The Islamic State (IS) and their opponents in the Kurdish Regional Government (KRG) share the same problem. The ongoing oil crisis has exacerbated a funding shortage in both administrations, which is leading to inability to maintain salary payments.
IS’ de facto treasury has announced that the group has halved the salaries paid to its fighters due to ‘exceptional circumstances’. According to the announcement, the decision will apply to all fighters regardless of rank.
Risk & Security SolutionsMuch of this oil is reportedly smuggled through Turkey, bringing in much needed foreign exchange for IS, but the group has sustained significant damage to its oil fields, processing and distribution capacity.
IS-controlled fields in and around Deir Ezzour, including al-Omar, had reportedly produced 34-40,000 barrels per day for IS in late 2015, with a further 8,000 barrels per day coming from the Qayyara field near Mosul. At the time, this was estimated to generate around US$1.1 million per day in revenues for IS.
This source of revenue has been the target of coalition efforts. US air strikes have targeted oil facilities and supply lines since October 2015 as a part of Operation Tidal Wave II. British, French, and Russian strikes have also targeted the facilities. Indeed, the first British air strikes in Syria in December 2015 targeted the al-Omar oilfield near Deir Ezzour in IS-occupied Syria.
The impact of salary cuts on morale and loyalty should not be underestimated. With the region in deep economic crisis, many join IS due to the offer of financial stability.
Iraqi Kurdistan Faces Similar Strain
In Iraqi Kurdistan, KRG employees went on strikes on 18 January due to withholding of salaries by the regional government. Some employees had reportedly not been paid in four months. Members of the Education and Health Directorates in Raniya were among those on strike.
Staff of the Oil Production Directorate in Sulaymaniyah have also reportedly gone on strike for two days, with some claiming to have not been paid for five months.
The KRG Ministry of Finance and Economic Affairs announced on 17 January that the Ministry of Education would receive half of the salaries owed for September 2015, and would be responsible for distribution. No date was given for the timing of the second half.
As well as suffering from the global slump in oil prices, and the cost of ongoing fighting against IS, the KRG is involved in a lengthy dispute with the Iraqi central government over budget allocation.
As IS and the KRG continue their conflict, loyalty of employees should be the top concern. Without a lifeline of salaries to offer potential recruits, IS may have to resort to harsher measures to maintain loyalty. Additionally, the KRG runs the risk of losing critical national infrastructure if the payments crisis continues, which would worsen the funding shortages in the long term.
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