The Unsustainable Economics of ISIL

posted by Lyric Hughes Hale on December 3, 2015 - 10:40pm

ISIL is not a juggernaut, according to a recent article in Politico by UC San Diego economics professor Eli Berman and associate professor Jacob Shapiro at Princeton, "Why ISIL Will Fail on Its Own".  Oil revenues in particular are not sustainable:

Early on in ISIL's existence, one heard a great deal about its oil revenues, and recent estimates apparently extrapolated from one province in one month put revenues at $500 million per year from oil alone, yet oil and gas extraction is not sustainable as a funding source. Oil production is dropping because the group lacks engineers and because its infrastructure is being bombed. And what oil ISIL can sell must go at an enormous discount relative to world market prices, because of sanctions and physical constraints on transporting the product to world markets.

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