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 The United States, France, Britain and Russia have vowed to defeat
Islamic State, which uses an extreme interpretation of Islam to
justify attacks and brutality in large parts of Syria and Iraq that
it controls.
A U.S.-led coalition is bombing the hardline Sunni group, as is
Assad's only big-power supporter Russia, in an attempt to kill its
leaders and cripple the oil wells which the group uses to finance
its rule and attacks abroad.
In one of the most detailed public explanations of Islamic State's
oil trade, U.S. Treasury Department official Adam Szubin said
militants were selling as much as $40 million a month of oil at the
installations which was then spirited on trucks across the
battlelines of the Syrian civil war and sometimes further.
"ISIL is selling a great deal of oil to the Assad regime," Szubin,
acting under secretary for Terrorism and Financial Intelligence with
the Treasury, told an audience at Chatham House in London.
"The two are trying to slaughter each other and they are still
engaged in millions and millions of dollars of trade," Szubin said
of Assad's government and Islamic State, also known as ISIS or ISIL.
The "far greater amount" of Islamic State oil ends up under Assad's
control while some is consumed internally in Islamic
State-controlled areas. Some ends up in Kurdish regions and some in
Turkey, he said.
"Some is coming across the border into Turkey," Szubin said when
asked for details on the money trail.
"Our sense is that ISIL is taking its profits basically at the
wellhead and so while you do have ISIL oil ending up in a variety of
different places that's not really the pressure we want when it
comes to stemming the flow of funding - it really comes down to
taking down their infrastructure," he said.
Szubin said it was unclear whether the $40 million a month estimate
could be multiplied over a year. But in remarks prepared for
delivery, he said Islamic State had made more than $500 million from
the oil trade, but did not give a more specific time period.
'SECURE THE TURKISH BORDER'
After Turkey downed a Russian fighter jet last month, Russian
President Vladimir Putin said he had intelligence that large amounts
of oil and petroleum products were moving across the border from
Islamic State territories to Turkey.
The son of Turkish President Tayyip Erdogan has denied Russian
allegations that he and his family were profiting from the illegal
smuggling of oil from Islamic State-held territory.
"There is no question that better security, closing the Turkish
border to flows is a key component right now and we are looking to
the Turks to do more in that respect," Szubin said.
"It's not just a financial issue - it is about foreign terrorist
flows, it's about weapons and it's about financing. I think securing
that border would pay major dividends in terms of intensifying the
pressure and also reducing the threat."
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In an attempt to cut militants' links to the global financial
system, Szubin said the United States had worked with Iraq to close
down dozens of bank branches in Islamic State-held territories.
Szubin said militants had looted up to $1 billion from bank vaults
in Syria and Iraq, but he said Islamic State's oil trade was the
main target.
Islamic State militants claimed responsibility for a Nov. 13 attack
on Paris that killed 130 people and the Oct. 31 downing of a Russian
passenger aircraft over Egypt’s Sinai region that killed 224.
They promise more attacks on the West and Russia and have claimed
that U.S.-born Syed Rizwan Farook and his Pakistani wife Tashfeen
Malik who killed 14 people in a mass shooting in Southern California
last week were its followers.
IRAN BANKING
Szubin sought to soothe concerns about U.S. reaction to what is
expected to be a boom in trade with Iran when Western sanctions are
lifted as part of a nuclear deal between Tehran and six world powers
reached earlier this year.
Many Western companies, including European ones, remain concerned
about initiating trade with Iran fearing they could still fall foul
of the complex layers of sanctions and potentially face fines or be
cut off from the U.S. financial system.
Szubin acknowledged there would be a great deal of “caution and
hesitancy” by international banks initially.
In 2014, the United States imposed a record fine on French bank BNP
Paribas <BNPP.PA>, which agreed to pay almost $9 billion to resolve
accusations it violated U.S. sanctions against Sudan, Cuba and Iran.
Without naming any banks, Szubin said there had been some "very bad
conduct" going on in the Western banking system in the mid-2000s and
before.
"That conduct by and large stopped in 2007, 2008... we haven't seen
reputable European banks doing this for close to a decade now," he
said.
"If banks are being honest and accurate in describing what they are
doing and there's an accidental payment that goes through the U.S.
payment system that shouldn't, we are not going to look at the
penalty cases, these massive enforcement cases."
He said once global sanctions were lifted, all non-U.S. companies
would be able to invest in Iran and trade oil with Iran, though
accompanying U.S. sanctions on Iran for supporting terrorism would
remain.
(Editing by Toby Chopra and Grant McCool)
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