3 Ways Isis in Iraq has Affected the Country’s Economy

The Islamic State of Iraq and Syria (ISIS) has terrorized many countries in the Middle East and sabotaged the reconstruction of Iraq and prolonged the Syrian Civil War. This group, one of the most virulent extremist groups in history, is a jihadist militant group that originated from an al Qaida splinter group called Jama’at al-Tawhid wal-Jihad. In this article, we will update you on the ISIS situation in Iraq and discuss how these militants disrupted its economy.


  1. ISIS in Iraq has forced many governments to spend billions of dollars on military equipment.
  2. ISIS in Iraq has forced the country to divert billions of dollars needed for reconstruction.
  3. ISIS in Iraq created a humanitarian crisis.

Isis has negatively impacted the economy of Iraq over the years, ruining every effort by various administrations to rebuild the country after the Iran-Iraq and the Gulf War had damaged the infrastructure and uncompromising UN sanctions imposed during the Saddam Hussein regime had crippled the economy.

Let’s take a closer look at the ways it has frustrated the efforts of various Iraqi government administrations have tried to improve the quality of life of the people of Iraq by rebuilding the economy.

1. ISIS in Iraq has forced many governments to spend billions of dollars on military equipment.

Since 2014, a global coalition of countries led by the US has spent billions of dollars training and equipping Iraqi military forces to fight against ISIS. This coalition included many Western military powers like the United Kingdom, Australia, Canada, Belgium, France, Denmark, and the Netherlands. Besides this massive military and fiscal aid, Iraq still needed to spend millions of dollars of its own money to buy even more weapons from the coalition member countries. Since this was still not enough, they also bought armaments from Russia and its former enemy Iran.

2. ISIS in Iraq has forced the Iraqi government to divert billions of dollars needed for reconstruction.

While Iraq was trying to rebuild its infrastructure from the damage inflicted after the Gulf War, the country also experienced about $45 billion dollars’ worth of damage in battles against ISIS. According to reports issued by Iraqi government officials, as well as reports by World Bank assessors, ISIS destroyed a vast amount of civilian infrastructure, like residential homes, schools, and power plants. Foreign journalists routinely took pictures of streets lined with nothing but rubble because heavily armed militants leveled entire neighborhoods. United Nations officials reported that in Mosul Iraq alone, grenades, missiles, bombs, and artillery fire had destroyed more than 40,000 homes.

Over the course of about nine years, billions of dollars flooded into Iraq from foreign governments following the 2003 invasion to topple the dictatorship of Saddam Hussein. The US alone spent about $15 million a day for the reconstruction of Iraq. Over the course of almost a decade, this amounted to a colossal $60 billion dollars in foreign aid. Iraq could spend all this money on repairing water plants, repairing water pipes, rebuilding schools and other critical infrastructure needs. About $25 billion of this money had to go directly into training and arming the Iraqi military and security forces to combat ISIS militants.

Ironically, despite this massive influx of money over many years, there is little to show for it today. Where the money went was difficult to trace. US government auditors believe that a large amount of it disappeared in armed conflicts against the Islamic State militants. They speculate that Iraq probably wasted the rest on failed reconstruction projects by corrupt US government contractors hired for the reconstruction of Iraq, as well as squirreled into the bank accounts of minor Iraqi bureaucrats.

Today, Iraqi government authorities estimate that the country still needs $88.2 billion to rebuild the country after the Sunni extremists seized vast amounts of territory—including occupying Mosul, the second largest city in Iraq after Baghdad. Out of this money, rebuilding homes destroyed by the military conflicts will account for at least $17 billion dollars.

3. ISIS in Iraq created a humanitarian crisis.

The war against ISIS resulted in over five million displaced Iraqi citizens. After the defeat of ISIS by Iraqi military and security forces, a US-led coalition army ended the reign of terror. However, only half of the missing number of Iraqi people returned home.


Here are some common questions that readers often ask about the impact ISIS had on the Middle East, particularly in Iraq and Syria.

What Does ISIS Stand For?

Although the acronym ISIS stands for the Islamic State of Iraq and Syria, this is not its only name or acronym. The jihadist group also goes by many other names. For instance, you may read articles or listen to ISIS news reports that refer to it as the Islamic State of Iraq and the Levant (ISIL), the Islamic State (IS), or Daesh, which is its generic Arabic name.

What Do These Iraqi and Syrian Rebels Fight For?

Like many other jihadist groups in the Middle East, there is a recurring political theme of wanting to return to earlier centuries when Islam flourished. This nostalgia for an earlier time, considered to be a golden or classical age, served as an effective way to recruit many young Muslim men to join the fight against Middle East governments. Essentially, Islamic State militants of Sunni persuasion aspire to recreate a caliphate in Iraq, Syria, and other neighboring countries and displace all Shiite Muslim groups.

The primary aim of ISIS appears to be to build an Islamic society that echoes the assumed glory of the distant past. Although the nuances of their religious doctrines and political aspirations are unclear to outsiders, its agenda is fairly obvious. They want to destabilize governments in the Middle East through the corruption of government officials, police, and other authority figures and incite political violence.

Who Formed ISIS? 

Although journalists have not identified the original ISIS leaders, researchers have found that Jabhat al-Nusra may have inspired the formation of ISIS. Jabhat al-Nusra was another jihadist organization that fought in the Syrian Civil War to overthrow Bashar al-Assad’s Syrian government. They modeled themselves after this group and adopted the same Salafi doctrine of Sunnism that believes in 8th Century Sharia laws.

Jabhat al-Nusra still respected the human rights of Muslim civilians during the Syrian war and focused on ridding the country of the Syrian government and Western influence, particularly of the United States, which they viewed as a satanic world power. However, ISIS had no Islamic-based moralistic compunctions or behavioral restraints. Despite their name as defenders of Islam, they desecrated holy places for religious artifacts and relics that they could sell on the black market and used many terror tactics to control large populations captured in ISIS territory, including crucifixions and executions.

When Did ISIS Start?  

ISIS started in 1999 as a Jihadist group called Jama’at al-Tawhid wal-Jihad, taking part in the insurgency of Jihadist groups into Iraq after the United States led an invasion of Western forces in 2003. The Americans believed Saddam Hussain’s government was hiding weapons of mass destruction.

Who Funded ISIS?

U.S. intelligence believes ISIS has access to billions of dollars of funding, supported by a large network of illegal businesses like crop control, stealing and selling artifacts, and ransom money from kidnapping, smuggling. It’s supported by donations from anonymous wealthy benefactors who believe in its fundamentalist doctrines. It’s supported by legal businesses like mineral mines, oil fields, and banks. ISIS is also supported by taxation revenue imposed on the people of conquered areas.

Where Was ISIS on Iraq’s Map? 

ISIS conquered and lost thousands of miles of territory. The ISIS war map stretched from the south of Baghdad to the coast of the Mediterranean. These lands, including parts of Syria and Iraq, cover tens of thousands of square miles. In 2014, ISIS territory reached 34,000 square miles, but in 2016, US officials estimate it lost about forty percent of this territory in Syria and Iraq.

At the height of its power, Isis had conquered much of North and West Iraq, and occupied major cities like Mosul, Tikrit, Fallujah, and Ramadi. After Iraqi military and security forces got these territories back, they were in ruins. The toll on human lives is unclear, but authorities estimate that ISIS killed about 10,000 people.

Did ISIS Enslave People in ISIS Territory?

The United Nations believes ISIS created a socio-economic system based on slavery. A 2015 United Nations report states that ISIS enslaved women and children from minority groups, particularly Yazidi people captured by ISIS militants.

Is ISIS Still in Iraq?  

ISIS was such a large, wide-spread, fanatical, well-funded, highly organized militant group that the war on ISIS only ended in late 2017.

Although President Trump announced the total defeat of ISIS earlier this year, recent ISIS news suggests that it’s hasn’t entirely disappeared. Fueled by fanatical religious persuasions, jihadist extremists are now conducting guerrilla warfare in Iraq and Syria. In fact, US intelligence and the Iraqi military leaders suspect that ISIS is still trying to recruit people and attempting to rebuild its broken financial empire. Unstable governments in the Middle East region, like Libya, may give ISIS a place to regroup. Although it’s unlikely to regain its previous strength and influence, it’s still a terrorist threat to the security of Iraq. Efforts to keep the peace still involve armed Iraqi police officers and soldiers in small fighting operations in remote areas.

What Happened to ISIS After Its Defeat in Iraq?

After fleeing Iraq, ISIS crossed the border into eastern Syria. However, Kurdish-led Syrian forces, backed by US air attacks, are routing the militants in ISIS territory there.

Did ISIS Prevent a Dinar Revaluation?

Although dinar recaps mainly cover the efforts of the Iraqi government to rebuild the infrastructure and reconstruct the oil industry and the Central Bank of Iraq to organize the Iraqi currency, they seldom mention how ISIS hampered the Iraqi government’s efforts to restore the country to its prosperous pre-war levels.

Since Iraq has defeated ISIS, Iraq is far more likely to experience economic progress in the coming years. It’s reasonable to expect that it will renew its oil-based economy and establish international trade agreements with geopolitical players.


ISIS had a devastating effect on Iraq’s ability to recover from the damage it experienced from previous wars. ISIS devastated large areas of Iraq and frequent outbreaks of political violence and the open murder of civilians demoralized the entire country. For a long time, ISIS’s well-funded and expertly coordinated military occupancy of one major Iraqi city after another appeared unstoppable.

ISIS attacks in Iraq resulted in a large death toll and the largest mass migration of a population since the Second World War. ISIS blew up homes, reduced schools to rubble, and debilitated hospitals and humanitarian agencies from providing medical help to victims. ISIS even caused extensive damage to the canal networks flowing out of the Eastern Euphrates River, causing large areas like Anbar Province to experience drought.

After the enormous human suffering and wide-scale destruction of property, Iraqi leaders, like Prime Minister Adil Abdul-Mahdi al-Muntafiki and President Barham Ahmed Saleh, are now focusing on rebuilding their country and restoring normal life for its citizens.