An expert on terrorist financing has said Islamic State (IS) poses a far greater threat than Al Qaeda and the Taliban, and that Australia’s foreign fighters law will not work.
Economist Loretta Napoleoni said IS acted like a government, raising money from taxes and resources like oil, and was on its way to setting up a 21st century caliphate – a state ruled by a supreme religious leader according to Islamic law.
Ms Napoleoni said the West’s policies, such as the Australian Government’s foreign fighters law, would not work because the dream of being part of an Islamic caliphate was so appealing to IS recruits.
In a new book about IS called The Islamist Phoenix, Ms Napoleoni said the rise of IS, previously known as ISIS, in Syria and Iraq took the world by surprise because the West was asleep at the wheel.
“ISIS was fighting a war by proxy, or at least this is what we thought, against the regime of Assad and nobody paid any attention to the real plan of the Islamic State which was, of course, not to fight a war by proxy but to establish itself as a new power in the region,” she said.
The great appeal of the Islamic State is the fact that you can go there and build a new state, so why do you want to go back to Australia if this is your objective?Economist Loretta Napoleoni
This plan to establish itself as a power in its own right, along with its estimated funding of between $2 billion and $4 billion, was what made the IS more dangerous than Al Qaeda and the Taliban, Ms Napoleoni said.
“They’re using the sort of structure of finances which is the structure of a state,” she said.
“Once they conquer a territory, what they do is they start a joint venture with the local population, with the tribal leaders to run these kind of resources.
“This is how a state functions, this is not how an armed organisation functions.”
Islamic State has conquered large parts of eastern Syria and northern and western Iraq, giving it control over valuable oil fields and water supplies.
It made money from looting, kidnapping for ransom, taxing businesses and selling oil, Ms Napoleoni said.
“The oil sale is important, smuggling of course in small quantities and the estimate is about $2 million per day in terms of revenue,” she said.
“Most of it goes to Turkey and is done again in a joint venture with the local population.”
Even Iraq bought grain from the Islamic State because the group controlled about 40 per cent of the country’s annual wheat production, Ms Napoleoni said.
“There is nothing we can do because you know, there is no international flow of money, they’re not using [an] international banking system,” she said.
“It’s a complete model of closed economy.
“We could have done it in 2011, we could have done it in 2012 but that meant to go to Saudi Arabia, to Kuwait, to Qatar and say stop funding war by proxy in Syria.”
The dream of an Islamic caliphate has drawn recruits from around the world, including Australia, but Ms Napoleoni said she did not think the Federal Government’s new foreign fighter laws would work.
The laws make it illegal for Australians to go to a conflict zone without a valid reason.
“I think the effectiveness of those policies will be very minimal,” she said.
“If somebody wants to go, they will go.
“The great appeal of the Islamic State is the fact that you can go there and build a new state, so why do you want to go back to Australia if this is your objective?”