Surferbettle your post,

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.