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When the Islamic State Comes to Town

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When the Islamic State Comes to Town WHEN THE ISLAMIC STATE The Economic Impact of Islamic State Governance in Iraq and Syria COMES TO TOWN Eric Robinson Daniel Egel Patrick B. Johnston Sean Mann Alexander D. Rothenberg David Stebbins C O R P O R A T I O N For more information on this publication, visit www.rand.org/t/RR1970 Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN: 978-0-8330-9855-9 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2017 RAND Corporation R® is a registered trademark. Cover background: Sipa via AP Images. 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. 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 At its peak, the Islamic State of Iraq and the Levant (ISIL) controlled vast portions of territory in Iraq and Syria with several million inhabitants. The Islamic State’s territo- rial ambition and desire to conduct state-like governance over this territory are integral to its global ideological appeal. By examining the group’s impact on local economic activity in Iraq and Syria, this report seeks to assess the effectiveness of ISIL’s gover- nance over its self-styled caliphate. This report leverages publicly available remote sensing data and low-cost com- mercial satellite imagery to develop a unique, data-driven assessment of the impact that ISIL control and governance have on local economies within ISIL’s territory. It paints a bleak picture of economic life under the Islamic State, replete with shortages of elec- tricity, massive refugee flows, reductions in agricultural output, and upticks in violence all associated with ISIL control. At times, ISIL was able to build a dense governing apparatus that helped maintain stable local commercial activity, particularly within its strategic capitals in Raqqah and Mosul. At other times, the group inadvertently mismanaged key resources or sought to punish its citizenry rather than govern it. However, this report suggests that decay- ing economic conditions within the Islamic State are just as much a product of the group’s inability to insulate its territory from opposing military forces. Outside pres- sure against the group successfully prevented the Islamic State from realizing its gov- erning ambitions across significant parts of its caliphate, with major consequences for its ability to support functioning local economies. This report is important for those trying to understand the group’s impact on local populations in Iraq and Syria, for those seeking to counter its financing or con- duct postconflict stabilization, and for broader efforts to understand the economic impact of insurgent governance. The research was conducted within the Intelligence Policy Center of the RAND National Security Research Division (NSRD). NSRD conducts research and analysis on defense and national security topics for the U.S. and allied defense, foreign policy, homeland security, and intelligence communities and foundations and other nongov- ernmental organizations that support defense and national security analysis. iii iv When the Islamic State Comes to Town For more information on the RAND National Security Research Division, see www.rand.org/nsrd/ or contact the director (contact information is provided on the web page). RAND Ventures RAND 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 inter- est. RAND Ventures is a vehicle for investing in policy solutions. Philanthropic contri- butions support our ability to take the long view, tackle tough and often-controversial topics, and share our findings in innovative and compelling ways. RAND’s research findings and recommendations are based on data and evidence, and therefore do not necessarily reflect the policy preferences or interests of its clients, donors, or supporters. Funding for this venture was made possible by the independent research and devel- opment provisions of RAND’s contracts for the operation of its U.S. Department of Defense federally funded research and development centers. Contents Preface ................................................................................................. iii Figures ................................................................................................. ix Tables .................................................................................................. xi Summary .............................................................................................xiii Acknowledgments .................................................................................xxix Abbreviations ...................................................................................... xxxi CHAPTER ONE Introduction ........................................................................................... 1 The Islamic State’s Vision for an Economically Prosperous Caliphate ........................... 2 Research Questions .................................................................................... 3 Methodology ........................................................................................... 4 Value of This Research................................................................................. 6 Organization of This Report .......................................................................... 8 CHAPTER TWO The Islamic State’s Influence on Local Economies ............................................. 9 Pathways of Islamic State Influence over Local Economies ....................................... 9 Time Frame of the Islamic State’s Economic Impact .............................................14 Sector-Specific Impacts ...............................................................................15 Hypotheses ............................................................................................ 23 CHAPTER THREE Measuring Economic Activity Using Satellite Imagery ..................................... 27 Electricity Consumption .............................................................................29 Population Levels..................................................................................... 30 Agricultural Activity ..................................................................................32 Industrial Activity .....................................................................................32 Market Activity ....................................................................................... 34 Damage and Destruction ........................................................................... 36 Car Counts.............................................................................................37 v vi When the Islamic State Comes to Town CHAPTER FOUR The Economic Impact of Islamic State Governance Across the Caliphate ................41 Cities in the Analysis Sample ........................................................................41 Measuring the Islamic State’s Control of Territory .............................................. 43 Violence and Control ................................................................................ 48 The Islamic State’s Impact on Electricity Consumption..........................................52 The Islamic State’s Impact on Population Movements ...........................................58 The Islamic State’s Impact on Agricultural Activity ..............................................63 Conclusion ............................................................................................ 66 CHAPTER FIVE Case Study Approach ...............................................................................69 City Selection ..........................................................................................69 Case Study Structure and Methodology ...........................................................70 CHAPTER SIX The Islamic State in Mosul .........................................................................73 Mosul’s Importance to the Islamic State ...........................................................73 Mosul’s Economy Before the Islamic State ........................................................75 The Islamic State’s Governance over Mosul’s Economy ..........................................76 Measuring the Islamic State’s Economic Impact in Mosul ......................................82 Conclusion ...........................................................................................
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