For ISIS, Losing Territory Means Losing Revenue

The terror group’s ability to make money from taxes and oil sales is taking a hit with its battlefield defeats.

Once the wealthiest terror group in the world, Islamic State is losing lucrative sources of income and its ability to recruit fighters along with the territory in Iraq and Syria that is rapidly slipping from its grip.

Islamic State’s self-declared caliphate catapulted them to a success no other jihadist group had ever seen. In 2014, the extremists ruled an area the size of Belgium and presided over some eight million civilians from whom it extorted money and collected taxes and fees for basic services.

Now that the extremist fighters have been defeated in their de facto capital of Raqqa, which fell to U.S.-backed forces in Syria on Tuesday, the group is likely to try to become a more traditional hit-and-run insurgency. That means it will no longer be able to generate revenue in the same ways, or to tout an ambitious, state-building project that its supporters found so appealing and that set it apart from other jihadist groups.

More From The Wall Street Journal (subscription required):