Two Years after Losing Baghouz, ISIS Regroups in Deserts, Caves

Smoke rises in the village of Baghouz in northeastern Syria, after an airstrike staged by the US-led International Coalition on March 3, 2019. (AFP)
Smoke rises in the village of Baghouz in northeastern Syria, after an airstrike staged by the US-led International Coalition on March 3, 2019. (AFP)
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Two Years after Losing Baghouz, ISIS Regroups in Deserts, Caves

Smoke rises in the village of Baghouz in northeastern Syria, after an airstrike staged by the US-led International Coalition on March 3, 2019. (AFP)
Smoke rises in the village of Baghouz in northeastern Syria, after an airstrike staged by the US-led International Coalition on March 3, 2019. (AFP)

It was around this time in 2019 that ISIS lost its final holdout in Syria. The terror group fought fiercely but was ultimately defeated and driven out of the eastern village of Baghouz, the last sliver of territory left of a violent “caliphate” that once was the size of the UK.

Two years later, concerns of an ISIS resurgence are increasing. Was the terrorist organization truly defeated? What is the status of its leader, branches and lone wolf recruits?

After crushing ISIS in Baghouz, then US President Donald Trump declared that the organization was “100 percent” defeated.

Trump's claim sparked wide speculation. Many questioned that he might have been quick to boast about the end of ISIS just like President George W. Bush had rushed in 2003 to declare “mission accomplished” in Iraq with the downfall of Saddam Hussein.

Even though Saddam was taken out of the picture, the US found itself sucked into an Iraqi quagmire that cost it the lives of thousands of its soldiers.

The power vacuum left behind by Saddam’s defeat was seized by anti-US armed groups like Iran-linked Shiite militias and Sunni factions dominated by Al-Qaeda.

US withdrawal from Iraq in 2011 enabled Al-Qaeda, through its “Islamic State in Iraq” offshoot, to regain momentum.

The terror group quickly expanded across Iraqi cities and spilled over into neighboring Syria, where chaos that followed the revolution against the regime of President Bashar al-Assad presented a unique opportunity for strategic land grabs.

It is still early to judge if Trump’s declaration of ISIS’ defeat was rushed, especially since the group had officially lost its “caliphate” and was chased into deserts and mountains.

Today, operations staged by ISIS in Syria and Iraq suggest that the group is in the process of reorganizing its ranks in caves and desert stretches, but also go to show that it still hasn’t reached the capacity for leaving its hideouts and overrunning cities.

Although UN estimates place the number of remaining ISIS fighters in Syria and Iraq at about 10,000, it is clear that the organization has not yet decided to move to the stage of trying to launch attacks on cities and large towns.

Instead, ISIS is limiting its activity to hit-and-run attacks, bombings and assassinations.

It seems that the terrorist organization is aware that attacking cities and towns is more of a suicide mission than an expansion effort. Russian and US air forces in the region would swiftly eliminate any of its assaulting or retreating units.

While it appears that ISIS in Syria and Iraq is currently still in the process of regrouping, the image of the organization's branches around the world appears somewhat muddled. Some are successful and expanding, while others are incurring heavy losses.

In Libya, ISIS suffered a severe setback in 2017, after it lost the thousands of fighters it had gathered in the city of Sirte, its capital on the coast of the Mediterranean. It fought for seven months but was eventually defeated.

Since then, ISIS's presence has been confined to tiny outposts deep in the southern deserts of the North African nation. Despite managing to stage a series of offensives, these outposts have been weakened greatly.

In Tunisia, ISIS failed in its venture to establish an “emirate” in the southern Ben Gardane region. The group’s activity is currently limited to mountainous areas near borders with Algeria.

In Algeria, security forces managed to eradicate the local ISIS branch, branded “Caliphate Soldiers” in 2014.

In the Sinai Peninsula, ISIS offshoots were faced by a large-scale military campaign by the Egyptian army that targeted the organization’s hideouts. Despite the apparent weakening of ISIS in Sinai, the terrorist group still announces from time to time the killing of people suspected of collaborating with the security forces.



Cash Shortage Squeezes Gaza Residents

Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)
Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)
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Cash Shortage Squeezes Gaza Residents

Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)
Palestinian children queue for a hot meal at a charity kitchen in Gaza City on April 30, 2025. (Photo by Omar AL-QATTAA / AFP)

Even when food is available, many in Gaza cannot afford to buy it, as the enclave suffers from a severe cash shortage. Israel has blocked the entry of new currency into the territory since October 7, 2023, leaving residents at the mercy of money changers who have hiked exchange rates on remittances to exorbitant levels.

Palestinians in Gaza primarily rely on the Israeli shekel for daily transactions, which used to enter the strip through banks operating under the Palestinian Monetary Authority, supplied by the Bank of Israel.

Banking operations in Gaza have ground to a halt since the start of the war, and no fresh banknotes have entered the enclave, worsening an already dire humanitarian situation. Residents say they have been left at the mercy of traders who exploit the cash shortage to impose arbitrary rules on currency use.

'The Traders’ Game'

Dubbed “the traders’ game” by many in Gaza, the practice began with merchants refusing to accept worn-out banknotes and certain coins, such as the 10-shekel piece (worth about $3), which have all but vanished from local markets. Some vendors now reject older versions of bills - like the brown-hued 100-shekel note (around $28) - insisting instead on the newer yellow ones. The same rules apply to various denominations.

Speaking to Asharq Al-Awsat, Hani Jahjouh, a resident of al-Shati Camp west of Gaza City, said vendors selling vegetables and essential goods - when available - often refuse worn banknotes or specific coins, claiming they are counterfeit or easily faked.

“This just adds to the burden of people already crushed by impossible living conditions,” said Jahjouh, 59. “We don’t have solutions. We don’t even know where to get the money they’re asking for.”

Only a very small number of traders accept digital payments, and even then, residents say, they impose tough conditions - such as inflated prices or demands for partial payment in cash.

Displaced Gazan Duaa Ismail, originally from Beit Hanoun in the north of the enclave, says even when goods are available, she cannot afford them due to a lack of cash.

“We’re suffering badly from a shortage of money, and that makes it even harder to get basic items like flour and sugar - when they’re even in stock,” she told Asharq Al-Awsat from a shelter in Gaza City’s Sheikh Radwan neighborhood.

Ismail said that during a brief ceasefire, some traders had accepted digital payments through mobile apps. “But once the war resumed, things worsened, and they stopped taking them altogether,” she said.

Salaries They Can’t Spend

The crisis has also hit public-sector employees, private workers, and international aid staff, many of whom receive salaries through bank transfers or mobile wallets but have no way of accessing their funds with banks shuttered. They are forced to rely on currency dealers or traders with access to physical cash.

Amjad Hasballah, an employee with the Palestinian Authority, said he has been cashing his monthly salary through mobile banking apps for over a year and a half, paying a steep commission to money traders in return.

“When I received my last salary in early April, the commission had reached 30%,” he said.

Speaking to Asharq Al-Awsat, Hasballah explained that at the start of the war, commissions hovered around 5%, but they spiked during Ramadan, peaking at 35% around Eid al-Fitr, before dipping slightly to 30%.

“My salary is just 2,800 shekels. When I pay a 30% fee, there’s barely anything left,” he said bitterly. “At this point, the traders might as well take the whole salary and just give us pocket money.”

Caught in a Trap

Jamal Al-Mashal, a father of six who lost two children in an Israeli airstrike, said he lives off 1,000 shekels (about $280) in monthly international aid. But even that amount is slashed by up to 30% when he exchanges it through local traders.

“People in Gaza have become a cash trap for currency dealers and big traders,” he said. “They’re exploiting our desperation, and it’s like a harvest season for them - raking in profits while we suffer.”

The poorest and most vulnerable are hit hardest. Many international agencies rely on electronic payment platforms to distribute aid to these groups, who often have no access to physical currency.

No Oversight, No Restraint

The Hamas-run government has made attempts to cap commission rates at 5%, but those efforts have largely failed. Officials blame ongoing Israeli targeting of personnel involved in regulating the process.

Money changers defend the high fees, arguing that the lack of currency entering Gaza leaves them with limited options.

“We raise commission rates because there’s simply no new cash coming in,” one trader told Asharq Al-Awsat. “Once money is distributed to the public, we have no way of getting it back. What goes out doesn’t return.”

He added that while ministries and law enforcement have tried to impose limits, traders view the rules as unfair. “There have been attempts to regulate us, but we haven’t complied - they’re asking too much from us under impossible conditions,” he said.

Some municipal leaders and community elders in Gaza have recently appealed to the Palestinian Monetary Authority in Ramallah to intervene in what they describe as unchecked profiteering by traders controlling access to scarce cash.

They have called for greater oversight, including monitoring and freezing the traders’ bank accounts.

The authority has repeatedly warned against exploitation of civilians and threatened to take action. But in practice, traders continue to charge hefty commissions on money transfers with little deterrence.

The Authority has urged residents to use its Instant Payment System available through mobile banking apps, which it says offers a practical alternative to cash, promotes digital payments, and enables real-time transactions.

Cash Squeeze Tightens Further

Despite the hardship, Israel is considering new measures that could further tighten the financial stranglehold on Gaza. One proposal involves withdrawing the 200-shekel banknote (worth about $55) from circulation, on the grounds that Hamas allegedly uses it to pay salaries to its fighters.

The suggestion was reportedly made by Israeli Foreign Minister Gideon Sa’ar to Bank of Israel Governor Amir Yaron, who rejected the move. Other proposals include voiding the serial numbers of banknotes believed to be inside Gaza, effectively rendering them worthless, a step that could deliver a significant financial blow to Hamas.

According to a report published Tuesday by the Israeli daily Maariv, the proposal has backing from several ministers and economists both within and outside the central bank.

The report estimated that around 10 billion shekels in high-denomination bills - 100 and 200 shekels - remain in circulation within Gaza. These notes entered the enclave over the years through official banking channels supplied by the Bank of Israel.

Economists told Maariv that Gaza residents receive an estimated 150 to 200 million shekels each month through digital transfers from aid organizations and the Palestinian Authority. That money is then converted into cash within markets dominated by Hamas and supported by a network of money changers.

Israeli security sources estimate that Hamas has accumulated up to five billion shekels since the war began and has spent nearly one billion shekels on salaries for fighters and new recruits. The sources claim Hamas has profited significantly by reselling aid and fuel at inflated prices during the conflict.