance include first and foremost the exploitation of the land and the population it controls. Oil, illegal ‘taxation’, extorting and smuggling from passports to slaves, are already known as terrorism financing methods, but it’s the first time in modern history that are being used in terrorist state-building, with state-like apparatus to provide for its ‘citizens’ from sewer service to widow recompensation. In addition the extensive use of cyberspace via a network of media centers, twitter accounts, an online magazine and even a mobile phone application, is a force-multiplier of the groups efforts. Controversial plans have also been announced for the minding of a currency ‘dedicated to God’ to offer ‘true Muslims freedom from the satanic financial system’. The ‘defeat and degrade’ strategy of the rest of the world includes besides ideological, military and security counter-measures, cutting off ISIS access to financing by cutting its access to revenues, restricting access to the international financial system and targeted sanctions against ISIS leadership and facilitators. The contribution of this paper will be the comprehensive presentation of the above mentioned economic facets of this first modern endeavor for a Terror-State.

Keywords: Geo-politics, Geo-economics, Defence and Security, Terrorism Financing

JEL Classification: D740, F51, H56

Suggested Citation

Stergiou, Dimitrios, ISIS Political Economy: Financing a Terror State (May 18, 2016). Journal of Money Laundering Control, Vol. 19, Iss 2, pp. 189-207, 2016, Available at SSRN:

Dimitrios Stergiou (Contact Author)

University of Peloponnese, Department of Economics ( email )

Tripolis, 22100

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