ISIS is making about $1 million a day from oil sales, according to a U.S. Treasury Department estimate. And disrupting the group's ability to sell the roughly 50,000 barrels of oil it's believed to produce daily is a top concern for David Cohen, the U.S. undersecretary of the Treasury for terrorism and financial intelligence.
Dealing with that problem—and a variety of others, from curbing Iran's nuclear program to pressuring Russia over its involvement in Ukraine—has involved a shift in the way the U.S. applies economic and financial pressure, Cohen told The Atlantic's Steve Clemons at the Washington Ideas Forum on Wednesday. "The traditional model had been sort of broad trade embargoes in service of equally broad foreign policy goals," he said. "What we've done over the past 10 years is focused on illicit conduct"—such as the funding of terrorist organizations or the proliferation of weapons of mass destruction.
Cohen argued that focusing sanctions on activities has made them more effective as a tool for convincing other governments and banks not to do business with terrorist financiers, WMD proliferators, or international criminals. The profits banks in particular can get from facilitating such activities, he said, are minimal, and the reputational harm is much greater than any potential benefits. "What we've been able to do," he said, "is sort of align our interest in pursuing illicit actors with private interest in protecting their reputation."
The issue of reputation is a major component of inhibiting ISIS's ability to profit from the longstanding smuggling networks it has taken over across Iraq and Syria. "In the past the people who were involved in these smuggling routes could sort of turn a blind eye to where this oil was coming from," Cohen said. "Now if you are involved in one of these smuggling operations, you have to know that the ultimate beneficiary is this terrible terrorist organization.”
Another innovation in U.S. sanctions is that they are now, in Cohen's words, "heavily intel-driven." Cohen said the U.S. Treasury Department is the only finance ministry in the world with its own in-house intelligence operation. "I have people who day in, day out help to map these illicit networks and help us to target these activities," Cohen said. This intel operation, per a recent New York Times description of it, takes place in a "fortified, cavelike complex in the bowels of the Treasury Department."
But the cave in the Treasury can only do so much, and it runs up against limitations in dealing with finance ministries elsewhere. “We’ve found it’s hugely effective to have this all in one department," Cohen said, adding that he'd love to see other countries around the world develop similar operations.
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