End of ISIS Approaching as Caliphate Loses Money and Land

Iraqi Forces in Mosul
Iraqi soldiers look on as smoke rises from the Qayyarah area, some 60 kilometres (35 miles) south of Mosul, on October 19, 2016, as Iraqi forces take part in an operation against Islamic State (ISIS) group jihadists to retake the city. Yasin Akgul/AFP/Getty

The self-styled caliphate of the Islamic State militant group (ISIS) is unlikely to survive its fourth year not only because it is losing territory, but because it is going broke, according to new analysis.

The jihadi group has not only lost more than 60 percent of the territory it held straddling the Iraqi-Syrian border, but it has lost 80 percent of its revenue, according to London-based defense consultancy IHS Markit.

It says that the group controlled 90,800 square kilometers (35,000 square miles) of land as of January 2015, but two-and-a-half years later, the group now only holds 36,200 square kilometers (14,000 square miles), still about twice the size of New Jersey.

"The Islamic State's rise and fall has been characterized by rapid inflation, followed by steady decline," said Columb Strack, senior Middle East analyst at IHS Markit.

"Three years after the 'Caliphate' was declared, it is evident that the group's governance project has failed," he added.

Syria map
The state of play in Syria as of May 1. Newsweek

Similarly, its revenue stream shrunk from a monthly average of $81 million in the second quarter of 2015, to $16 million in the second quarter of 2017.

The U.S.-led coalition's bombing campaign, coupled with local ground forces in Iraq and Syria, has mostly put an end to the group's oil production and smuggling, taxation, hostage-taking and confiscation.

The new analysis came on the same day that the Iraqi forces besieging the northern Iraqi city of Mosul recaptured the 12th-century mosque complex where the ISIS leader Abu Bakr al-Baghdadi declared the creation of the caliphate in July 2014. Mosul is the only city ISIS controls in the country, and its fall could happen within days, essentially splitting the caliphate in half.

Syria map
The areas of control in Syria as of June 29. Newsweek

After eight months battling for Mosul, Iraqi Prime Minister Haider al-Abadi said the caliphate had collapsed on Thursday.

"The return of al-Nuri Mosque and al-Hadba minaret to the fold of the nation marks the end of the Daesh state of falsehood," he said in a statement, using an Arabic acronym for ISIS.

In Syria, the Kurdish-Arab coalition fighting to reclaim the eastern city of Raqqa "completely encircled" the de facto capital of ISIS's caliphate on Thursday, the Syrian Observatory for Human Rights (SOHR), a U.K.-based monitoring group with extensive contacts in Syria, confirmed to Newsweek.

"They have besieged ISIS from everywhere. They have nowhere to go out," SOHR director Rami Abdelrahman told Newsweek by phone.

The encirclement occurred after the Kurdish-Arab fighters, known as the Syrian Democratic Forces (SDF) captured two southern villages that ISIS fighters were using to flee amid the offensive.

The SDF have captured a quarter of Raqqa's neighborhoods in the three weeks since the offensive began on June 6.

The prospects for ISIS's state project in the coming year are dim—the remaining pockets of ISIS-controlled territory will likely be overrun once its major cities are captured, according to Strack.

"The Islamic State's remaining caliphate is likely to break up before the end of the year," he says, "reducing its governance project to a string of isolated urban areas that will eventually be retaken over the course of 2018."