Despite the territorial loss, the chance of a terrorist attack happening abroad could be on the rise, according to a new report.
A global intelligence and data firm, IHS Markit, said ISIS has lost more than 60 per cent of its territory and 80 per cent of its revenue since the terrorist group declared its “caliphate” in Iraq and Syria in 2014.
But the loss of territory is driving ISIS to intensify its campaign of terrorist attacks abroad, the report said.
“ISIS’ ideology is still all over the world,” Phil Gurski, a former CSIS analyst and current president of Borealis Threat and Risk Consulting said. “The caliphate may be dead, but the terrorist ideology is still alive.”
WATCH: Iraqi forces launch final assault on ISIS’s hold on Mosul Old City
Gurski said ISIS fighters in Iraq may flee the area and instead may be on their way to carry out attacks in the West.
Loss of territory
In January 2015, the jihadist group controlled 90,800 square kilometres in Iraq and Syria, according to the report. This is roughly the size of Portugal or the U.S. state of Wyoming.
In 2017, the territory spanned an estimated 36,200 square kilometres, which is roughly the size of Belgium or the U.S. state of Maryland, the report said. This is a 40 per cent loss of land since the start of 2017, and a 60 per cent reduction since January 2015.
“The Islamic State’s rise and fall has been characterized by rapid inflation, followed by steady decline,” Columb Strack, senior Middle East analyst at IHS Markit said.
“Three years after the ‘caliphate’ was declared, it is evident that the group’s governance project has failed.”
Strack said ISIS’ remaining caliphate is likely to break up before the end of 2017, which will be reduced to “a string of isolated urban areas that will eventually be retaken over the course of 2018.”
WATCH: ISIS seized the Iraqi city, Mosul in June 2014
With Mosul about to fall, Col. Ryan Dillon with the U.S. Defence Department, said ISIS no longer has a hub.
“ISIS’ so-called caliphate is crumbling from the outside and from within. As ISIS continues to lose territory, their morale plummets,” he said at a media briefing last week.
ISIS finances dwindling
As ISIS continues to lose more ground in the Middle East, the group’s monthly income is also dwindling. In 2015, ISIS was making around $81 million a month. In 2017, the group was taking in around $16 million a month, which is a reduction of 80 per cent, according to the report.
The extremist fighters receive most of their income from taxation and extortion, oil production and smuggling and other illicit activities, according to the International Centre for the Study of Radicalization and Political Violence (ICSR).
“Territorial losses are the main factor contributing to the Islamic State’s loss of revenue,” Ludovico Carlino, senior Middle East analyst at IHS Markit said.
“Losing control of the heavily populated Iraqi city of Mosul, and oil-rich areas in the Syrian provinces of Raqqa and Homs, has had a particularly significant impact on the group’s ability to generate revenue,” he said.
There are no signs ISIS will make up for the financial losses and the group’s business model could soon fail, according to ICSR.
Attacks abroad could increase
The military defeat in Iraq and loss of territory in Syria won’t “sway the views of Islamic State supporters,” the report said.
“Egyptian, Saudi Arabian and UAE efforts at weakening radicals’ influence, and pressuring clerics to develop a new interpretation of Islam that is reconciled with modernity, are likely to drive some Islamist conservatives into embracing violence,” Firas Modad, senior Middle East analyst at IHS Markit said.
“Efforts by Western governments to confront Islamists are likely to have the same effect. Terrorism risks from Islamist groups are therefore likely to increase before they decrease,” Modad said.
He said even if ISIS in Iraq and Syria disappears forever, there are still several other ISIS affiliates that have pledged allegiance to them, including in Libya and Yemen.
“ISIS is on the way out, this is a good thing,” he said. “But we don’t want to get on our party hats and celebrate as this isn’t the end.”
— With files from the Associated Press