Stratfor: ISIS & the rise of Warlord Entrepreneurs

Summary: This analysis by Stratfor discusses the adoption of modern business methods by insurgents, something long discussed here. It’s progress that mainstream geopolitical analysts are finding more analytically useful perspectives on jihadists rather than the usual hackneyed labels. It’s learning, that if continued might make us a threat to them.  {1st of 2 posts today.}

The Rise of Warlord Entrepreneurs

By Jay Ogilvy at Stratfor, 24 June 2015

As the Islamic State digs in after its conquest of Ramadi, U.S. President Barack Obama has been candid about his lack of a strategy to deal with the group, in part because he is waiting for commitments from the Iraqi government, but in part because the Islamic State is poorly understood. We know it is “nimble,” “aggressive” and “opportunistic.” But there is much about it we don’t know.

If you Google “books on the Islamic State,” you might be surprised at how many have jumped off the press in the past year, a phenomenon all the more remarkable given how little we actually know about the group. One book you will not see among your search results, since it does not have “Islamic State” in its title, is the recently published Warlords, Inc: Black Markets, Broken States, and the Rise of the Warlord Entrepreneur, edited by Noah Raford and Andrew Trabulsi. It is an anthology and therefore unlikely to be widely noticed, but I would like to draw on the insights of a few of its authors.

Together with Philip Bobbitt’s analysis of the nation-state’s decline and the market state’s rise, Warlords, Inc. provides geopolitical context for understanding the rise of the Islamic State. Though their prescriptions differ, Bobbitt and several Warlords, Inc. authors define the edges of a white space that the Islamic State is trying to fill by referring to the group’s geopolitical context. By looking at what’s outside the outline rather than what’s inside it, they may be giving us a more accurate picture of the Islamic State than those who claim to be peering directly into the group’s dark and secretive interior.

The Market-State Warlord

Like Bobbitt, the authors of Warlords, Inc. believe we are undergoing a major historical transition in which many governments, and even the very idea of the nation-state itself, are under threat. The anthology’s central thesis is that a netherworld of drugs, kidnapping and the smuggling of people and other contraband is bound to open up wherever the state fails to deliver public goods like health, education and security.

A shrieking feedback loop kicks in when failing states spawn illicit economies that in turn prey on the failing states from whence they came. “Once the social fabric is torn, the warlord entrepreneur is like the clotting blood, the scab forming over the wound.” A vivid image, but how is this any different from earlier warlord threats?

The distinctive property of the new warlordism is the degree to which it follows an economic logic as opposed to the political logic of prior insurgencies. There’s less talk of colonial oppression and class, and more talk of marketing, money laundering and finance. In an essay titled, “Innovation, Deviation, and Development,” authors Nils Gilman, Jesse Goldhammer and Steven Weber argue:

Talk about “animal spirits” (Adam Smith) or “disruptive innovation” (Clayton Christensen) or “creative destruction” (Joseph Schumpeter) — it is all here. Just because these markets feature goods and services that may disgust us, does not mean we can’t learn a great deal from deviant globalization’s “success stories” and “best practices.”

Behind the backs of — and often despite — all those corporations and development NGOs, as well as the World Bank and the International Monetary Fund, the poor are renting their bodies, selling their organs, stealing energy, stripping their natural environments of critical minerals and chemicals, manufacturing drugs, and accepting toxic waste — not because they are evil, but in order to make a living. Thus, deviant globalization is a form of economic development.

India’s Naxal Insurgencies

Nowhere is the shift from ideology to economics clearer than in the case of India’s Naxals. As we learn in a chapter by energy security consultant Shlok Vaidya that is entirely devoted to their story, the Naxals began in March 1967 as a group of idealistic, college-educated Maoists who wanted to help the peasants out of penury. From their origin in Naxalbari (hence the name), committing isolated acts of banditry, they grew within a few months to form massive mobs of people armed with little more than farm tools; at one point, they had even managed to gain control of 300 square miles of territory.

Still, given their weak organization and even weaker weaponry, they were eventually overwhelmed by state police. Thousands of attempts to resurrect the insurrection over the following months and years led only to the imprisonment of 40,000 insurgents by 1972. Apparently defeated, the Naxals went largely dormant for decades.

But since 2005, the Naxals have been making a significant and terrifying comeback. In 2012, they perpetrated over 1,500 violent acts, including attacks on police and the demolition of cellphone towers. The new Naxals trace their heritage directly to the original Naxalbaris, but they are different: less ideological, more focused on money, and because of that money, better armed. They still embrace some Maoist tactics, including focusing overwhelming force on one target at a time. But this raises a question: If they can indeed focus overwhelming force on a target that kills two birds with one stone, such as a cellphone tower that is surrounded by a rural police station, why don’t they do so as often as they can?

The answer is to be found in what is the clearest demarcation between Naxalbari’s revolutionaries and the insurgency of today. This generation has embraced the very activity the Maoist ideology so vehemently opposes: profit. India’s illicit economy is estimated to be between 40 and 71% of the size of the legitimate economy — somewhere between $500 billion and $1 trillion. The Naxals underpin a huge segment of this growing market.

Naxals need cellphones, too. They maintain a going concern that employs foot soldiers at $60 per month. Many of those foot soldiers go forth with price cards to collect what has become known as “the revolutionary tax” on a monthly basis: $2 for daycare workers, $4 for elementary school teachers, $10 for high school teachers, $4 for bank employees, $14 for bank managers and $100 for businessmen.

Whereas the revolutionary objectives of the original Naxalbaris were formed from a Robin Hood-cum-Mao mix of ideological egalitarianism and targeted violence, the principal goals of the new Naxals are quite different: to preserve India’s natural resources from predation by the rest of the globe.

Over the past twenty years, India has signed thousands of contracts that parcel out its reserves of bauxite, thorium, and coal, respectively 10%, 12%, and 7% of the world’s reserves. India stands to do deals worth more than $80 billion, should the Naxals allow it. Unfortunately 80% of these natural resources are found in four Naxal-afflicted states that lack governance and opportunity.

But will the Naxals aim to kill the beast on which they so successfully prey?

There are an estimated sixty thousand illegal mines operating today… These mines are operated by criminal organizations that also pay into the Naxal revenue pool… 20 and 30% for each truckload of coal.

Similarly, isn’t there quite a bit of oil in the provinces the Islamic State is overrunning? And weren’t Islamic State fighters quick to loot the banks in Mosul?

Lessons for Understanding the Islamic State

Most characterizations of the Islamic State feature it as a group chiefly driven by the religious fanaticism of Islamic extremism. But if Bobbitt and the Warlords, Inc. authors are correct, there may be more to it than that; we could be looking at an enemy driven by both God and Mammon.

With the rise of the market state, the parasite has taken on some of the features of the prey. The Naxalite insurgency (and quite possibly, the Islamic State) has adopted some of the market state’s characteristics, transcending the old confines of state borders to achieve a transnational reach and becoming media- and social networking-savvy, well financed and well armed.

Modern Naxals have corrected the flaws in their revolutionary predecessors’ model. Instead of relying on ideology to amass huge numbers with a shared purpose, this generation emphasizes execution: building tactical training capacity, capturing popular support and stockpiling equipment. Instead of bows and arrows, the new generation is armed with state-of-the-art weaponry.

Comparisons between the Naxals, old and new, naturally invite comparisons between the Islamic State and its predecessor, al Qaeda. The brutality of beheadings and the extremism of religious rhetoric could be obscuring a more important difference between the two jihadist groups: financial acumen.

If that is the case, then the recent assassination of top Islamic State moneyman, Abu Sayyaf, along with the capture of his wife and a trove of records may prove especially valuable. If we can “follow the money,” as Watergate informant Deep Throat so succinctly put it, we may yet learn enough about the Islamic State to be able to frame a credible strategy for its defeat.

The Rise of Warlord Entrepreneurs is republished with permission of Stratfor.

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About the author

Jay Ogilvy was a professor of philosophy at Yale. In 1979 he join SRI, the former Stanford Research Institute, as director of research. Dr. Ogilvy co-founded the Global Business Network of scenario planners in 1987. He is the former dean and chief academic officer of San Francisco’s Presidio Graduate School. Dr. Ogilvy has published nine books, including Many Dimensional Man, Creating Better Futures and Living Without a Goal.

About Stratfor

Founded in 1996, Stratfor provides strategic analysis and forecasting to individuals and organizations around the world. By placing global events in a geopolitical framework, we help customers anticipate opportunities and better understand international developments. They believe that transformative world events are not random and are, indeed, predictable. See their About Page for more information.

For More Information

If you liked this post, like us on Facebook and follow us on Twitter. For more about insurgents adopting modern business methods see

• Business 101 tells us what to expect next from jihadists: good news for them, bad for us.
• Jihadists will prosper using the methods of America’s entrepreneurs.

Also see Stratfor takes a closer look at India’s Naxalite threat, and all posts about the Islamic State — especially these…

• What’s in a terrorist’s name? A step to understanding the Islamic State. by Hal Kempfer (Lt. Colonel, USMC, retired).
• Who will find the key to power: America or the Middle East’s jihadists?
• Are we at war with ISIS? Does it make a difference what you call it? by Chet Richards.
• Stratfor: The Islamic State’s Pretense of Strength in Yemen.
• Martin van Creveld asks who will stop the Monster, the Islamic State?