Its self-declared state has no functioning ministries, nor is it recognised by any government in the world; it is also under sustained daily air attack by the US and its allies. But none of this has prevented the Islamic State of Iraq and Levant from declaring plans to mint its own money.
A statement on Wednesday by the al-Qaeda offshoot known as Isis, announced the launching of its new currency as a way to separate its self-declared proto-state encompassing northwest Iraq and northeast Syria from the “tyrannical financial system imposed on Muslims”.
The group also released a 17-minute audio recording purported to be of their leader, Abu Bakr al-Baghdadi, in an apparent effort to dispel rumours that he had been killed in recent air strikes. In the recording he referred to recent events that took place after announcements by the US of his presumed death – such as a pledge of allegiance by an Egyptian jihadi group.
“Fighting is obligatory upon every individual,” he said in speech that called for new recruits and lambasted western countries and their Arab allies, especially the oil-rich Kingdom of Saudi Arabia. “Jihad is the peak of deeds and the best of Islam.”
The speech also claimed that western powers “feared Muslims’ wealth and goods of our land, which they plunder”.
The recording did not disclose plans for the new currency but Abu Bilal al-Homsi, the nom de guerre of a Syrian activist who serves as a liaison to Isis, confirmed the veracity of the document announcing its launch. “This is a strike against the Crusader coalition, and it’s a victory that the Islamic State has an economy and is self-sufficient,” he said.
But despite seeking to distance itself from the international economy, the new currency’s underpinnings may make Isis’s economy even more heavily dependent on global fluctuations than most, specifically on precious metal and commodity prices.
The highest-denominated 5 dinar coin is set to contain 21.25 grams of 21 carat gold, worth about $694, while its lowest-denominated 10 flous coin would contain 10 grams of copper and be worth about 7 cents. The proposed silver dirham coins would range in value from 45 cents to $4.50 at current rates.
“The purchasing power of the money they’re emitting will be wholly dependent on what the purchasing power of gold, silver and copper are,” said Steven H. Hanke, professor of applied economics at Johns Hopkins University. “The important thing is: where are they going to get the gold and copper? Isis will have to confiscate more property through theft and the spoils of war.”
Although the jihadis would not necessarily need a central bank if the coins were made of gold and silver, the statement described how the currency’s introduction would be overseen by a leadership council in the “house of finance” and approved by Al-Baghdadi.
Isis supporters, many of whom are frustrated at the group’s stalled progress and recent losses on the battlefield, took to social media in a torrent of support for the group.
The announcement also provoked derision. Karl Sharro, a UK-based Lebanese comedian and architect posted an illustration of a pigeon clutching a letter in its beak. “Along with its new currency, Isis today revealed its new postal service,” he wrote on Twitter.
Letter in response to this report: