The Profits of Piracy
Piracy has been a source of easy money on the coast of East Africa. Here is a look at how it has affected shipping trade in the region.
When Captain Jawaid Saleem stepped off a Pakistan Navy ship in Dubai, on the first leg of his journey to freedom from the captivity of Somali pirates, he knew he was one of those few lucky individuals on the ship who had been let off against a huge ransom. His cargo ship, the Malaysian-owned M.V. Albedo had been captured in the early morning hours of November 26, 2010, some 900 nautical miles east of Mogadishu as it made its way from Kenya, sailing in the north-easterly direction towards the Strait of Hormuz, and then to the Port of Jebel Ali in Dubai. On August 1, 2012, seven Pakistani crew members of M.V. Albedo were released after almost 2 years in captivity of the pirates.
The history of piracy off the coast of Somalia has continued to threaten international shipping since the second phase of the Somali Civil War in the early 21st century. It reached its peak in 2012. From 2005 onwards, several international organizations such as the International Maritime Organization and the World Food Programme, have said that the rise in incidents of piracy in this part of the world had been impeding the delivery of much needed shipments sent to various organizations. Piracy off the coast of Somalia has also appreciably increased shipping expenses, negatively affecting global trade. According to Oceans Beyond Piracy (OBP) and the German Institute for Economic Research (DIW), some kind of an industry of profiteers has also developed around the piracy activity. As such, industry has also profited from piracy as insurance companies have applied a higher premium on cargo passing through these shipping lanes.
Delving into the reasons as to why piracy took hold in this part of the world, it came to light that perhaps the illegal fishing trade was responsible for this. Added to this was the dumping of toxic waste in Somali waters by foreign vessels. This affected the ability of local fishermen to earn a living from fishing. The upshot was that local Somali fishermen formed armed groups to prevent the ships from coming in their waters. Since the fisherman used to be armed, they soon resorted to hijacking the cargo vessels and eked out an income from the ransom money. The practice became so lucrative that by 2009, many local coastal communities backed piracy as a form of defending the country's territorial waters. Somehow, the pirates thought they were protecting their fishing grounds and this was their way of compensation for their stolen marine resources.
The growth of piracy on the Somali coast is also attributed to the fact that as a result of the civil war in Somalia, it had not been possible to develop an effective national coast guard. Somalia has hardly had any armed forces. It was this gap that was filled by local fishermen who formed organized piracy groups and hijacked ships passing along the Somalian coast. However, the pirates subsequently discovered the big money involved in hijacking ships and from thereon, financial gain became the primary motive for the pirates and their supporters, some of whom were based as far afield as Europe. It is also said that information about shipping activity in the area was passed on to them from Mombasa in Kenya.
The situation became rather alarming when the incidence of piracy around the Horn of Africa began to grow to dangerous numbers and its impact was felt seriously on the transport of ship cargo, containers, chemicals and oil. It was then that the
CTF (Combined Task Force) 151 was established on 12 January 2009, with a specific piracy mission-based mandate, under the authority of various UN resolutions. The task force mainly dealt with maritime security and counter terrorism around the Gulf of Aden and the Somali Basin.
The measures carried out by the task force included conducting an active 24 hour lookout, removal of access ladders, reporting apprehensive actions to proper authorities, use of deck lighting, razor wire, netting, fire hoses, electrical fencing and surveillance and detection equipment, defending the lowest points of access, engaging in evasive maneuvering, speed through pirate attacks and joining group transits. CTF-151 had naval ships, helicopters and maritime patrol aircraft at its disposal from over 20 participating nations to make sure that all the trading through its area of responsibility went smoothly and without interference from the pirates.
The Task Force included Australia, the Republic of Korea, Pakistan, Singapore, Thailand, Turkey, the U.K. and the U.S. Among South Asian countries, Pakistan was the most active member of the Task Force which was commanded by Pakistan Naval officers for a number of terms.
According to a study released in 2011, the sea transportation industry shouldered 80 percent of Somali piracy’s impact on the global economy while the remaining 20 percent was the expense that each country’s government made towards making anti-piracy efforts. The study said that the total cost that Somali piracy had caused the shipping trade was somewhere in the region of USD 7 billion. Some 9 factors were taken into consideration in determining this figure. These included ransom money paid to pirates, piracy insurance, the cost of security equipment and guards, re-routing of ships, the cost of increased speeds, the cost of labor, the cost of prosecutions and imprisonment, the cost of military operations and the cost of counter-piracy organizations.
According to the report, there was no successful pirate attack on a vessel travelling at 18 knots or faster. It was therefore recommended that vessels should travel at a minimum of 18 knots through the hazard area, As a matter of course, this increased speed was an added cost to vessels given that they were moving at higher speeds than their most ‘economically optimum’ speeds.
The report estimated that the cost of the military operations was in two forms - the administrative budgets of the task force and the operating costs of each contributing state. Nations contributed to the missions through naval vessels (surface combat vessels and auxiliary ships), maritime patrol/reconnaissance aircraft, vessel protection detachment teams and military staff assigned to operational headquarters or onboard ships and aircraft.
Even with the world's navies rushing to protect shipping passing along East Africa, the sheer size of the ocean and the huge numbers of ships involved means warships are rarely in the right place at the right time. The mood in Mombasa, where so many ship owners and seafarers are based, has been bleak. Ship owners say it is time for the world to mobilize an army and invade Somalia.
The United Nations has passed a resolution allowing such an invasion, but the United States has put the brakes on participating in any such operation. Perhaps they are hesitant because of their last experience of sending troops to Somalia. In 1993, 18 Americans were killed during a commando raid to capture a few, low-ranking warlords. And yet, it's becoming more and more clear that without major, international intervention, piracy will continue to grow in the region. With the benefits far outweighing the risks, it looks like pirates have no incentive to stop pillaging.
The biggest victims of Somali piracy are the Somalis themselves. Nearly 4 million people (half the population of Somalia) depend on food donations to survive. But pirate attacks on food ships have made it difficult for the United Nations to keep sending provisions. "If you don't have an escort, you cannot move food there," says a U.N. official. But since naval deployments are expensive, warships might not be available forever. This could mean death by starvation for millions of Somalis, all due to a few thousand opportunistic pirates.