By Mark Corcoran and Freya Petersen, additional reporting from Reuters
Photo: An image grab taken from a propaganda video uploaded on June 11, 2014 allegedly shows ISIS militants at an undisclosed location in Iraq's Nineveh province. (AFP: Ho/ISIS)
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"We are fighting devils, not ordinary people" an Iraqi police captain told Reuters on Wednesday, after fleeing from ISIS rebels who swept into Tikrit, home town of former Iraqi dictator Saddam Hussein.
After a series of stunning victories, the black battle flags of ISIS also fly over Iraq's second city Mosul and the Sunni strongholds of Fallujah and Ramadi that were captured in January.
More than 500,000 Mosul residents have now fled the city.
Rolling in from the desert in convoys of pick-up trucks, ISIS fighters have outsmarted and outfought Iraq's 1 million strong security forces, trained and equipped by the US at a cost of $US25 billion.
The insurgents' main fighting force is now poised less than 150 kilometres from the capital Baghdad.
Reuters reported that in Sadr city, a Shiite slum in Baghdad, men were stockpiling weapons in anticipation of a battle against ISIS.
"The army has proven to be a big failure. People have begun to depend on themselves because ISIS may enter Baghdad any minute," Muhannad al-Darraji from Sadr City told Reuters.
ISIS supporters may already be active in the capital. At about the same time, a suicide bomber blew himself up in Sadr City, killing at least 38 people. A further 18 people were killed when a car bomb exploded near the northern Kadhimiya district, where there is a Shiite shrine.
So what is ISIS?
Video: Explained: The Islamic State of Iraq and Syria (ISIS) (Scott Bevan)
The Sunni Islamist militant group the Islamic State of Iraq and Syria (ISIS), also known as Islamic State of Iraq and the Levant (ISIL), is considered so extreme, it has been disavowed by its original sponsor, Al Qaeda.
The jihadist group has mounted hundreds of attacks in Syria since the start of the civil war in 2011.
But the ambitions of ISIS stretch far beyond deposing president Bashar al-Assad. The ultimate objective is the establishment of an extremist Islamic caliphate across the region, incorporating Syria, Iraq, Jordan, Lebanon, Israel and the Palestinian Territories.
Other Islamist rebels have accused ISIS of being "worse than the Assad regime".
In 2013, German newspaper Der Spiegel reported that the group had kidnapped hundreds of people, including activists, politicians, Christian priests and several foreign journalists, adding that "anyone who opposes the ISIS fighters, or who is simply considered an unbeliever, disappears".
Der Spiegel cited an engineer who fled Syria after threats he said he received from the group as saying: "We call them the Army of Masks, because their men rarely show their faces. They dress in black, with their faces covered."
Photo: An image taken from an ISIS propaganda video purports to show militants driving near the central Iraqi city of Tikrit. (AFP/ISIS)
Human rights abuses and ISIS's vision of creating an Islamic extremist state led to tensions with other Syrian rebel groups that soon escalated into open warfare.
ISIS suffered setbacks after clashes with more moderate anti-government militias, but still controls an arc of territory across the north-east of Syria, stretching from the Turkish border across to the frontier with Iraq.
The Syrian enclave, based around the northern city of Raqqa, provided the jumping off point for attacks into western Iraq.
In January 2014, ISIS captured the city of Fallujah and large tracts of the surrounding Anbar province.
Coming home - from Iraq to Syria and back again
This latest campaign represents a kind of homecoming for the group that can trace its origins to the anarchy of the Iraq conflict.
ISIS is led by a veteran Iraqi militant, Abu Bakr al-Baghdadi, who formed the Al Qaeda-affiliated Islamic State in Iraq in 2010.
As the uprising against Syria's president escalated into civil war in 2011, Baghdadi sent trusted aid Abu Mohammad al-Golani across the border to establish another Al Qaeda affiliate, the Jabhat al-Nusra Front, recruiting members from rival militant groups.
But as the popularity and influence of al-Golani's al-Nusra Front grew, Bagdhadi demanded the Syrian group merge back under his command. Al-Golani refused and the two sides clashed. Al Qaeda leader Ayman al-Zawahri sided with the Syrian faction.
Undeterred, ISIS quickly expanded operations into Syria in 2012-13. Fighting not only Assad's army but other anti-government militia groups, ISIS soon developed a reputation for extreme brutality.
Despite presenting itself as a paragon of strict Islamic virtue, the bulk of ISIS's financing, experts say, comes from illegal black market activities in Iraq, including robbery, arms trafficking, kidnapping and extortion, and even drug smuggling.
In 2013, when Mosul was still nominally under the control of Iraq's government, ISIS was netting upwards of $8 million a month by extorting taxes from local businesses, according to the US-based Council on Foreign Relations (CFR).
It'll be interesting to see what happens in Mosul over the next weeks. If they're pushed out in the next day or two, then that has much less strategic significance than if they're able to actually hold it.
Former White House adviser Douglas Ollivant
ISIS finances may soon be significantly bolstered, as the militants now occupy territory surrounding Iraq's largest oil refinery at Baiji, which is capable of producing 300,000 barrels a day.
But it is the ability of the militants to capture Iraq's second city of 2 million people that has taken many Iraq-watchers by surprise.
Douglas Ollivant, a former US army officer and adviser on Iraq to both presidents George W Bush and Barack Obama, told the ABC that the critical question now is how long the militants can hold Mosul.
"It'll be interesting to see what happens in Mosul over the next weeks," he said.
"If they're pushed out in the next day or two, then that has much less strategic significance than if they're able to actually hold it."
ISIS fighting force numbers unclear
Photo: ISIS militants show off their weapons in the Iraqi desert in a video released on June 11 (AFP: Ho/ISIS)
ISIS has a reputation as a tough, experienced guerrilla force, but the group's exact combat strength remains unclear.
Video released by the militants show convoys of fast-moving, lightly armed fighters in pickup trucks, reminiscent of the Taliban when they swept to power in Afghanistan in the mid-1990s.
"We don't know how many jihadists are coming into ISIS from outside of country," Mr Ollivant said.
"We don't know how many of the former insurgent groups have essentially joined ISIS, either formally or as their auxiliaries.
"But if they have the combat power to push into Mosul, I think they have more strength than most outside analysts thought they had."
The ranks of ISIS have reportedly been bolstered by thousands of foreign fighters
The group claims to have recruited militants from across the Middle East, Europe, the UK , the US and south-east Asia, although it is impossible to confirm exactly how many are now in Iraq.
International terrorist with $10m price on his head
In October 2011 Washington declared ISIS supremo al-Baghdadi a leader of a terrorist organisation, offering a $10m bounty on his head.
Who is Abu Bakr al-Baghdadi?
The group has been similarly proscribed by the United Nations Security Council and the governments of Canada and New Zealand.
In December 2013, the Australian Government declared ISIS to be "one of the world's deadliest and most active terrorist organisations".
The Government said the militant group "conducts daily, often indiscriminate attacks" and "targets crowds and public gatherings during holidays and religious festivals to maximize casualties and publicity".
ISIS replaced Al Qaeda in Iraq on Canberra’s terrorism list to reflect "the expansion of its operating area to include both Iraq and Syria".
The December 2013 listing cited an estimated strength of around 2,500 mostly young Sunnis in Iraq, with the ranks bolstered by "a prison break at Abu Ghraib in July 2013 that freed hundreds of ISIL (ISIS) members, many of whom are still at large".
The Australian Government estimated ISIS had another 5,000 fighters, including foreigners, in Syria, although "due to ISIL's Iraqi origins, a large number of its Syria-based senior operatives and leadership are Iraqi nationals".
The listing cited a wave of executions, bombings of public places, and suicide attacks carried out by ISIS in Syria and Iraq in the last six months of 2013.
