Can bombing oil infrastructure really damage IS?

The oil infrastructure in the territory controlled by the Islamic state is a frequent target of air raids of both the coalition led by the U.S. and Russia. While oil is an important source of revenue for the Islamic state, it is probably not the most important one.

Extensive operations of the Islamic state, including the attacks in Paris, would be hard to execute if the organisation did not have a large amount of finance. With the growing fear of its activities, there is also increased attention paid to the means of the IS's funding and how to at least partially cut off their sources. Perhaps the most discussed source of the IS's funding - though not the only one - is the oil extraction. Foreign forces fighting the IS recently intensified military operations that are supposed to stop the market with oil extracted in the territories of the IS. This concerns the US and its allies, as well as Russia. The question is whether their intervention can inflict a mortal wound to the IS's funding.

The Islamic State currently controls more than a half of the Syrian oil production and a smaller part of the Iraqi one. Most of the raw material is extracted and sold to small local refineries and from there to the local market, alternatively to territories controlled by the rebels. At the same time, there is also a network of middlemen and smugglers who sell the oil in foreign countries or even to the enemies of the IS, such as the Syrian government or the Kurdish Regional Government. Russia has repeatedly claimed that a significant part of the oil sold by the IS travels to Turkey. In December 2015 the Financial Times estimated that the IS makes more than 1 million dollars per day from oil production. However, oil extraction in the two largest oil fields dropped by 30% as a result of air raids. A number of the IS's revenues is evidenced by the fact that their fighters are the best paid in the region. The revenues do not solely come from the oil extraction.

The Islamic State gains its funds through a wide range of activities and oil production is, according to the New York Times, the third most profitable. The IS makes more money by extortion of the population, tax collection and robbing the banks in the territories the IS controls. The aforementioned activities in 2014 earned the IS $600 million dollars only in Iraq while oil production only $100 million dollars. Other sources of revenue are e.g. ransom money for captured foreigners or selling off cultural monuments and artefacts. However, it needs to be stated that estimated revenues of the Islamic state may differ depending on the source of information. Although the main spotlight is on crude oil, preventing its treatment process and distribution will not entirely cut off the IS from its finances. It could, however, result in a shortage of fuels or their price increase for both the IS and the territories controlled by it.

Bombing oil wells and infrastructure can cause numerous complications that affect more local people than the Islamic State itself. In the past, this prevented the coalition led by the US from more extensive attacks and damage caused to oil infrastructure was often limited and easily remedied. Oil infrastructure is often operated by private entities and a direct bombing of oil wells would result in widespread environmental damage. Nonetheless, it appears that the original approach of the United States changed with the Operation Tidal Wave II. Russia, which came into conflict at the end of September, does not emphasise the issue of civilians. Almost from the beginning of its involvement Russia aims some of its attacks on the oil industry. However, it is estimated that only small part of Russian air raids is directed on the IS targets.

The revenues of the Islamic State is, therefore, a complicated and often discussed problem, but significant in a different way than it might seem. Crude oil is probably more important for the economy and general running of the territories controlled by the IS than for its funding. This becomes much more of an ethical issue: how to defeat the IS and at the same time protect the local population, which takes no direct part in their activities. Currently, the US, Russia and other participants attack oil infrastructure but it is unlikely it will lead to a quick victory. On the other hand, it is a controversial issue and due to the chaos of the situation, it is hard to successfully predict the outcome of these operations.

About author: Tereza Krásová


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