When we think of the resources under threat when it comes to the conflict in Iraq, crude oil is usually the first that comes to mind.

But ISIS just brought another resource back into play… one that has been a cause of dispute for centuries.

Oil may be the driver of the Iraqi central budget and economy, but there is something else even more essential to the people who live there.

And ISIS is now raising the stakes in Iraq by asserting its control over this vital resource.

ISIS Now Controls a Vital Dam

This resource more essential than oil is one of the basic building blocks of life. As you might have guessed, it’s water.

I have been writing about this situation for years. As I discussed in my recent book The Great Game: The Coming Face Off for Global Supremacy (you can still get a free copy here), there are regions of the world where nations would go to war in a matter of hours should the supply of water be cut off. And this part of the Middle East is poised on a razor’s edge.

Known as the “Cradle of Civilization,” the region’s salvation is the confluence of two mighty rivers, the Tigris and the Euphrates. In this otherwise arid desert, these have been lifelines for thousands of years.

ISIS controls the dam on the Euphrates north of the city of Ramadi. And this morning, it began using it for military purposes. There are 26 gates on the dam, controlling survival for a wide area south in the direction of Baghdad, Iraq’s capital. ISIS has closed all but two or three of these and even then opens them for only a few hours a day.

Increased Pressure on Baghdad

My sources in the region have concluded that the motivations for these actions are threefold. First, the intentional relocation of the waters will benefit the city of Fallujah already under ISIS control. By redirecting what water is allowed through which dam gates, volume can be provided to some areas (such as Fallujah), but not others, based on downstream flow.

Second, ISIS has already begun to “water starve” areas remaining loyal to the central government.

This objective puts additional pressure on the capital’s Shiite-controlled administration. Preventing water from moving south has an immediate (and very negative) psychological impact on both the population and the officials.

Remember, as I have previously mentioned here in the Oil & Energy Investor, ISIS does not intend to capture Baghdad. Rather, the goal is to immobilize the decision-making apparatus in the city, further weakening its ability to govern elsewhere and making the expansion of the insurrectionist “caliphate” the group is creating near the Iraqi-Syrian border more secure.

Additional areas to the west and southeast could always be employed as buffer zones over which ISIS would exert control – either directly or through surrogate rulers – thereby providing a more defensible periphery.

Oil Disarray Would Lead to Iraq’s Fall

Trying to extend formal control over Baghdad is not in the cards. However, by paralyzing the government, ISIS does wield direct control over both oil production and export.

The large international oil majors operating huge fields in the far south are working on restrictive agreements that pay a fixed fee on each barrel extracted beyond contract minimums. The companies do not control policy, payment, or exports. The government does. Lack of official oversight is tantamount to throwing the entire nation’s oil picture into disarray, which would increase sectarian infighting and put additional pressure on the central budget and provision of services, while prompting an increasing splintering of the country.

In short, this will accomplish what ISIS wants without forcing it to take over a single oil operation in the most productive (and Shiite-dominated) land around Basra in the south.

New Crossing Points for ISIS Attacks

However, it is the third rationale for the move on the Euphrates dam that has the Iraqi military leadership most concerned. By cutting down the water flow, ISIS is significantly reducing the river’s water level. This will provide numerous areas where the water is sufficiently shallow to allow forces direct (and hit-and-run) attack venues.

In short, by this afternoon there are too many crossing points for the effective defense of Iraqi positions. As the army becomes less able to stand its ground, Baghdad will need to rely more heavily on Shiite militias under the command of Iranian General Qasem Soleimani.

That guarantees two things: greater control of Iraqi defense from Tehran (a prospect keeping Washington planners up at night) and a further accentuation of Sunni-Shiite mistrust.

These are just what ISIS wants to expand its influence and perpetuate its drive for power. I’ll be watching closely how these events play out over the coming weeks and let you know of any ways to potentially profit from these geopolitical maneuvers.

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