"The Islamic State requires a huge amount of funds to run their business because they're trying to build a state –at least half a billion dollars annually," Nellemann explained.
"That funding has been cut in the past year. They used to make most of their funds from oil, and now that has been reduced by anywhere from 60-80 percent. But the Islamic State have been very professional in shifting their income sources, and have now moved mainly into taxation schemes including trafficking." The expert noted that with the onset of the current crisis, ISIL-affiliated "trafficking is becoming one of the most lucrative businesses in North Africa and the Middle East."
Nellemann estimates that taxation has quickly become "the largest share of ISIL's income, both through taxation schemes of the local populous," various mafia-like schemes forcing payment with the threat of violence, as well as human trafficking. The expert suggested that "in 2015, [the smuggling] business is likely going to exceed a total of $2 billion, of which the Islamic State will slowly increase their share."
The expert pointed out that this figure marks a dramatic increase from the estimated $300 million earned in similar schemes last year. "We can easily say that this figure has increased substantially, because we know that traffickers are typically charging not for the full route, but only for a section of the route, and the Islamic State has been particularly good at establishing and controlling some of the main trafficking points in Libya but also in the Sinai, and increasingly toward the Lebanese/Jordan border…They are not currently in control of a northern route, but they probably will be soon," he warned.
Nellemann noted that much of ISIL's success comes down to its organization. "We have never encountered a terrorist organization with a similar effective accounting and auditing system, and most likely by the end of the year they will be moving back to what they were making a year ago, making over a billion dollars in all of their taxation schemes combined, of which human trafficking is going to become increasingly important," he said.
The expert recalled that the tactic of deliberately driving refugees out of an area is nothing new in and of itself, pointing to the case of rebel groups in countries like Congo doing the same thing over the course of many years. "It's not entirely new, but it's the skill and organization that we have not witnessed before," Nellemann noted. "This is characteristic of the Islamic State. They are extremely good at organizing and generating income, and distributing it into their system." With this in mind, the expert argued that "attacking their financial chain is probably the most important aspect of hindering ISIL's continued growth."
At the same time, Nellemann played down the use of these mass migrant flows as a channel for ISIL fighters into Europe. He noted that while this doubtlessly does take place, many ISIL fighters who originated in Europe in the first place are able to simply use conventional forms of travel in order to make their way back onto the continent. In his words, the crisis is not being used as a scheme to get ISIL fighters into Europe, "because they have already been doing that for quite a long while."
The expert recalled, for example, that before "the fall of Libya, a lot of people now involved in trafficking used to have other sources of income. Gaddafi used to have a lot of agricultural investments, and many other things in the border towns, and when he disappeared, a lot of people shifted to the only sort of income they could get, which included trafficking."
"We need a much wider range of messages, including addressing the conflict in Syria and Iraq directly," Nelleman explained. "Simply trying to deal with the refugee problem alone is not going to solve the income and the threat from Islamic State."
Ultimately, the expert suggested that in addition to simply bombing ISIL, the West will need to account for all the other issues, including all of the group's streams of income, its recruitment tactics, its propaganda initiatives, the corrupt regimes in which the group operates, and the lack of any semblance of social order in countries like Libya. All of this is necessary in order to deal with the terror state long-term, in Nelleman's view.