Iraq and its allies and drying funding of Daesh

Iraq and its allies and drying funding of Daesh

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The  political and economic crises  that beset Iraq are classified  as the harshest on the level of countries in the region for more than 13 years after the invasion of the US  to its territory in 2003, and the  terrorism formed the first Trinity, which has plagued the country’s stability, and  stood  as an obstacle to any political  or economic stability, and    this scourge reached to the peak  after that domination of the  state regulation (Daesh) on the city of Mosul in June 2014, and  managed  to isolate it from the rest of Iraq.


Since more than two years Iraq tried with all its allies to cooperate to expel this organization and strangle it , but the economic conditions of Iraq formed another obstacle in the face of these challenges, and the financial corruption within the state institutions was  of  the biggest obstacles, so it was necessary to be a confrontation on two fronts; the home front (within the framework of the Iraqi government and control of the institutions and parties within the territory of Iraq),  and the foreign front ( the cooperation with allied nations to confront terrorism and dry   its financial activities and others),  so it was necessary  for Iraq to enter into bilateral and multilateral agreements to get rid of this terrorism, which  introduced him  in a severe economic crisis in more than a two years at least.


In this context , the US embassy in Iraq  indicated  to the bilateral agreement (US-Iraqi agreement) to counter the terrorism of the  organization “Daesh” and drying  its financial  sources  and all  its economic activities and sources of funding, on the other hand  to monitor  the bodies that finance the  regulation or  deal with him, noting that the organization is going through a difficult financial situation  which  confused  his calculations and  could undermine its existence on  the short and medium term.


Daesh in trouble


Information indicates that the state regulation “Daesh”  is suffering more than ever from a severe economic crisis, squandered its efforts and its ability to withstand in  any confrontation, not to mention the international restrictions on its resources and striking vital sites in areas controlled by him  that formed the main source of funding for him and his operations since the more than two years.


In a new development in this context , the chief financial officer at the US Embassy in Iraq, John Sullivan, stressed that the cooperation agreement between “Washington and Baghdad to stop the financing Daesh  made great strides , and that the organization, which reproduced mafia-style is passing financial crisis  that undermined its preparations for the battle of Mosul and will finish it in its current form in the event of loss of the  City”.


Sources  and reports  from the city of Mosul have already indicated  that al Daesh now depends on the imposition of financial penalties because of the financial hardship experienced by him , and replace sanctions with financial fines to get the  required money  to be ready to face the ambient conditions, particularly the  liberation of Mosul, the repercussions of the future. ” According to observers, this financial distress  may cause  its drain  and its  end  more quickly.


The earlier report of the  British  newspaper “The Independent”  said “The Daesh”  were forced to cut salaries of its fighters  in half because of the financial crisis experienced by the organization, after the Allied bombing  oil sites and important economic centers. In addition  that Daesh sought in Nineveh province, at the current stage to overcome its  financial  crisis depending on reducing the so-called sponsorship program for the families of his supporters in half because of a severe financial crisis experienced by the organization after the loss of most of the sources of financial funding.

Reports said that the organization has lost a lot of its financial revenues after it was fallen from eighty million dollars to fifty-six million dollars in March, after the destruction  of  a lot of regulation fields in Syria and Iraq because of aerial bombardments.


In February 2016, the international coalition forces destroyed the building of the branch of  Iraqi Central Bank of the city , along with other banks, namely: building of  the branch of Land Bank , and the building of a branch of the Rasheed Bank and the Diwan al- Zakat of the organization .As well as the financial resources of the organization in Iraq and Syria were fallen. According to a report published by the  British newspaper “daily Telegraph” , in April 2016,  the organization “Daesh” loses  about 30% of its income following the  reduction of the size of  territory controlled by  him , and thus the loss of revenues from taxes that were imposed in these areas.


Dollar control


Agreement also is the first of its kind between the Federal Reserve and the Treasury Department on the one hand, and the Central Bank of Iraq, on the other hand to monitor the dollar shipments and ensure the prevention of the arrival of these funds to illicit destinations , it is successfully applied, a turning point in this file.


And added “The Central Bank of Iraq and through close cooperation with the US side put a black list to prevent funds from reaching to the territory controlled by Daesh, and has more than 150 companies today.” Among the most important achievements of the Convention  was “dramatically  to  reduce the dollar shipments to Iraq and replace it by  dinar.”


And here to  point out that the  federal  reserve and the US Department of the Treasury  took  the decision last year  to temporarily halt the flow of billions of dollars to the Central Bank of Iraq due to its  growing concern that the currency may end up in Iranian banks, and perhaps being funneled to militants of the organization Daesh, where American  finance officials  are  making  a world track  process  to keep the dollar from falling into the hands of  what designated by US the “enemies” who can use it to finance their activities.


Sullivan adds , that since the year and  before the signing of the agreement ,  “militants of  Daesh  were dealing  in dollars, and this is stopped today,” noting that “the senior leadership of the organization  receives  in dollars”, and speaking  about the financial crisis afflicting Daesh, “and added that” the salary of the ordinary armed men  fell more than 50 percent, as well as to their dealings with  Dinars prevents them from making international transactions. ” He pointed out that “Iraq was one of the most  countries that buy the dollar for years and there are a radical change today.”


John Sullivan  added  that “The organization was formerly dependent on oil  and after the decline of prices ,  the organization  began trying to swap oil with goods or services.” He revealed that “the campaign against Mosul found a lot of hidden  cash .”


Here  to quote what was reported by  informed sources that the organization was kept getting  on the hard currency through the sale of  basic commodities produced in factories controlled by him , to  the local distributors in dollars but pays wages in dinars to thousands of fighters and public officials.


Earlier reports revealed that the organization win up to 20 percent under the prices of preferential currency imposed by him , which raise the price of the dollar when exchanged with  denominations smaller than  the dinar .


With regard to the central bank ,  Sullivan has praised the efforts of the bank in the reform, noting that the bank has done during the year more than what has been achieved in the past 13 years. ” He added that “Washington and Baghdad will exchange the required  intelligence, financial, security information  to stop transfers  for Daesh .”


US officials have insisted on tighter controls and exchange information on how the dollars are distributed to financial firms in Iraq, according to US officials and Iraqis.


In an article published in the Washington Institute for Near East Policy about the speech  of Daniel Glaser ,  the assistant of US  Treasury secretary for affairs of terrorist financing at the “Office of Terrorism and Financial Intelligence”: “But  the main concern in Iraq is  in exploiting of” Daesh “to the exchange offices that its numbers are  approximately  1900 Office, the number  was so huge that  increases the difficulty of organizing it  effectively. In the long run, Iraq needs to reduce the sector by   reducing the number of exchange offices to a level that can be monitored to a reasonable extent. The inherent  challenges  in the short term mainly includes actions to be taken at the level of the  exchange offices working  within the territory of the organization. Central Bank of Iraq issued a  public regulation  that included more than a hundred  similar institution and    the Treasury ministry also  put an active  arrangements for the exchange of information with Iraqi officials in order to warn them  from  any  exchange offices  that raise  suspicions. The entities can be added to this list or removed when the territories are liberated . And Financial institutions around the world must see   this list to avoid doing any business with any exchange office   included on the blacklist. So far, the central bank  has prevented these offices to have access to millions of dollars, in a clear sign of Iraq’s commitment to this issue. ”


In this context, the Central Bank of Iraq has taken a decision to deny three private  banks and 99  banking company from entering  to the window of  sale   of the currency , for violating the laws and regulations on the purchase and sale of foreign currency . It is a positive step to stop the extended corruption and access to this sensitive institution .The central bank also took steps to improve the laws of  financial system  in Iraq  adopting  laws to combat money laundering and combating the financing of terrorism and the development of systems to be applied.


In conclusion, it must be noted that the Iraq war and its allies against terrorism, and specifically  the organization of  Daesh is not an easy task, because the expertise owned by these organizations to deal with the strategies, so it is necessary to besiege its financial resources and sources of funding and their illegal economic activities . Iraq today is in need of an international support  to eradicate the sources of terrorism and draining its resources, not to mention the need for internal controls to eliminate corruption, which parallels the terrorism in its effect on the stability of the country, not to mention the follow-up to the abuses that take place in the Iraqi state institutions, and to support the Iraqi Central Bank’s efforts, which is the most important  financial institution  in Iraq, it is  a move that will protect Iraq’s resources and contribute to  save him from  the clutches of corruption and terrorism  which exhausted it over  the past years.


Rawabet Center for  Research and Strategic Studies