By Michelle Nichols
UNITED NATIONS, Aug 9 (Reuters) - The U.N. Security Council is negotiating a draft resolution to tackle Islamic State militants by financially weakening the jihadi Islamist group, stopping a flow of foreign fighters, and threatening sanctions on those who recruit and help the group.
Islamic State militants control a third of Syria's territory and have captured wide swathes of northern Iraq since June, declaring a caliphate.
The group has executed non-Sunni Muslim captives, displacing tens of thousands of people and drawing the first U.S. airstrikes in the region since Washington withdrew troops in 2011. In a boost to funding their operations they have seized hundreds of millions of dollars from banks and captured five oil fields.
The British-drafted Security Council resolution, obtained by Reuters, would condemn direct or indirect trade with Islamic State and al Qaeda's Syrian wing Nusra Front and warns sanctions could be imposed on those who do, urging states to submit names of individuals and entities believed to support the groups.
The initial draft text, which the 15 council members first discussed on Friday, names Islamic State leaders to be sanctioned with an international asset freeze and travel ban.
The resolution could be voted on later this week, said Britain's U.N. Ambassador Mark Lyall Grant. Britain initially aimed to adopt the resolution by the end of the month, but accelerated its plan after Islamic State fighters surged toward the capital of the Kurdish region in Iraq.
U.N. diplomats, speaking on condition of anonymity, said the council appeared unified in the face of the biggest threat to Iraq, a major oil exporter, since Saddam Hussein was toppled by a U.S.-led invasion in 2003.
The Islamic State group, previously known as the Islamic State of Iraq and the Levant (ISIL), has long been blacklisted by the U.N. Security Council - subjecting it to an asset freeze and arms embargo - while Nusra Front was added this year.
The draft resolution "calls upon all Member States to take national measures to suppress the flow of foreign terrorist fighters to ISIL, ANF (Nusra Front) and all other individuals, groups, undertakings and entities associated with al Qaeda."
The council resolution would ask U.N. experts - charged with monitoring violations of the council's al Qaeda sanctions regime - to report "within 90 days on the threat posed by ISIL, its sources of arms and funding, and recommendations for additional action to address the threat."
The draft resolution is under Chapter 7 of the U.N. Charter, which gives the council authority to enforce decisions with economic sanctions or military force. However it does not mandate the use of military force to tackle the militants. (Reporting by Michelle Nichols; Editing by Frances Kerry)