(Bloomberg) -- Islamic State has been battered in Iraq and Syria and declared defeated by President Donald Trump. But the terrorist group and its predecessor, al-Qaeda, are finding ample room to rebuild in other places with weak central governments, officials and analysts warn.

As an attack Saturday that killed 63 people in Afghanistan underscored, Islamic State affiliates have proven they can carry out deadly strikes, gain support and establish footholds from Sri Lanka to Nigeria. As its leadership goes deeper underground and spends millions of dollars to expand, Western security officials are looking for new ways to disrupt its operations.

“The so-called ISIS caliphate has been destroyed, but the ISIS brand lives on around the world,” Nathan Sales, the State Department’s coordinator for counterterrorism, said in a briefing this month. The fight against Islamic State is entering a new phase, and the effort to defeat it globally must be approached with the “same level of urgency and commitment that brought us victory in Syria and Iraq.”

Sales’s concern reflects an uncomfortable reality: Islamic State is adapting, undermining security and economic prosperity in more countries as it establishes new bases. The threat is particularly acute in Africa, where it’s clearly on the rise.

Governments in Europe -- where Islamic State unleashed a string of deadly attacks in France, German, Sweden and the U.K. in the middle of the decade -- have “decreased significantly” the group’s ability to strike through tougher policing and a crackdown on online propaganda that’s reducing the ranks of its supporters, said Thomas Hegghammer, a senior research fellow at the Oslo-based Norwegian Defence Research Establishment.

“For a start, the pool of perspective attackers wasn’t bottomless,” Hegghammer said in a phone interview. “Over time, it got depleted as people were arrested and killed in attempts to attack. The networks became smaller and weaker as a result of repression. It’s been hard for them to reorganize.”

But the lull may be short-lived. The United Nations warned in a July report that the risk of attacks from Islamic State “remains high.”

Developing Skills

Islamic State’s “core is seeking to develop the technical skills of potential attackers,” the UN said in the report published on July 15. “Security services in Europe have noted a relatively high rate of disrupted attacks owing to the poor tradecraft and unsophisticated methods of would-be attackers.”

Islamic State is “like water that seeps into cracks wherever the cracks are,” Hegghammer said. “If there are fewer attacks in Europe, it’s not because Islamic State leadership decided to wind down that front. I am sure the central organization at the same time is thinking about areas where it can direct more of its resources.”

While Europe has experienced a noticeable dropoff in Islamic State-inspired attacks, other places haven’t been so lucky. In the first half of 2019, the terror group claimed to have conducted more than 1,800 strikes, resulting in more than 8,000 people killed or injured, the Counter Extremism Project reported, citing ISIS’s Amaq Agency.

In Afghanistan, an Islamic State affiliate claimed responsibility for Saturday’s suicide bombing attack at a wedding hall in the capital. More than 180 others were injured in the attack, which took place in the western part of Kabul, Nasrat Rahimi, a spokesman at the Interior Ministry, said by phone on Sunday.

While U.S. efforts have effectively disrupted the funding that Islamic State collected from businesses and criminal activities in Iraq and Syria, its global branches and networks are moving toward locally generated revenue, like taxation, in areas they control, according to a State Department official who asked not to be identified discussing U.S. strategy.

Extortion, Trafficking

Despite the loss of valuable territory containing oil wells and a population to tax, Islamic State still has access to hundreds of millions of dollars in reserves to finance attacks and support global affiliates, the U.S. official said. Islamic State and al-Qaeda affiliates are also raising funds through criminal extortion, human trafficking and kidnapping for ransom, the official said.

The group has “demonstrated effectiveness at exploiting geopolitical conditions, whether they are political economic, sectarian, religious, or military, ” said Kamran Bokhari, founding director at the Center for Global Policy. “They have plenty of local conflicts that they are exploiting.”

Somalia Car Bombing

At the same time, al-Qaeda, which carried out the Sept. 11, 2001 terrorist attacks in the U.S., has taken advantage of the global focus on Islamic State to rebuild itself and is now as strong a threat “as it has ever been,” Sales, the State Department official, said.

A car bombing by the al-Qaeda-linked militants al-Shabab in July killed at least seven people in Somalia’s capital, Mogadishu. The group claimed responsibility for an attack on an up-market hotel and office complex in Nairobi in January. And it still holds territory in northwest Syria, even after Islamic State’s territorial defeat in the country.

Among the world’s most recent deadly terror attacks, one this year targeting Christians in Sri Lanka, set off alarm bells among counterterrorism officials. More than 250 people were killed in coordinated attacks on Easter Sunday at churches and hotels frequented regularly by tourists. In response, the counterterrorism bureau at the State Department sent a delegation in July to discuss the Islamic State threat and assess how it might be able to provide assistance to combat it, the official said.

‘Wake-Up Call’

“Sri Lanka was a wake-up call for U.S. officials,” said Theodore Karasik, a senior analyst at Gulf State Analytics in Washington. “Primarily of concern is how Islamic State is able to create groups solely based on ideology and transfer its ideology by the dissemination of information.”

It’s doing that across South Asia, where Islamic State is a growing threat, the official said. In addition to naming an Islamic State branch in India in May, the department is aware of recent arrests of the group’s followers in Kerala state, the official said. Kerala is one of India’s most religiously diverse states.

Even as U.S. officials tout successes in Iraq and Syria, they warn that many Islamic State fighters have gone underground and are biding their time, particularly as the Trump administration weighs troop draw-downs in the Middle East.

“The physical caliphate offered IS advantages in operational terms as well as in projecting itself,” according to James Dorsey, senior fellow at Singapore’s S. Rajaratnam School of International Studies and its Middle East Institute. An Islamic State that “is far more decentralized, and potentially far more a franchise with greater opportunity, is likely to prove more difficult to combat.”

To contact the reporter on this story: Glen Carey in Washington at gcarey8@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert

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