Abstract

The Financing of Armed Groups in Conflict Colin P. Clarke At its peak, the Islamic State, also known as ISIS or ISIL, controlled more than 100,000 square kilometres of territory containing more than 11 million people. The United States, and the West in general, were caught completely by surprise by the rapid development of this new jihadist group, which attracted legions of recruits – including 40,000 foreign fighters from more than 120 countries worldwide – as it transformed into a formidable fighting force. Its social-media presence was ubiqui- tous and its propaganda compelling, both in its extremely high production values and also in the way in which it offered a bold vision of a new state founded on extremist ideals. But above all else, perhaps the most surprising statistic about ISIS was that in 2015, the group’s gross domestic product (GDP) was estimated at over US$6 billion. That figure put the Islamic State’s GDP on a par with actual nation- states, including Lichtenstein, in terms of the size of its economy. Through taxation and rent extraction, this violent non-state armed group amassed a huge war chest. Although ISIS is perhaps an exceptional case, the issue of the financing of