Through five trips to Iraq, a team of journalists from The New York Times uncovered a trove of Islamic State documents that explain how the group took control of Iraq and Syria. Taken together, the documents show how ISIS, for a short period of time, established its own government, or caliphate.
We discussed their findings with Jacob N. Shapiro, professor of politics and international affairs at Princeton University’s Woodrow Wilson School of Public and International Affairs. Shapiro, who also is the director of the Empirical Studies of Conflict project, studies political violence, economic and political development in conflict zones, security policy and urban conflict.
Q. What’s your reaction to The New York Times investigation into ISIS?
Shapiro: One way to read the piece is to marvel at how a terrorist group managed to establish some form of governance over a huge city, to think — as Fawaz Gerges is quoted in the piece —that “The Islamic State's capacity to govern is really as dangerous as their combatants.” I would argue the piece shows exactly the opposite. Iraq's 2013 gross domestic product (GDP) per capita in current U.S. dollars was approximately $6,900, according to the World Bank. Given the population of Mosul City, which is approximately 2.8 million people, that implies a tax base when the group took over of $19 billion per year. The New York Times study estimated the group took in $800 million in taxes, which they called “an astonishing sum.”
That sum is astonishing, but not the way the authors meant. Assuming Mosul's economy did not suffer under ISIS rule, that $800 million sum would then imply a tax-to-GDP ratio of approximately 4.2 percent. That's wonderful for a tax shelter, but for a country fighting a war it's ridiculously low. For example, Sierra Leone, not a notably high-capacity state, achieved a tax-to-GDP ratio of 9.1 percent in 2013. If we are generous to the Islamic State, and assume that Mosul's economy shrunk by 50 percent in the first year of their rule (which in itself would not be indicative of skilled governance), then their tax performance would still be worse than Madagascar (10.3 percent), Burundi (12.2 percent) and Mali (13 percent). Serious countries with big security threats tax like they mean it; Turkey at 18.5 percent and Israel at 23 percent come to mind.
Q. In your opinion, what are the biggest takeaways from the piece?
Shapiro: What we learn from the piece is that the Islamic State was either administratively incompetent as a state, or that the hodgepodge of regressive taxes reported in the piece did what any economist would predict they would do and ran the economy into the ground. Either way, what reporter Rukmini Callimachi’s intrepid reporting shows us is a “Keystone Cops” effort at state building. Maybe ISIS could get the trash collected, as her interviewees described, but thankfully they failed to extract the revenue needed to fight and win the war they started when they invaded Iraq in 2014 from their sanctuaries in Syria.
WWS Reacts is a series of interviews with Woodrow Wilson School experts addressing current events.