| 
			 A wheat farmer from outside Mosul, Paulis and his family fled the 
			militant group Islamic State early last month. The group overran the 
			family farm as part of its offensive that captured vast swathes of 
			territory in northern Iraq. Two weeks later, Paulis, who is a 
			Christian, received a phone call from a man who said he was an 
			Islamic State fighter. 
 “We are in your warehouse. Why are you not here working and taking 
			care of your business?” the man asked in formal Arabic. “Come back 
			and we will guarantee your safety. But you must convert and pay 
			$500.”
 
 When Paulis refused, the man spelled out the penalty. “We are taking 
			your wheat,” he said. “Just to let you know we are not stealing it 
			because we gave you a choice.”
 
 Other fleeing farmers recount similar stories, and point to a 
			little-discussed element of the threat Islamic State poses to Iraq 
			and the region.
 
 The group now controls a large chunk of Iraq’s wheat supplies. The 
			United Nations estimates land under IS control accounts for as much 
			as 40 percent of Iraq’s annual production of wheat, one of the 
			country’s most important food staples alongside barley and rice. The 
			militants seem intent not just on grabbing more land but also on 
			managing resources and governing in their self-proclaimed caliphate.
 
 
			
			 
			Wheat is one tool at their disposal. The group has begun using the 
			grain to fill its pockets, to deprive opponents – especially members 
			of the Christian and Yazidi minorities – of vital food supplies, and 
			to win over fellow Sunni Muslims as it tightens its grip on captured 
			territory. In Iraq’s northern breadbasket, much as it did in 
			neighboring Syria, IS has kept state employees and wheat silo 
			operators in place to help run its empire.
 
 Such tactics are one reason IS poses a more complex threat than al 
			Qaeda, the Islamist group from which it grew. For most of its 
			existence, al Qaeda has focused on hit-and-run attacks and suicide 
			bombings. But Islamic State sees itself as both army and government.
 
 “Wheat is a strategic good. They are doing as much as they can with 
			it,” said Ali Bind Dian, head of a farmers’ union in Makhmur, a town 
			near IS-held territory between Arbil and Mosul.
 
 “Definitely they want to show off and pretend they are a 
			government.”
 
 The Sunni militants and their allies now occupy more than a third of 
			Iraq and a similar chunk of neighboring Syria. The group generates 
			income not just from wheat but also from “taxes” on business owners, 
			looting, ransoming kidnapped Westerners and, most especially, the 
			sale of oil to local traders. Oil brings in millions of dollars 
			every month, according to estimates by Luay Al-Khatteeb, a visiting 
			fellow at the Brookings Doha Center in Qatar. That helps finance IS 
			military operations – and is why IS-held oilfields in Syria are 
			targets in U.S.-led airstrikes.
 
 “Islamic State presents itself as exactly that, a state, and in 
			order to be able to sustain that image and that presentation, which 
			is critical for continued recruitment and legitimacy, it depends on 
			a sustainable source of income," said Charles Lister, another 
			visiting fellow at the Brookings Doha Center.
 
 SEIZING CROPS AND LIVESTOCK
 
 In early August, Kurdish farmer Saeed Mustafa Hussein watched 
			through binoculars as armed IS militants shovelled wheat onto four 
			trucks, then drove off in the direction of Arab villages. Hussein 
			said he does not know what became of his wheat. But he knows that IS 
			runs flour mills in areas it controls and he believes that his wheat 
			was likely milled and sold.
 
 He had 54 tonnes of wheat on his farm in the village of Pungina, 
			northeast of Arbil, wheat he had been unable to sell to a government 
			silo or private traders because of fighting in the area.
 
 The militants also took 200 chickens and 36 prized pigeons.
 
			
			 
 "What made it worse was that I was helpless to prevent this, I 
			couldn’t do anything. They took two generators from the village that 
			we had recently received from the Kurdish government after a very 
			long process," said Hussein.
 
 Residents are too scared to return even though Kurdish fighters are 
			now in control. "We think the Islamic State laid mines to keep us 
			from going back," said neighbor Abdullah Namiq Mahmoud.
 
 There are scores of similar stories at displacement camps across 
			Kurdistan.
 
 "We escaped with our money and gold but left our wheat and furniture 
			and everything else," said farmer and primary school teacher Younis 
			Saidullah, 62, a member of the tiny Kakaiya minority.
 
 "Everything we built for 20 years using my salary and our farming: 
			It's all gone. We are back to zero," he said, sitting on the floor 
			of a tent at a United Nations-run camp on the outskirts of Arbil.
 
 MILITARY AND ECONOMIC POWER
 
 After Saddam Hussein’s 1990 invasion of Kuwait triggered Western 
			sanctions, the then-Iraqi dictator built a comprehensive subsidised 
			food distribution system in Iraq. That was expanded under the United 
			Nations’ Oil-for-Food program. Joy Gordon, a political philosophy 
			professor at Fairfield University in Connecticut and author of the 
			2010 book “Invisible War: The United States and the Iraq Sanctions,” 
			estimates that two-thirds of Iraqis “were dependent primarily or 
			entirely” on food subsidies between 1990 and 2003.
 
 The system survived the U.S. invasion and years of violence. Now 
			fully run by the Iraqi government, it has been plagued in recent 
			years by “irregular (food) distributions” that have cut dependency, 
			according to a June report by the United Nations' Food and 
			Agriculture Organization. A former U.S. Department of Agriculture 
			economist estimates that about quarter of Iraqis living in rural 
			areas were dependent on subsidised food before the latest violence, 
			while another quarter used it to top up food they bought.
 
 IS is demonstrating that controlling wheat brings power. As its 
			fighters swept through Iraq’s north in June, they seized control of 
			silos and grain stockpiles. The offensive coincided with the wheat 
			and barley harvests and, crucially, the delivery of crops to 
			government silos and private traders.
   
			
			 
			IS now controls all nine silos in Nineveh Province, which spans the 
			Tigris river, along with seven other silos in other provinces. In 
			the three months since overrunning Nineveh’s provincial capital 
			Mosul, IS fighters have forced out hundreds of thousands of ethnic 
			and religious minorities and seized hundreds of thousands of tonnes 
			of wheat from abandoned fields.
 
 
 A SILO UNDER ATTACK
 
 One target was the wheat silo in Makhmur, a town between the cities 
			of Mosul and Kirkuk. The silo has a capacity of 250,000 tonnes, or 
			approximately 8 percent of Iraq’s domestic annual production in 
			2013.
 
 IS attacked Makhmur on August 7. But even in the weeks before that, 
			the group had found a way into the silo and the Iraqi state 
			procurement system.
 
 Abdel Rizza Qadr Ahmed, head of the silo, believes that IS forced 
			local farmers to mix wheat produced in other, IS-controlled areas 
			into their own harvest. The farmers then sold it to Makhmur as if it 
			all had been grown locally. In the weeks before the attack, the silo 
			purchased almost 14,000 more tonnes than it had in 2013. That extra 
			wheat is worth approximately $9.5 million at the artificially high 
			price Baghdad pays farmers.
 
 Ahmed believes IS was looking to make money from the wheat and 
			ensure there was bread available for Sunnis in the areas it 
			controlled.
 
 Ahmed said it was not his job to investigate the source of the 
			grain, just to buy it. “We just take the wheat from the farmers and 
			we don't ask 'Where did you get this from?'" he said.
 
 Huner Baba, local director general of agriculture, said he too 
			believed that traders and farmers had sold wheat from outside the 
			region.
 
 But Baghdad usually pays its wheat farmers around two months after 
			they deposit their produce and so wheat farmers around Makhmur – and 
			therefore IS – had not yet been paid by the time IS militants 
			entered the town on June 7 and, according to Baba, headed for the 
			silo.
 
 [to top of second column]
 | 
            
			 
			The militants were met by Iraqi Kurdish fighters, known as 
			Peshmerga, and fighters from the Kurdistan Worker’s Party (PKK). 
			After IS took the silo, Baba said, they installed snipers there. He 
			speculates that the militants believed U.S. warplanes would not 
			strike the facility, which is in the center of town.
 “They want to get people on their side especially the Arabs. Maybe 
			that’s why they didn’t do anything to the wheat, not to anger 
			people,” he said.
 
 IS held Makhmur for three days before the Kurdish fighters and U.S. 
			air strikes on IS positions – though not on the silo – drove them 
			out. U.S.-led air strikes did hit grain silos in the northern Syrian 
			town of Manbij on Sept 28. A group monitoring the war said the 
			aircraft may have mistaken the mills and grain silos for an Islamic 
			State base. There was no immediate comment from Washington.
 SMOOTH 
			TRANSITION
 In many ways, IS is replicating in Iraq strategies it developed in 
			Syria. In the year it has controlled the town of Raqqa in 
			northeastern Syria, for instance, IS militants say they have allowed 
			former employees from Assad’s regime to continue to run its mills. 
			The group has set up a wheat "diwan," or bureau, in charge of the 
			supply chain, from harvesting the crop to distributing flour.
 
 The same push to keep things running smoothly can be seen in Iraq. 
			IS fighters have regularly avoided destroying government 
			installations they have captured. When IS took over Iraq's largest 
			dam it kept employees in place and even brought in engineers from 
			Mosul to make repairs.
 
 Baghdad, too, has tried to minimise upheaval.
 
 Hassan Ibrahim, head of Iraq's Grain Board, the Trade Ministry body 
			responsible for procuring Iraq’s wheat internationally and from 
			local farmers, said that government employees in IS-held areas keep 
			in regular touch with head office. Some staff in IS areas even come 
			to Baghdad every couple of weeks, he said.
 
 In the past few weeks, he said, IS fighters had disappeared from 
			some areas in Mosul and Kirkuk because of the U.S.-led air strikes. 
			“The situation is stable,” he said, with IS fighters mostly happy to 
			allow state employees to continue to run the silos.
 
 
			
			 
			“I give instructions to my people to try to be quiet and smooth with 
			those people because they are very violent people. It is not good to 
			be violent with violent people because they will come to kill you. 
			Our aim is to keep the wheat.”
 
 After IS’s June offensive, Ibrahim was ordered to suspend salaries 
			for workers in IS areas. “But this troubled me," he said. "I cannot 
			have the mills stopping. I need people to stay there like guards to 
			convince the Islamic State that wheat is important for everybody.”
 
 Ibrahim says he convinced his bosses to keep paying salaries. A 
			Trade Ministry spokesman confirmed that all government employees in 
			Mosul had been paid their salaries “through state banks in Kirkuk, 
			as it’s safer and under government control.”
 
 Ibrahim is now worried about farmers who have not been paid for the 
			wheat they delivered in the weeks before the grain was seized by IS.
 
 He said the Grain Board and the Trade Ministry were trying to pay 
			farmers either living in IS-held areas or recently displaced from 
			them. "We would like to help the farmers, but not IS," he said.
 
 
 
 WINNING HEARTS AND STOMACHS
 
 In some places, the IS stranglehold on wheat appears to be winning 
			support among Sunnis.
 
 Ahsan Moheree, chairman of the government-affiliated Arab Farmers 
			Union in Hawija, says IS has gained in popularity since its fighters 
			took over. Baghdad’s dismissive attitude towards the country’s Sunni 
			Arabs had forced people towards IS, he said. But IS’s ability to 
			provide food had also helped.
 
 “They distribute flour to the Arabs in the area. They get the wheat 
			from the Hawija silo ... And they run the mill and they distribute 
			to people in a very organised way,” he said.
 
 Even those who have fled IS see wheat as one reason for the group’s 
			strength.
 
 “Nowadays a kilo of wheat is 4,000 or 5,000 dinars ($3.45 - $4.30). 
			It used to be 10,000 to 11,000 dinars,” said Joumana Zewar, 54, a 
			farmer who now lives in Baharka camp outside Arbil. IS and Sunni 
			Arabs are selling the wheat they stole “for very cheap. It’s cheap 
			because they stole it.”
 
			 Zewar called a friend in Mosul to check on the latest prices.
 
 “The price of foods and bread is very cheap,” the friend said. 
			Islamic State had taken control, and as in Syria, was dictating 
			prices. “They are the government here now. They are going to the 
			bakeries and saying, ‘Sell at this price.’”
 
 THE YEAR AHEAD
 
 The big worry now is next season’s crop. In Nineveh province, home 
			to the capital of the group’s self-declared caliphate, 750,000 
			hectares (1.8 million acres) should soon be sown with wheat and 
			835,000 hectares with barley, an Iraqi agriculture ministry official 
			said.
 
 The official said that the province normally has 100,000 farmers. 
			But thousands have fled.
 
 Iraqi farmers normally get next season’s seeds from their current 
			harvest, keeping back some of the wheat for that purpose. IS 
			controls enough wheat so finding seeds should not be a problem. It 
			also controls Ministry of Agriculture offices in Mosul and Tikrit 
			which should have fertilizer supplies.
 
 But getting the seeds and fertilizer into the right hands will be a 
			problem. Mohamed Diab, director of the World Food Program's Regional 
			Bureau for the Middle East, North Africa, Central Asia and Eastern 
			Europe, said that it is "highly unlikely" that displaced farmers 
			would return.
 
 "The picture is bleak regarding agriculture production next year," 
			he said. "The place where displacement has happened is the main 
			granary of the country."
 
 That’s especially true for non-Sunni Arab farmers. Those who have 
			remained on their land just outside IS-held territory fear the 
			militants will soon take their villages, and their harvested but 
			unsold crops.
 
 Even if that does not happen, they say, they will not plant after 
			the first rain, which typically comes at the end of September or in 
			early October.
 
 Farmers in the town of Shekhan, nestled among sun-bleached wheat 
			fields, say they have no hope of getting the seeds, fertilizer and 
			fuel needed to plant because the provincial government in Mosul is 
			under IS control.
 
 "The real problem is how to get seeds to those inside Mosul and 
			surrounding areas,” said Nineveh Governor Atheel Nujaifi, who 
			believes production will drop next season.
 
			
			 
 Bashar Jamo, head of a local farmers' cooperative, is also worried. 
			“The most important thing to us is agriculture, not security. Maybe 
			(IS) will have a state, maybe an army, but all we need is to be able 
			to farm.”
 
 (Additional reporting by Ned Parker and Ahmed Rasheed in Baghdad, 
			Maha El Dahan in Abu Dhabi and Mariam Karouny in Beirut; Editing by 
			Michael Georgy and Simon Robinson)
 
			[© 2014 Thomson Reuters. All rights 
				reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published, 
			broadcast, rewritten or redistributed. |