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The IDF is closely watching the progress of Islamic State, and views 2016 as a critical year that will help decide the fate of its caliphate. Whether its state formation survives the year or not, its recruitment drive and propaganda calls will continue nonetheless, according to assessments.Much of its fortunes (or misfortunes) depend on the willingness of Western powers to take the fight to them.When looking at Islamic State’s various regional branches and affiliates in the region, the first thing that becomes apparent to military analysts is that, although they are linked to one another through budgets and directives from ISIS’s central leadership, their behavior varies significantly from place to place.The Islamic State-affiliated Al-Yarmuk organization, which sits on the border with Israel on the Syrian Golan Heights, for example, behaves differently from ISIS in Raqqa, which in turn follows patterns different from ISIS in Sinai or in Libya.As a result, the IDF must study the capabilities, behavior patterns and intentions of each and every ISIS affiliate separately, to gain as accurate a picture as possible of emerging threats. Some of that information can be shared with Israel’s Western allies whose national security is deeply threatened by ISIS’s attacks.In fact, the evaluation in the IDF is that if ISIS brings down a few more passenger jets or pulls off attacks on stadiums in Europe, 2016 will mark the transition to a “world war” situation, not in the sense of full-scale global conflict but in the sense of the impact and consequent change ISIS attacks would have on Western culture, which will be altered dramatically by repeat terrorist attacks.There can be no doubt that Islamic State is, at this very time, planning additional mass-casualty incidents in the West, just as its operatives spent more than three months plotting the Paris attacks in November 2015.In the grand scheme of things, Islamic State views its activities as retribution for the Christian Crusades of the Middle Ages, and for what it sees as the Western arrogance that has led to intervention across the Middle East more recently, according to assessments in the IDF.In the Middle East, beyond establishing and expanding a caliphate – the latter goal being challenged now – Islamic State remains fixated on recruiting more jihadists to replace those killed on the battlefields, and spreading its Salafi-jihadi ideology as far as it can.But Islamic State’s economy is in trouble.Oil cash funds, once its prime source of income, is dwindling due to persistent coalition air strikes on its oil-producing facilities.Today, 45 percent of ISIS’s income stems from oil sales, nearly half of what it was a year ago. Islamic State makes $500 million a year from oil, but it is an entity that knows how to adapt quickly, and it has found alternative sources of revenue. In 2015, it made $300m. from taxes, $160m.from farming, and $80m. from the sales of looted antiquities. An additional $40m.was made from ransoms.In total, the organization enjoyed an annual budget of $1.3 billion in 2015. It is questionable whether it can sustain that level of funds in 2016, and it will struggle to fund its domestic and battlefield operations.Closer to home, the IDF is disturbed by the fact that Islamic State receives the highest level of support in the Middle East from Palestinians in the West Bank and Gaza.Those kinds of support levels could create dangerous dynamics for Israeli national security, as the recent case of Israeli-Arab lone terrorist Nashat Milhem, who gunned down two civilians and wounded several others in Tel Aviv this month, demonstrates.The IDF identified a vicious circle of terrorist inspiration, in which Milhem was motivated to act by ISIS’s Salafi-jihadi ideology, while ISIS operatives in neighboring regions took notice of Milhem’s actions and got ideas about orchestrating future attacks in Israel.Scanning surrounding territories and states, the IDF has identified the Sinai Peninsula as the area from which an ISIS attack on Israel is most likely to occur in the coming months.Although small in number, the 1,000 members of Wilayat Sinai (Sinai Province) who aligned themselves with ISIS have increased their threats and rhetoric to target Israel – despite being involved in a series of attacks on the Egyptian security forces, who are making gains in their quest to purge Sinai of their presence.Wilayat Sinai members are mostly made up of Sinai Beduin who have been marginalized from the local economy, and who have access to weapons smuggled from Libya or looted from raids on Egyptian bases.Regionally, the military has identified four nation-states that will remain intact in a Middle East where the state model is collapsing all around: Israel, Turkey, Iran and Egypt. All other states face varying degrees of dangers of semi or full collapse.Unfortunately, Jordan, too, faces risks in the current chaos.While King Abdullah II is studying the strategic threats closely, and his security forces are capable of repelling ISIS attacks from Syria, the Royal Hashemite Court faces challenges from within, from southern Jordanian Islamists, who could exploit the situation to undermine Jordan’s stability.Israel, meanwhile, is helping the coalition fight ISIS wherever it can, while preparing for a wide range of scenarios that could sweep the region in the coming year.