ISIS and Iraq Update: 2 August, 2014August 5, 2014 in Iran, Iraq, Russia, United States
Note– Flight Pattern shifts around Iraq: Due to concerns that Islamic State of Iraq and Syria (ISIS*) might possess surface-to-air missiles, and in light of the downing of flight MH17 in Ukraine, many airlines and air safety regulators have modified flight patterns around Iraq. The US Federal Aviation Administration has raised its minimum flight altitude over Iraq to 30,000 feet and requires planes taking from countries neighbouring Iraq to reach 30,000 feet before entering Iraqi airspace. These restrictions are only applicable to US-based airlines. In Europe, aviation safety regulators will issue non-binding guidance regarding flights in Iraqi airspace. Air France and Virgin Atlantic Airways have rerouted flights away from Iraqi airspace. British Airways will continue to fly over Iraq. Emirates Airline is reviewing the situation. The UN’s air safety group met on 29 July for an urgent review of information sharing regarding flight risk around conflict zones, and will identify methods for airlines to communicate any risks.
- Rapid ground advances slowed significantly in July as ISIS fights to maintain control of captured territory. However, cells of the group are known to be active in Baghdad.
- ISIS has developed an administrative power centre in Mosul, Iraq.
- ISIS has used extreme and violent tactics in their bid for power, such as targeting “non-believers” including Christians, Sunni, Shi’a civilians, and destroying historic and holy sites.
- ISIS has access to heavy weapons systems but is unlikely to use them beyond the short to medium term.
- Neighbouring nations have developed plans for domestic protection and border security.
- In hopes of building a unity government, the Iraqi parliament has elected a new Speaker and President, and is in the process of electing a Prime Minister.
- Iraq has called upon the US and Russia to provide more military weaponry.
- As fighting has not advanced south, there has been no significant change in oil sector contingency planning.
- Companies in the banking sectors do not appear to be adversely impacted by ISIS, but have developed contingency plans in the event of emergency evacuations or a breakdown of the banking system.
17 July: The Iraqi Parliament elected Sunni politician Salim al-Jubouri as its speaker. This marks the first important steps toward building a national unity government.
20 July: ISIS burns an 1800 year old church to the ground in Mosul.
21 July: Iraqi forces reportedly withdraw from a skirmish with ISIL fighters at Camp Speicher, a key base in Tikrit. Early press reports indicated that ISIL intended to set up an administration in the city. Hours later, Iraqi Special Forces conducted counterattack operations, retaking control of the base.
21 July: ISIS militants forced nine Christian monks out of a 1,600 year old Christian monastery in northern Iraq. Peshmerga soldiers found the monks walking miles away from the monastery and moved them to safety.
23 July: ISIS claims responsibility for a suicide bombing in a Shi’a neighbourhood in Baghdad that killed 33 people and wounded 50. The Iraqi Council of Representatives postponed their sessions to elect a new president for 24 hours.
24 July: ISIS reportedly creates “Euphrates Province” which straddles both sides of the Syria and Iraq borders. The province is reportedly intended to erase the border between the two nations. Cities within the region include Albu Kamal and Hajin in Syria, and al-Qaim in Iraq.
24 July: ISIS denies claims that it is initiating Female Genital Mutilation (FGM) in women and girls ages 11-46.
24 July: Hours before a Parliament vote on the presidency, an attack on a convoy of prisoners near Baghdad left over 60 people dead. Later, two car bombs struck in central Baghdad killing almost two dozen as restaurants were filled with residents breaking their Ramadan fast.
24 July: Fouad Massoum, veteran liberal politician and senior member of the Patriotic Union of Kurdistan (PUK) is elected president of the Iraqi Republic. This fulfilled the second step toward developing a new unity government.
30 July: A car bomb in eastern Baghdad killed one civilian and injured nine. Later in the day, a second car bomb detonates in the Shiite enclave of Sadr City in Baghdad, killing 2 civilians and injuring 11.
30 July: Conflicting news reports emerge as to whether Prime Minister al-Maliki will run for a third term. A Member of Parliament reportedly said al-Maliki withdrew his candidacy for the post because of political pressure, however later in the day, a spokesman for the State of Law Coalition denied those claims, adding that al-Maliki remains committed to run for a third term.
1 August: The United Nations reports that 1,737 people, mostly civilians, were killed non-ISIS controlled parts of in Iraq in July. The number is down from 2,400 in June. The toll excludes casualties in the Anbar province that is held by ISIS.
Analysis of ISIS
On 23 July, Ed Royce, Chairman of the US House Foreign Affairs Committee stated, “Never has a terrorist organization itself controlled such a large, resource-rich safe haven as ISIS does today. Never has a terrorist organization possessed the heavy weaponry, cash and personnel that ISIS does today.” Since June, ISIS has held control of a large portion of Iraq and Syria, creating a corridor between the two nations. Despite their plans for continued and rapid ground advances, the group has slowed considerably as it develops an administrative base in Mosul. ISIS has amassed a great deal of wealth through donations, extortion, and the capture of money and resources, allowing them to attract recruits from around the world through targeted and flashy social media campaigns.
Income: ISIS has been called one of the wealthiest terror organisations in the world, and their hold on oil fields in Iraq and Syria allow them to produce up to 80,000 barrels of oil a day. Current global market prices for oil hover around US $100 a barrel, which could fetch $8 million per day. However on the black market, the price sinks to between $10 and $22, due to cuts taken by middlemen to transport the oil. ISIS has made up for this by using their own fleet of tankers, and is estimated to be profiting at a rate of $50 to $60 a barrel. While this amounts to millions of dollars a day, it is a temporary profit sector for two reasons: First, ISIS does not have the skilled tradesmen and technicians necessary to maintain the oil fields; and second, following new regulations, nations or groups caught violating sanctions against ISIS face the threat of United Nations action.
Apart from oil, ISIS also gains income through mafia-style “protection” insurance, extortion, enforcing local taxes, donations, and smuggling. In total, ISIS has an average monthly income of US $12 million.
Weaponry: Within the territories, ISIS seized a number of weapons caches which were abandoned by Iraqi soldiers. The group has control of a range of artillery spanning from BM-21, towed and self-propelled artillery to anti-aircraft cannons ZSU 23-4, as well as a number of armoured fighting vehicles, Humvees, and M1 Abrams main battle tanks. It remains unlikely ISIS will use heavier artillery, as it requires extensive maintenance, and is only useful in the hands of skilled fighters. Analysts still believe that heavy weaponry will be stripped for parts or traded for mortars, small arms and IED components, which are effective in the hands of both skilled and unskilled fighters.
Recruitment Efforts: On 31 July, ISIS released an eight-minute promotional video entitled “Join the Ranks”, which featured a number of Indonesian nationals urging Muslims in Indonesia to join the fight. In the video, a man calling himself “Abu Muhammad al-Indonesi” delivered an impassioned, sometimes angry speech, in which he states that it is an obligation mandated by Allah for Muslims to participate in this fight and pledge their allegiance. ISIS sees great potential in Indonesia as at least 56 Indonesians have joined the militant group. This latest promotional video comes after the release of similar videos featuring Muslims from Australia, Canada, Chile and Germany.
In late July, ISIS also published the first issue of their official state magazine, Dabiq. The magazine outlines the group’s direction, recruitment methods, political and military strategy, and tribal alliances. The magazine has been published in English as well as several European languages. Its purpose is multi-fold; first it intends to call Muslims to the new caliphate by detailing stories of success and support. Second, it aims to show the justification of their cause by enumerating the atrocities against the group while simultaneously displaying images of their own violence. Finally, the magazine is meant as a sort of educational tool to justify the existence and nature of the caliphate, and to underscore legitimacy and political and religious authority over all Muslims. This is achieved by defining a destiny for the group that is linked to apocalyptic literature. Even the name Dabiq refers to a city in Syria that is said to be a site of great fighting during Armageddon (Malahim). The magazine states, “One of the greatest battles between the Muslims and the crusaders will take place near Dabiq.” The magazine is not dissimilar to Inspire Magazine, the periodical issued by rival group Al Qaeda in the Arabian Peninsula (AQAP). As there is an overt competition for recruits, it is not surprising that ISIS is using this platform to lure current members and potential recruits away from AQAP and into ISIS.
In addition to promotional videos, recruiters have been discovered internationally and online. In April, a 19 year-old woman from Colorado in the US was arrested as she attempted to fly to Syria to meet her online suitor, a Tunisian man who claimed to be a member of ISIS. The woman attended a military tactics and firearms training course with the US Army Explorers earlier in the year, with intentions to help ISIS fighters who shared her “view of Islam as requiring participation in violent jihad against any non-believers.”
Recruitment of Women: ISIS has two female battalions based in the northern Syrian city of Raqqah. The battalions are called “Al-Khansaa” and “Umm al-Rayan”. Recruits must be female, between the ages of 18 and 25, single, and can have no other jobs outside of ISIS. If they join, they receive a monthly salary of 25,000 Syrian liras, nearly US $170.
These all female battalions have a duty to “expose male activists who disguise in women’s clothing to avoid detention when stopping at the ISIS checkpoints,” after learning that men in opposition groups have dressed in burqas to pass through checkpoints easily. These all-female brigades set up checkpoints to search female passersby, as men cannot search women. It is also suspected, but unverified, that the battalions have a secondary role of enforcing the strict rules of the caliphate on women, including enforcing dress codes.
Expansion: On 1 July, Islamic State called for willing Muslims, particularly scholars, judges, doctors, engineers and people with military and administrative expertise, to move to the “Islamic State” and develop the new caliphate. The vast majority of the Muslim world has been dismissive of the caliphate, preferring to focus on Ramadan and the World Cup. With little support and a great deal of opposition, in the past month the group has made few efforts toward expansion, with the exception of certain oil fields in Syria. Rather, they are concentrating on maintaining control of currently held grounds and implementing an administration with an extremist interpretation of Sharia Law. While the group has slowed their ground offensive, it is known that there are cells of ISIS in Baghdad with the intention of causing violence and disruption in the city’s security. ISIS has claimed responsibility for several car bombings in Baghdad, mainly targeting Shi’a districts. ISIS has also committed a series of atrocities against Christians, and Shi’a and Sunni Muslims inside and outside of their control zone.
Violence and Religious Targeting: ISIS appears to be indiscriminate in its rampant targeting of what they consider “kafirs” (non-believers). The group has become known for mass murders, violent beheadings and crucifixions. ISIS has targeted Christians in Northern Iraqi cities, particularly in Mosul. Since capturing areas in the north, the group has imposed anti-Christian rule, including ordering Muslim employers to fire Christian workers. On 18 July, ISIS gave Christians in Mosul a 48 hour deadline to comply with their directive: Christians must either convert to Islam, pay tax, leave, or be killed. Homes belonging to Christians were marked with the Arabic letter noon ( ﻦ ), to stand for “Nazarene”. Christians in Mosul, who once numbered over 50,000, fled to a nearby town and the homes of Christian leaders were ransacked. Evacuated Christian properties have been reportedly seized and marked with signs reading: “This is the property of the Islamic State.”
The bulk of the Christian population fled to nearby Qaraqosh, leaving Mosul devoid of Christians for the first time in nearly 1600 years. Qaraqosh, a city approximately 20 miles south of Mosul, is protected by the Peshmerga, well-armed Kurdish fighters from the autonomous region of Iraqi Kurdistan who seek to absorb Qaraqosh and surrounding villages.
Rather than fighting with the Peshmerga, ISIS has responded by blocking pipes that connect the town to the Tigris River, effectively cutting off the city’s water supply. The town has become reliant on rationed water being shipped in from Kurdish controlled areas, and residents pay US $10 every two days to refill their water tanks. NGOs have also erected water depots, but they are insufficient to supply the growing number of evacuees coping with the summer heat. In addition, Qaraqosh suffers hours-long electrical blackouts, and ISIS has placed an embargo against the city, preventing nearby towns from conducting trade with merchants in Qaraqosh. The situation has forced residents to drive to different cities in search of income.
On 20 July, ISIS burned an 1800 year old church to the ground. One day later, monks residing at the Mar Behnam monastery were evacuated by ISIS fighters. The monastery, run by the Syriac Catholic Church, is an important Christian pilgrimage site dating back to the 4th century. The monks asked to save some of the monastery’s relics but were refused. The evacuated monks were picked up by Peshmerga fighters several miles from the monastery. It must be noted here that ISIS, who claim to be Sunni Muslims, evicted the Christians, who were taken in by Sunni Kurds.
Christians are not alone in facing discrimination by ISIS. Shi’a Muslims, as well as Yazidis (a sect linked to Zoroastrianism) are reportedly killed immediately upon identification. Reports indicate that this initial identification and differentiation between Shi’a and Sunni Muslims is based on four questions. ISIS members ask the person’s name, where they live, how they pray, and what music they listen to. These questions can help to identify, respectively and to some degree, whether they hail from a historically Shi’a family, if they live in a Shi’a neighbourhood, whether they use the Shia or Sunni prayer position (Sunni Muslim’s fold their hands or cross their arms in front of their stomachs; Shi’as leaving their arms extended, palms resting on their thighs), and whether their music, if religious, is of Sunni or Shi’a nature.
Sunni Muslims, the segment of the population that ISIS claims to represent, have been targeted as well; in June and July, ISIS targeted a number of Sunni imams and muftis in Iraq. Various tolls of targeted attacks on Sunni citizens in Iraq and Syria show that ISIS may have killed as many as 700 Sunni Muslims. Further, ISIS has demanded the allegiance of nearby Sunni militant groups, most of which are in direct opposition to ISIS. Several of these groups have refused to take this oath, which also requires the groups to hand over all weapons. The resultant clashes have led to a number of deadly battles in Syria and Iraq.
Inside ISIS controlled zones, residents are subjected to an extremely militant, loosely adapted version of Sharia law. On 19 June, ISIS tweeted images from a trial in which a Muslim woman was accused of adultery and then stoned to death. The photos did not show the woman, however they did show a gathering of male ISIS members in attendance to watch the event.
Most puzzling, however, is ISIS’ rampant destruction of Shrines that are sacred to Abrahamic religions (Judaism, Christianity, and Islam). On 9 July, a video attributed to ISIS was posted on YouTube showing an ancient tomb being destroyed. Iraqi government officials say it is “almost certainly” the tomb of Biblical prophet Jonah, who is also a prophet in the Jewish and Islamic faiths. The group has destroyed over 30 holy shrines for Sunni and Shi’a Muslims, as well as historically significant Christian and Abrahamic sites, causing international outrage. The combined actions indicate that ISIS, while claiming to be a religious group, is merely using the guise of religion to justify their atrocities and organized crime.
Pushback: ISIS is facing opposition from Syrian, Kurdish and Iraqi military fighters, as well as anti-extremist civilian militias, sectarian militias, rival militias, and a growing number of tribes in the regions that once supported their activities. The group, which is estimated to number at 10,000 members, has been stretched thin. To accommodate this, the group is likely to shift their strategy from brute force to guerrilla tactics in order to gain territory.
Internationally, Muslims continue to express outrage at the caliphate, calling it “heretical”, “reckless” and a “mockery of Islam”. Islamic scholars and political leaders have accused ISIS of distorting the concept of the caliphate for its own purposes. In a speech on 1 August, Saudi Arabia’s King Abdullah castigated militants who are “killing innocent people and mutilating their bodies in contravention of Islamic teachings.” The King then called upon regional leaders and religious scholars to prevent Islam from being hijacked by militants. In the first issue of Dabiq, ISIS addresses why Saudi Arabia’s concerns that they will be the next target are well-founded. In June, Saudi Arabia moved 30,000 troops to their borders to protect the kingdom. Likewise, Jordan has reinforced troops along its border. Hamas, which ISIS calls “too moderate”, has called ISIS is a direct challenge to their regime. King Abdullah’s sentiments have been praised by former Lebanese Prime Minister Saad Hariri; particularly as the Syrian War has already deeply impacted Lebanon.
Even in online radical militant forums, members are opposed to the rampant destruction and violence conducted by ISIS. One writer, calling himself Faruq al-Iraq, wrote, “You claim to follow in the path of the Prophet (Mohammed), but you are the first to stray from his word,” adding that there was no theological justification for destroying the shrines. This comment has been echoed by many other online posts from people who, only weeks earlier, had fully endorsed the caliphate.
Domestically, civil militias are taking up the posts of combating ISIS. The Sunni majority in the controlled region initially welcomed ISIS, believing they would put an end to sectarian policing. However that opinion soured quickly as ISIS conducted atrocities against the residents and destroyed historic holy sites, churches and mosques in a show of force. In Mosul, a group of students, civil servants, and merchants have formed a militia called Kataeb al-Mosul (The Mosul Brigades). In the past week, Kataeb al-Mosul has reportedly killed five ISIS militants, and intends to conduct more operations. Residents have been told “not to cooperate with Daash [Arabic word for ISIS] in any way.”
ISIS has been outspoken about plans continue to absorb additional ground in the region, including Iraq’s capital city, Baghdad. While advances toward the capital were halted in July, their reach has stretched through to areas outside of its control. ISIS has claimed responsibility for a number of bombings in Baghdad, particularly in Shi’a dominated areas. This suggests that while they do not currently have the capability to both hold their controlled territory and continue their advance, they intend to take measures to weaken the security in Baghdad and shake the government as it seeks to establish new leadership.
ISIS has turned Mosul into an ersatz power centre in direct opposition to Baghdad. In doing so, Iraq is effectively broken into three separate states: Kurdish controlled territories on Iraq’s northwest borders with Turkey and Iran, ISIS controlled zones in the northeast and to the Syrian border, and government-controlled Iraq to the south, which is struggling with sectarian violence. This breakup, while unofficial, is not unexpected. The US government estimated as early as 2003 that Iraq could break into three distinct states with differing and feuding religious and ethnic factors, and result in a failed state which could become a safe haven for terrorism. There is a growing sense that if the country does not break into three states, Baghdad will still not be able to control the entire nation for some time; it is speculated that a decentralized Iraqi government is the most likely way forward.
The strongest defence Iraq has from becoming a failed state is a united federal government system that can impose a sense of national unity and a willingness to combat ISIS regardless of sectarian identities. To this end, the incoming parliament selected a new speaker, moderate Sunni Salim al-Jubouri, on 17 July. A week later, moderate Kurdish politician Fouad Massoum was named the new president of Iraq. Since 2003, the position of Iraqi President has always been a Kurd; the Speaker of Parliament has been Sunni, and the Prime Minister a Shi’a.
The selection of prime minister is likely to be the most contentious. Current Prime Minister Nouri al Maliki has been internationally criticised for pro-Shi’a sectarian policies, including empowering Shi’a militias to target Sunni Muslims at will. It is in this environment that the ISIS has thrived, manipulating the emotions of Sunni citizens and tribal groups to grow their influence and control. Despite conflicting reports, Maliki has stated that he intends to run for a third term as Prime Minister. His political party, State of Law Coalition, won the largest bloc of seats in parliament, and therefore has the right to form the government. The Prime Minister, in turn, has the right to assemble his Cabinet. Al-Maliki has brazenly insisted he will remain at the helm, and has threatened that his cabinet will not include “rival” Kurds or Sunni Arabs.
The Kurds, meanwhile, seek to create an autonomous government, yet their involvement in Iraq’s central government is crucial in both developing a united front against ISIS and keeping Iraq from devolving into a failed state. However, the Kurds are also aware that they have the best chance for survival if they break away from Iraq. The Peshmerga (Kurdish armed forces) have stepped up to assist the Christian population that was evacuated in Mosul in late July, and has used the opportunity to put “protections” around villages where Christians have retreated, in a de facto annexation of Iraqi land. Likewise, the Kurds have protected Muslims and Arabs in lands that serve as corridors between disconnected areas within Kurdish control.
On 21 July, the Iraqi ambassador to the US called on the Americans to launch “precision air attacks” on territories held by ISIS. H.E. Lukman Faily said that “the US should offer air support targeting terrorist camps and supply convoys in remote areas,” adding that the strikes would protect Iraq from a further terrorist influx, particularly through the Iraq/Syria corridor which has been created by ISIS.
Iraq is awaiting a shipment of US 24 Apache helicopters and 36 F-16 fighter planes that have been delayed through bureaucratic controls associated with foreign military sales. The F-16 shipment is expected to arrive in the autumn, after which time Iraqi pilots will need to be trained to operate the machinery. There is no scheduled date for the Apache helicopters. Speaking on the delays, Faily said they had an “adverse impact” on Iraq, adding that Washington’s slow pace “also has created questions for us back home” about Washington’s commitment to Iraq.
Currently, there are approximately 200 US military advisers serving in two operations centres in Iraq, and US warplanes are conducting approximately 50 surveillance flights per day in Iraqi airspace. While the US is reluctant to conduct military operations in Iraq, on 31 July, the United States announced plans to sell 5,000 Hellfire missiles to Iraq in a $700 million deal, pending Congressional approval. If passed, which is expected, it will be the largest sale of lethal missiles to Iraq. The sale will include equipment, parts, training and logistical support. The AGM-114K/N/R can be fired from AC-208 Cessna Caravan planes and other aircraft. Prior to the deal, the US has shipped approximately 780 Hellfire missiles to Iraq since July.
Meanwhile, Russia shipped Sukhoi-25 fighter jets in June, and reports indicate that the Iraqi government has signed a US $1 billion deal with Russia for the sale of at least two battalions of Grad rocket launchers, mortars, anti-tank missiles and other weaponry. The government is in ongoing talks to purchase an additional ten Sukhoi 27-30 fighter jets.
Lukman Faily stated that Iran has offered military assistance, which the Iraqi government has reportedly declined. However, reliable Arabic media sources suggest that as many as 2,000 Iranian troops are operating inside Iraq. This includes members of Iran’s Revolutionary Guard, who are believed to be organising Shi’a militias to fight ISIL.
Kurdish Defence: The Kurdistan Regional Government has also asked the US to supply them with sophisticated weaponry to reinforce the Peshmerga as they attempt to deal with the ISIS threat. They are seeking tanks, sniper equipment, armoured personnel carriers, artillery and ammunition, as well as helmets, body armour, fuel trucks and ambulances. The US has been wary of providing such weaponry for fear that the arms could be used in the Kurdish fight to break away from Iraq. The Kurds are fighting ISIS on the Syrian and Iraqi borders, but with the intention of protecting the areas which they consider as Kurdish. They have not fought ISIS in cities beyond their borders, but in some instances have “annexed” areas into their protection. In some cities, for example Hasika in Syria, regional armies have handed some parts of the land to the Kurds in order to protect area, believing the Kurds to be the only group that can push back the ISIS militants. The Peshmerga may also operate in areas that serve as land bridges between Kurdish controlled territories which are not connected to one another. Currently, the battle between Kurds and ISIS is for control of land and resources, particularly oil facilities. On 1 August, Peshmerga forces clashed with ISIS fighters in Zumar, on Iraq’s border with Syria. ISIS fighters stormed an oil installation in the town and captured six bunkers from the oil police. Later in the day, the Peshmerga forces conducted a surprise counter-attack, regaining the installation and expelling ISIS militants from the region.
Economically, ISIS is insolvent. Despite the wealth and resources available to ISIS, they appear to be struggling in their dual role as fighters and administrators. According to Michael Knights, a Middle East expert at the Washington Institute for Near East Policy, ISIS has “gone from being the world’s richest terrorist organization to the world’s poorest state.” The $12 million income that ISIS pulls in every month is a decent sum for a terrorist organisation, but grossly insufficient to support a state.
The oil flow that ISIS currently relies on for nearly 40% of its monthly income is dependent on finding and keeping technicians with the capability to maintain the oil fields that the group has captured, and according to several reports, the turnover rate is high. In addition, a large portion of the money that comes from extortion and taxes is beginning to dry out. The money ISIS was extorting from public servants disappeared after Baghdad froze public salaries in the region. In fact, ISIS has become responsible for providing a salary to the same public servants it once extorted, in addition to paying for fighters, paying for support from tribal leaders, and providing basic public services, such as trash removal, electricity, water supplies, and other civil requirements normally controlled by a central government. The group’s 80,000 barrels a day and $12 million monthly income suddenly becomes paltry, particularly when compared to Iraq’s 3 million barrels a day (from southern Iraq) and monthly income of $10 billion. Because ISIS has made enemies of like-minded organisations, they cannot ask for support from other radical groups.
ISIS has also weakened itself in a way that it may not have expected. In destroying historic shrines and holy sites, they made enemies in every sector of the nation. In July, ISIS militants announced they would target the Hadba, a minaret dating back to the 12th century that leans like the Tower of Pisa. The Hadba is a national icon which features on Iraqi currency. Residents in and near Mosul rushed to the site to form a human chain around the minaret, and forced ISIS to back down. It is possible that by destroying these sites, ISIS has done what no government could do since the downfall of Saddam Hussein: create a sense of national unity.
The continued destruction of historic and holy sites could be a bridge too far, sparking the dual reactions of dissuading even the most radicalised among militants from joining ISIS, while simultaneously converting Iraqi fear into anger, generating a the very nationalism that that has prevented Iraqis from working together to dismantle ISIS.
Oil and Banking Sector Impacts
With the slowing of ground advances by ISIS, there have not been any significant changes to the oil sector. Approximately 75% of Iraq’s oil is in the Shi’a dominated south. There have been fears that ISIS will attempt to advance south to gain control of those resources, but indicators suggest that a brute force siege is unlikely. Southern Iraqi oil facilities are not under immediate threat; however oil companies in the region remain on high alert with 100,000 Iraqi police with protecting oil facilities.
Oil battles have mainly occurred between Baghdad and the Kurdish regional government. In mid July, the Peshmerga expanded their area of control into oil-rich Kirkuk, where they seized two key facilities located just outside the city. The Kurdish regional government has begun pumping oil from the Kirkuk field into their pipelines to sell to Turkey. The Kurds claim that since Baghdad has not met its commitment to financially support the regional government, they are left with no choice but to sell their own oil. Meanwhile, Baghdad calls the move illegal.
In the banking sector, no changes have occurred to adversely impact banking security in the region. International banking companies have developed contingency plans to relocate operations and protect client assets in the event of a breakdown in the banking system, but otherwise, regional banks continue business as usual. Foreign banks are still advising multinational corporate clients to reduce the amount of cash they keep in Iraq to a minimum.