Is ISIS Running Out of Money?

Japanese hostage crisis suggests group having financial problems
January 20, 2015 Updated: January 20, 2015

The Islamic State, or ISIS, posted a video Tuesday that purports to show two Japanese hostages and included a threat to execute both of them unless the organization receives $200 million in 72 hours. The threat to kill both men, Kenji Goto Jogo and Haruna Yukawa, contrasts ISIS’ previous tactic of simply decapitating its captives in lieu of any negotiation.

The development could suggest that ISIS might be having financial problems. The organization mainly generates its revenue through oil smuggling, but there’s recent downturn in prices worldwide.

ISIS also recently released more than 200 Yazidi hostages in Iraq, which prompted speculation by Iraqi officials that the terrorist group didn’t have any money to care for them.

A report in Foreign Affairs in late November said that ISIS “has become the world’s richest precisely because it has seized some of the world’s most profitable oil fields in Iraq and Syria,” and it said that more than $1 million is generated per day.

The ISIS oil production was also imperiled after U.S.-led airstrikes took down most of the group’s refining ability. The State Department said in mid-November that ISIS lost 22 of its refineries.

“Still more funding comes from the sale of counterfeit cigarettes, pharmaceuticals, cell phones, antiquities, and foreign passports. The trafficking of some of these commodities into Turkey from Syria has risen dramatically,” the report added.

The ISIS oil production was also imperiled after U.S.-led airstrikes took down most of the group’s refining ability. The State Department said in mid-November that ISIS lost 22 of its refineries.

Amos Hochstein, who is an acting special coordinator for the State Department, said “revenue has fallen significantly” since the airstrikes started, according to Bloomberg News.

Meanwhile, terrorist organizations have increasingly turned toward hostage-taking to finance their operations. A Swedish company handed over $70,000 to save an employee that was captured by the Islamic State. ISIS also secretly demanded $100 million in ransom for free captured American journalist James Foley.

For al-Qaeda and its affiliates, kidnapping Europeans has been a primary source of revenue, according to New York Times report. It said more than $125 million in ransom payments were made in the past five years.

The United States’ official policy is not to negotiate with what it deems terrorist organizations. However, some European countries don’t have that policy.

The hostage-taking is not unprecedented territory for Japan–as a Japanese backpacker was beheaded in 2004 in Iraq by a predecessor of ISIS–but Prime Minister Shinzo Abe, who is visiting Israel, told reporters that the demand to pay ransom is “unforgivable,” adding that Japan won’t give into terrorism.

Abe and other Japanese officials, however, didn’t say whether they would pay the ransom. “If true, the act of threat in exchange of people’s lives is unforgivable and we feel strong indignation,”Chief Cabinet Secretary Yoshihide Suga said in Tokyo, per Voice of America. “We will make our utmost effort to win their release as soon as possible.”

Goto was a freelance journalist who reported from war zones, and Yukawa is a private military company operator who was kidnapped in Syria in August after he went there to train with militants.

In the video, released by the media arm of ISIS, a masked figure, speaking with a British accent, said, “To the prime minister of Japan: Although you are more than 8,000 and 500 kilometres from the Islamic State, you willingly have volunteered to take part in this crusade.” 

“You have proudly donated $100 million to kill our women and children, to destroy the homes of the Muslims … and in an attempt to stop the expansion of the Islamic State, you have also donated another $100 million to train the (apostates),” he added.


The Associated Press contributed to this report.