When news surfaced that the Islamic State group (ISIS) was pumping petroleum from the oil fields it had seized, commentators and analysts mocked whether Abu Bakr al-Baghdadi — ISIS’s self-proclaimed caliph — will be entitled to an invitation to OPEC’s next meeting.
For the past few months, media outlets have been reporting that ISIS, Al-Nusra Front and other groups in Syria and Iraq have been competing over control of oil fields and routes. Syrian and Iraqi oil is not only being sold locally, but it is also finding a place in the regional oil black-market using the routes and networks exploited during the scandal-ridden oil-for-food program for Iraq in the 1990s.
Interestingly, the reports regarding oil trade and ISIS coincided with Baghdadi’s spectacular announcement of the establishment of his caliphate in Syria and Iraq, and the expansion of ISIS services to local communities in Syria and Iraq as well as stipend payments to its militants.
It has become clear that the financial rewards generated from oil smuggling are being used to finance the growth of ISIS’ state and to buy local loyalties.
This is not the first time in the region a group managed to barter services and financial rewards for loyalty and obedience.
On the contrary, this phenomenon constitutes the centerpiece of the “Rentier State” theory found in academic studies of the Middle East. This paradigm is used to understand the longevity and stability of monarchies and authoritarian republics in the region.
It has been argued that when state income — or rents — are derived from natural resources as well as strategic and geographic positions, stability becomes positively related to the amount of rents generated, allocated and distributed.
Given the ability of rulers in the Arab region to generate rents without relying on production, industrialization or simply the domestic economy, a new pact was implicitly established where wealth was traded for power.
Looking at instability and violence stretching from Libya to Yemen through the lens of “Rentier State” theory, we can understand the rise, resilience, and ruthlessness of groups such as ISIS, Nusra, the different Libyan militias, the Houthis in Yemen, and Hezbollah.
Such groups are directly generating rents from oil and the control of strategic seaports and airports, whereas others are dependent on indirect rents transferred from rentier countries such as Iran. The ability of these groups to flourish is mainly the result of their ability to generate and receive revenues which are being used to buy arms, pay regular salaries and create substantial networks of social and health services.
Today, however, the region is witnessing unconventional non-state groups.
These groups differ structurally in nature from the ones the region witnessed from the 1950s through the 1970s. These groups are also different from Al-Qaeda that used Sudan and later on Afghanistan from the 1990s until 2001.
Today’s groups have the ability to generate revenues, move inside major cities, and exploit strategic ports. More importantly, these groups are succeeding in becoming entrenched within the local communities through the allocation of rents.
This conceptualization of these groups requires a serious reorientation of the fight against terrorism. To be able to eliminate their imminent threat, their access to sources of income should be blocked. In other words, rents have to dry out. The fear is that by not succeeding in doing so, we will soon witness the total collapse of all rentier states and the rise of only non-states rentiers in the Arab region and perhaps beyond.
It would be beneficial for the Western-led alliance against ISIS to keep in mind that the military infrastructure of these terrorist groups is fueled by their ability to turn into non-state rentier groups. Therefore, a serious attempt to uproot ISIS and such groups needs to take the transformation of the rentier paradigm into consideration
Khalil Gebara is a Lecturer of Political Science at the American University of Beirut. Makram Rabah is a PhD candidate at Georgetown University’s History Department.