Where does ISIS get its money?

Where does ISIS get its money

Where does ISIS get its money? That doesn’t seem like a personal finance title at all!  

Well you’d be almost right if that’s what you thought when you read the title of this article. Where does ISIS get its money is a topic that has been touched on by some news outlets and various pages across the internet.  I recently listened to a podcast by Planet Money titled Auditing ISIS.  At first when google play suggested it to me I thought maybe I wasn’t reading the title correctly, but it turns out at 31 years old I can actually read; writing is a bit more difficult, but that’s what this blog is for! Right?

This podcast was very interesting and I felt the need to write about it mostly because I was curious about the percentages that they gave for their military spending compared to countries and municipalities. I highly recommend you guys check it out because there’s a few great anecdotes in the podcast from a man who lived in that region that are worth the insight alone.  But if you’re not interested in listening to the podcast, you can check out a break down of what appears to be the same document on this website.

Alright Let’s get into it!

So where does ISIS get its money? According to the podcast they’re bringing in about $8.44 million in this region, which has been an important figurehead in Syria’s oil and gas economy. Here’s how it breaks down:

Where does ISIS get its money - revenue

Now for some reason I just assumed ALL of their money was coming from oil and gas. It never really occurred to me that ISIS is taking over regions and actually running them and providing somewhat of a service in the form of power, and well actually it’s mostly just electricity on the chart and that’s really only for a few hours a day at best. The podcast did mention water that wasn’t safe to drink but I don’t imagine they’re getting much for that.

I also never really considered taxes to be an option either but it makes sense. I’m pretty sure it’s more bullying than actual taxes, because when you demand money from people and call it taxes but threaten to kill them, it’s not taxes…that’s extortion but who am I to argue how to run a province?  If I lived there I don’t think I’d be spending much time trying to reduce my taxes like I am here in Canada through fear for my life.

So I guess to answer where does ISIS get its money we’re looking at: $2,335,000 from Oil and Gas, which is sold on the black market after it’s transported out of the country. $331,000 from “electricity”. I’m assuming that is mostly for any larger businesses that might still exist in the area like farming or something as the podcast mentioned there was only power for a few hours in people’s homes. $1,998,000 through extortion…I mean “taxes”. And finally the most surprising and probably least sustainable income $3,774,000 from confiscations.  Which blows my mind, on the article there is a breakdown of these confiscations and it’s everything from land to vehicles to livestock.  I’m curious if the dollar value attributed to these is the sale price they’re getting or if it’s a value they’ve assigned and they pay some of their soldiers in goods rather than cash? Who knows! I’d love to have more information on the confiscations so if anyone came across anything else online please let me know.

Oh and if anyone is wondering why I think it’s not sustainable, it’s because you can only steal so much until there’s nothing left to steal…

So where does ISIS spend its money?

According to these documents ISIS’ budget for this region is $5,587,000.  Which is a large monthly budget but what’s even more impressive is that they have a surplus of $3 million. I guess they realize that the $3.5 million in pillaging isn’t sustainable and are budgeting for that?

What made me most curious was the percentage of the budget spent on their military. I really wanted to see how this compared to other forces.  Unfortunately I cannot find a lot of information on military spending compared to a national budget. Most stats are given as a percentage of a country’s gross domestic product.  

But according to Wikipedia for the USA  “Including non-DOD expenditures, military spending was approximately 28–38% of budgeted expenditures”. So when compared to the largest military spenders on the planet, ISIS is a lot higher at 63.4%.  I have no evidence to support my theory other than the table below, but based on the percentages spent by GDP I would guess that Saudi Arabia and Iraq would both have high percentage numbers based on their budgets.

Where does ISIS get its money - GDP

Overall I think one of the best parts of the Planet Money podcast is the stories from the man who lived in that region. It gave interesting insight as to what the ISIS soldiers are like.  Apparently they’re spending all of their money on fancy cars, like land rovers and Lamborghinis and western products like AXE body spray and snacks.  Pretty much acting like a bunch of immature teenage boys if you gave them all the money they think they need in life. Basically ISIS seems to be a group of Dan Bilzerians(pictured below if you don’t know him) except swap the women for more goats and I feel like it’s a fairly accurate portrayal.

Where does ISIS get its money

Now just replace the women with more goats and you have an idea who ISIS fighters are…Goat F#$%ers

 

So what can we learn from ISIS?

Now I’m sure all of you reading this aren’t big ISIS supporters and would probably just like to see them eliminated. You’re not alone, but as barbaric as they are they seem to have some financial sense that we could learn from. Here’s the two main financial points I think you should take away from this:

  1. Diversify your income – Let’s step back to the initial thought you had when coming to this post; Where does ISIS get its money? They’re bringing in money from 4 different sources in this region, some are sustainable, some not so much. This helps ISIS in a similar way it would help us.  Let’s take the oil and gas revenues for example.  A few years ago this probably was much higher for them due to the world markets, since the crash they have been able to continue a surplus on their budget by having alternative means. For you and I, we need to diversify away from our day jobs so if we’re ever laid off or fired, we can continue our life style without many(hopefully none) adjustments.Another bonus for us on alternative income sources is that they could possibly have tax benefits if they’re considered a small business or if you have income properties you can benefit from these deductions.
  2. Keep  your spending within your means – ISIS is running a $3 million surplus. That’s saving about 35% of their income. If you could do that with your day job you could retire in 25 years according to Mr Money Mustache’s early retirement calculations. That’s a whole lot less working than most!

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