The renegade Islamist group known as ISIS now controls swaths of Syria and Iraq, and it's partly because the fighters are so rich. ISIS, or the Islamic State of Iraq and Syria, is known for having the biggest guns and paying the highest salaries.
While kidnapping, oil smuggling and donations from sympathizers have been well-known sources of money, the groups also run complex and brutal protection rackets, according to analysts.
Charles Lister of the Brookings Institution in Doha, Qatar, says Iraqi intelligence sources estimate that extremist militants take in more than $1 million a month in extortion from the northern Iraqi city of Mosul.
"Mosul seems to have acquired a very central role in terms of making money," Lister says. "Certainly since late 2012, early 2013, I've seen a number of reports to suggest that ISIS's activities in extortion and acquiring levies on transport and real estate having increased fairly dramatically."
Money has been important in helping extremist militants in Syria overtake more moderate and Western-backed rebels fighting against the Syrian government.
In Mosul, the extortionists prey on thousands with regular demands and threats. The story of one small business owner shows how it works.
Tawfik ran a computer shop in Mosul until last year. He was too afraid to give his full name even though he has fled Mosul for the safer city of Erbil. He says he left Mosul after an anonymous caller demanded about $114,000 for jihad, or holy war, an unthinkable amount for a shop owner who made perhaps $1,000 a month.
The extortionists "told us that everyone in the street who is working pays for them and that we should pay too," Tawfik says. "They killed three people because they had not paid or were actually late to pay. They were really serious."
He didn't know who the men were — they told him to leave the money for them in a bag.
"Those kinds of guys are like ghosts," he says. "You can't see them. You pay them but you cannot see them. You don't know who they are and where they live. You have no idea about them. They stay in the shadows and they take the money."
Several other people interviewed said the problem of extortion is entrenched and ongoing.
Abulraheem al Shammari, an official at the Mosul provincial council, says the phenomenon is crippling the city.
"They are extorting money from tradesmen, people with capital, shops, and pharmacy owners," he says. "I believe that all the state officials are aware of it."
And he agrees with residents who say the police and army, despite a heavy presence in the city, are powerless against this heavily armed mafia.
"I don't believe that a plan to tackle the issue exists," he says.
Alice Fordham is NPR's Beirut correspondent. Follow her @AliceFordham.
AUDIE CORNISH, HOST:
Al-Qaida-linked militants are surging in the Syrian civil war where they outmuscle Western-backed rebels for power. And they've also captured ground in next door Iraq. The militants are known locally as ISIS. They have the upper hand, in part, because of money. The group buys bigger guns and pays better salaries than its rivals. NPR's Alice Fordham went to northern Iraq and found the source of much of that money: an extortion network.
ALICE FORDHAM, BYLINE: This is a street of car mechanics on the outskirts of Mosul. Here, in a largely Christian suburb, business is pretty good and the situation is safe. But ask people about doing business in the center of the city and they describe a mafia run by terrorists.
UNIDENTIFIED MAN: If anyone success in his work, in his business, come to him, need money from him.
FORDHAM: They come to him and need money from him. And that's how it goes, says this guy having his car fixed, who won't give his name out of fear. Over and over, people from Mosul say that the Islamists known as ISIS run the city like Al Capone ran Chicago. The garage owner, Louay, who's also scared to give his full name, says that, yeah, he made more money in the city center but the risks weren't worth it.
LOUAY: (Through Translator) Of course. OK. The business and working was better in Mosul, inside the city before. But now, working here may be less, but I'm secured, myself and my family.
FORDHAM: He fled a giant protection racket. Businesses, shops, doctors - they all have to pay or risk being killed.
CHARLES LISTER: I would say in Iraq, Mosul has taken the key role in terms of ISIS's making of money through illicit means.
FORDHAM: Charles Lister, an analyst with the Brookings Institution. He says Iraqi intelligence suggests ISIS makes at least $1 million a month in Mosul.
LISTER: Money is critical for any insurgent group's operations to sustain on the same level that they have been or potentially to escalate further.
FORDHAM: The group uses the cash for weapons and salaries for its extremist fighters. That's helped it marginalize more moderate factions across the border in Syria. And the practice is growing. For example, the group now taxes trucks on roads it controls. So what does this mean for the people who live there? This man asks to be identified only as Tawfik.
TAWFIK: Actually, I'm from Mosul. I grow there and I'm working as IT. I have a computer shop there for a long time.
FORDHAM: Tawfik made about $1,000 a month from his shop. Then, one day, he got the call from ISIS.
TAWFIK: They ask for some money and we stuck in this. And, you know, it was kind of a scary thing to deal with them.
FORDHAM: Their demands were incredible.
TAWFIK: Well, they asked for, I guess, 100,014.
FORDHAM: They asked for $114,000?
TAWFIK: Mm-hmm. Yes.
FORDHAM: So it was a huge amount of money for you.
TAWFIK: Yeah. Actually, it's not a reasonable number to pay for a small shop that cannot make more than 1,000 bucks per month.
FORDHAM: Not reasonable. But the man on the phone said they needed the money for jihad. He told Tawfik that everyone else with a shop on the street paid or was killed.
TAWFIK: OK, and you know, they killed three persons, yeah, because he haven't paid or actually late to pay. And, yeah, they were really serious.
FORDHAM: Tawfik fled to Erbil, a safer part of Iraq, where I meet him. Abdul-Rahim al-Shammari, an official with the Mosul provincial council, says the phenomenon is widespread.
ABDUL-RAHIM AL-SHAMMARI: (Foreign language spoken)
FORDHAM: Al-Shammari says that the police and army are either unwilling or unable to stop the extortion. And people in Mosul say that ISIS is now so rich, powerful, and brutal that no one can see a way to force these gangster extremists out of their city. Alice Fordham, NPR News. Transcript provided by NPR, Copyright NPR.