On Thursday, Islamic State announced their intent to create their own currency resurrecting the ancient Islamic dinar from 634 CE. This has consumed Western media and led the vast majority to completely discount this move as doomed for failure. Islamic State continues to move towards a true state as it established a Treasury Department that will manage the new currency. ISIL's success in this endeavor is not necessarily important. The fact that they are taking this new step indicates that terrorist organizations intend to be a lasting entity with a permanent place in global affairs, not unlike the rise of many nation states in centuries past.
Certainly ISIL has huge impediments to overcome to pull this off, but it might have more value than the world seems to believe. Sure no bank in the world will accept ISIL’s currency on the sole basis it comes from a terrorist organization. They will also need to pull enough money together to buy the necessary material for widespread dissemination. Plus the logistics of minting a new currency haven’t been ironed out and will be even more difficult to pull off with constant airstrikes. The continuing battles over control in Syria and Iraq will work against a stable government and currency. But just because there are many factors working against ISIL’s plan does not mean it will not get off the ground or end in utter failure.
To ISIL’s credit they have not disclosed exactly how and where they will mint their new seven coins, made out of gold, silver and copper. Doing so would only provide an easy target for drone strikes. Coming up with the money to produce the new coins may not be as difficult as it seems as they are considered one of the wealthiest terrorist organizations from ransom demands and confiscated oil sales. Changing its current store of currency into new money might appear counterproductive. Except doing so contributes to ISIL’s caliphate and reinstatement of Sharia law by eliminating the “tyrannical monetary system that was imposed on the Muslims [leading to] enslavement and impoverishment.”
Using precious metals for currency not only ties the new currency to its historic roots but also ensures the new dinar has intrinsic value from its inception. Even though the world will not accept the new dinar thereby delegitimizing its value on a global scale, it can certainly help establish legitimacy in ISIL occupied territory. As a fledgling currency with no international recognition it wouldn’t be too difficult to use on a local level that is wholly controlled by ISIL. Gold and other precious metals have long been the currency of choice as its value transcends what the government sets, until this century.
The U.S. may have been too quick in casting ISIL as just a destabilizing force in the region and the world would be remiss to write off this latest announcement as impractical and a nonstarter. Even if it fails at the local level, the fact that ISIL has “assembled a team of experts to figure out how it is going to work” indicates their commitment to the establishment of a true state. This level of bureaucracy meant to outlive individual leadership demonstrates a new and serious threat. ISIL does not have to succeed at this juncture in establishing a lasting currency. The longer Islamic State can outlast the airstrikes while holding onto power and territory the more legitimacy they will gain in the region until they can mint again.