Islamic State: Degraded not defeated

As Islamic State's proto-nation crumbles, A2 assesses the consequences.


Over August, Iraqi military units launched a final assault on al-Ayadiya, one of Islamic State's last urban redoubts in the country. Despite a ferocious defence from Islamic State fighters, who have unleashed IEDs and snipers to hold back the encroaching Iraqi forces, A2 assesses that it is only a matter of when, rather than if, the town will be recaptured by the government This marks yet another defeat for Islamic State, which has lost control of the major Iraqi city of Mosul, is besieged in its Syrian capital Raqqa, and is losing ground on multiple fronts in the face of determined campaigns by Syrian and Iraqi military units. The majority of the group's attempts to build a presence in other countries have failed. Lebanese military units have cleared Islamic State from their stronghold in the north-east, Libyan militias have destroyed Islamic State's coastal holdings, and Algerian counter-terrorism operations have destroyed the group's presence in that country. Yet, simultaneously, the group has established a resilient foothold in Afghanistan and Egypt, and continues to inspire terrorist attacks around the world. Within Iraq, Islamic State is rapidly reconfiguring itself from a paramilitary-style force to a more traditional insurgent group, reliant on favourable terrain and close-knit cells to carry out acts of maximum casualties. Despite heavy losses, the group has over 10,000 battle-hardened fighters at its disposal, large quantities of military-grade weaponry, and substantial financial resources. Furthermore, Islamic State has entrenched itself in the international consciousness, and through the effective utilisation of propaganda and social media campaigns continues to have an outsized role in the orchestration of international political violence. Below, A2 discusses the various adaptions the group is likely to undertake over the one-year outlook, and the threat these pose to commercial operations.


Urban zones have been the symbolic, logistical and political centres of Islamic State, simultaneously demonstrating their ability to directly govern and providing bases to co-ordinate military operations. However, cities are difficult to defend exposed as they are to air strikes, artillery bombardment and armour. Recognising this vulnerability, Islamic State commanders and small groups of fighters appear to be relocating to the Hamrin mountains in northern Iraq. Withdrawal to Hamrin involves a trade-off  Islamic State's own heavier weaponry will likely have to be left behind, and a large section of its membership will doubtless choose to leave rather than live an austere life in the mountains. However, A2 assesses that the group will continue to possess sufficient kinetic capability to carry out strikes nationwide, particularly in neighbouring provinces, especially Diyala, Kirkuk and Saladin. Simultaneously, Islamic State cells are infiltrating cities nationwide. Local officials have raised alarms in cities from Ramadi in the west to Kirkuk, in the north, claiming that militants are re-establishing networks of contacts within their areas.
Islamic State cells are infiltrating cities nationwide
The capital Baghdad is another affected area, and multiple vehicle-borne IED attacks over the past 12 months  strikes which have caused dozens of fatalities starkly show that Islamic State's territorial setbacks elsewhere do not prevent it from launching operations nationwide. Therefore, A2 assesses that Islamic State will remain entrenched within Iraq well over the one-year outlook, albeit in a different configuration from before. This could, in fact, even heighten the risks to businesses, as Islamic State commanders will be entirely concentrated on carrying out terrorist strikes rather than making traditional battlefield tactical and strategic decisions. Businesses with a presence in Iraq, or which are considering market-entry strategies, should not confuse Islamic State's territorial degradation with a marked improvement in the national security environment. Extreme precautions should not be downgraded, and security assessments should continue to underpin business decisions. In particular, businesses should monitor, insofar as is practical, grievances in the local populations around their facilities. Increases in anti-government discontent, which could take the form of protests, low-level militant activity against security forces or vandalism, should act as gauges for popular opinion. Site security managers should factor in local sentiment during their decision-making processes.