Conclusions and recommendations
An overview of ISIL’s finances
1.Knowing whether ISIL’s revenues can match its costs is an essential measure of the Coalition’s success in the economic war against the group.We recommend that a continuing assessment is made of ISIL’s finances and that this assessment is part of the Government’s ongoing Counter-Daesh Quarterly Update to Parliament. (Paragraph 9)
The deaths of ISIL financial operatives
2.The UK’s efforts to undermine ISIL’s finances should be informed by an assessment of whether ISIL does, or does not, depend on a small number of high-ranking operatives to run its most lucrative financing operations. If ISIL does largely depend on such operatives, then two key measures of success in the economic war against the group would be:
i)Assessing the financial disruption caused to ISIL by the deaths of these operatives; and
ii)Assessing to what extent ISIL is able to replace these operatives after their deaths. (Paragraph 11)
The disruption of oil production and sale by ISIL
3.If the FCO assesses that, despite the Coalition’s efforts to eliminate key aspects of ISIL’s oil-producing capacity, ISIL’s oil production continues to provide the group with revenue and fuel, then the Coalition should be prepared to target the wellheads themselves more intensively. (Paragraph 22)
The disruption of ISIL’s cash economy, and its taxation
4.The only way to completely stop ISIL from exploiting the populations and economies under its occupation is to end this occupation itself, by re-capturing the territory held by the group. Particular emphasis should be placed on recapturing the cities now occupied by ISIL, because holding them allows the group to control concentrations of people and commerce. (Paragraph 26)
5. When choosing which ground forces to support in the fight against ISIL, the UK must take into account that there are unreconciled territorial disputes between some of the different sides that are currently fighting the terrorist group. Providing military support should be undertaken in the context of a broader effort to reconcile the anxieties of different national communities in both Iraq and Syria (Paragraph 27)
Isolating ISIL from financial systems
6. The defeat of ISIL depends on ensuring that the group cannot access local or international financial systems as a means of making or moving money, in Iraq but also in any other territory that the group controls. (Paragraph 31)
7.The UK should work in conjunction with international partners to ensure the effective exclusion of all ISIL-occupied banks from national and international financial systems. (Paragraph 32)
8.The FCO should assess whether ISIL is capable of accessing local or international financial systems via Syria, and work to close any remaining points of access for ISIL elsewhere if they exist. (Paragraph 33)
9.Understanding ISIL’s use of the Hawala system should be a priority in the effort to counter the group’s finances. (Paragraph 36)
10.States such as Iraq, in which ISIL operates, must achieve and maintain an effective ability of their own to counter ISIL’s finances. The FCO should work to ensure that any deficiencies in Iraq’s ability to counter ISIL’s finances are addressed, and that the Iraqi authorities can access UK training and expertise in order to help build their own capacity in this respect. (Paragraph 38)
Donations to ISIL
11.ISIL has received funding in the form of donations in the past. The FCO should work with local partners in the region to ensure that they have the capacity and resolve to rigorously enforce local laws to prevent the funding of ISIL, so that the group cannot benefit from donations in the future. (Paragraph 46)
The future evolution of ISIL’s finances
12.As its oil and tax revenues are countered, ISIL is likely to evolve new sources of funding. (Paragraph 48)
13.ISIL in Libya is able to function without the financial resources that the Government has identified as providing the majority of the funding to the group in Iraq and Syria. The Government should present an assessment of how ISIL in Libya funds itself, and whether financial links exist between the core ISIL groups in Iraq or Syria and their Libyan affiliate. A holistic understanding of ISIL is vital to the effective global defeat of the group. The Government should present an assessment of how ISIL in Libya funds itself, and whether financial links exist between the core ISIL groups in Iraq or Syria and their Libyan affiliate. (Paragraph 50)
Adaptation of the UK response
14.As the sources of ISIL’s finance evolve, so too must the UK’s response. Rapidity is imperative, and Air Vice-Marshal Stringer’s team should be supported in its efforts to quickly identify and target new funding streams for ISIL as soon as they emerge. Government departments must continue to work to ensure that the appropriate internal processes are in place to allow an agile UK policy, which is able to respond quickly to changes in ISIL’s fundraising. (Paragraph 55)
15.With the need for a rapid and flexible approach in mind, we urge the FCO to cater for accelerated vetting of the relevant experts, in coordination with other Government departments. The FCO should establish a budget for the payment of these external experts, and the procedures for paying them promptly. (Paragraph 58)
© Parliamentary copyright 2015
7 July 2016