ISIS now has a 'colony' in an oil-rich Libyan city just 400 miles from Italy

Despite facing a series of military setbacks throughout Iraq and Syria, ISIS is consolidating its control over a key city in Libya less than 400 miles away from the Italian island of Sicily.

Over the past year, ISIS has been deepening its presence in Sirte, a city along Libya's northwestern Mediterranean coast.

ISIS jihadists first gained a foothold in Sirte in early 2015. Today, the city is an "actively managed colony of the central Islamic State, crowded with foreign fighters from around the region," according to the New York Times.

Since October 2014, the jihadist group has steadily moved to take over Sirte and transform the city into the group's capital in North Africa.

Aaron Zelin, writing for The Washington Institute for Near East Policy, notes that ISIS slowly expanded in Sirte through absorbing jihadists from the al-Qaeda-linked group Ansar al-Sharia. After banding together with local fighters, ISIS began to rapidly expand its reach out from Sirte and towards the rest of the surrounding region beginning in February 2015. Approximately 125 miles of territory along the Libyan coast is under de facto ISIS control, according to Zelin.

ISIS' position in Sirte puts the group in a prime location to capitalize upon, or further destabilize, Libya's precarious oil economy. The country has the ninth-largest proven oil reserves in the world, according to the US Department of Energy. About 80% of Libya's accessible oil is located in the Sirte basin.

These reserves also "account for most of the country's oil output," according to the Department of Energy. And although ISIS does not control these reserves, the militants are in a prime location to disrupt production, or to launch an eventual attempt to take control of the resources for themselves.

Should ISIS take control of the fields, the organization could receive another major source of funding at the same time that a US-led coalition has started to carry out strikes against the militants' oil infrastructure in Syria and Iraq.

ISIS moves against the Sirte basin's oil infrastructure could have economic consequences in Europe. Libya provided 11% of Europe's oil needs before the 2011 uprising that deposed dictator Muammar Gaddafi. In 2014, Europe imported only 3.4% of its oil from Libya, according to The Fuse. But Libya has the potential to become a significant exporter to Europe - something that might end if ISIS were to move against the country's oil fields.

Libya also doesn't have many oil customers outside of Europe. Eighty-five percent of the country's oil was exported to Europe in 2014 while half of its natural gas exports went to Italy alone, according to The Wall Street Journal.

ISIS has threatened to use its location in Libya to disrupt European security and economic well being. In an issue of Dabiq, an English-language ISIS propaganda magazine, the leader of the ISIS affiliate in Libya vowed that "the control of Islamic State over this region will lead to economic breakdowns especially for Italy and the rest of the European states," the Wall Street Journal reports.

ISIS's consolidation of territory in Sirte gives the group a foothold in close proximity to Europe - and near a number of potentially fragile neighboring states.

"Libya is the affiliate that we're most worried about," Patrick Prior, the Defense Intelligence Agency's top counterterrorism analyst, has said according to The New York Times. "It's the hub from which they project across all of North Africa."

Tunisia, Libya's western neighbor and the only Middle Eastern country to have removed a long-serving autocratic regime during the Arab Spring protests that has also emerged as a functioning democracy, has been the target of several attacks by ISIS militants that had trained in Libya.

On November 24th, at least 11 people were killed in Tunisia after ISIS bombed a bus carrying presidential guards in the capital, Tunis. And in June, ISIS-linked militants killed 39 people in an attack on a beach resort in Tunisia. The attack is expected to cause $515 million in damages to the country's tourism industry, according to Reuters.

And ISIS also claimed responsibility for a March attack against Tunis's Bardo Museum in which 22 people were killed.

ISIS's consolidation of control in Sirte also gives the group a fallback option if it loses significant territory in Syria and Iraq.

"A great exodus of the Islamic State leadership in Syria and Iraq is now establishing itself in Libya," Omar Adam, a commander of a rival militia in Libya, told the Times.

Assuming this movement of high-level leadership from Syria to Libya is actually occurring, Sirte could become a new base of operations for ISIS's top officers if the group is ultimately forced out of Syria and Iraq. It also means that ISIS cannot be totally defeated until it is uprooted from its new zones of control in Libya.

Libya could prove a challenging environment for international efforts to defeat the group. Since Gaddafi's otherthrow in 2011, the country has been racked by four years of civil conflict involving two rival governments, along with various paramilitary groups, warring tribes, and jihadist organizations.