IRAQ: Islamic State Skiming Funds Headed For Government Employees

Islamic State militants are skimming tens of millions of dollars a month from salaries paid to Iraqi government employees in occupied areas such as Mosul, and Baghdad continues to send the cash to maintain local support.

U.S. defense officials say U.S.-led strikes have put pressure on Islamic State, hurting its command-and-control operations, but they remain cautious about the near-term prospects of retaking Mosul and other territory under the group’s firm control.

A lack of desirable options has put U.S. officials in an awkward position, forced to choose between the goal of denying funds to Islamic State and the goal of persuading Sunnis to back the Shiite-led government in Baghdad.

The U.S. provides Iraq with hundreds of millions of dollars in assistance each year, with some of those funds earmarked for local security forces and counterterrorism operations. It is unclear whether any of those contributions go toward government payrolls.

The Iraqi and U.S. governments have mounted a joint campaign to cut off Islamic State’s revenue sources.

In debating how to proceed, U.S. officials have weighed a choice with two bad options. If they intervene and try to direct the Iraqi government to stop paying certain employees so as to prevent Islamic State from stealing a portion of the money, they could prevent hundreds of thousands of innocent Iraqis in Mosul from receiving any pay and potentially trigger a humanitarian crisis. But if they don’t intervene, Islamic State could use the revenue to buy weapons and fortify the city against the expected siege by the U.S. and Iraqi militaries this spring.

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