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Management, Money, and Terror in Iraq, 2005-2010 Foundations of the Islamic State Management, Money, and Terror in Iraq, 2005–2010 Patrick B. Johnston, Jacob N. Shapiro, Howard J. Shatz, Benjamin Bahney, Danielle F. Jung, Patrick K. Ryan, Jonathan Wallace C O R P O R A T I O N For more information on this publication, visit www.rand.org/t/RR1192 Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN: 978-0-8330-9178-9 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2016 RAND Corporation R® is a registered trademark. Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions.html. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org Preface The group calling itself the Islamic State constitutes a dangerous chal- lenge to numerous Middle Eastern countries and a terrorist threat to Western Europe and the United States. The level of danger might be new, but the group is not. The Islamic State is the successor organiza- tion to al-Qa‘ida in Iraq (AQI) and subsequently the Islamic State of Iraq (ISI), and it has continued AQI’s organizational, management, and financial practices. The fact that coalition forces, led by the United States; Awakening forces, reflecting the people of Iraq; and official security forces of the government of Iraq once successfully degraded the group suggests that it can be stopped again. This report presents an analysis of foundations of the Islamic State, as reflected in more than 140 documents prepared by AQI and ISI. It represents the most comprehensive portrait available of the group, based on the group’s own records. ISI organized itself for statehood as early as 2006. It used a bureaucratic management model based on that of core al-Qa‘ida but replicated the model at different geographic levels. It also carefully demarcated the administrative boundaries of its jurisdiction. ISI paid its personnel a wage that would draw true believers rather than opportunists; trained and allocated its membership with an eye toward group effectiveness; raised revenues locally through diversified sources; and was able to maintain itself, albeit at much reduced strength, in the face of a withering counterterrorism and counterinsurgency strategy put in place by its opponents, starting in late 2006. This report is a joint effort among the RAND Corporation, the Empirical Studies of Conflict Project at Princeton University, and the Combating Terrorism Center (CTC) at West Point. The CTC iii iv Foundations of the Islamic State arranged for the declassification and release of most of the documents used for this research and has posted on its website the documents on which this report is based, making them available to all research- ers. These documents and more can be found at https://www.ctc.usma. edu/isil-resources. This research was sponsored by the Defense Advanced Research Projects Agency and conducted within the International Security and Defense Policy Center of the RAND National Defense Research Insti- tute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the -Uni fied Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community. Additional part- ners and funders are listed in the acknowledgments. For more information on the RAND International Security and Defense Policy Center, see www.rand.org/nsrd/ndri/centers/isdp or contact the director (contact information is provided on the web page). Contents Preface ............................................................................. iii Figures and Tables ............................................................... ix Summary .........................................................................xiii Acknowledgments .............................................................xxix CHAPTER ONE Introduction ....................................................................... 1 The Group’s Own Words .......................................................... 4 Continuity .......................................................................... 5 The Plan of This Report ........................................................... 6 CHAPTER TWO The Islamic State of Iraq and the Iraq War .................................11 The Iraq War .......................................................................12 The Operational Environment.................................................. 26 Conclusion ........................................................................ 46 CHAPTER THREE The Organizational Economics of Insurgency and Terrorism ..........49 Management .......................................................................53 Revenue ........................................................................... 60 Compensation .....................................................................62 Conclusion ........................................................................ 66 v vi Foundations of the Islamic State CHAPTER FOUR Organizing Insurgency and Terrorism in Iraq .............................67 Terrorist Organizations as Networks and Hierarchies ....................... 68 ISI’s Organizational Blueprint ...................................................71 The Geography of ISI Militancy ................................................83 Conclusion ....................................................................... 102 CHAPTER FIVE Foreign Fighters, Human Capital, and Terrorism in Iraq ............. 105 Data on ISI Human Capital ................................................... 109 ISI Human Capital: Foreign Fighters Versus Iraqi Members .............. 113 Human Capital and Terrorism: Comparing Iraqi and Foreign ISI Operatives ................................................................... 119 Findings and Implications ..................................................... 129 CHAPTER SIX Islamic State of Iraq Compensation ........................................ 131 Compensation Data ............................................................. 132 ISI Compensation Rules ....................................................... 134 Reimbursements ................................................................. 145 Conclusion ....................................................................... 150 CHAPTER SEVEN The Fates of Terrorists: Tracking Militants’ “Career Paths” ......... 153 Documents and Data ........................................................... 154 Summary Characteristics of ISI Personnel in Mosul in 2007 and 2009 ......................................................................... 157 Tracking Militants over Time ................................................ 157 Militant Mortality and Turnover ............................................. 160 Militants’ Career Paths: Personnel Mobility, Promotions, and Lateral Transfers ............................................................ 162 Compensation Trends over Time ............................................. 165 The Curious Case of ISI’s “Unknowns” in Mosul ........................... 170 Conclusion ....................................................................... 181 Contents vii CHAPTER EIGHT Assessing the Islamic State of Iraq’s Finances: The Governorate Dimension ................................................................. 185 Data on AQI and ISI Financing .............................................. 187 ISI Provincial and Sector Revenues ........................................... 189 AQI Revenues in Anbar Governorate ......................................... 190 ISI Revenues in Ninewa ........................................................ 195 Internal Financing Strategy .................................................... 204 ISI Expenditures and Funding of Subsidiary Units ......................... 207 ISI Revenues and Expenditures in Other Locations and Periods ......... 217 Conclusion ....................................................................... 225 CHAPTER NINE Assessing the Islamic State of Iraq’s Finances: Central Activities and Financial Control ................................................... 227 Transfers to and from the ISI Treasury ...................................... 227 Financial Management Within ISI ........................................... 234 Conclusion ....................................................................... 247 CHAPTER TEN Conclusions and Implications ............................................... 249 Key Findings ..................................................................... 253 Implications and Recommendations
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