Political and economic threat from ‘Islamic State’

Establishing a democratic system is not an easy task. The fallout of such efforts could be extremely destructive – and as a result some of the Middle East and North African countries are struggling to come back to normal.

Libya and Syria can easily serve as the case studies for the research experts who want to explore the devastating aftereffects of the so-called Arab Spring.

Besides the perils of instability in a country undergoing changes, the rise of militant groups with extremist ideologies poses a huge political, economic and social risk.

Call it Islamic State of Iraq and Levant, Islamic State of Iraq and Syria, or just Islamic State, the group has become more voracious with each passing month.

Experts worldwide, who claim to have understood the phenomenon of terrorism, are left scratching their heads in bewilderment and frustration with the meteoric rise of the Islamic State.

American comedian and TV personality John Stewart in his The Daily Show joked about ISIS few weeks back saying ‘how bad you have to be that even a terror organization like Al Qaeda disowns you’.

However, Islamic State is no joke. The group has killed hundreds of Iraqi and Syrian civilians, which include minority communities such as Yazidis and Christians besides Shias and moderate Sunnis. Islamic State’s blitzkrieg, which reached the autonomous Kurdistan in northern Iraq, in almost all of western Iraq has displaced thousands of families. According to the United Nations Refugee Agency about 1.8 million Iraqis are displaced since the beginning of 2014. Most of the displaced Iraqis come from Anbar and Ninevah provinces, which are under Islamic State’s control, as per the United Nations statistics.

The group has used social media and Internet quite successfully in propagating its goals and “values”. As a result, the group has become the magnet for impressionable young minds not only in the region, but also in the United States, Europe and Asia.

Every now and then, media reports appear about young men and women joining the IS group.

Even Al Qaeda was not as cosmopolitan as Islamic State. The weak and divided government of former Iraqi prime minister Nouri Al Maliki and conflict in Syria have proved to a boon for IS.

Evidently, the rise of Islamic State has impacted Iraq and Syria politically, but the economic repercussions are gradually showing its signs.

Geographically, Iraq is a landlocked country with a narrow coastline of just 58 kilometers, and this means most of its imports are through land routes. Iraq shares the longest border with Iran on the east, second longest with Saudi Arabia in the south, third longest border with Syria in the west, and fairly long borders with Turkey, Jordan and Kuwait.

Iran continues to be the biggest trading partner of Iraq because the Islamic State’s advance has not reached the eastern border of Iraq. However, Iraqi trade routes with Turkey, Syria and Jordan are affected badly, or have virtually closed down in the wake of the militant group’s capture of large swathes of land in western Iraq.

Cyprus-based Banc de Binary has come out with a report analyzing Islamic State’s economic structure. It says: “The ISIS only controls a small portion of Iraq’s immense oil wealth, what it does control is sufficient to fund its continued expansion. It is estimated that their share of the oil market is worth $2 million per day. As they continue to expand their network further, more oil fields are coming into range.

“By extrapolating these figures over the course of the year, oil revenues could bring in up to $750m.”

Though Islamic State’s funding is mainly through stolen oil, which is sold in the black market, the group also resorts to extortion and kidnapping to make financial gains.

Summing up the Iraqi economy, head of education at Banc De Binary Orti Nathan Mahalal writes in her blog: “The country [Iraq] is currently the fifth largest oil-producing nation in the world, and its oil reserves are estimated at 143 billion barrels.

“In fact, with the exception of Iran and Saudi Arabia, Iraq is the largest oil producer in the Middle East. The country’s gross domestic product is largely comprised of oil (54 per cent). The total GDP of the country was listed at $230 billion, of which 99 per cent is generated through exports.

“The government also generates an astounding 93 per cent of all its revenues from oil. Almost 40 per cent of the labor force in Iraq is employed by the public sector, with far better benefits and greater security than the private sector. Unemployment in Iraq is currently around 15 per cent,” says Mahalal in her blog.

Most of Iraq’s oil reserves are concentrated in southern region of Basra, which were spared the onslaught of Islamic State. However, the Baiji refinery in the Kurdistan region, which used to supply oil to Turkey was attacked by IS, will take years to recover from the sabotage. Iraqi officials have said it will take at least one year to repair Baiji refinery.

The Islamic State group has not only fueled sectarian tension, but also separatists’ aspiration among Kurds. President of Iraqi Kurdistan Region Masoud Barzani has time and again indicated that Kurds should have their own country. Threat from Islamic State aggravated such calls.

As of now, it looks like Kurds will remain in Iraq, and Islamic State will not get a country of its own. Speaking to TRENDS, President of New York-based Eurasia Group Ian Bremmer, says ISIS, or IS, may well establish de facto control of parts of Syria and Iraq, but they face serious challenges in holding onto territory populated by people who will not accept the militant’s extreme interpretation of Islamic Law. “For a group like ISIS, it will always be easier to take territory than to hold it, and Damascus and Baghdad are not in immediate danger of collapse,” says Bremmer.

The extremist group poses a bigger threat to Syria than to Iraq. Lack of support for President Bashar Al Assad in Syria has added fuel to the fire, while Nouri Al Maliki’s departure in Iraq has helped abating the sectarian atmosphere in the country.

The absence of strong military opposition to Islamic State in Syria has helped the extremist group in sustaining ground.

In a press note, Brussels-based International Crisis Group says: “Syria is sliding toward unending war between an autocratic, sectarian regime and the even more autocratic, more sectarian ‘jihadi’ group that has made dramatic gains in both Syria and Iraq.

Islamic State Flag Waving On The Wind
Flag of extremist group Islamic State

“Without either a ceasefire in Aleppo or greater support from its state backers, the mainstream opposition is likely to suffer a defeat that will dash chances of a political resolution for the foreseeable future.

“It is hard to overstate the importance of the battle for greater Aleppo: continued gains there by the regime and Islamic State threaten the viability of the mainstream opposition as a whole, the defeat of which would be an unprecedented boon to IS and would render a negotiated resolution of the conflict all but impossible,” says the note, which is part of the think tank’s latest report, “Rigged Cars and Barrel Bombs: Aleppo and the State of the Syrian War”.

On the rise of Islamic State and the threat it poses to the region, Chatham House’s deputy head and senior research fellow for Middle East and North Africa program Jane Kinninmont says the rise of the Islamic State is a symptom of the failure of governments and established political leaders – in Iraq itself and in the countries that led the 2003 regime change – to rebuild Iraq as a nation-state after it had been hollowed out by decades of war, dictatorship and crippling economic sanctions, or to move beyond the chronic patterns of militarization and external intervention that characterize modern Iraqi politics.

Writing for an in-house journal of Chatham House, Kinninmont says: “When Islamic State took over Mosul, its forces were estimated at just a few thousand people. The Iraqi army has 350,000. IS has plenty of money from the oil and gas fields it controls in Syria, making it one of the best-funded militias in the world. But this is nothing on the revenues available to a state that has the world’s fifth largest oil reserves

“Yet Iraqi troops melted away from their positions in Mosul, where they felt they had little local support, and they still have not managed a successful counterattack.”

The fast-paced expansion of Islamic State in Iraq has been blamed on Nouri Al Maliki’s divisive policies. Some of the disenchanted Sunnis who lost faith in their Baghdad government joined and assisted Islamic State.

The divisive policies have put Iraq several years back in terms of social cohesion. Bremmer of Eurasia Group says: “Most of the international community would like to see a unitary Iraq that works, one in which Sunnis, Kurds and Shia share security and prosperity. But given the deep-seated mistrust between Saudi Arabia and Iran-and unresolved sectarian tensions within Iraq itself-there is no credible possibility for this result for the foreseeable future.”

For the international community and the region, the good news is that Iraq now has new prime minister in Haider Al Abadi, who is taking more inclusive approach toward all Iraqis.

Other ray of hope is senior Muslim religious figures in Saudi Arabia, Iran, Iraq, and even in the United States, Canada and the United Kingdom have condemned the Islamic State group. The chief prayer leader in Islam’s holiest city of Makkah went as far as saying that Islamic State represents a “poisonous ideology”.

The political stability in Iraq is bad news for Islamic State, but the ongoing tussle among Syrians is likely to keep Islamic State alive in the near future.