Islamic State has cut by half the salaries of its fighters and employees due to "exceptional circumstances", the terrorist group's treasury ministry has announced.
Until last month fighters for Islamic State were paid $400-$1,200 (€360-€1,100) per month, plus $50 per wife and $25 for each child.
The ministry declared reductions would affect “all fighters”, with no exemptions for officers, and called upon militants to give priority to the “jihad of the soul” rather than the “jihad of wealth”.
For many recruits, Islamic State salaries and perks, which have helped to lure 36,000 foreign fighters – 6,000 since last autumn – are considered generous and have been a major attraction. Perks include accommodation in homes abandoned by local residents, as well as the provision of “wives,” concubines and slaves.
Another sign of increasing financial distress has been revealed by Mosul Eye, a blog covering events in the Iraqi city seized by Islamic State, which is also known as Isis, in June 2014. It says that the Hizbah bureau, which is tasked with keeping the population in line with laws imposed by Islamic State, has stopped reporting violations and has begun to collect fines for invented breaches with the aim of becoming self-financing.
Islamic State’s governor of Mosul has issued a fatwa (ruling) permitting the taxing of residents already suffering from deprivation caused by Isis’s rule, according to Mosul Eye.
During 2014, when Islanic State dramatically expanded territorial holdings and the number of people under its control, it is estimated that revenues amounted to $2 billion. Although revenues made the group the wealthiest terrorist organisation the world has known, this level of income was not enough to cover escalating costs and has not been sustained.
Revenue has been shrinking for several reasons. According to the Pentagon, Islamic State has lost 25 per cent of its territory in Iraq and 10 per cent in Syria due to government military offensives in western Iraq and central Syria.
Observers argue since Islamic State holdings have not expanded, the group no longer has fresh infusions of cash stolen from banks and wealthy businesses which initially filled the group’s coffers with large sums in foreign and local currencies.
US warplanes recently dropped two heavy duty bombs on a building in central Mosul, Islamic State’s main base in Iraq, destroying millions of dollars in cash slated to pay wages.
Oil pumped illegally from captured wells in Syria and Iraq provided $40 million a month, according to the US treasury. But US-coalition and Russian air raids on oil fields, mobile refineries and storage tanks and the rapid fall in the price of oil have reduced income. Islamic State may now be earning $10-15 dollars a barrel instead of $25-30 cleared when technicians, tribal elements, and smugglers given their share, according to an oil industry source.
The cash-strapped Iraqi and Syrian governments have, reportedly, stopped paying salaries of civil servants living in Islamic State-held areas. These salaries sustained families and provided taxable income for Islamic State.
The fall in the value of the Syrian pound has raised the prices of essential supplies imported from Turkey, has squeezed residents of Raqqa, the group's de facto capital, and reduced the amount that can be collected in taxes. Impoverishment of residents of Mosul has had a similar effect.
US treasury tracking of wealthy Islamic State donors may have reduced transfers from individuals although the group may continue to receive arms, indirectly, from governments supplying other fundamentalist factions operating in Syria.
Ruling cities, towns and villages is costly. Islamic State has taken on responsibility for the running of public utilities – water and electricity – as well as the provision of food, fuel, and public services to residents . According to UN reports, the group pays $1,500 a month to engineers servicing plants producing limited hours of electricity. Islamic State subsidises bread, a staple of the Arab diet, in line with government practice in Syria and Iraq.
