Financing Terrorism Transcript

(Partially Translated)

VO 00:06

A tax office in the caliphate - IS officials count the revenue taken from intimidated citizens. Their accounting is meticulous and bureaucratic through and through. This is a scene of IS propaganda.

VO 00:26

This woman recently escaped to a German refugee centre with her family. A few weeks ago, they were still living in the so-called caliphate. She has experienced this IS extortion first-hand.

00:40

"You have to pay taxes for everything - for your motorcycle, a marriage or birth certificate, water, electricity. No matter what."

00:51

"Even if you kill a sheep, you have to pay - then you a stamp from the Islamic State".

VO 1:01

The refugees in this centre describe how the IS has taken everything from them, through taxes, expropriation, robbery and extortion. Those who do not comply are killed.

1:17

"They come disguised to your house so you can't recognise them, then they search your home and threaten you, saying 'give us the money’, and if you don’t, they will ransack your house, find it and confiscate it.

1:31

"When they first arrived they were poor. They have become rich off of us"

VO 1.36

These tax revenues are becoming increasingly important for the IS, explains Der Spiegel reporter Christopher Reuter. He has analysed the structure of IS for years, trying to work out how the Caliphate is organised, and how they obtain their money.

1.52

As an outsider, it is extremely difficult to estimate the largest source of income for IS. This is because it is mainly seized from the approximately 8 million people who live under their oppressive control in Syria, in Iraq. There has always been the 5% Zakat tax, but now there are constantly new taxes for specific business, or for the import of specific goods. For example a few months ago frozen meat was suddenly taxed.

VO 2:26

Reuter explains how the ISIS tax collectors work according to a plan, revealing a diagram to demonstrate the extent of the statewide organization.

2:36

Here you see the structure of the whole administration, with the separate departments for medicine and education: the civil departments. And if you enlarge the image a little bit, on this side you can see the financial sector. There are two columns – one of them for accountancy, and underneath the other someone has written the word ‘Ranima’, or ‘Loot’

VO 3:07

Extortion is a fundamental part of the IS system, and their actions legitimise the pseudo-state. IS officials inspect and check everything, and residents must pay taxes for almost everything.

VO 3:22

A Tax receipt issued by IS.

VO 3:26

The recipient of this receipt had to pay up for his "non-Muslim-ness". The IS is becoming increasingly bureaucratic. These propaganda images show a receipt being issued for every small transaction. These are taken to the tax office where they are handled and logged meticulously. This feeds their cash register.

VO 3:52

State financing through taxes is becoming increasingly important, confirms terrorism expert Loretta Napoleoni: she argues the IS is more professionally organised than the West realises.

4.06

"The biggest mistake that the west is making today - the same mistake that they've been making since the beginning and a fact that they want to deny, is that IS is a state. It is acting as a state, it is presenting itself to the world as a state, and it is the beginning of a sort of revolution."

VO 4:27

IS controls an area comparable in size to the UK, including the cities of Mosul and Raqqa. Around 8 million people live under their control. It is unclear how much money the Caliphate takes from its inhabitants. There are however concrete figures from one region: Deir-ez-Zor, a particularly oil-rich region. These papers show how the IS obtain its money here.

VO 4:58

The Bristish researcher Aymen al-Tamimi has leaked numerous official ISIS papers from Syria. He lives in Assad's Syria and has contacts in the so-called Caliphate. Through them, he has obtained these IS-financial documents. Most of the money comes not from the sale of oil, says Tamimi, but through "expropriations".

5.24

"They confiscated a variety of things, like houses, cars, trucks, quantities of cigarettes, land, cattle even"

VO 5:34

The Budget Papers from Deir ez-Zor show the financial breakdown in detail: Only 27.7 percent of ISIS's income is through the sale of oil and gas. 3.9 percent comes from Electricity, 23.7 percent from taxes. The majority, 44.7 percent, comes from expropriation – almost half of their budget.

5:57 

"Ah, this comes from Iraq ... ... and this from Syria."

VO 6:02

Only a few weeks ago these refugees were in Deir ez-Zor. Today they are looking over the papers leaked by Tamimi. They immediately know what they are about and explain these expropriations work.

6:14

It’s very simple – they walk into a house, and if they like it, they’ll stick a note to it saying it’s now owned by IS. Then you have to leave, quickly.

VO 6:26

Another refugee, afraid of jeopardizing his relatives, agrees to speak anonymously. The IS chose their targets randomly, he says, looking at the papers, Random, but in accordance with the rules of the Calipahte.

6:39

"For example, if they catch someone who has cigarettes in their car, the car is confiscated and he is sent to prison"

6.46

The IS is practicing a loot economy. They don’t produce enough within their captured territory to sustain themselves long term. But in the short term this expropriation from the local population works, and when that runs out, they must capture new territory.

VO 7.05

Experts disagree over how long the IS can continue running the caliphate in this way. The fact is: the exploitation is being conducted in a highly bureaucratic manner. The IS create their own statewide structures, their own law and order. These further propaganda images show the setting up of a market.

7.25

This is the first time we've seen a jihadist organization running a state in a very modern fashion. They haven't made the mistake of other organizations like the PLO for example, which was mired by corruption, or the Taliban, who were an occupying power. What they are trying to do, is achieve the consensus of the population through social work but also through a smooth running of everyday life inside the caliphate.

VO 8.03

Day by day, the IS is becoming more like a legitimate state. This is why experts like Loretta are so convinced that the bombing of oil infrastructure will do little to halt this growth. The Caliphate now has more than eight million subjects, and each one of them is being forced to fill the war chest.

Credit: 8:05 to 08:13

Report: Rahel Sahli, Manuel Frick. Section: Armin Male