The U.S. says it is crushing life out of the

U.S. Defence Secretary James Mattis also said the destruction of ISIS’ physical caliphate would change the way the coalition was working to defeat ISIS.

"As we sit here today at the end of 2017, the caliphate is on the run, we’re breaking them.

"Some ISIS terrorists escaped the encirclement of Raqqa into the Middle Euphrates River Valley.

"We are in the process of crushing the life out of the caliphate there, while trying to keep the innocent people safe – which is very hard with this group," Mattis said.

He explained that the demarcation line between the Syrian President Bashar Assad regime and its ally Russia, and the Syrian Democratic Forces (SDF) and the coalition, was the middle of the river in the area.

Mattis said the line had held up well, adding that communications between Russian and coalition forces continued.

"The ISIS fighters that escaped into the valley will have to be hunted down," Mattis said.

He said ISIS operatives who moved into the region controlled by the Assad’s regime and the Russians was another matter, saying the SDF and the coalition would not launch attacks past the demarcation line.

The Pentagon chief explained that having the terrorists in their area was not in Assad’s or the Russian’s best interests.

"The United States tipping off Russia of a potential ISIS attack in St. Petersburg is an example of ways the countries can work together against the group," the U.S. defence chief stressed.

Mattis, however, noted that the battle against ISIS was not over, saying while the group had been shattered, its survivors were looking for ways and places to reconstitute.

"Its only a safe haven if people give them one," the Pentagon chief said adding that hunting ISIS down was not over.

"Am I worried about it? Not in the least. These guys have not proven they can stand against the Iraqi security forces or the SDF. They are best against unarmed men, women and children."

Looking to 2018, Mattis said the operations against ISIS would change, declaring the group as being a ‘losing brand’ for terrorists, adding, however, it could inspire lone wolf attacks or other groups.

"But it is less inspirational when they have lost their physical caliphate. It is less inspirational as the stories of what it was like living under their rule come out.

"I think it is a brand with a diminishing appeal, but the appeal is still there for those who go in for that philosophy," the Pentagon chief said.