"It has reimposed taxes on local populations in its historical support zones, displacing civilians and de facto controlling small pockets of terrain in Iraq."
Syria may prove more difficult, with Isis likely to face a daunting task in battling US-backed Syrian Democratic Forces, forces loyal to Syrian President Bashar al-Assad, and Hay'at Tharir al-Sham, al Qaeda's Syrian affiliate.
The report argues the terror group's members scattered many of its fighters and their families on purpose, and are now well-prepared for battle.
"Isis deliberately withdrew and relocated many of its fighters and their families," the reports states.
"Isis' forces are now dispersed across both countries and are waging a capable insurgency," it says. "Isis retained a global finance network that funded its transition back to an insurgency and managed to preserve sufficient weapons and other supplies in tunnel systems and other support zones in order to equip its regenerated insurgent force."
The study argues Isis leader Abu Bakr al-Baghdadi has been systematically reforming the group to get ready for a new wave of violence across the Middle East.
"The slow-motion reduction of Isis' territory and strength initiated by President Obama and continued by President Trump gave the group plenty of time to plan and prepare for the next phase of the war," the study says. "Isis' forces are now dispersed across both countries and are waging a capable insurgency … Isis began reconstituting key capabilities in late 2018 that will enable it to wage an even more aggressive insurgency in coming months."
This will culminate in a potentially-devastating new breakout success that could be even more devastating than its 2014 campaign.
"Its external provinces outside Iraq and Syria are contributing resources to its insurgency in those countries while giving the organisation renewed global momentum," the report says.
At the end of last month, Isis declared the start of a new global campaign called the "Battle of Attrition", in which its propaganda instructed its forces to seize terrain temporarily as a way to attrite opponents.
"Isis' ability to campaign simultaneously abroad and in Iraq and Syria gives it new opportunities.
"Its successful reconstitution of a physical caliphate in Iraq and Syria would produce new waves of IS attacks in Europe and dangerously legitimise Isis' narrative of inevitable long-term victory."
The report also suggests US President Donald Trump was wrong to announce the territorial defeat of Isis.
Isis has also been blamed for burning hundreds of hectares of farmland in Syria and Iraq. Isis still commands at least 10,000 fighters across the two countries, but US troops have been leaving Syria.
The report argues the US is wrong to lower its priority of combating Isis at a time when the group is regrouping its efforts.
"The US is repeating a critical mistake by deprioritising this effort at a pivotal moment when our gains are at their most fragile," it says.
It calls on the US to take "immediate steps" to dampen Isis' resurgence in both Iraq and Syria, and expand humanitarian aid operations to help dampen the appeal of Isis.
It also notes that — while America's partners and allies should contribute — these countries must recognise that the US is "the only country with both the ability and moral clarity to lead this effort".
On that note, it calls on the US to develop a long-term strategy that addresses both military and a plan to address enduring economic and humanitarian problems.
"Another limited intervention will not be sufficient," the report concludes.
"The Isis campaign in Iraq and Syria has demonstrated to ostensibly liberated communities that they are not safe, perpetuating conditions of fear and distrust that will make it increasingly difficult to establish durable and legitimate security and political structures."
