As discussed in previous blogs, as the access to the Iraqi labor market has been used over the decades as a means to ensure political loyalty, its full democratization is required. This unequal access to the labor market has not only created circles of loyalty around the state apparatus, but it has also indirectly supported competing hostile factions of the populations. As a telling article by Shatz (2015) has powerfully demonstrated, in recent times, the use of public employment has had the unintended consequence of radicalization and terrorist reinforcement. Financing the terrorist organization Islamic State in Iraq and the Levant (ISIL), an umbrella of previously Al-Qaeda linked groups but a with clearer political and nation-building project, has, for example, been made possible by government subsidies to government employees who live in ISIL-controlled territories (wilaya or ‘protectorates’) (Khatib 2015). This money estimated in several hundred million US$, have not only reinforced the local system of patronage and clientelistic relations, but have also provided additional support for an involuntarily sponsored ISIL administrative local economy, reinforcing the ISIL ‘clear, hold, build’ strategy (Khatib 2015). Financing ISIL has also meant taking the control of oil revenues and pipelines and of the relative bureaucratic redistributive apparatus (Sanger and Davis 2014). This has resulted in the emergence of local ISIS mini-states with local administrative governance mechanisms, banking and social investment policies. As Shatz (2005, p. I) has powerfully described, this nation-building activity has contributed to create ‘hundreds of thousands of refugees, behead or crucify scores if not hundreds of people, murder thousands, create sex-slave markets, destroy irreplaceable archaeological and cultural sites, steal property based on religious affiliation or ethnicity of the owner, use and train child soldiers and otherwise make life miserable for millions of people’. This has also implied the creation of its own currency (Milliken 2015).
Drawing on Charles Tilly’s (1985) seminal work entitled War Making and State Making as Organized Crime, it is possible to affirm that the functions that several rebel and terrorist organizations linked to ISIL carry out in their everyday lives (in particular, protective, extractive, and redistributive) are equivalent to those of a state and, therefore, turn the organization or the rebel group into something more than a simple loose confederation of organized ‘self-made’ criminals. It is not by chance that their members, once emotionally and institutionally affiliated to the organization, have started to: (1) carry out ‘intelligence’ activities typical of a state, such as those linked to searching and punishing possible spies within the territory under their control; (2) tax for the passage from one city to another city of any illicit contraband (e.g. drugs, weapons, laundered cash and people); (3) collect profits, and protect and control the production areas; (4) recruit and provide subsistence to the marginalized peoples living in underdeveloped regions; and (5) deliver a range of social services to the population in need (see also Sanger and Davis 2014). In this process, rentierism becomes a complementary mechanism of state formation made possible by the acquisition and redistribution of natural resources. This nation-building process also requires a system of propaganda that occurs mostly through social networks (Khatib 2015), as well as the construction of a Weberian bureaucratic structure, necessary to ensure the state fiscal capacity to reduce a ‘state failure’ and state collapse. In this context, the creation of an ISIL organized rentier state represents a further impediment to the process of democratization in Iraq, as it aligns socio-political norms to the patrimonial nature of social interactions with associated religiously dominated loyalties (Thies 2015). In fact, as argued by Schwarz (2011, p. 427) for the Saddam era, “the massive influx of oil revenues during the 1970s enabled Iraq to pursue a policy of ‘guns and butter’ – extravagant spending on expanding its military-security machinery and on welfare benefits […] [which allowed] the regime to embark on a state-making project based on large-scale spending implemented in a top–down fashion and divorced from societal demands. These benefits mainly came in the form of state-provided jobs”.
To go more into details on our case study, as Almukhtar (2015) explains, close to war-making activities, in Iraq, ISIL relies always more often on the acquisition of state assets of captured cities, as well as on money coming from different sources, redistributing them among the population to acquire legitimacy and support. The main sources of financing include: oil, natural gas, phosphate, cement, agriculture, revenue of criminal origin, extortion; kidnap and ransom, antiquities trafficking and donations (CAT 2016).
In June 2014, ISIL’ estimated assets in Iraq corresponded to no less than $875 million. Its major revenue sources in 2014 were given by extortion and taxation activities in the Iraqi territory, which were estimated at $600 million. In addition, $500 million were, in fact, stolen from state-owned banks, $100 million from oil whose barrels are sold at half the official price. $20 million were raised by kidnapping ransoms (Almukhtar 2015). In 2015, ISIL expanded increasing its investments in people, paying its 20,000-30,000 fighters between 350 USD and 1500 USD per month according to their rank, skills and nationality (FATF 2015, pp. 29-30). Similar estimations made by Lister (2015) state that there were approximately 30,000 ISIL armed members in early 2015, and about a half of these were foreigners of not Iraqi or Syrian origin. The ISIL total assets, presumably including also other occupied territories outside Iraq, should have, in reality, corresponded to $2 billion, with an annual revenue of $200 million to $300 million (Waterbury 2015). In 2016, ISIL oil revenue are estimated to range from $250 million per year to nearly $365 million per year, though this numbers are likely to decline due to the airstrikes on tanks and oil refineries (Rand 2017, p.8). An up-to-date report on ISIL financing mechanisms, including wage salaries, is provided by Jones et al. (2017) available here.
More recently, ISIL money may come also from stealing and redistributing credit cards, social welfare benefits, small loans, scooters, or even selling organs of dead fighters (for information on such disgusting business, see also May (2017)’s Global Financial Integrity report: Transnational Crime and the Developing World. As in other countries, selling weapons can also be used as a corruption mechanism (see Weapons of Mass Corruption Report). Counterterrorist financing strategies can here play a crucial role (on methods of financing and counterterrorist financing strategies, see my other blog on sub-saharan Africa).
The importance of ISIL in the making of a new political and economic territorial structure also involves the increasing number of women who joined the organization as fighters (and in case martyrs) and built a new family (Saltman and Smith 2015). In order to increase its acceptance among the population, ISIL also invests in infrastructures (such as building underground pipelines, employing engineers, etc.), in social services and social benefits. It also makes regular payments to the families of members killed or captured, purchases of diesel generators for distributing electricity, and mobilizes existing infrastructures to provide basic services, or engaging in agricultural production and taxation (FATF 2015, pp. 29-30). The largest expenditures in salaries estimated (between $3 million and $10 million every month) are, however, employed for police-state institutions, such as committees, media, courts, and market regulation and thus ensuring Tilly’s security function (see Almukhtar 2015).
Ensuring security becomes, in this context, the most crucial undertaking in order to avoid possible distortions in the use of funds. Similarly, the ‘Oil for Food Program’ implemented to fasten the fall of the Saddam regime during the 1990s has had important negative consequences for the health status of the Iraqi population. In order to reduce the number of deaths, the ‘Oil for Food Program’ could have, for example, been coupled to a ‘Health for Food Program’, more specifically aimed at ensuring that the health status of the Iraqi population would not have dramatically worsened. However, and this is important to remember, good governance mechanisms as well as the fight against corruption and mismanagement of aid should also have been ensured. In reality, in fact, a substantial part of the aid was channeled through the Saddam bureaucracy and his closest entourage, limiting the scope and efficacy of the aid efforts, ultimately supporting his stay in power.
As a consequence, in order to de-radicalize extremists, the importance of timing and sequencing of reforms must not be underestimated. Whilst guaranteeing security is an urgent and unavoidable necessity in order to make development, social security and democratization related projects really work, recalibrating and rescaling policy-making (Kazepov 2010; Stubbs and Zrinščak 2009) represents an additional important element to take into account in system transformation. It affects positively the restructuring of spatial politics through the creation of new political boundaries (Bartolini 2005), as well as new boundaries of responsibilities (Ferrera 2005). This would necessitate the creation of new steering mechanisms (Mayntz 2003) and structures of more adaptive multilevel governance (Hooghe and Marks 2001). In order to resolve the issue of a failing federalism, as discussed by Haggard and Long (2007), the creation of a system of multilevel governance, in which ‘local states’ interact among each other to ensure that national human development objectives are effectively implemented, is needed.
In Iraq, following the fall of the Saddam regime, and due to poor public administration capacity, the governance architecture of the welfare regimes is highly underdeveloped and decentralized. Access to social services and distribution of welfare benefits depend, for the most part, on non-state and religious actors (see Benthall and Bellion- Jourdan 2003; Gellner 1981). By devolving the tasks to decentralized religious and other non-state actors (or clans and tribes as in the case of Libya) (see Cerami 2015), the pressures caused by the state inefficiencies in public administration are reduced. In this way, the religious attachment of the population has been increased and with it the loyalty to the current dominant political elites (Cammett and McLean 2014). The participation of non-state actors in national and multilateral institutions becomes, in this context, crucial to increase input and output legitimacy (Nasiritousi et al. 2015), which, consequently, spill-over in great democratization (including liberalization, institutionalization and consolidation). The participation of non-state actors can also help to depoliticize and de-radicalize national decision-making and policy-making, including religious extremism (Willets 2006; Nasiritousi et al. 2015; see also Acemoglu and Robinson 2012).
Different strategies of de-radicalization can be envisaged. Griffin (2012, p. 11) explains terrorist’s creed and fanatical violence analyzing the different hidden symbolic or psychological liquid meanings, so as to understand the evil logic of terrorist acts. These are, primarily, concerned with the absurdity of killing an individual for a higher ‘suprapersonal’ cause in a state of total commitment to this meta-political cause (p.13, 19). Tosini (2011, p.61) describes, in contrast, a variety of social mechanisms of ISIL terrorist affiliation. These include action-formation mechanisms and transformational mechanisms are primarily concerned with ‘in-group love’, mutual loyalty and dependency, as well as ‘out-group hate’..
As a ‘total social phenomenon’ in the sense of Marcel Mauss (2000), that is, an economical, juridical, moral, religious, mythological and esthetical multidimensional phenomenon, linked to new ISIL counter-terrorist financing strategies, more effective de-radicalization strategies must be implemented. These must include a redefinition of the main economical, juridical, moral, religious, mythological and esthetical forms and countours of radicalized Islam.
 According to Fatf (2015, p. 30), ‘energy experts estimate that ISIL can rebuild a single mobile refinery in 10 days for 230,000 USD’.
 According to Fatf (2015, p. 13), ISIL fighters paying for a female slave approximately 13 USD. In 2017, the price has increased between 35 or 50 USD (Rand 2017, p. 11).