NYALA, Sudan, Nov 8 (Reuters) - Stepping into the leafy courtyard of the busy K2 restaurant, it's hard to believe one is in Darfur, at the heart of a conflict that has killed tens of thousands of people and shocked the world.

The restaurant caters for almost 11,000 aid workers in Sudan's remote west who, despite daily threats and harassment, try to feed and shelter 2 million people who have fled their homes to wretched camps during 2-1/2 years of fighting.

K2 is one of many local businesses that have sprung up in Darfur to cash in on the extra spending power of about 1,000 international aid workers in Darfur and around 6,000 foreign peacekeepers posted to the region.

"This is great money for me. I couldn't find a job before," said Mariam Zacharia, who cleans for an international aid agency in El-Fasher, the main town on North Darfur state.

"They help with aid and we can get jobs with them too."

Sensing a market, the K2 Indian restaurant in Khartoum, popular with foreigners, has opened a branch in Nyala, capital of South Darfur state. A store selling pirated video and DVDs has also opened, offering after-curfew entertainment for aid workers.

Doing business in Darfur may be lucrative, but it is also risky.

Armed men intimidate, beat and sometimes kill to steal valuable food, fuel and medical supplies. Banditry is rife and commercial convoys are favourite targets, meaning supply lines are never guaranteed.

Those in remote towns can find themselves cut off without access to bottled water or fuel as trucks struggle to make their way along the dangerous roads from Khartoum.

"BUSINESS IS GOOD"

Rebels took up arms in early 2003 in Darfur, accusing Khartoum of monopolising wealth and power. The Sudanese government is accused of arming Arab militias who raided mostly non-Arab villages, raping and murdering civilians.

The government denies the charges but the United States has called the conflict genocide and the International Criminal Court is investigating alleged war crimes in the area.

The fighting drove tens of thousands from their homes, sparking a humanitarian crisis, which drew in thousands of foreign aid workers.

However, the aid workers are not the only ones with money to spend. The African Union (AU) has about 6,000 troops spread over a vast region the size of France, responsible for monitoring an often-violated ceasefire.

Seeing the opportunity for a quick profit, shrewd locals have opened shops selling imported goods such as Tabasco sauce, Mars bars and non-alcoholic beer for the soldiers next-door to the AU headquarters in El Fasher.

"Business is good," said Ali Imam Karkoum who owns a grocery store near the AU. Soldiers sit on the shaded balcony eating imported goods, buying cigarettes and checking out the latest accessories for their mobile phones.

Sudanese authorities say restaurants should close during Ramadan, the Muslim holy month of fasting and prayer which ended last week, but they made an exception for the cafe next-door to the AU.

Owner Huda Abu el-Yemen said she invested $8,000 to open the cafe and expected profits to start rolling in after two months.

HOUSE PRICES ROCKET

The arrival of humanitarian workers, soldiers, pilots, human rights observers and journalists has had other effects.

A year ago, Darfur's silent nights were interrupted only by the sound of sporadic gunfire. Now, the roar of huge generators, brought in to provide aid agencies with power, drowns out the chirp of crickets.

House prices have rocketed as workers seek offices and accommodation. Demand is high but supply is scarce in the region, where buildings higher than two storeys are rare.

El-Yemen said her family had let a house to governmental aid agency USAID for twice the rent it would have fetched 18 months ago.

"Two years ago, the maximum rent you would pay for a house here would be about $100. Now, you can pay up to $1,000 (per month)."

Even the state mobile phone company has cashed in. The need for communications has brought mobile networks to remote areas bordering Chad such as el-Geneina town and even the small town of Zalengei in the heart of Darfur.

Existing networks in main towns are overloaded and at peak times it is impossible to place a call.

Coupled with supply problems because of the violence in the region, the flow of new money has raised the prices of goods bought by both locals and foreigners.

A chicken used to cost $6 but has risen to $7.50 and local people expect it to increase further. A kilo (two lb) of meat was $3.50 but now costs up to $5.

"But praise be to God that they are here, because they help our way of life," said cleaner Fatma Jabbar.