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The ISIL insurgency and its economic implications

By 3 de novembro de 2014No Comments

The Islamic State of Iraq and Levant (ISIL or ISIS) leader, Abu Bakr al-Baghdadi, and his organization are unusual among terrorists in their explicit articulation of their ambitions, agenda, priorities, and strategy (Allison, 2014). It is noticeable a high level of alignment between what they say and what they do.

            ISIL`s self-proclaimed mission is to create an Islamic State, one governed according to their own interpretation of Islam. To achieve that objective, they organize fighters prepared to strike with vividly brutal strokes that are aimed at terrifying and intimidating their adversaries – whether they are individuals from the Western or even from the “Muslin World”. In a region where the bloodshed of its population has been broadcasted throughout years, starting in 2003, with the invasion of Iraq by American troops, Iraqi people face once more the insurgency of a battlefield within its borders. This time, although, whoever comes to its territory to thwart its ambitions, ISIL promises death, in the most brutal fashion. 

            Having the aforementioned points been highlighted, it is noteworthy that the region is riddled with chaos and despair of individuals from all over the world. In addition to these political, humanitarian and social implications, the economic situation of the area has to be underlined properly as well, in order to fulfill a complete coverage of the current scenario. By economy, it must be considered the impacts beyond the rise of the oil price and the decrease of the exports of Iraqi oil; thus, the food and energy production, gas reserves and government programs are also under the scope of this analysis.

            Currently, Iraq is divided, chiefly, into three major areas controlled by different actors and organizations: the ISIL, the Kurdish Regional Government (KRG) and the government in Baghdad (see the chart below).



            According to the chart, the estimated reserves of oil and gas in the ISIL-controlled territory are estimated in 11%. This situation requires immediate attention due to the lackadaisical management of such reserves by the organization. It renders the entire territory to a dire situation concerning power generation and investment – which will not be supported by the KRG, in the north, nor by the Baghdad government, in the south of Iraq.

            Here are some characteristics that emphasize the unfeasibility of ISIL’s economic situation. First, the maintenance of the conflict itself is expensive. The UN, through its Security Council, is striving to cease the “black economy” that sustains ISIL – mostly derived from the oil resources under its control (Al Khatteeb, 2014). Second, an unknown portion of the funds gathered by ISIL are directed to Sunni governments, otherwise the organization would end up without any popular assistance. Third, it is believed that ISIL leaders are prone to corruption. Fourth, the ISIL-controlled territory is the worst economic situation in Iraq, which poses several hindrances to the purchase of import power and food (Gunter, 2014).

            Though the KRG has a more favorable economic situation than the ISIL territory (due to its huge amount of oil exports), it also faces economic challenges concerning the pipelines in which the oil is transported and the few direct jobs offered by the oil industry. Unlike the ISIL and the KRG, the Baghdad-controlled territory can trade internationally without going through an intervening state. It has, strangely, improved its economic scenario. Baghdad not only has a territory with a much more homogeneous population but also continues to control most of the country’s most important asset, its oil and gas. The situation of the other territories is not nearly as favorable.

            Outside Iraq’s borders, Turkey is currently going through difficult times. Finance Minister Mehmet ?imek has accurately said, adding that the ISIL has hurt the country’s trade routes and export market for some time. ?im?ek said effects had been felt on the foreign exchange deficit, growth and inflation. Nonetheless, it is unlikely to be witnessed any action toward the organization, by Turkey, due to the delicate situation that the country faces with its Kurdish population and within its own government – divided into those who support an intervention and those fearful of further retaliation. According to E. Haldun Solmazturk (2014) “Neither the Kurdish administration nor the Iraqi central government, like Assad, in Syria, is likely to accept Turkish troop presence inside Iraq”.

            As ISIL’s insurgency occurred only, more evidently, in the current year, it is difficult to predict what will be its next steps in a close future. Under Obama’s administration, the United States has demonstrated enough willingness to support the countries of the region by the use of airstrikes, so far. Even though, the President has certified that there will be no mercy by the American government in case ISIL continues to threaten American and worldwide security and freedom.


Francisco Aderbal de Almeida Júnior is an undergraduate student of International Relations at the University of Brasília (UnB) and works at the Division of Corporate Affairs at Barral M Jorge & Associates. 


ALLISON, Graham. Is America on the ISIS hit List? The National Interest. September 30, 2014.

Chatam House: The Royal Institute of International Affairs.

GUNTER, Frank K. The ISIL Invasion of Iraq: Economic Winners and Losers. Foreign Policy Research Institute. July 2014.

AL KHATTEEB, Luay. The UN strikes back at ISIL’s Black Economy. August 23, 2014.

Press TV Iran. September 25, 2014

The White House. Address to the Nation on United States Strategy to Combat the Islamic State of Iraq and the Levant Terrorist Organization (ISIL). 10, 2014.


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