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Comment by misja111 | Hacker News Reader

I have my doubts about the explanations given in the CNN article about ISIS' recent salary cuts. CNN suggests that some of USA's recent bombings are the cause of ISIS' financial problems. Oil transports have been bombed, cutting off one source of ISIS' income, and a money depot has been bombed as well.

If this is true, then why does ISIS get into financial trouble only now? The airstrikes in Syria have been going on already since September 2014. Did the USA realize that they should start bombing oil transports only recently?

On the other hand, Russia has claimed to have been bombing oil transports since the very start of their air campaign. Which happens to have started a couple of month ago. Maybe I'm too suspicious, but to me it looks like ISIS is getting into trouble because of the recent Russian intervention, and not because the USA.

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I obviously can't prove any of this since I don't have inside evidence, but my theory (explained below) is supported by a few ideas reported by the news:

1. When ISIS moves into a city they appropriate everything of value. During their initial expansion they built up quite a war chest, but their expansion has stopped for now so they are not adding funds that way. 2. ISIS makes most of its money by taxing civilians. The oil bombings are targeting the small piece of pie, not the big piece.

Here's my theory: ISIS ran into a classic problem seen by several startup companies. They saw initial success and had fast growth. They wanted to keep growing so they recruited heavily. To recruit a lot of soldiers they promised generous pay and benefits and even offered to support the families of soldiers so dads could go fight. Their burn rate was astronomical, but was okay because they were staying ahead of it through growth. But the growth ended up being unsustainable, because competition arrived and contained them. They kept it up for a long time because they had a lot of funding, but their burn rate finally caught up to them since they haven't been able to keep growing as before. Leadership did not/have not made the transition from wild startup CEOs that give pitch talks and sell to investors into the sensible, sustainable CEOs that manage a company in a saturated market with an eye toward creating a mature company. Remaining in the mode of a wild growth startup company is not an option for these guys. There is no viable strategy for a terrorist group that says "we'll grow like crazy and then sell out to Apple/Facebook/Google/Microsoft while we are popular and they'll handle the maturity stages. Terrorists have to make the maturity transition themselves because they can't be bought out.

Next step: IPO.

Or being bought out by one of the big player, US or Russia.

If they get bought by Al-Queda in Iraq, would that make it an AQIhire?

Perhaps they could grow to the point where they can make an alliance with the US (we would do it for strategic reasons, like in the case of Saudi Arabia). There would be a re-branding into the "Free Syrian Republic" or some such, and the buy out would be complete. Assad out of power, oil controlled by the US. It's what we wanted back when we gave ISIS (then known as the "Free Syrian Army") their initial startup capital and weaponry.

This makes so much sense that I am afraid it will happen. It's not like the US hasn't gotten in bed with unpopular countries before, and what the government really wants is for the major geopolitical power in the Middle East to be allied with us so we can secure cheap energy.

> they can make an alliance with the US

It's hard to make an alliance with someone who already funded you.

> when we gave ISIS (then known as the "Free Syrian Army")

There are several sides to the Syrian Civil War. The Free Syrian Army is different from ISIS

The FSA and ISIS are two different entities. Both still exist. The third major player is Al Nusra Front, which falls under Al Qaeda. FSA and Al Nusra are fighting ISIS, the Syrian government, and Hezbollah.

In a very interesting interview conducted by Al Jazeera a few months back, the head of Al Nusra Front stated that ISIS and the Syrian government/Hezbollah never really fought each other.

I am sure that at least some area some local commander of either Al Nusra or FSA have joined Isis, for various reasons, like being besieged by Assad's forces, running out of munition, etc.

This is also the messy part of civil war to survive alliances are fleeting. And so it is totally believable that some weapons given by the West to support FSA ended up in Isis hand willingly.

Watch out for signs that ISIS is hiring a PR firm (which is what Saudi Arabia did) to convince us that they're the good guys, and whomever they're fighting are the badder guys.

http://www.prwatch.org/books/tsigfy10.html

It's already been done that for Al Nusrah, though not by Saudi but Muslim Brotherhood and Turkey.

Al Nusrah is the new hip and modern wing of Al Qaida. They are now so moderate and progressive that only stone women using Fair Trade stones.

there's not that much oil to control in Syria

According to this (http://ig.ft.com/sites/2015/isis-oil/) Financial Times article, oil is ISIS' single greatest source of revenue. It is supposed to bring in 1.1 million dollars a day.

A funny thing about the oil transports is that until not so long ago they were sort of a public secret. Because it was Turkey, USA's NATO ally, where most of those transports were going to, but Turkey was of course denying that.

I bet it's almost all this [1]. it was like $100+ a barrel back in 2014. It's a tough time to be in the oil business.

http://www.cnbc.com/2016/01/19/oil-prices-fall-further-on-gl...

So, ISIS earns 1/5th the daily revenue of than Clash of Clans, or about the same revenue as ~250 McDonalds stores?

http://www.gamesindustry.biz/articles/2014-02-11-clash-of-cl...

As a sanity check: ISIS soldiers earn between $400 and $1,200 a month, plus a $50 stipend for their wives and $25 for each child, according to the Congressional Research Service.

Call it ~1,000 / month or ~30$ a day. Let's assume 1/3 of that 1 million / day goes to fighters and the rest is overhead. ~= 10,000 fighters which is a significant force and importantly it's replaceable with new recruits.

PS: Though that could significantly understate things if the average is closer to say 500$ per month and / or overhead is lower and paid with other income sources.

Those numbers seem far too high. ISIS pays soldiers more than China and Russia do?

This may be a question of direct vs. indirect pay. China and Russia both provide food / shelter / equipment which ISIS may skimp on. Also, ISIS is in a major war relative to there size so hazard pay is an issue.

Anyway poking around the web it looks like they are somewhere between 7,000 and 35,000 fighters which seems to be in the right ballpark for 1Million / day revenue.

PS: And of course graft is a major issue.

Small note, 1/5th of the daily revenue for Supercell as a whole, not for Clash of Clans alone (although that is likely the lion's share).

This doesn't change the overall thrust of your point. Just noting for accuracy only.

"ISIS ran into a classic problem seen by several startup companies"

Bro culture?

Also, yes. But considering that women are marginalized in several of the competing companies as well (Saudi Arabia, Iran, etc.) I don't think it's a differentiating factor.

When you have a hammer all problems are nails. ISIS isn't a startup company, and the analogy to one fails beyond the initial thought.

>There is no viable strategy for a terrorist group that says "we'll grow like crazy and then sell out to Apple/Facebook/Google/Microsoft

What ?

That's harsh pinkrooftop. I'm not a startup employee or founder, and I read HN because I find the non-startup related submissions interesting. I was deployed at the end of 2012-2013 and my boss called ISIS as a big threat even as it was developing (although he may have just gotten lucky). I wasn't trying to force this into a startup picture, I just saw a lot of parallels between ISIS and a lot of "unicorns" that look awesome and then deflate once reality takes hold and it turns out their business plan is unsustainable. And a lot of startups have an exit strategy to get bought out by a larger tech company. The point I was trying to make is that they can't keep acting like their growth will continue forever and they just realized that they don't have the money to pretend like it will.

If you want to pick apart my comparison, use specific details rather than complaining that the "analogy fails" without offering any support. Sure, startup companies don't kidnap and murder innocent civilians, but I think its a fair comparison when talking about financials and paying employees.

It just doesn't seem worthwhile to fit ISIS into a startup model. It's a terroristic cult focused on Sharia Law. So the business model would be conquer and impose Islamic law, and start a world wide Islamic Caliphate to serve God by means of ushering in the apocalypse, thru innovative disruption of basic human rights? The only similarities to a startup are that they need leadership and money to achieve their goals. Which is what I said before, the analogy fails after the initial idea.

> ISIS isn't a startup company

Why do you say that?

I think that's exactly what it is. It's a shitty business though. It's business is war and conquest and rape and pillage and destruction. But in the end it has a budget, it has a start date, it has employees, it has a stated plan, it recruits, etc... What else do you want in an organization to make it a company?

If it looks like a duck and sounds like a duck...

https://news.vice.com/article/a-leaked-budget-may-finally-sh...

http://www.npr.org/2015/12/10/459249994/leaked-budget-docume...

Using money and budgeting expenditure doesn't alone make something a startup company. Or a company. Paul Graham says a startup is simply a company designed to grow fast. ISIS is trying to grow but are they a company? When do they issue an IPO? What benefit does analyzing ISIS as a startup provide, judging if they are more innovative than other terrorists groups? Can they literally capture enough market share? It's a silly concept, would make a good SNL skit

It was an analogy, not a definition. Your entire rebuttal so far has leaned far more on a definitional objection than any of the comparisons made.

Less a startup than a Ponzi scheme.

same diff, in most cases

This is the classic Civ IV problem; you add too many cities too fast and your economy can't keep up.

Your second point. That Isis makes much of its money by taxation. Got any source on that? Taxing the local people sounds like a sure way to lose support. As far as I understand Sunni locals support Isis as their militia.

The first attack on oil convoys was in November 2015 (http://www.nytimes.com/2015/11/17/world/middleeast/us-strike...)

Primarily this was to avoid unnecessary civilian and collateral damage:

"Until Monday, the United States refrained from striking the fleet used to transport oil, believed to include more than 1,000 tanker trucks, because of concerns about causing civilian casualties. As a result, the Islamic State’s distribution system for exporting oil had remained largely intact."

Plus why destroy infrastructure required by civilians during peacetime if you don't have to? That just puts them in a worse position when all this is done.

"The USA, great protector of Middle Eastern civilians." Somehow I'm not buying it. The USA does what's good for their bottom line. Everything else is propaganda.

the US only started bombing the oil trucks once their hand was forced by the russians doing so while pointing out that the US had been avoiding these obvious targets. we can speculate on reasons that they held back before then, but i suspect it had to do with the oil being sold to the turks.

The US gave another explanation why they didn't attack oil infrastructure:

> A former CIA director said the U.S.-led coalition fighting the Islamic State has been reluctant to attack oil wells controlled by the extremist group partly because of environmental concerns. http://www.washingtontimes.com/news/2015/nov/25/michael-more...

Suddenly the US becomes the protector of mother earth?

Close, but I don't think so. The ISIS is supported by the Saudis; as long as they could sell oil, it saved the Saudis money. The Saudis have long opposed air strikes on ISIS. Saudis are using ISIS as proxies in their fight against the new Iraqi government and Syria.

I'm really not sure where the oil-exporting Saudis benefit financially from ISIS undercutting them on the black market. Or indeed where you've got the idea they're opposed to air strikes they've even participated in.

Any tactical enemy-of-my-enemy-is-my-friend inclinations towards supporting ISIS that Saudi might have are are also rather tempered by the fact that wresting control of Mecca from the American-allied kleptocrats of the House of Saud is rather close to the top of the Islamic State's to-do list. Which actually makes them more of a threat than Assad or Iranian-backed Shia militias

The suggestion that Turkey is a sufficiently influential ally for the US to not just disregard but actively encourage cross border black market oil trade with ISIS is almost as silly.

Before ISIS took off, they were Al Qaeda in Iraq (AQI). Here's an old news story I quickly dug up about the Saudis asking US not to hit them: http://www.frontpagemag.com/point/234500/saudi-arabia-agains...

ISIS are Sunnis. Saudis are Sunnis. Iran, Syria are Shia (as are Hezbollah). That's one factor. The other is: some regimes have it in for Assad; they want to get rid of him. They'll support anybody taking on Assad. That's another factor.

Bearing in mind the Saudis launched airstrikes against ISIS in Syria themselves a couple of months later, it's not really plausible they want[ed] to protect ISIS as opposed to avoid the US stepping in to stabilise the Iraqi government (or bombing Sunni cities)

ISIS being Sunnis actually makes them more dangerous to the House of Saud, since they represent a challenge to their legitimacy as rulers rather than their population's natural enemy. Similarly, the US damaging the ISIS economy and prestige actually strengthens Saudi Arabia's position as the benefactor-of-choice for aspirant Sunni militants.

I have a friend from the region (Aleppo, to be precise). He claims that Saudi airstrikes actually hit the groups fighting ISIS, and not ISIS. As I haven't followed the news as closely as he does, I'm inclined to take his read on it.

USA is not a single entity with a single voice.

Historically, generals of strong empires tend to go fight rebellions or weaker enemy states for prolonged time even if they could destroy them quickly. They do that to maintain power, or the empire will have no more enemies and the military's influence drops.

I'm not saying that's what happened in this case, but that is one of many reasons American entities (military, politicians, whatever) act against some other Americans' interests.

Doesn't the old saw about "never ascribe to malice what can be adequately explained by stupidity" comes to mind instead? American political leadership is desperately incompetent and is obsessed with avoiding bad publicity at all costs. That more than adequately explains our comically ineffectual war strategy.

It seems that way to me. The current administration desperately hope to be able to do nothing and have it resolve itself or do just the bare minimum response to each crisis, but usually underestimate just what that bare minimum response is and have to ramp it up a bit due to political pressure or saving face.

Of course, that attitude is pretty much due to the previous administration being too naively adventurous and stupidly causing big messes that are still causing problems.

And the previous administrations attitude is due to them thinking the problems were caused by the previous previous administration being too weak in their military responses.

etc etc ad infinitum...

Thankfully we have wikileaks to clear that up for us so we don't have to "ascribe" anything.

The consequence of not destroying this infrastructure is that a vicious and brutal regime has much more resources and has an easier time surviving. By protecting a couple of "civilian" truck drivers -- and if your day job is illegally smuggling oil for a terrorist organization, one must question how much of a "civilian" you really are -- we guarantee that actual civilians in the Islamic State, not to mention civilians in areas attacked by it, will suffer far longer.

The reasons may be varied, and perhaps Russia added alot to the mix with their less discriminating bombing... Add to that better financial tools for tracking and removing illicitly gained moneys from their coffers.

But, really, that's beside the point. The how. The important thing is the what. And that is they are getting financially squeezed.

And their pay scales allow for internal dissent since foreign fighters get paid twice the rate of their locals...

Good to see them make poor decisions.

There was a news story within the past week about how a large ISIS cash storage warehouse was destroyed. Probably related to that.

http://www.news.com.au/world/middle-east/footage-shows-bombi...

Parent commenter referenced that: "a money depot has been bombed as well"

> Did the USA realize that they should start bombing oil transports only recently?

Do you want to permanently destroy Iraq's and Syria's ability to create oil?

As long as ISIS wasn't considered a major threat, there was no real reason to bomb the refineries and wells (causing permanent damage to Syria). Now that ISIS is being taken as a more serious threat, the permanent damage to Syria has been deemed acceptable.

"Guys, it was really hilarious when the ISIS came and took lots of land in Iraq and Syria, but then the oil price fell and then they became really scary so now we're bombing their oil-making and oil-moving stuff"

So that's how it went down. Did I get that right?

No.

"Guys, at first we thought ISIS wouldn't take root as successfully as they have, so we didn't want to damage Iraqi and Syrian infrastructure (which will then have to be rebuilt). But they did take root, so now we have to suck it up and bomb the infrastructure."

I realize that this may be a possible explanation, but it strikes me as unlikely. The evidence that oil has a special status in US foreign policy are legion, the evidence that other countries' infrastructure has a similar status are substantially less numerous.

Well, if you follow that path to the logical conclusion why not just drop an atom bomb and be done with it?

The thing is ISIS will lose, it's not a question of if but a question of when. Unlike a fairy tale there won't be a happy end afterwards though. These countries will have to be moved back on track and need to become stable. That requires state building which takes time, is expensive and very unpopular with voters.

Additionally these strikes themselves cost lots of money. It also makes sense to avoid civilian casulties to not further support ISIS and other terrorist organizations in their recruitment, which is already going better than anyone would like.

If you think ahead, I don't think you can come to any other choice than to try to minimize damage, especially to important infrastructure like this.

>The evidence that oil has a special status in US foreign policy are legion

Yes and no. Note that the Iraq War was funded by Americans, and that Iraq kept its own oil fields and refineries.

It's unfair to compare the say... Eisenhower administration (1953 Iran revolution, which oil was a big part of) against the Bush administration (2000s Iraq invasion) and assume the policies are the same.

The evidence, as far as I can tell, is that the Bush tried to do the right thing with regards to Iraq's oil. The fallacy of the Bush administration was believing that the Muslim world would love us after we killed the only secular leader in the region. But I don't see any evidence that oil had much to do with the decision.

The 1953 Iran mistake is certainly a mistaken coup with regards to oil.

The 2001 Iraq mistake was one of hubris, a lack of understanding about the Muslim world, and most importantly, piss poor intelligence (WMDs wasn't "Bush's lie", it was the failure of the entire US intelligence community)

I only doubt this theory because we civilians are not privy to strategic bombing locations. It is entirely possible that the US air campaign (or the Russians', for that matter) recently took out targets key to the financial strength of ISIS.

And French bombings. Yeah I know our forces are ridiculous and it sounds patriotic to request to be named when we participate to a war. But every French home who pays the income tax spent about 800€ to bomb Syria in 2015, out of the 2300€ average of income tax, so please include us ;)

That sounds way off. Way less than 25% of tax revenues go towards the military (more like 2% in Europe). Then the bombing campaign must be a fraction of that.

Income tax total for France was 57B euros. The employer (payroll) tax isn't counted in there. Nor are some of the other social charges. It's a progressive tax designed to keep low-earning households from paying much, if any, income tax.

French ministry of defense is 32b€. You can't move an aircraft carrier without submarines and destroyers, you can't move a fleet without the satellites, you can't do anything without headquarters. We are currently active in 2 wars and present in a lot more places, but without wars, there'd be no need of a big headquartets; so how would you, yourself, make a honest pro rata of the cost of each war?

Then income tax is 20m homes, avg 2300€ per home.

NATO membership requests 2% of GDP be spent on defence.

The person you were replying to specifically stated income tax to highlight their point.

I hear you, but that's a disingenuous argument unless you have a reason to say that income tax is somehow tied together with the bombing raids.

France spent a third of its budget on bombing Syria? Seriously?

The income tax is a tiny part of France budget. Most of its revenue is a combination of VAT, energy tax, corporate taxes, etc.

So what does it mean to say that the EUR 800 came from income tax? Doesn't everything (mostly) just go into one general fund?

The drop in oil prices probably doesn't help, either.

Yes, it's interesting that Oil exports are mentioned as part of this Iran deal - that has to be an alternative to the Saudis, who very likely are funding IS.

Russians usually target opposition forces such as Al Nusra (AQ affiliate in Syria), FSA et al and hit ISIS sites only when they want to help Assad's militias advance toward Palmyra or any other territory held currently by ISIS.

>On the other hand, Russia has claimed to have been bombing oil transports since the very start of their air campaign.

The key word is claimed. Like everything Putin's propaganda spews out, it couldn't be farther from the truth.

That's a great point; it goes both ways though. No media statement should simply be taken at face value in this type of international conflicts, whether it is RT or the NYT.

Everyone there is getting into trouble with Russian intervention. They are not fighters for the civilisation, they have their intentions and they intervened for those. The problem of middle east is a historical one, and it does not concern only the middle eastern states and people. Since WWI with the fall of the empire, the people started having identity problems, given that until the inception of the twentieth century these people lived under empires, and suddenly then they got their own states, even though there is not and was not such a great cultural divide among these countries, nor a great cultural unity within them. The western state did not work out in the proche-orient, and now we have these problems. Time is the remedy.

With regards to the oil traffic, I do not understand why we, instead of bombing, get a hold of those tankers and use that oil. Oil is precious and finite.

Or maybe, the main economic problem for ISIS are falling oil prices?

This actually has a pretty straight-forward answer: Russia is not afraid of collateral damage. They will bomb basically anybody, anywhere. The fact is that US/European militaries are acutely cognizant of stepping on anyone's toes. Russia is bombing everything that moves. Watch video of the oil tankers: Those jets dropped 500-pound bombs on checkpoints full of civilians just to get at the tankers. The United States military would not do that.

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