Excerpts: Iran says US violating sovereignty in ISIS fight. Hamas: no direct
talks with Israel.Kerry says Egypt on frontline fighting terrorism.Enforced
blackmail yields repeated funding by victims September 13, 2014

+++SOURCE: Al Arabiya News 13 Sept.’14:”Iran accuses U.S. of violating
sovereignty in anti-ISIS fight”, Agence France Presse
SUBJECT: Iran says U.S. violating sovereignty in ISIS fight

QUOTE: “The secretary of Iran’s Supreme National Security Council accused
the United States on Saturday[13 Sept.]of violating the sovereignty of
nations on the ‘pretext of fighting terrorism’ in Iraq and Syria”

FUL L TEXT:The secretary of Iran's Supreme National Security Council accused
the United States on Saturday of violating the sovereignty of nations on the
"pretext of fighting terrorism" in Iraq and Syria.

"On the pretext of fighting terrorism, the United States want to pursue
their unilateral policies and violate the sovereignty of states," Ali
Shamkhani said, quoted by the official IRNA news agency.

He said Washington was "trying to divert the eyes of the world from its
pivotal role in supporting and equipping the terrorists in Syria in a bid to
topple the legitimate regime."

Shamkhani was the latest Iranian official to criticize an international
coalition the United States is building against the jihadist Islamic State
group, which has captured large parts of Iraq and Syria.

On Thursday[11 Sept.], foreign ministry spokeswoman Marzieh Afhkham cast
doubt on the "sincerity" of the coalition.

Last week, Foreign Minister Mohammad Javad Zarif accused the United States
of not taking the threat from ISIS militants in Iraq and Syria seriously.

He also charged that US aid had previously helped the jihadists, alluding to
support given by Washington to other rebel groups in Syria, some of which
has found its way into the hands of ISIS.

Iran has been Syrian President Bashar al-Assad's main ally since the revolt
against his rule erupted in March 2011 and has also provided military
advisers to the Shiite-led government in Iraq to help it battle the
jihadists.

Shamkhani's comments come as France prepares to host a conference on Iraq in
Paris on Monday15 Sept.] to which Iran has not been invited.

U.S. Secretary of State John Kerry said on Friday[12 Sept.] his country is
opposed to Iran's participation because of its "engagement in Syria and
elsewhere".

+++SOURCE: al Arabiya News 13 Sept.’14:”Hamas official rules out direct
talks with Israel”, Agence France Presse
SUBJECT: Hamas says no to direct talkswith Israel
QUOTE:” ‘no direct negotiations with the Zionist enemy’ “
FULL TEXT:Hamas’s former Gaza Prime Minister Ismail Haniya said on
Saturday[13 Sept.] the militant Islamic Palestinian group would not hold any
direct talks with Israel.

There would be “no direct negotiations with the Zionist enemy”, Haniya said
in a public address in the Gaza Strip, and called on Western-backed
Palestinian president Mahmud Abbas to “review” his own strategy of talks
with Israel.

Hamas does not recognize Israel which denounces Hamas as a “terrorist”
organization, and the two sides have never had any overt direct contact.

But on Friday[12 Sept.], exiled Hamas official Mussa Abu Marzuq -- along
with Haniya one of the movement’s two deputy leaders -- said direct talks
with the Jewish state might be unavoidable in light of planned negotiations
in Cairo to consolidate last month’s tentative Gaza truce.

“If the situation remains as it is now... Hamas could find itself forced to
do this,” Abu Marzuq said, referring to the dire humanitarian situation in
Gaza after 50 days of Israeli pounding from air, land and sea, which ended
on August 26.

“From a legal (Islamic) perspective there is nothing wrong with negotiating
with the occupation,” he said, indicating it could be necessary in order to
guarantee the “rights” of the people of Gaza.

Truce talks are due to resume in Egypt later this month, but Hamas chief
Khaled Meshaal has himself ruled out face-to-face dealings with the
Israelis.

“Direct negotiations with the Israeli occupier are not on the agenda of
Hamas; if negotiations are necessary they must be indirect,” he said on
Friday[12 Sept.]no direct negotiations after meeting Tunisian President
Moncef Marzouki in Tunis.

Meshaal has also rejected Israeli demands that Gaza reconstruction be linked
to the disarmament of Hamas and Haniya restated that line on Saturday.

“The weapons of the resistance are a red line,” he said. “You can not make
(them) bargaining chips for reconstruction.”

+++SOURCE: Naharnet (Lebanon) 13 Sept.’14:”Kerry Says Egypt on Frontline in
Fight against Terrorism”,Agence France Presse
SUBJECT: Kerry says Egypt frontline fighting terrorism
QUOTE:”U.S. Secretary of State John Kerry said Egypt was on the frontline of
fighting "terrorism" as he sought Cairo's support for a coalition against
Islamic State jihadists.”

FULL TEXT:"Egypt is on the frontline of the fight against terrorism,
particularly when it comes to fighting extremist groups in Sinai," Kerry
told a press conference with Egyptian Foreign Minister Sameh Shoukri.

Ties between the traditional allies soured last year after the army
overthrew elected Islamist president Mohammed Morsi and cracked down on his
supporters. Washington suspend some military aid, but it has since been
restored.

Kerry said he and his government support Egypt's campaign against the Sinai
militants, who have killed scores of policemen and soldiers.

"That is why in an effort to support, we announced last month the delivery"
of Apache helicopters, he said.

SourceAgence France Presse



+++SOURCE: Islamic State’s financial independence poses quandary for its
foes”, Reuters
SUBJECT: Enforced blackmail yields repeated funding by victims
QUOTE: “An islamic form of taxation, looting and oil sales”
BAGHDAD/DUBAI — Sometimes they came pretending to buy things. Sometimes they
texted, sometimes they called, but the message was always the same: "Give us
money".

Months before they took control of the Iraqi city of Mosul in June, Islamic
State (IS) militants were already busy collecting money to finance their
campaign of setting up a 7th century-style caliphate.

The owner of a Mosul grocery store recounted how, when he hesitated to pay,
militants exploded a bomb outside his shop as a warning. "If a person still
refused, they kidnapped him and asked his family to pay ransom," he said.

The shopkeeper, who declined to be identified out of concern for his safety,
said he had paid the militants $100 a month six or seven times this year.

In return, he was given a receipt that says: "Received from Mr. ...., the
amount of ...., as support to the Mujahideen."

The shopkeeper's tale illustrates how IS has long been systematically
collecting funds for a land grab that already includes a stretch of northern
Iraq and Syria. Another Mosul worker corroborated the account of IS tactics.

"The tax system was well-organised. They took money from small merchants,
petrol station owners, generator owners, small factories, big companies,
even pharmacists and doctors," said the shop owner who, out of frustration
and fear, closed his store and is now trying to make a living as a taxi
driver.

Learning from their previous incarnation as the Islamic State of Iraq and
the Levant, when they received money from foreign fighters, Islamic State
has almost weaned itself off private funds from sympathetic individual
donors in the Gulf. Such money flows have come under increased scrutiny from
the US Treasury.

Instead the group has formalised a system of internal financing that
includes an Islamic form of taxation, looting and most significantly, oil
sales, to run their “state” effectively.

This suggests it will be harder to cut the group's access to the local
funding that is fuelling its control of territory and strengthening its
threat to the Middle East and the West.

Nevertheless, financing from Gulf donors may prove more critical in months
to come, if US President Barack Obama's mission to "degrade and destroy" the
group succeeds and the group loses territory and finds itself looking abroad
for funds.

Controlling commercial centres

In the eastern Syrian city of Mayadin, an IS supporter who goes by the name
of Abu Hamza Al Masri, said the militants had set up checkpoints in the last
few months demanding money from passing cars and trucks. The money
purportedly goes into a “zakat” or “alms” fund, but Abu Hamza admitted some
sums go to pay bonuses or salaries of fighters.

"Passengers are asked to open their wallets... in some instances they are
threatened at gunpoint if they resist," said another Syrian secular activist
in Deir Ezzor contacted by Reuters via WhatsApp.

But extortion is not Islamic State's top money-spinner.

Analysts and activists say the majority of the group's money comes from oil
sales to local traders from wells under IS control.

Luay Al Khatteeb, a visiting fellow at the Brookings Doha Centre who has
done extensive research into IS oil smuggling, says the group now has access
to five oil fields in Iraq, each of which have between 40 to 70 oil wells.

"They deal with a sophisticated network of middle men, some of whom are
affiliated with the [Iraqi] oil companies. They have to pay various
checkpoints to move around all these oil convoys and specifically to export
the oil to Turkey," Khatteeb said.

"It is estimated that now, after recent territory losses, they can produce
give or take 25,000 bpd, easily getting them about $1.2 million a day, on
and off, even if they sell at a discount price of $25-$60 a barrel,"
Khatteeb said.

This volume of oil production would be on par with a small offshore field on
the north slope of Alaska.

A high-level Iraqi security official put the number of oil fields under the
group's control at four, with a fifth in contest between them and Kurdish
peshmerga forces.

The group appears to have chosen areas of conquest carefully, with an eye to
funding.

In the Syrian province of Raqqa, a stronghold of the group, the militants
made sure they could effectively manage the area before moving on to conquer
territory across the border in Iraq. They moved into Fallujah in Iraq's
Anbar province in early 2014, before reaching Mosul in June, a major urban
centre.

"It's about controlling financial nodes. It's controlling commercial
centres, it's controlling roads for checkpoints and there's no surprise in
that, because there's significant value in that control. And the more
finance you earn, the more you can develop. It's a reinforcing circuit,"
said Tom Keatinge, a finance and security analyst at the Royal United
Services Institute.

"There's no point in controlling acres of desert. You want to control the
financial nodes so that you can continue to expand. You don't want to spread
yourself too thin financially before you can operate effectively in an
expanded area."

Less reliance on private funds


Documents from Al Qaeda in Iraq captured by US forces near Iraq's Sinjar
town in 2007 included reams of finance and expense reports, showing the
group, a predecessor of IS, "relied heavily on voluntary donations", says a
2008 report by West Point's Combating Terrorism Centre.

The report, "Bombers, Bank Accounts and Bleedout", said the "financial
reports and receipts in the Sinjar documents show that IS relied on three
sources of funding: transfers from other leaders in Al Qaeda in Iraq, money
foreign suicide bombers brought with them and fundraising from local
Iraqis." The study said it was unclear from the documents whether the funds
from locals were given voluntarily.

The bureaucratic obsession with accounting proved ironic — while it helped
the group track funds, the documents, once in the hands of the US military,
helped Washington understand how the financing worked — from the operatives
who moved money, to the ones who donated money, to how the money was spent.

One lesson learned, the Sinjar documents show, was the need for more
reliable financing, especially with countries trying harder to disrupt the
flow of funds, Keatinge said.

"If you have a sophisticated understanding of financial management like
Islamic State or Al Shabab in Somalia, you know very well that relying on
diaspora or private donations or funds that can be disrupted by the
international community is a risky way to go," said Keatinge.

By its own admission, Washington realises funds from outside donors are not
as significant a threat as their self-financing methods, but the United
States and its allies have been slow to move to cut those sources off.

"[IS] receives some money from outside donors, but that pales in comparison
to their self funding through criminal and terrorist activities," a senior
State Department official said.

Ransoms from kidnappings do not seem to compete with oil sales, and not much
is reliably known about the amounts they have received. ABC News reported
that one US hostage held by IS is a 26-year-old female aid worker, for whom
the group has demanded $6.6 million in ransom.

British Prime Minister David Cameron told parliament he had no doubt that
tens of millions of pounds of ransom payments were going to IS militants in
Syria and Iraq.

Focus, a German magazine said in April that France paid $18 million for the
release of four French hostages who had been held by IS, citing NATO sources
in Brussels.

French officials say the French state does not pay ransoms.

Then there is crime. IS raided the central bank in Mosul and reportedly
seized substantial sums of money, though the figures are disputed. The group
apparently allows Iraqis in Mosul to withdraw 10 per cent of their bank
deposits and give 5 per cent of the withdrawn amount, as zakat, or Islamic
alms.



What can be done



Kuwait has been one of the biggest humanitarian donors to Syrian refugees
through the United Nations. It has also struggled to control unofficial
fund-raising for opposition groups in Syria by private individuals.

Ahmed Al Sanee, head of charities in Kuwait's social affairs ministry, said
recently there was "strict monitoring" of unlicensed donation collecting.
Finance minister Anas Al Saleh said on Tuesday Kuwait was "committed to
international efforts in fighting this terror".

"Whomever has been identified by the United Nations as a terrorist, we will
be implementing our law on them," he said.

Washington has moved to cut off sources of private donations. Last month it
imposed sanctions on three men it said funnelled money from Kuwait to
Islamic militant groups in Iraq and Syria. Kuwait briefly detained two of
the men, both of whom are prominent clerics.

"If I were the Chief Financial Officer of IS or ISIS as it was then, I would
be watching that development very closely. Because if I were receiving money
from the Gulf states, at that point I for sure knew that it would get
harder," said Keatinge.



No simple solution



In the end, squeezing the group's finances will involve a mixture of
intelligence and force. Ending the group's control of a given area using
military might would remove its ability to raise local taxes, for example.
Tracking smuggling routes or Gulf donors, in contrast, would involve local
informants.

Khatteeb, who is also the director of the Iraq Energy Institute, says Turkey
must clamp down on oil smuggling routes through southern Turkey. This would
dent a revenue stream IS has used to fund a significant recruitment drive.

"Turkish authorities [need] to really pay attention in closing down these
markets, put more work in intelligence and enforce the rule of law."

In an op-ed last month published in the New York Times Patrick Johnston and
Benjamin Bahney of the RAND Corporation argued that strategies that focused
on sanctioning international financial activities were unlikely to be
effective.

The authors say that "the terrorist group's bookkeepers, its oil business
and cash holdings" should be the targets of greater intelligence and
scrutiny to help "disrupt ISIS' financing and provide additional
intelligence on its inner workings."

Johnston told Reuters that even with the rapid expansion of IS and its need
to pay a larger number of recruits, the group could still make an estimated
$100-$200 million surplus this year, given the amount of money it is making.

"They're making more money, they have less opposition militarily... the
question is what are they going to do with it?"

Sue Lerner - Associate - IMRA