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U.S. Tries To Exploit Islamic State's Financial Weak Spot


Following the money has been one of the major counterterrorism tools the United States has used over the years to track, isolate and cripple bad actors. And now that weapon is being aimed at the Islamic State.


Last week, in a firs, the UN Security Council passed a resolution designed to choke off Islamic state revenues. That group has supported itself through a combination of taxing and extorting people under its control while also selling gas and oil seized in Syria and Iraq. The U.S. Treasury Department calculates oil alone has brought in roughly half-a-billion dollars, money the Islamic State needs as it tries to fashion itself into an actual country. Adam Szubin is the acting undersecretary for terrorism and financial intelligence at Treasury.

ADAM SZUBIN: The entire narrative of ISIL is that it's building a so-called caliphate, an Islamic state. And in order to do that, it needs to be able to hold territory and to be able to govern. And it needs to be able to keep the lights on and keep water flowing. Otherwise, its narrative falls apart and its local support falls apart. And that's a vulnerability, and a vulnerability we need to exploit.

MONTAGNE: I think it will amaze listeners to hear that a great deal of the oil paying for the Islamic State's war is going to the regime of Syria's Bashar al-Assad, the very person he's fighting. You've been quoted as saying the two are trying to slaughter each other, and they are still engaged in millions of dollars of trade. What is going on there? Are they functionally partners?

SZUBIN: I wouldn't call them partners. Clearly they're adversaries on the battlefield, but necessity makes some strange bedfellows. And in this instance, the Syrian regime is very hungry for gas and also for oil. And they don't mind seemingly purchasing some of it from ISIL.

MONTAGNE: You know, traditionally, financial institutions have been huge sources of information and pressure, you know, in terms of changing conduct. How much does banking even figure into the Islamic State?

SZUBIN: Well, within ISIL-controlled territory, obviously the role of the international banking system is almost nonexistent. That said, ISIL does need access to things outside of its territory. And here you should be thinking of things like communications equipment, weapons, replacement parts for its oil and gas infrastructure it can't be producing those things from within. That's why ISIL's access to the international financial system has been such an acute focus for us here at the Treasury and other governments around the world who are working with us to shut that off. The Iraqi government moved very quickly to sever access to over 90 bank branches that are in the territory that ISIL controls so that those bank branches might still be standing, but they aren't banks in any modern sense of the word.

MONTAGNE: Well, besides Iraq, how much support have you received from the Gulf states in this effort to isolate the Islamic State financially?

SZUBIN: We've received significant support. These estates in the Gulf face a threat themselves domestically from ISIL. And we do not see flows of foreign donations, for example, coming from those states to support ISIL.

MONTAGNE: And foreign donations - you're not speaking about the state sponsored donations. You're, I'm guessing, speaking about wealthier citizens who have quietly funded extremists groups for many years.

SZUBIN: That's right. And if you are familiar with the model of how al-Qaida or groups like Hamas and even Hezbollah have financed themselves, they've typically been heavily reliant on foreign donations, whether from state sponsors like Iran or whether from wealthy what we call deep-pocket donors, often in the Gulf. But that financing model is not ISIL. When you have a group that's raising hundreds of millions of dollars in a year from internal sources, we don't have those same chokepoints to go after in terms of the foreign flows.

MONTAGNE: Adam Szubin is the acting undersecretary of terrorism and financial intelligence at the U.S. Treasury Department. Thank you very much for joining us.

SZUBIN: Thank you, Renee. Transcript provided by NPR, Copyright NPR.