WASHINGTON — The Obama administration is struggling to cut off the millions of dollars in oil revenue that has made the Islamic State one of the wealthiest terror groups in history but has been unable to persuade Turkey, the NATO ally where much of the oil is traded on the black market, to crack down on an extensive sales network.
Western intelligence officials say they can track the Islamic State oil shipments as they move across Iraq and into Turkey’s southern border regions. Despite extensive discussions inside the Pentagon, US forces have not attacked the tanker trucks, though a senior administration official said Friday “that remains an option.”
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In public, the administration has been unwilling to criticize Turkey, which insists it has little control over the flow of foreign fighters into Iraq and Syria across its borders or the flow of oil back out.
One senior official, calling President Obama’s recent conversations with Turkey’s president, Recep Tayyip Erdogan, “sensitive,” said the decisions about what the country will do to counter the Islamic State “will be theirs to make.”
But behind the scenes, the conversations about the Sunni extremist group’s ability to gather vast sums to finance its operations have become increasingly tense since Obama’s vow on Wednesday night to degrade and ultimately destroy the group.
Turkey’s failure to help choke off the oil trade symbolizes the magnitude of the challenges facing the administration in assembling a coalition to counter the Sunni militant group. The Islamic State’s access to cash is critical to its ability to recruit members, meet its growing payroll of fighters, expand its reach, and operate across the territory of two countries.
“Turkey in many ways is a wild card in this coalition equation,” said Juan Zarate, a senior adviser at the Center for Strategic and International Studies and author of “Treasury’s War, the Unleashing of a New Era of Financial Warfare.”
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“It’s a great disappointment: There is a real danger that the effort to degrade and destroy ISIS is at risk,” Zarate said, referring to the Islamic State. “You have a major NATO ally, and it is not clear they are willing and able to cut off flows of funds, fighters, and support to ISIS.”
Turkey declined to sign a communiqué on Thursday in Saudi Arabia that committed gulf states in the region to counter the Islamic State, even limited to the extent each nation considered “appropriate.” Turkish officials told their US counterparts that with 49 Turkish diplomats being held as hostages in Iraq, they could not risk taking a public stance against the terror group.
Still, administration officials say they believe Turkey could substantially disrupt the cash flow to the Islamic State if it tried. “Like any sort of black market smuggling operation, if you devote the resources and the effort to attack it, you are unlikely to eradicate it but you are likely to put a very significant dent in it,” a senior administration official said Saturday.
A second senior official said that Obama’s national security team had spoken several times with Erdogan and other top Turkish officials in the past two weeks about what they can do to help counter the Islamic State. “Stopping the flow of foreign fighters, border security, and dismantling ISIL funding networks are also key aspects of our strategy, and we will continue to work closely with Turkey and our other partners in the region on these efforts in the days ahead,” the official said, using a different acronym to describe the militant organization.
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At the core of the talks are the dozen or so oil fields and refineries in Iraq and Syria on territory the group has controlled. The output has provided a steady stream of financing, which experts place at $1 million to $2 million a day — a pittance in terms of the global oil market, but a windfall for a terror group.
“Oil is a huge part of the financing equation” that empowers the Islamic State, said James Phillips, the senior fellow for Middle Eastern Affairs at the Heritage Foundation, a Washington-based research center.
The territory the Islamic State controls in Iraq alone is producing anywhere from 25,000 to 40,000 barrels of oil a day, which can fetch a minimum of $1.2 million on the black market, according to Luay al-Khatteeb, a visiting foreign policy fellow at the Brookings Doha Center, who also directs the Iraq Energy Institute.
Turkish authorities have been unwilling to cooperate in efforts to target the smuggling network. The supply chain of routes, individuals, families, and organizations that allow the oil to flow are well-established, some dating back decades, to when President Saddam Hussein of Iraq smuggled oil during the United Nations Oil-for-Food Program.