U.S. and Russia unite to target Islamic State's revenue sources

Russian President Vladimir Putin said at his year-end news conference that Moscow’s plan for Syria "coincides with the U.S. vision in its key aspects."

Dec. 17, 2015 6:08 PM PT

Reporting from WASHINGTON — In a rare show of unity, the United States and Russia on Thursday led 13 nations to unanimous approval of a United Nations plan to choke off revenue sources for the militant group Islamic State, including oil, cotton and antiquities that are smuggled out of Syria to thriving black markets.

The Security Council vote, attended by finance ministers from all 15 countries, signaled that Moscow and Washington are narrowing their differences on how to confront the crisis in Syria, where Islamic State has consolidated power and territory despite more than 5,000 airstrikes from U.S., Russian and other warplanes.

“If we can get at [Islamic State’s] wallet and its financial coffers in an intensified and even more aggressive way, that’s going to have a material effect on their ability to prosecute war,” U.S. Ambassador to the U.N. Samantha Power said.

The goal “is to put more pressure on the countries that are not acting aggressively enough, or at all, to cut off the funds flowing to terrorists,” she said. “Such inaction puts all of our nations at risk, including the United States.”

The plan builds on U.N. sanctions already in place for Al Qaeda. It urges countries to track suspicious financial transactions that might be funneling money to Islamic State. Offenders may be subject to freezing of assets, travel bans, an arms embargo and other sanctions.

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The resolution also urges countries to expand the sharing of information — among governments and between governments and the private sector — about extremist groups and financial activities.

“Cutting [Islamic State] off from the international financial system and disrupting its financing are critical to effectively combating this violent terrorist group,” said U.S. Treasury Secretary Jacob J. Lew, who led Thursday’s meeting. “A united international front is vital to achieve that goal.”

Islamic State controls large parts of Syria and neighboring Iraq, and has seized assets from banks and other institutions in its self-declared caliphate. The group also generates hundreds of millions of dollars annually to finance its military operations, support affiliates in Yemen, Libya and elsewhere, and pay for day-to-day governance of its territory, U.S. officials say.

Unlike Al Qaeda, which is financed largely by donations, ransoms and money sent from abroad, Islamic State does not rely heavily on banks. That has made it more difficult to track its money and interrupt or seize its funding sources, experts said.

Still, the group needs access to international financial systems to import oil production machinery, weapons and communications equipment, Adam Szubin, the acting Treasury undersecretary for terrorism and financial intelligence, said at a White House briefing this week.

Most of the group’s money comes from the illicit sale of oil and gas, some of it to the Syrian government, as well as to black market operators who Szubin said purchase it at the wellheads before smuggling the product out of the region.

The White House has denied a Russian claim that the Turkish government, a U.S. ally, is buying Islamic State oil. Turkey also has denied the charge.

Other revenue sources include fees, or “taxes,” extorted from the estimated 8 million people in Islamic State-controlled areas.

Taxes are reportedly levied for businesses, real estate and commerce; there is even a special tax Christians must pay. And, as Power put it, “most grotesquely” the terrorist group makes money by trafficking women and girls sold as slaves.

Washington and Moscow have edged close enough in their vision of what should happen in Syria that a separate Security Council meeting will take place Friday after some doubt as to whether it would go forward.

The council is expected to approve a cease-fire resolution for Syria as a first step toward an eventual political solution to the crisis.

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Russian President Vladimir Putin, who met with U.S. Secretary of State John F. Kerry at the Kremlin this week, said Thursday that he and President Obama concur that a political solution is the only way to end the fighting.

“Strangely as it may seem,” Putin said at his year-end news conference, the Russian plan “coincides with the U.S. vision in its key aspects.... We will help settle this crisis in every possible way, and we will try to find solutions acceptable for all parties.”

The White House has gradually moved away from its insistence that Syrian President Bashar Assad must step down from power immediately, and now acknowledges he may need to remain through a managed transition while a new government forms.

That position is more in sync with Moscow, which has long been a key Assad backer and wants him to remain in office at least until a political solution is worked out.

The United States and Russia continue to disagree on which of the myriad Syrian opposition groups should be invited to take part in negotiations — and which, other than Islamic State, should be designated as terrorist organizations.

Russian warplanes have attacked some U.S.-backed militias in Syria that Moscow claims are terrorists. U.S. officials say Putin appears more determined to destroy Assad’s opponents than Islamic State, a charge Russian officials deny.

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