IS releases hostages at low prices due to lack of money

The Islamic State has now had to cut fighters' salaries, ask civilians to pay for living expenses in black market dollars, and even agree to release hostages at low prices due to lack of money.

Islamic State (IS) militants parade on the streets of Raqqa, Syria. Photo: Reuters

According to residents of Raqqa, the headquarters of the Islamic State (IS) in Syria, the extremist group that once boldly declared that it minted its own currency to serve all activities of the self-proclaimed state is now struggling to cope with the financial crisis. The continuous airstrikes by Russia and the US-led coalition, combined with a number of other measures, have caused IS to lose millions of dollars, contributing to the decline in the organization's funding sources.

When it was still powerful, IS did not hesitate to lure members with sky-high salaries, luxury vacations, and expensive gadgets. But now, all that is gone. The group has even stopped providing free energy drinks and cheap chocolate bars.

In the urban centers of IS, inflation and shortages are widespread, according to people who have fled the group. Faced with the difficult situation, IS is scrambling to find alternative sources of money to finance its costly operations, analysts say. Libya is one target.

“Not only IS fighters but also officials working in courts and schools have had their salaries cut by 50 percent,” said an activist with contacts in Raqqa, who lives in the Turkish city of Gaziantep.

But the savings are still dwarfed by what IS spends on paying its members and replacing the vast amounts of weapons destroyed or damaged on the battlefield—two expenses that account for two-thirds of the group’s budget, according to Aymenn Jawad al-Tamimi, a researcher at the Middle East Forum who monitors IS documents.

In the past two weeks, IS has started to accept only US dollars when collecting “taxes” and utility bills, said an activist in Raqqa who goes by the pseudonym Abu Ahmad. “Everything has to be paid in US dollars,” he said.

A document released by IS also stated that "to deal with the current situation, the organization has decided to halve the salaries of its fighters, with no one exempted, regardless of rank or position."

According to observers, the biggest difficulty IS is facing right now is the sharp decline in world oil prices. Meanwhile, money earned from oil smuggling is one of the group's main sources of income. In addition, the recent Western air campaign has also destroyed many money depots, cutting off vital logistics routes, making IS even more miserable.

The Russian-backed Syrian government offensive in Aleppo has also significantly increased the pressure on IS. Government troops and allied militias are gradually closing in on key towns in Aleppo, forcing IS fighters to send their relatives to Raqqa.

Raqqa residents say IS is now having to cut salaries and abolish some special benefits for fighters due to financial difficulties. Illustration photo: Reuters

A man who fled the Aleppo town of al-Bab, surnamed Oussama, said low-level IS fighters had begun complaining about their plight. Residents in the town also spoke of hearing IS leaders discussing how oil facilities, vital supply routes and sources of income were being crippled by air strikes.

According to Oussama, dozens of al-Bab residents have fled, ignoring orders from the extremists. "You can clearly feel the frustration of these fighters, their morale is low," he said.

A former Raqqa resident now living in Beirut said he was sending money back home to help his family make ends meet. Prices have risen at a dizzying rate, especially for vegetables and sugar.

Another resident of Gaziantep said the road to Mosul was blocked late last year and prices have been rising ever since. Gas prices have gone up 25 percent, meat 70 percent, sugar has doubled.

According to a resident of Fallujah, Iraq, IS fighters who used to receive $400 a month have not been paid anything recently. Their food rations have also been cut to two meals a day.

IS is so desperate that for just $500, the group is willing to release a prisoner, a family in Fallujah said.

Residents of Mosul, the IS stronghold in Iraq, have also begun fining people who violate the group’s dress code. Previously, IS punished them with flogging, which many believe is a way for IS to cope with financial difficulties.

The Soufan security research group believes IS is looking for alternative sources of funding in Libya, where it is under less pressure and has not had to withstand air strikes.

However, according to one Raqqa defector, IS fighters still have plenty of food and free electricity. Al-Tamimi said that "this is not a very serious problem for IS" because he has not seen "signs of rebellion from within". According to al-Tamimi, IS is only weakening very slowly.

According to VNE