Late last month, we reported that ISIS has cut its fighters’ salaries in half due to “exceptional circumstances the caliphate is facing.”

Those “exceptional circumstances” include Russia’s unrelenting aerial campaign against the group’s illicit oil trafficking business in Syria. The US-led “coalition” likes to take credit for helping to cripple the oil trade, but in reality it was Vladimir Putin (and Zero Hedge) that put the issue in the spotlight in November.

After Putin’s comments at the G20 summit in Antalya and the subsequent aggressive push by the Russian air force to disable the group’s oil production and transport capabilities, the US was effectively forced to join the party. Asked why The Pentagon hadn’t hit ISIS oil trucks during the 14 months the US has supposedly been bombing the group, Washington responded by claiming that America didn’t want to risk collateral damage. In other words, Washington’s excuse for not targeting Islamic State’s $450 million/year oil trade is that the US was worried about a few truck drivers.

In any event, the group’s ability to fund its activities through the sale of stolen oil has been curtailed and it will be months (at least) before that money can be recouped through the capture of Libyan crude. That means less money for fighters and civil servants.

And it also means no more Gatorade.

And no more Snickers bars.

“The extremists who once bragged about minting their own currency are having a hard time meeting expenses, thanks to coalition airstrikes and other measures that have eroded millions from their finances since last fall,” AP reports. “Having built up loyalty among militants with good salaries and honeymoon and baby bonuses, the group has stopped providing even the smaller perks: free energy drinks and Snickers bars.”

Yes, no more damn Snickers. And when it comes to taxes and utility bills, it’s now “dollars only.” Here’s AP again:

Within the last two weeks, the extremist group started accepting only dollars for "tax" payments, water and electric bills, according to the Raqqa activist, who asked to be identified by his nom de guerre Abu Ahmad for his safety. "Everything is paid in dollars," he said. His account was bolstered by another ex-Raqqa resident, who, like Ahmad, also relies on communications with a network of family and acquaintances still in the city.

That’s exceptionally ironic because it was just last August when ISIS released a propaganda video announcing the return on the gold dinar which the group said was set to replace a worthless “piece of paper called the Federal Reserve dollar note.” Back to AP:

“Circumstances include the dramatic drop in global prices for oil — once a key source of income — airstrikes that have targeted cash stores and oil infrastructure, supply line cuts, and crucially, the Iraqi government's decision to stop paying civil servants in territory controlled by the extremists. A former Raqqa resident now living in Beirut said Syrians abroad are sending remittances in dollars to cover skyrocketing prices for vegetables and sugar. The resident, whose wife and baby still live in the city, did not want his name used for their safety. One of the other ex-residents, now living in Gaziantep, Turkey, said the road to Mosul was cut off late last year, and prices have risen swiftly — gas is up 25 percent, meat up nearly 70 percent, and sugar prices have doubled. In Iraq, where Islamic State has slowly been losing ground over the past year, the Iraqi government in September cut off salaries to government workers within territory controlled by the extremists, after months of wavering about the humanitarian costs paid by those trapped in the region. Iraqi officials estimate that Islamic State taxed the salaries at rates ranging from 20 to 50 percent, and analysts and the government now estimate a loss of $10 million minimum each month. In the Iraqi city of Fallujah, fighters who once made $400 a month aren't being paid at all and their food rations have been cut to two meals a day, according to a resident. The account of the resident, who spoke on condition of anonymity for fear of death at the hands of extremists, was supported by that of another family trapped in Fallujah that said inhabitants can only leave the city if they pay $1,000 — a sum well beyond the means of most in the Sunni-majority city that was the first in Iraq to fall to Islamic State in 2014. IS is also allowing Fallujah residents to pay $500 for the release of a detainee, the family in Fallujah told the AP, saying that they believed the new policy was put in place to help the group raise money — a system akin to bail. Mosul residents contacted by AP say IS has begun fining citizens who do not adhere to its strict dress code, rather than flogging them as before. The residents say they believe this is in response to financial problems in part because the group has already confiscated anything valuable, namely cars and other goods that are later resold in Syria.

As an aside, the Assad government still pays the salaries of civil servants in Raqqa. Those salaries are likely also taxed at high rates in order to line the pockets of top ISIS officials and, ironically, to continue the battle to destabilize Syria.

In any event, one important thing to note here is that to the extent ISIS is running out of cash, it isn't a consequence of one airstrike on a Mosul cash center as AP and other Western media would have you believe. We're talking about an organization that brings in a billion dollars a year here, so destroying a few million in hard currency isn't going to make a difference.

This is a direct result of Russia's move to decimate the oil trafficking business and that includes the PR effort to put Turkey's role in the international spotlight.

Going forward, the big question is this: to what extent will ISIS be able to plug the funding gaps by commandeering assets in Libya, where the group isn't subject to Russian airstrikes and where government (to the extent there is a government) forces aren't backed by a major state actor like Iran?

Or perhaps the better question is this: how long before Libya becomes yet another theatre in World War III?

* * *

For those who might have missed it, here's the actual ISIS document announcing the pay cuts:



Islamic State

Bayt Mal al-Muslimeen

Wilayat al-Raqqa

Decision no.: n/a

Month of Safr 1437 AH [c. November-December 2015]

In the name of God, the Compassionate, the Merciful

God Almighty has said: "Go forth, lightly or heavily armed. And wage jihad with your wealth and souls in the path of God. That is best for you if you know" (al-Tawba 41) [Qur'an 9:41]. And on the authority of Anas (may God be pleased with him): that the Prophet (SAWS) said: "Wage jihad against the mushrikeen with your wealth, souls & tongues"- Musnad Ahmad: Musnad Anas Malek (11798).

Jihad of wealth has been mentioned with jihad of soul in the Qur'an in ten cases, and in nine of those cases jihad of wealth has been presented beforehand over jihad of the soul, and only in one case has jihad of the soul been presented beforehand over jihad of wealth. And on the authority of Omar bin al-Khattab (may God be pleased with him): "The Messenger of God (SAWS) ordered us to give charity and that coincided with the time I had some wealth. So I said: 'Today I will outdo Abu Bakr, if ever I have outdone him.' So I came with half of my wealth, and so the Messenger of God (SAWS) said: 'What have you left for your family?' I said: 'The same amount.' And Abu Bakr came with all he had, so he said: 'Oh Abu Bakr, what have you left for your family?' He said: 'I have left for them God and His Messenger.' I said: 'By God, I can never outdo him in anything.'" (muttafiq alayhi).

So on account of the exceptional circumstances the Islamic State is facing, it has been decided to reduce the salaries that are paid to all mujahideen by half, and it is not allowed for anyone to be exempted from this decision, whatever his position. Let it be known that work will continue to distribute provisions twice every month as usual.

And God is the guarantor of success.