Black Economic Development
Surferbettle your post,
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The market’s growing size is making some bankers wonder if phone credit should be traded on a public exchange. This may not be practical, but more regulation would be welcome. Criminal rings are among the parallel currency’s busiest users. Kidnap gangs ask for ransom to be paid by text messages listing a hundred or more numbers of high-value phone cards. Prostitutes get regular customers to send monthly retainers to their phones, earning them the nickname “scratch-card concubines”, while corrupt government officials ask citizens for $50 in phone credit to perform minor tasks. Viewed as cash substitutes, scratch cards have also drawn the attention of armed robbers. In one case, a gang emptied out the card storage of Iraq’s biggest mobile operator, Zain, which is based in neighbouring Kuwait.
triggered an old idea about the black economy (illegal/illicit economic activity). Obviously the thrust of our economic assistance is to boost the white (legal) economy, but in countries where there is limited State control (such as Iraq and Afghanistan) the black economy emerges rapidly, and I suspect these models become deeply rooted (part of their economic culture) and thus are hard to eradicate.
I remember many of the coalition development efforts in Southern Iraq were controlled by the Shi'a militia's (sometimes directly, sometimes clandestinely by coercing from the shadows). They controlled what contractors got the jobs, and no doubt the militia's collected their taxes and got the message out that if you want to make money you need to side with us. All others will be paid a visit by your friendly militia thugs.
Several points worth studying IMO.
- How much of our economic aide in these countries actually supports the efforts of our foes? I just looked a graph today that showed a correlation between CERP spending and reduced violence, but is that the real picture, or did we simply forfeit control to the enemy, thus there is no need to fight?
- Once black economy models are established (such as the illicit business transfers on the cell phones, selling gas illegally on the side of the road, narcotics trade, human smuggling, kidnap for ransom, etc.) is it even feasible to displace this black economy with a legal economy?
- There are estimates that up to one third of the world's economic activity takes place in the black economy which equates to over a trillion dollars that governments have no control over. What does the ever increasing convergence of crime and extremism mean to those of us who develop and execute plans in an attempt to defeat terrorists and insurgents?
- Are there cases where our economic development efforts actually undermine successful black economic development, thus push the populace away from us and the HN? For example, attempting to eradicate the poppy plant and replace it with some form of unskilled labor or with a replacement crop that isn't worth as much?
There is a lot more to economic development than meets the eye when you're operating in these chaos zones.
Economic development and illicit activity
This is the first post of a few on this topic if the moderators don’t shut me down. In this one I just want to introduce some additional context that will shape later posts on the efficacy of our economic development efforts as means to counter threat economic systems, which can probably be described as the life blood of any movement.
Eventually I hope to evolve these thoughts with your help to where I can make a case for changing “clear, hold and build” to clear, hold, and consolidate” where build is one subcategory of consolidate. Then I hope to collaborate with the SWJ larger mind to develop effective approaches of neutralizing enemy economic systems (slap, I’ll know you’ll love this), which will hopefully push the populace to rely on State endorsed economic systems (without conducting economic warfare against the populace). However, I think this will prove to be a tough nut to crack.
I think that even with over eight years of experience with GWOT, our military and other government organizations such as State remain largely incapable of understanding unconventional warfare, since our perception is biased by outdated doctrine.
The U.S. military focus on unconventional warfare is really nothing more than a focus on the warfare piece (i.e. maneuvering guerrillas within the constraints of the law of land warfare) against enemy forces. This really isn't UW at all, but simply a fifth column of surrogates that is conducting a limited form of guerrilla warfare that is very much tied to the our interpretation of CvC’s view of war as a state versus state conflict where the military is the decisive factor.
If this is true (open for debate), then it is only natural that our counter UW, or COIN doctrine is largely focused on militarily defeating the IED networks (in the current fight). Once again the conventional force has learned this isn’t a conventional war (but they were slow learners), so they slowly revisited previous lesson from previous conflicts that had a similar (not identical) character. They started protecting the populace, providing essential service and focused on developed relationships with community to facilitate more effective intelligence operations, which were largely focused on finding and destroying the IED networks. It still keeps coming back to that, because CvC taught us the way to win was to destroy our foe’s ability to wage war. CvC wasn’t wrong, but we failed to see that the enemy can wage war without IED networks through propaganda, political subversion, quiet terrorism behind the scenes to influence key personnel, establishing shadow governments, taking over the local schools, economic subversion, etc. We tend to largely ignore these threats, we may deal with them if we stumble across them, but that isn’t what our intelligence is focused on. I think Jmm would agree that we simply don't have the legal authority to fight fire with fire in the shadow wars, so we focus on what we can.
Specifically I want to focus on the E in DIME, and challenge the idea that our economic development efforts are achieving the desired results. A combination of luck, intent and globalism is allowing our irregular foes to effectively undermine our economic power. As Naim wrote in his book “Illicit” there is a growing gap between the haves and have nots as globalization spreads. This has facilitated, perhaps out necessity, the rapid growth of the black economy, which according to Naim is in the trillions of dollars. How does the Taliban manage to pay their fighters more than the State of Afghanistan paid theirs? How do numerous NGOs who are clearly tied to various terrorist organizations effectively fund the development of schools, medical clinics, etc.? How do we displace black economic activities such as the narcotics trade and other forms of smuggling without harming the locals who thrive off of it? The State is no longer relevant in this economic system (thus legitimacy is further undermined), and if the State intends to crush or displace this activity, what economic system will they replace it with?
While this doesn’t apply to all conflicts, it does apply to OIF and OEF-A. If we even hope to understand the problem (system) we have to look at it globally, because the black economic systems are tied into the new global economy of which less and less is controlled by States.
We see a rapidly increasing trend where organized transnational crime networks (its an open system) and other irregular threats such as insurgents, terrorists, etc. are converging on a global scale, and I suspect we don’t really understand the implications of this.
These relationships are often based simply on mutual business interests. Such as AQ affiliated groups in the Trans Sahel assisting drug cartels from S. American and W. African smuggle cocaine into Europe. This is just one of many examples of how a terrorist network expands its links (perhaps unintentionally) from a regional effort in the Trans Sahel to bad actors in W. Africa, South America and Europe. The amount of money involved in these activities is overwhelming for developing states, so centers of power shift from State to non-state actors. These groups can now buy effective influence from the windfalls garnered from their illicit activities. Over time, I suspect this corruption/subversion changes the character of the war and its goals, thus my reference to new economic cultural norms in my previous post. We now have an area that neither our law enforcement nor military is ideally organized, trained, or enabled through authorities to confront effectively. Those limitations extend to our partner nations who are afflicted with this threat.
I recommend a quick read through "Illicit" (there are other books on the topic now) to get additional context.
http://www.amazon.com/Illicit-Smuggl...1677733&sr=1-1
Bring it on, Bill Moore ...
I like to read and think about your ideas. Lord knows, we need a more comprehensive approach to transnational violent non-state actors - and to the non-violent species as well. That cuts across the entire DIME spectrum and ultimately will affect all of the various legal systems that have to deal with these non-state problems.
Merry Christmas - I now have to go out in the snow and buy the bottle of Christmas dinner wine.
Mike
So, what are the kids doing in Khandar this winter?
How-to-build a wireless router:
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FabFi is an open-source, FabLab-grown system using common building materials and off-the-shelf electronics to transmit wireless ethernet signals across distances of up to several miles.
From Scientific American by Richard Heeks, Gaming for Profits: Real Money from Virtual Worlds
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A gold farmer in China who plays games and sells virtual currency can earn the same wage and, sometimes, more than might be paid for assembling toys in a factory for 12 hours a day.
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In just a few years gold farming has become a vast enterprise. A best estimate suggests that Asia, and particularly China, where most of the gold farmers reside, employs more than 400,000 players who spend their days stocking up on gold. Total annnual trade in virtual gold probably amounts to at least $1 billion. Perhaps as many as 10 million players worldwide buy gold or services from farmers that help them to advance in the game.
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...currently the game most subscribed to, 1,000 gold units retail for around $10, which is about the same as the yen-to-dollar exchange rate
CIA World Factbook puts the estimated 2008 GDP for Afghanistan at 11.71 billion dollars.
What about having a 'Virtual Easy Button' in the games to employ a 'gold farmer' in Afghanistan to help with the OEF effort?
Some musings on Bill's thoughts
Bill,
A small quote from your longer commentary above:
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How do numerous NGOs who are clearly tied to various terrorist organizations effectively fund the development of schools, medical clinics, etc.?
I suspect the reason some Islamic groups can obtain funding and have a non-violent infrastructure is that compared to their competitors they are not corrupt, greedy etc. Look at how the PLO ran the Gaza Strip and Hamas's pre-power imagery; or in slightly different setting of Southern Lebanon, how Hezbollah became the de facto state IMHO.
I not aware of how much overseas funding is raised by such groups, IMHO mixing the non-violent even charitable actions and the violent actions enables donors to "pick & mix", or claim "I gave it to 'X' charity and it ended up there, shocking".
Probably the best example is nearer the 'frontline' with LeT in Pakistan, with an established structure of charities, schools etc (see Stephen Tankel's writings on LeT). That provides not just supporters, but the wider public with facilities when others - including the state - fail to provide.
It will be interested to watch, from afar, whether this non-violent aspect of the 'struggle' and the creation and maintenance of a broader coalition, which is assumed, is adopted by AQ. A question that has been posed in discussions amongst analysts on the future of the global jihad (FGJ).