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 The group famous for its beheadings, crucifixions and mass
executions provides electricity and water, pays salaries, controls
traffic, and runs nearly everything from bakeries and banks to
schools, courts and mosques.
While its merciless battlefield tactics and its imposition of its
austere vision of Islamic law have won the group headlines,
residents say much of its power lies in its efficient and often
deeply pragmatic ability to govern.
Syria's eastern province of Raqqa provides the best illustration of
their methods. Members hold up the province as an example of life
under the Islamic "caliphate" they hope will one day stretch from
China to Europe.
In the provincial capital, a dust-blown city that was home to about
a quarter of a million people before Syria's three-year-old war
began, the group leaves almost no institution or public service
outside of its control.
"Let us be honest, they are doing massive institutional work. It is
impressive," one activist from Raqqa who now lives in a border town
in Turkey told Reuters.
 In interviews conducted remotely, residents, Islamic State fighters
and even activists opposed to the group described how it had built
up a structure similar to a modern government in less than a year
under its chief, Abu Bakr al-Baghdadi.
Reuters journalists are unable to visit the area for security
reasons.
The group's progress has alarmed regional and Western powers - last
month U.S. President Barack Obama called it a "cancer" that must be
erased from the Middle East as U.S. warplanes bombarded its
positions in Iraq.
But Islamic State has embedded itself so thoroughly into the fabric
of life in places like Raqqa that it will be all but impossible for
U.S. aircraft - let alone Iraqi, Syrian and Kurdish troops - to
uproot them through force alone.
BRIDE OF THE REVOLUTION
Last year, Raqqa became the first city to fall to the rebels
fighting to overthrow President Bashar al-Assad. They called it the
"Bride of the Revolution."
A variety of rebel groups ranging from hardline Islamists to
religious moderates held sway in the city, although Islamists
clearly dominated. Within a year, Islamic State had clawed its way
into control, mercilessly eliminating rival insurgents.
Activists critical of the group were killed, disappeared, or escaped
to Turkey. Alcohol was banned. Shops closed by afternoon and streets
were empty by nightfall. Communication with the outside world -
including nearby cities and towns - was allowed only through the
Islamic State media center.
Those rebels and activists who stayed largely "repented", a process
through which they pledge loyalty to Baghdadi and are forgiven for
their "sins" against the Islamic State, and either kept to their
homes or joined the group's ranks.
But after the initial crackdown, the group began setting up services
and institutions - stating clearly that it intended to stay and use
the area as a base in its quest to eradicate national boundaries and
establish an Islamic "state".
"We are a state," one emir, or commander, in the province told
Reuters. "Things are great here because we are ruling based on God's
law."
Some Sunni Muslims who worked for Assad's government stayed on after
they pledged allegiance to the group.
"The civilians who do not have any political affiliations have
adjusted to the presence of Islamic State, because people got tired
and exhausted, and also, to be honest, because they are doing
institutional work in Raqqa," one Raqqa resident opposed to Islamic
State told Reuters.
Since then, the group "has restored and restructured all the
institutions that are related to services," including a consumer
protection office and the civil judiciary, the resident said.
BRUTALITY AND PRAGMATISM
In the past month alone, Islamic State fighters have broadcast
images of themselves beheading U.S. journalists James Foley and
Steven Sotloff as well as captive Kurdish and Lebanese soldiers, and
machine-gunning scores of Syrian prisoners wearing nothing but their
underwear.
But the group's use of violence has not been entirely
indiscriminate. The group has often traded with businessmen loyal to
Assad when it has suited its interests, for instance.
According to one fighter, a former Assad employee is now in charge
of mills and distributing flour to bakeries in Raqqa. Employees at
the Raqqa dam, which provides the city with electricity and water,
have remained in their posts.
Islamic State's willingness to use former Assad employees displays a
pragmatism residents and activists say has been vital to its success
holding onto territory it has captured.
They have been helped by experts who have come from countries
including in North Africa and Europe. The man Baghdadi appointed to
run and develop Raqqa's telecoms, for instance, is a Tunisian with a
PhD in the subject who left Tunisia to join the group and serve "the
state".
Reflecting Islamic State's assertion that it is a government -
rather than simply a militant group that happens to govern -
Baghdadi has also separated military operations from civilian
administration, assigning fighters only as police and soldiers
Instead, Baghdadi has appointed civilian deputies called walis, an
Islamic term describing an official similar to a minister, to manage
institutions and develop their sectors.
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Administrative regions are divided into waliyehs, or provinces,
which sometimes align with existing divisions but, as with the case
of the recently established al-Furat province, can span national
boundaries.
Fighters and employees receive a salary from a department called the
Muslim Financial House, which is something like a finance ministry
and a bank that aims to reduce poverty.
Fighters receive housing - including in homes confiscated from local
non-Sunnis or from government employees who fled the area - as well
as about $400 to $600 per month, enough to pay for a basic lifestyle
in Syria's poor northeast. One fighter said poor families were
given money. A widow may receive $100 for herself and for each child
she has, he said.
Prices are also kept low. Traders who manipulate prices are
punished, warned and shut down if they are caught again.
The group has also imposed Islamic taxes on wealthy traders and
families. "We are only implementing Islam, zakat is an Islamic tax
imposed by God," said a jihadi in Raqqa.
Analysts estimate that Islamic State also raises tens of millions of
dollars by selling oil from the fields it controls in Syria and Iraq
to Turkish and Iraqi businessmen and by collecting ransoms for
hostages it has taken.
BAGHDADI CALLS THE SHOTS
At the heart of the Islamic State system is its leader, Baghdadi,
who in June declared himself "caliph", or ruler of all the world's
Muslims, after breaking with al Qaeda.
Residents, fighters and activists agree Baghdadi is now heavily
involved in Raqqa's administration, and has the final word on all
decisions made by commanders and officials. Even the prices set for
local goods go back to him, local sources say.
Residents say Baghdadi also approves beheadings and other executions
and punishments for criminals convicted by the group's Islamic
courts.
On the battlefield, fighters describe him as a fierce and
experienced commander.
The Syrian fighter said Baghdadi led major battles, such as one to
retake a Syrian military base known as Division 17 in July, the
first in a series of defeats the group dealt to Syrian government
forces in Raqqa province.
"He does not leave the brothers. In the battle to retake Division 17
he was also slightly wounded but he is fine now," the fighter said.
"He is always moving. He does not stay in one place. He moves
between Raqqa, Deir al-Zor and Mosul. He leads the battles."
NEXT GENERATION JIHAD
Although pragmatism has been a key to the group's success, ideology
is also vital to the group's rule.
By declaring the caliphate and setting up a "state", Baghdadi aimed
to attract foreign jihadis and experts from abroad. Supporters say
thousands have responded.
At the same time, wealthy Islamists from across the world have sent
money to Raqqa to support the caliphate, jihadis say.
According to sources in Raqqa, the group maintains three weapons
factories mainly designed to develop missiles. Foreign scientists -
including Muslims from China, fighters claim - are kept in a private
location with bodyguards.
"Scientists and men with degrees are joining the State," said one
Arab jihadi.
The group has also invested heavily in the next generation by
inducting children into their ideology. Primary, secondary and
university programs now include more about Islam.
The group also accepts women who want to fight - they are trained
about "the real Islam" and the reasons for fighting.
Islamic education groups are held in mosques for newly arrived
fighters, who, according to militants in Raqqa, have flocked to
Islamic State-controlled territory in even greater numbers since
Baghdadi declared the "caliphate".
"Every three days we receive at least 1,000 fighters. The guest
houses are flooding with mujahideen. We are running out of places to
receive them," the Arab jihadi said.
(Editing by Alexander Dziadosz and Giles Elgood)
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