The Islamic State militant group has been forced to cut pay to its fighters by up to 50 percent because U.S.-led airstrikes have had a substantial impact on the money it makes from oil, a senior U.S official said on Monday.
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Daniel Glaser, assistant secretary for terrorist financing at the U.S. Treasury Department, said the airstrikes had hit the group's ability to extract, refine and transport oil from the territory it controlled in Iraq and Syria.
"When you look at difficulties that we know that they are having with respect to the transport, with respect to the extraction, I think it's fair to say they are no longer able to make money the way they used to be able to," Glaser told a London conference.
"(ISIS) has cut salaries to its fighters in (its de facto capital) Raqqa by up to 50 percent," he added.
The strikes had also targeted cash storage sites which had "literally incinerated millions of dollars".
ISIS has declared a self-styled caliphate across areas of territory it controls in Iraq and Syria, imposing its own harsh interpretation of Islamic law.
Glaser said the U.S. had estimated it made some $500 million a year from oil, along with hundreds of millions more from taxation and extortion to go with the hundreds of millions it had seized from banks when it captured Iraqi towns and cities.
But the air attacks were beginning to have a major impact, he said.
This had been helped by the decision of the Iraqi government to cut off paying salaries to its employees in ISIS-held territory, as this amounted to some $2 billion a year.
He said ISIS still had a lot of money but cutting its income stream would hamper its efforts.
"It's not cheap to run a caliphate, it's not cheap to run a war," Glaser said. "You need to pay your fighters. They are having a harder and harder time doing it."