Islamic State's Funding and the Battle for Mosul

Iraq launched a military operation on Monday to rout Islamic State from Tikrit (Omar al-Jawoshy and Tim Arango, "Iraqi Offensive to Retake Tikrit From ISIS Begins"), and today The New York Times features a timely unsigned editorial, "To Hurt ISIS, Squeeze the Cash Flow." The editorial is a gloss of a recent Financial Action Task Force (FATF) report, "Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL)." FATF is an international organization set up by the G-7 to monitor and deal with money laundering. The Gulf Cooperation Council is a member.

The report, after a quick scan, seems to be extremely light on the historic funding streams of ISIS; it assumes an ISIS post-June of 2014 and its capture of Mosul -- in other words, after al-Baghdadi declared ISIS to be the Islamic State -- as the steady state. This is fundamentally misleading. How did ISIS grow so quickly after it took Fallujah in January 2014 that it could effortlessly capture Mosul, one of Iraq's largest cities, five months later? The oil revenue and looting of banks that followed the fall of Mosul became an explanation -- I am not kidding you -- for how ISIS funded its far flung potent military campaigns. To my mind, the early non-interference of the Kurds as they moved to take Kirkuk and the melting away of Iraqi Army commanding officers in Mosul indicated high-level coordination.

Now there appears to be a shift underway. Iraq's prime minister, Haider al-Abadi, originally pegged to succeed Nuri al-Maliki because of Abadi's pro-Western, more-Sunni-inclusive sensibilities, is ready to lead the assault on Islamic State. The campaign to recapture Mosul, when it was first announced, was to take place during Christmas of this year. Now that has been moved up to this spring. This is causing some consternation in the U.S. According to al-Jawoshy and Arango,

In a speech Monday to Parliament, Mr. Abadi echoed the words of President George W. Bush in the aftermath of 9/11, saying that the residents of Tikrit were either with Iraq or with the Islamic State.

“There is no neutrality in the battle against ISIS,” Mr. Abadi said. “If someone is being neutral with ISIS, then he is one of them.”

From a military perspective, capturing Tikrit is seen as an important precursor to an operation to retake Mosul, which lies farther north. Success in Tikrit could push up the timetable for a Mosul campaign, while failure would most likely mean more delays.

The American military, though, appears divided on the question of when the Iraqi military — which collapsed last summer in the face of the Islamic State onslaught — would be ready for a wide-scale offensive on Mosul, or in Anbar Province in the west of the country, which is also in the militants’ hands. Some American officials have backed off earlier estimates that it could happen as early as April.

Even a victory in Tikrit could be costly, given the prominent role of Shiite militias, which are feared by the Sunni population. And reports that the militias have carried out sectarian abuses in some areas have complicated efforts to persuade Sunnis to work with the government.

The United States, in returning to a military role in Iraq, has pushed for reconciliation between Iraq’s Shiite-led government and the country’s Sunni minority, but there has been little apparent progress. The United States has also insisted that Iraq establish Sunni fighting units to retake and hold Sunni areas, and it warned against using Shiite forces to invade those areas.

Yet it has been almost exclusively Shiite fighters that have protected Baghdad since the Islamic State offensive last summer, and it has been Iranian-directed militias that have secured some of the most significant gains on the battlefield, often fighting with the support of American airpower.

Further, the fight against the Islamic State has brought the United States and Iran into an awkward alliance in Iraq. While the United States’ effort has been most apparent in its airstrike campaign, Iran has taken the most prominent role on the ground, not just with the militias but with Iranian generals sometimes directing the fighting. 

On Monday, Maj. Gen. Qassim Suleimani, the Iranian spymaster who once directed the militias’ deadly campaign against American forces in Iraq, was on the ground near Tikrit, according to a prominent Iraqi militia leader and the Iranian Fars news agency.

What we are seeing, and have been seeing since last summer, is a third Iraq war since its invasion of Kuwait. And just as the last war left Iran in a more powerful strategic position after Saddam Hussein was ousted and a pro-Iranian, Shiite-majority government installed, so too this one is moving in the same direction.

The goal all along of the West and the Gulf Cooperation Council has been regime change in Iran. But Iran and it proxies and allies have proven to be formidable opponents on the battlefield.

So the fighting will continue, with the U.S. position -- working with Iran to fight ISIS at the same time working with the GCC to fight Iran -- becoming more obvious and untenable.