Empire of Fear: Inside the Islamic State (2015)
Car bombs and other expenses
You may imagine that a car bomb is a poor man’s WMD, perfect for terrorists, because an old car with a tank full of petrol sounds like it could already be a bomb of sorts in the wrong hands, but nothing could be further from the truth. In reality, a car bomb is an expensive weapon and some experts believe you need the resources of a state to mass-produce them, particularly in the way ISIS was able to, particularly during 2013, the year which saw a strong ISIS resurgence especially in the Iraqi capital.
In late 2013, I was being driven around Baghdad with a security consultant who told me:
You might hear on the news that a vehicle bomb containing fifty kilos of C4 plastic explosive went off or even a hundred kilos of C4. But people don’t realize that just one kilo of this C4 explosive could cost you two thousand to three thousand dollars. So if you do the calculation for fifty or a hundred kilos, you realize that a huge amount of money is going on one vehicle bomb. Sometimes you can have seventeen going off in one day, or twenty or thirty. So it’s running into millions of dollars. I think it means it’s not just an organization; there are countries funding them.1
According to the 2013 edition of Al-Naba, the ISIS annual report, the group carried out a total of 615 vehicle bombings, including 78 suicide attacks. The bill just for those assaults alone would total approximately $61.5 million, based on the security consultant’s lower-end calculation for both the amount used and the supposed lower-end black-market cost of fifty kilos at $2,000 per kilo. Alongside that, the group laid claim to a further 4,639 bombings for 2013, including 4,465 improvised explosive devices, 160 suicide-vest attacks and 14 MCBIEDs, or motorcycle-borne improvised explosive devices.2 It begs the question: how could Abu Bakr al-Baghdadi afford all this horror?
Relatively early in its history, it appeared that the group was surviving on its own financing independently of al-Qaeda. In his July 2005 letter admonishing Abu Musab al-Zarqawi for his excesses,3 the then deputy al-Qaeda leader Ayman al-Zawahiri also begged his supposed subordinate for funds. Al-Qaeda’s money problems had become acute, particularly following the Americans’ capture of the organization’s number three and suspected head of finance, Abu Faraj al-Libbi.4 Zawahiri wrote:
The brothers informed me that you suggested to them sending some assistance. Our situation since Abu al-Faraj is good by the grace of God but many lines [of finance] have been cut off. Because of this, we need a payment while new lines are being opened. So if you are capable of sending a payment of approximately one hundred thousand [dollars], we’ll be very grateful to you.5
Zarqawi may have received money from outside sources, possibly countries or organizations, but he was also a hardened criminal and his organization became wealthy by engaging in a number of successful criminal activities. For example in Anbar, Zarqawi and Abu Omar al-Baghdadi muscled in on the sheikhs’ various smuggling rackets.6 A US intelligence report leaked to the New York Times in November 2006 estimated that insurgents in Iraq were raising between $70 million and $200 million a year from illegal activities. Around $25 million to $100 million came from oil smuggling, aided by ‘corrupt and complicit’ Iraqi individuals. As much as $36 million was raised through ransoms paid for kidnap victims. ‘If accurate,’ the report said, then the estimates showed that ‘these sources of terrorist and insurgent finance within Iraq – independent of foreign sources – are currently sufficient to sustain the group’s existence and operation.’ It went on, ‘In fact, if recent revenue and expense estimates are correct, terrorist and insurgent groups in Iraq may have surplus funds with which to support other terrorist organizations outside of Iraq.’7 Early in 2006, the oil ministry in Baghdad had estimated that between ten and thirty percent of Iraq’s annual $4 billion fuel imports was smuggled back out of the country for resale. At that time, the Iraqi finance minister estimated that half of all the smuggling profits were going to the insurgents, including Zarqawi and Abu Omar al-Baghdadi.8
The anonymous source Wikibaghdady, who intelligence services believe has been leaking information from within Islamic State’s leadership, revealed how the group under Baghdadi’s leadership raised money to maintain its terror campaign in the years before the declaration of the caliphate in four ways, mainly through extortion, ‘collecting funds from the Shia, Christians and other minorities’ and ‘gaining control over the oil fields and energy sources and government funding’. Any company in receipt of a government contract should be blackmailed. ‘If the owner of the company doesn’t agree, then he/she should be threatened to be killed or destroy the company,’ reported Wikibaghdady. The last source of revenue mentioned was armed checkpoints that would take up to two hundred dollars at a time from drivers.9 Wikibaghdady’s revelations about the group’s fund raising ring true. Over the years, the group had lived extremely well ‘off the land’ through extortion and blackmail. At heart it was a criminal organization, which, like organized crime syndicates, raised millions through protection rackets. Often, as in Raqqa, it would describe this money as jizya when demanded from Christians,10 the word applied to the tax that the Prophet Muhammad asked of non-Muslim communities in return for protection back in the seventh century.11 Other ‘taxes’ were demanded of businesses from garages to telecommunications companies. The deal was always the same: you pay, or you die.
Wikibaghdady revealed, ‘The State started gaining a lot of money and this led to an increase in the salaries and funds to carry out military operations. This also led to more people wanting to join the State especially when they found out how much some members were getting paid.’12
It was clear that, particularly from 2012 onwards, a resurgent Islamic State of Iraq had growing access to resources and funds as it increased its terror. During 2012, it claimed to have carried out 3,156 bombings, including 352 car bombs.13 In 2013, the total number of bombings claimed was 5,254, including 615 car bombs.14 The attacks were part of two distinct campaigns launched by Abu Bakr al-Baghdadi. The first campaign, ‘Breaking the Walls’, was targeted against the Shia and aimed at augmenting Baghdadi’s ranks by breaking into prisons to free jihadis; the second campaign, ‘Soldiers Harvest’, was a classic exercise in the management of savagery, striking at important government infrastructure, security targets and naturally, of course, the Shia.
The ‘Breaking the Walls’ campaign began on 21 July 2012 and consisted of twenty-four major multiple-car-bomb ‘spectaculars’ and no fewer than eight prison break-ins.15 The campaign culminated on 21 July 2013 in the astonishing success of Baghdadi’s Abu Ghraib operation, which led to the escape of five hundred or more prisoners.16 The assault involved suicide bombers, car bombs and rocket-propelled grenades. The ministry of justice later confirmed that sixty-eight Iraqi soldiers and security officers had died in the break-in.17 By July 2013, the number of violent deaths had reached one thousand per month, for the first time since April 2008.18
Baghdadi announced the start of ‘Soldiers Harvest’ with a ‘spectacular’ of fifteen car bombings on 29 July 2013 that targeted a hospital, a restaurant and markets. Ten of the bombings were in Baghdad, mainly in Shia areas, killing more than fifty people and injuring another hundred.19 An authoritative investigation by a former US army intelligence official called Jessica D. Lewis, for the think-tank the Institute for the Study of War, observed that the group’s campaign ‘showcases the depth of a multi-echelon military organization with well-established command and control that can design and implement coordinated attacks across Iraq’.
Lewis also said ominously, ‘This organization enjoys unconstrained communication among teams as well as unconstrained access to human capacity and materiel.’20 The 29 June spectacular to mark the start of ‘Soldiers Harvest’ may have cost Baghdadi between $3 million and $4.5 million.
Terrorism finance has always been a murky business, often involving secretive individuals, charities and intelligence agencies. On top of that, funds can often be laundered through different countries and via a wide variety of different methods, including exchange companies.21 Few individuals and bodies ever own up to funding terrorism, and the merest hint of support for terrorist organizations can lead to economic sanctions, the closing or freezing of bank accounts and imprisonment. That is why there has been so much mystery and speculation about the source of any monies ISIS received outside its own criminal enterprises.
The CIA gained a significant insight into ISIS wealth following the discovery in June 2014 of 160 USB memory sticks belonging to a senior ISIS commander called Abdulrahman al-Bilawi. Bilawi, then head of Baghdadi’s military council, had been betrayed by a senior ISIS courier called Abu Hajjar and killed in an operation not long afterwards. The flash drives discovered at Bilawi’s hideout near Mosul provided a treasure trove of information about the group’s finances, disclosing cash and assets worth approximately $875 million.22 However, that was before the capture of Mosul, which took place just a few days following Bilawi’s death. On 11 June 2014, it was reported that ISIS had taken some $429 million from the central bank in Mosul, which would have pushed its net worth to more than $1.3 billion.23 Later Iraqi bankers and officials denied that the jihadis had stolen so much from the bank in Mosul,24 but, thanks to a range of criminal activities, the group was unquestionably wealthy. Later it would even diversify into the sale of stolen antiquities, or at least those it had not destroyed.
There has been a degree of mythologizing around the group’s wealth, although its net worth was estimated by Forbes Israel in October 2014 at around $2 billion, including the $1 million to $3 million a day it was said to earn from selling crude oil on the black market. The sum of $2 billion would make IS easily the richest terror organization in the world. Second-placed Hamas, with a reputed $1 billion, comes a long way behind.25
Wikibaghdady revealed how Baghdadi and Haji Bakr had gone about revolutionizing the group’s finances, but aside from its own criminal activities, who or what was helping to fund the group in the decade before the fall of Mosul? Or was it self-financing and self-supporting? Individuals and countries have all denied helping ISIS, for obvious reasons, but many observers find it hard to believe that the group has been totally self-sufficient.
In February and March 2014, Nouri al-Maliki explicitly accused Saudi Arabia and Qatar of funding and supporting ISIS. In a speech he accused both countries of recruiting fighters in Fallujah, and in an interview with France 24 TV on 8 March 2014, the Iraqi prime minister said, ‘I accuse them [Saudi Arabia and Qatar] of inciting and encouraging the terrorist movements. I accuse them of supporting them politically and in the media and by buying weapons for them.’26
Not only did Saudi Arabia vehemently deny any support for ISIS, its embassy in London also denied any links between the group and the Wahhabis, the Islamist sect which gives the monarchy its authority. In a statement issued to the London-based Saudi daily Asharq al-Awsat in August 2014, an embassy spokesman said, ‘Saudi Arabia wants the defeat and destruction of ISIS…There have been suggestions that ISIS followers are members of some sort of Wahhabi absolutist sect. Indeed, certain UK media outlets often refer to Muslims within Saudi Arabia as Wahhabists. The unsubstantiated use of this inverted connotation must end because it is untrue.’27 The Wahhabis may be Islamist extremists and share many of the intolerant beliefs of Islamic State, but they have never supported the idea of a caliphate and indeed rebelled against the authority of the Ottoman sultan, who was also the caliph.28
There may not be concrete proof of the Saudis’ direct funding of ISIS but the US certainly believed there was credible evidence of terrorism funding emanating from Saudi Arabia and that this money was going to Sunni terrorists. In September 2007, Stuart Levey, then the US treasury department undersecretary tasked with tracking terror financing, said, ‘If I could somehow snap my fingers and cut the funding off from one country, it would be Saudi Arabia.’29 The Saudi government has always denied direct funding of ISIS in Syria, dismissing the claims of an unnamed official from Qatar who once told The Atlantic magazine in 2014, ‘ISIS has been a Saudi project.’30 The key phrase when it comes to funding terrorists is ‘emanating from’, which suggests funding is coming from individuals and charities, and that it is not necessarily authorized by the government. ISIS has declared that it wants Saudi Arabia as part of its caliphate and Baghdadi has even appointed wali (governors) for the holy Saudi cities of Mecca and Medina.31 The ‘caliph’ himself has denied the legitimacy of the Saudi royal family, referring to it as ‘the serpent’s head’ and ‘the stronghold of the disease’.32 Baghdadi has declared his intention to destabilise Saudi Arabia and on 23 May 2015, IS claimed responsibility for a suicide attack on a mosque in the Kingdom’s predominantly Shia eastern city of Qatif, killing twenty-one people, and even identified the bomber as one Abu Amer al-Najdi. It appeared a classic management of savagery technique to foment sectarian strife between Saudi Arabia’s majority Sunnis and its Shia minority, which makes up just ten percent of the population.33
Saudi Arabia followed events in post-invasion Iraq keenly, which is understandable as the two countries share a border of approximately five hundred miles and Saddam had presented a real security threat to the kingdom for years. The kingdom had felt deeply threatened by Saddam’s invasion of Kuwait in 1990. The Saudis had allowed the US to station thousands of troops prior to the conflict. During the fighting they had seen the Iraqis attempt to take one of their towns, Khafji, on the border with Kuwait and were forced into a battle to save it. As a predominantly Sunni country, Saudi Arabia has always taken a keen interest in the regional ambitions of Iran. Relations between the two countries have often been strained and it is clear that the Saudi government grew increasingly alarmed at the growing Iranian influence in Iraq.
According to a secret US cable on 2 January 2006, at a meeting in his capital, Riyadh, Saudi King Abdullah had bitterly complained that whereas in the past the US, Saudi Arabia and Saddam Hussein had agreed ‘on the need to contain Iran’, US policy had handed Iraq to Iran as a ‘gift on a golden platter’.34 Later in 2006, the Saudis offered to broker a meeting between the US and ‘disaffected’ Iraqi Sunni leaders. The American ambassador to Iraq told the Saudis that such meetings would be possible ‘provided the Iraqis involved were not affiliated with terrorists like Zarqawi or with Saddam’. According to the secret cable, the Saudis ‘laughed’ at such a suggestion, claiming that ‘Saddam’s people are our enemies and we are looking for Zarqawi’.35
Professor Madawi al-Rasheed is a prominent Saudi Arabian scholar and historian of her native country, and is based at King’s College London. She said:
The Saudi position on the American-led invasion of Iraq was contradictory. Saudi Arabia wanted to see Saddam Hussein go because it saw him as a regional threat, especially after he invaded Kuwait in 1990. But at the same time Saudi Arabia did not anticipate that the American invasion would actually lead to the expansion of Iranian influence. Saudi Arabia rejoiced over the overthrow of Saddam but it did not see what was going to come. As a result, Saudi Arabia had to live with the aftermath and manage the outcome of that American invasion.
First they refused to readmit Iraq into the Arab community or the Arab League. They immediately saw the appointment of a Shia majority government as a threat but also Iran had an incredible opportunity after the removal of Saddam in the sense that it initially had a huge number of Iraqi exiles who were expelled by Saddam in the 1980s. At the same time it had religious links with Iraq and Iraqi cities and it immediately penetrated Iraqi society through religious and political channels.
Saudi Arabia saw that as a problem, and from that moment the regional rivalry between Iran and Saudi Arabia started to take place in Iraq and later it spilled over into Syria and Lebanon, and later into Yemen.36
I asked Professor Rasheed whether she thought that either Saudi Arabia or entities and organizations from there had funded the jihadis from the time of Zarqawi onwards. She said:
The funding is a very difficult thing. We know that after 2003 there were quite a lot of calls in Saudi Arabia to help Iraqi refugees who were mainly Sunnis who fled certain areas of Baghdad and Iraq in general and moved to Syria and Jordan.
In terms of funding, I think governments know what and who is funding. As an outside observer I cannot say there was Saudi funding. But I do know there were campaigns to raise money and when we are talking about funding, we have to distinguish between state actors and non-state actors. Also, in a country like Saudi Arabia, the line between the two is very blurred. So in an opaque situation like Saudi Arabia, even that can be very difficult when we don’t know who is with an NGO [non-governmental organization] and who isn’t.
Of course, Saudi nationals have played a prominent role in terrorism in Iraq and elsewhere. Osama bin Laden was Saudi, as were fifteen of the nineteen hijackers participating in the 9/11 attacks. The Islamic State of Iraq records discovered in 200737 revealed that Saudi Arabia contributed the largest number of jihadis by far to the group, around forty-one percent of the total from August 2006 onwards.38 Until Baghdadi made clear his threat to Saudi Arabia, there was support for ISIS in the kingdom and the group actively targeted Saudis with fundraising campaigns.39 The anonymous source Wikibaghdady revealed that Baghdadi had deployed a media team to Saudi Arabia to promote ISIS and defend its reputation. Another team of Saudi media operatives would operate inside Syria.40 Wikibaghdady also disclosed the identity of another close adviser to Baghdadi, a Saudi officer called Bandar bin Shaalan, who was asked to be the representative of the ‘state’ in Saudi Arabia. Wikibaghdady added, ‘Bandar has had a great relationship with Abu Bakr al-Baghdadi.’ Bin Shaalan also introduced Baghdadi to another Saudi, called al-Abu Bakr al-Qahtani, who later became head of Baghdadi’s religious department.41 Qahtani had links to what are described as ‘religious leaders from Saudi Arabia’,42 although there is no evidence that this is a reference to the wealthy Wahhabis. ‘Al-Qahtani was also responsible for bringing religious leaders from Saudi Arabia,’ said Wikibaghdady, ‘especially the ones who truly cared about Syria and are against al-Zawahiri [Ayman al-Zawahiri, leader of al-Qaeda]’.43
Yet another secret US cable in late 2009 made clear that, as far as the Obama White House was concerned, donors in Saudi Arabia constituted ‘the most significant source of funding to Sunni terrorist groups worldwide’.44 By then, of course, Islamic State of Iraq, as ISIS was known then, was regarded by the Pentagon as somewhat of a busted flush, or was rather lazily lumped in with al-Qaeda. A cable authorized by the then secretary of state, Hillary Clinton, also said rather damningly, ‘While the Kingdom of Saudi Arabia takes seriously the threat of terrorism within Saudi Arabia, it has been an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority.’
In 2008, the United States went as far as to deploy a treasury official to Riyadh specifically to help the Saudis deal with terrorism funding. ‘Despite this presence more needs to be done,’ the secret memo continued. ‘Saudi Arabia remains a critical financial support base for al-Qaeda, the Taliban…and other terrorist groups including Hamas, which probably raise millions of dollars annually from Saudi sources often during Hajj and Ramadan.’45
The annual Hajj pilgrimage was a particular problem for the Saudis as many pilgrims arrived in Mecca with large amounts of cash. The Saudis had passed a law requiring arriving travellers to declare cash above a certain level, but the Hajj remained ‘a vacuum in our security’, as they admitted to the US.46 However, only in March 2014 did Saudi Arabia formally designate ISIS as a terrorist entity, along with al-Nusra Front and Hezbollah.47
Social media funding has also presented problems for Saudi officials in tracing and blocking private donations. Furthermore, Saudi donors are encouraged to funnel any monies through Kuwait, long considered to be ‘one of the most permissive terrorism environments in the gulf’.48 Two other predominantly Sunni countries, Turkey and Qatar, have also been accused of supporting ISIS. Again Turkey, Qatar and Kuwait have all denied the allegations.
I went through the list of prime terror-funding suspects with Dr Afzal Ashraf, a consultant fellow and leading terrorism expert with the influential defence think-tank the Royal United Services Institute. He said:
I haven’t come across any evidence of these countries’ direct involvement. There are a lot of claims but that region is full of claims and counterclaims and rumours.
There is no doubt that al-Qaeda certainly and possibly ISIS gained some private support from individuals in those countries and from countries beyond. There are some people who support al-Qaeda to varying degrees in all of these countries. Very few are hard-core supporters and would actually pay al-Qaeda. Only rich individuals would do so. There are conspiracy theories, with some people even thinking al-Qaeda for example was created by the West.
I’m not sure at all, though, about state support. I certainly cannot imagine that the countries that you have listed, Saudi Arabia, Qatar and Kuwait, would dare to support al-Qaeda after 9/11. They just would not because they are totally beholden to the US. They know the price of funding and supporting any organization that is a declared enemy of the US. So those leaders would never ever allow that to happen knowingly.49
Former US Ambassador to Iraq, James Jeffrey, agreed with Dr Ashraf. ‘We found no evidence of direct funding for ISIS,’ he said. ‘We had concerns about individual citizens but that’s really hard to crack down. Even we would have a really difficult time cracking down on it.’50 However, allegations of Qatari meddling in the internal affairs of its neighbours are rife throughout the region. In the summer of 2013, Libyan army generals, including the acting chief of the general staff, spoke angrily to me of their suspicion that Qatar was helping to destabilize the country by funding and supporting certain militias, notably the powerful Libya Dawn group.51 In May 2013, protestors in the Libyan capital, Tripoli, protested against Qatari interference and even burned the Qatari flag.52
In August 2014, the German development minister, Gerd Müller, went as far as accusing Qatar of past funding of ISIS. ‘You have to ask who is arming, who is financing ISIS troops,’ Müller said. ‘The key word here is Qatar.’53The German government later distanced itself from Müller’s remarks.54 Again there is no evidence of official funding, but the suspicions of Qatari involvement in both ISIS and al-Nusra Front have remained.
Long before the fall of Mosul another Gulf state, Kuwait, had emerged as a financing and organization centre for charities and individuals supporting the many groups fighting Syria’s President Assad. In December 2013, an authoritative report by the Brookings Institution think-tank said, ‘These donors have taken advantage of Kuwait’s unique freedom of association and its relatively weak financial rules to channel money to some of the estimated thousand rebel groups now fighting against Syrian President Bashar al-Asad [sic].’55 In mid-2013, Kuwait enacted laws that for the first time criminalized terrorist financing. But according to the Brookings Institute, ‘much work is needed to fully implement the new law and Kuwait’s unique freedoms of assembly and association make it difficult to halt religious charities’ activities’.56
Turkey has also been accused of helping to fund and supply ISIS, again, allegedly, as part of the bulwark against Iranian dominance of the Middle East. The country’s hard-nosed president, Recep Tayyip Erdoğan, formed an alliance with Saudi Arabia to confront Iran and its ‘expansionist and sectarian attitude’.57 Professor Yasin Aktay is a leading member of Turkey’s ruling Justice and Development Party (AKP) and sits on its ruling executive.58 When we met in London, I asked Professor Aktay whether Turkey had been helping ISIS. He said:
The claim is completely ridiculous. Logically, it is impossible for us to support ISIS because ISIS is very dangerous for Turkey and it would be like playing with a bomb. Turkey has never approached ISIS and helped it.
The criticism of Turkey comes from within Turkey. There is a very dangerous political interplay in Turkey. Our political opponents have tried to destroy our party’s image. Turkey has very openly and obviously and deliberately supported the Free Syrian Army and the FSA is the only legitimate ally we have in Syria. Britain has also supported the FSA. ISIS has been the enemy of the Free Syrian Army.
What we in Turkey understand is that ISIS emerged out of the very dangerous discrimination against the Sunni people in Iraq. After America withdrew from Iraq they left the government to the Shia group and this Shia group was playing with Iran. The Nouri al-Maliki government very dangerously and violently discriminated against the Sunni and tried to make Iraq a Shia state, and there were also many murders and massacres of Sunnis. This created too much upset among the Sunnis and out of this emerged a mood of revenge. This created two enemies as far as the Sunnis were concerned: the US and the West, and the Shia. ISIS has nothing to do with Islam; it is all to do with revenge against the Shia. That is not to legitimize it but to try and understand it.59
Islamic State became financially independent thanks to theft, extortion and selling oil on the black market. Snarling ferociously, the group went on to bite the hands of those countries accused of feeding and sustaining it with fighters, arms and money. According to Baghdadi, all of the countries mentioned as his secret state backers must, in any event, be absorbed into his caliphate. None of Iraq’s neighbours in the Middle East have ever admitted culpability for the rise of ISIS nor are they ever likely to. What is certain is that the ISIS monster emerged from a poisonous witches’ brew of sectarianism, proxy wars and competing national and international interests. In the past, the law of unintended consequences led the US and Saudi Arabia to fund the Mujahidin in the fight against the Soviet Union, and that led ultimately to the creation of both the Taliban and al-Qaeda. If countries such as Saudi Arabia or Kuwait used ISIS, then ISIS used them right back in return. They say the path to Hell is paved with good intentions, but it can be paved with bad intentions too.