Like other Sunni extremist terror organisations, Daesh initially received much of its funding from wealthy Arab donors in countries such as Saudi Arabia and Qatar. As the jihadi group grew, its members increasingly turned to various forms of organised crime more traditionally associated with mafia-like clans to keep the funds flowing in.
To begin with, this activity was largely limited to the considerable swathes of Iraq and Syria Daesh grabbed during its rapid ascent in 2014. The group made millions of dollars from bank heists, protection rackets and oil smuggling in the territory it controlled, helping it pay for weapons, fighters’ wages, overseas terror attacks, slick propaganda videos and public services in the areas it seized.
Now well and truly on the back foot in its Syrian and Iraqi strongholds and less able to monetise the resources it once controlled in those countries, the group is becoming increasingly reliant on the funds it receives from illegal activities carried out elsewhere. While Daesh’s earning power is unlikely to return to what it was in its glory days immediately after it took Raqqa and Mosul, its diverse interests and links with traditional organised crime groups mean there’s little chance of it going broke any time soon.
Despite its hairline views on the consumption of anything more mind altering than coffee, Daesh has few qualms about profiting from drug production and trafficking. At the height of its powers, the group was estimated to be making $1 billion (€947 million) annually from the smuggling of Afghan heroin through the territories it controlled. In March 2015, the Russian Federal Drug Control Service (FSKN) estimated that more than half of all the heroin consumed in Europe came from Daesh.
All but defeated in Iraq and Syria, the group’s ability to profit from the flow of heroin through these countries is now greatly diminished, but that doesn’t mean making money from the drugs trade is no longer an option for Daesh. Last April, Italian anti-mafia chief Franco Roberti said police had found evidence the jihadi group had teamed up with Italian crime gangs to smuggle cannabis resin through Libya. In comments reported by Reuters, Roberti said decriminalising cannabis would have a major impact on terrorist organisations such as Daesh and organised crime groups.
In January last year, the UK’s Sunday People reported that Daesh had seized control of an Albanian cannabis farm worth an estimated $4 billion. The group was said to be using private jets to ship drugs from the site to Italy, where it would be sold on by local mafia organisations.
Daesh and other jihadi groups bear a significant level of responsibility for the migrant crisis that continues to grip Europe. Ironically, the organisation has been able to profit handsomely from the brutal human trafficking trade that has flourished as hundreds of thousands of people leave their homes in the Middle East and parts of Africa in search of a better life in Europe.
In May 2015, European border agency Frontex estimated that Daesh and other jihadi groups were making as much as $323 million a year from people smuggling operations. Despite losing control of its Libyan stronghold of Sirte in December, Daesh maintains a considerable presence in the country, which has become a major hub for people smugglers since Turkey agreed a deal with the EU to stem the flow of migrants leaving its shores for Italy.
As well as profiting directly from people smuggling operations, there is evidence that Daesh is being paid huge sums of protection money by major trafficking gangs. In June last year, it was reported that Libya-based mafia boss Mered Medhanie was paying Daesh millions of dollars to keep key smuggling routes open in Egypt and the Sinai Peninsula, where an offshoot of the jihadi group wields significant power.
Similar to other terror groups such as Hezbollah, Daesh has also diversified into counterfeiting. The perpetrators of the 2015 Paris attacks are said to have partly financed their activities by selling fake Nike trainers, while the Investigative Project on Terrorism estimates that as much as 20% of terror groups’ funding comes from counterfeiting.
The problem is thought to be particularly acute in the Belgium city of Molenbeek, which is home to a disproportionality high number of hardline Islamist fanatics. Back in 2012, authorities in the city seized three tons of fake groups, much of which would likely have funded the activities of individuals with links to terror groups such as Daesh if it had been sold.
Daesh has also created an entire industry out of producing fake passports stolen from the territories it seized in Iraq, Libya and Syria. The group’s fighters have been able to add false details to blank travel documents it took from government offices in the towns and cities it occupied. Only last month it was revealed that Italian organised crime groups have been offering Daesh fake UK passports. At least two of the Paris attackers are thought to have entered Europe using counterfeit travel documents.
While its fighters crucify people accused of cigarette smuggling in the territories it controls, Daesh and its sympathisers are happy to profit from the sale of illicit tobacco. As well as surreptitiously taxing tobacco smugglers in the dwindling regions it occupies, the terror organisation also traffics cigarettes into Europe to be sold on the black market.
Speaking with French newspaper Atlantico in October, Frederic Encel, Professor of International Relations at the Paris School of Business, said Daesh is making millions of dollars a year from the sale of contraband such as smuggled cigarettes, some of which ends up in France.
“The authorities need to redouble their vigilance on our territory,” Encel said.
“This contraband from the Middle East and Libya is not only expensive for our economy, but also directly threatens the lives of French people.”