Spreading the Pirate Booty Around

INSERT DESCRIPTIONSomali pirate town Boosaaso. (Photo: Jehad Nga/The New York Times)

Who’s making money from the piracy that’s flourishing off the coast of Somalia?

The pirates themselves seem to be raking it in. As the Guardian reports, pirates have made about $30 million from ransom payments this year, according to U.N. estimates; and they are demanding $25 million for the return of their latest capture, the Saudi supertanker Sirius Star.

Increased piracy also provides a welcome revenue stream for private military contractors like Blackwater Worldwide. As Wired reports, Blackwater hires itself out like mercenaries of centuries past to protect ships against pirates. Anti-Piracy Maritime Security Solutions, for example, charges $30,000 per boat for its piracy protection, according to NPR.

Another piracy profiteer: coastal Somali villages.

In the Somali fishing town Eyl — the “piracy capital of the world” — the local economy is booming, thanks to the 12 foreign ships being held hostage off its coast by hundreds of pirates who bring their business — using plundered money — to the village.

New businesses in the town, including hotels built to accommodate pirates, are dependent on its criminal economy. The Guardian quotes one of the town’s tea vendors:

When the pirates have money, I can easily increase my price to $3 for a cup.

It is good to see that inflation is alive and well somewhere.


arrrrrrrrrrrrg...me parrot ate too much fruit

...and of course, the famous Eyl Eyepatch Emporium is making huge money as well.

pelayo@cms

Piracy throughout the centuries has been condemed. In my opinion it is just another form of terrorism. The current level of pircay has increased dramatically but it has had positive externalities. Somalia has not had a stable government and all industries have failed. Piracy has given new life to this country. People of Somalia are actually happy about it, eventhough they admit it is not the best way to earn money. However, when your kids are hungry you are willing to do anything.
I think Piracy off the coast of Somalia will not stop until a government is set-up with the help of the U.N. and the leading nations of our world.

iampriteshdesai

I never beileved until few years ago that piracy was real in todays world rather than just in the books. However it is easier to wipe them away thanks to modern wepons

Magnus Falk

@2: Stop watering down the T-word! Terrorism is not something you do for profit, it's something you do for the sake of scaring people.

I'm so tired of people calling anything and everything terrorism these days.

- Security Professional

Ruben

According to BBC, the piracy is the symptom of the wider problems in Somalia: http://news.bbc.co.uk/2/hi/africa/7740417.stm
Fishing has decreased because of the passing tankers ripping through their nets, and depositing toxic waste off the coast.

teej

Piracy throughout the centuries has been condemed. In my opinion it is just another form of terrorism.

Has the word "terrorism" lost all meaning after seven years of the Bush administration using it like Marines use the F bomb? Does it now mean "bad things that bad people do"? I was under the impression that terrorism was violent actions against a civilian populace meant to inspire fear in order to effectuate political change.

Somalia doesn't have a government. No political change is possible. Piracy /= terrorism. This isn't Hagbard Celine we're talking about here, it's dudes with AKs running a ransom business for money.

Rich

#'s 2 and 3.

No, Terrorism is specifically for a political gain. Random scaring people isn't terrorism.

The economic question is, at what point do they get too greedy? Until recently it has been a cost of doing business, and companies will just pay them off. But when you start grabbing oil tankers and ships with tanks, you get noticed, and getting sunk. Will they scale back? Or will they keep pushing until the countries like the US and Britain send in their navys?

Douglas B. Stevenson

What has been lost in piracy discussions is its effects on merchant mariner victims of piracy . Most people do not realize how vital merchant mariners are to their everyday life. Over 90% of what we consume in the US has traveled on a ship operated merchant mariners. Between January and September of this year, 581 merchant mariners have been taken hostage and 9 killed by pirates worldwide. We need better to protect merchant mariners from pirate attacks and take care of those who have been attacked.

Sam

Just a matter of time before pirate attire becomes fashionable among hipsters...

Xian

Unfortunately due to maritime laws these ships are not allowed to have armaments. I think they should modify the law to allow armaments in international waters but must be stowed by the time they reach non-conflict national waters. this would make these pirates weigh the cost/benefit of their actions a closer. Just picture a super-tanker with .50ca guns mounted on the railing, those AK47s will seem whelpish in comparison. As well a .50ca would sink these fishing vessels within a few shots.

Bob W.

The good side of this increase in piracy that we should consider is the potential impact on global warming.

http://www.venganza.org/about/open-letter/

I blame the liberal media for not focusing more on this potential upside.

Dan

Another site I follow posted a link to the ICC Commercial Crime Services Piracy Map for 2008. The map has reports on every piracy instance in 2008.

http://link.veryshortlist.com/r/J4DR9G/VGJ6/FKA7U/ZBV7V/LA3W/7V/h

Joe Smith

This is going to end badly for the pirates.

This may be India's opportunity to project power and establish itself as a legitimate super power in the region. Whether it is the Indian Navy, or other nations' navies, someone is going to clean house on the pirates.

ElizabethCMS

My own brother works on a boat called the Indian Empress, which is currently in Malta. They had the objective of leaving Malta and to pass the Somalian Territory in order to get to their destination, and they haven't because his boss is too afraid of doing so. This is obviously causing extreme negative consequences for they aren't getting their objectives done.
My brother told me once that they were passing by the Somalian Territory and pirates surrounded them on their radar. Because the Indian Empress is an enormous boat with a lot of power, they had the ability of leaving, but another French boat behind them was taken over completely; nobody was killed but their boat was taken and they were left stranded.
What I believe should be done is obviously a betterment in the Somalian political and economic policies -- other major powers should assist them in order for them to achieve a more peaceful environment. All in all, I don't want my brother to be harmed, at all!

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SMR

Clearly the solution is to raise the cost of pirarcy to the level where it is no longer profitable. Typically that is done just as the Indian Navy has. Others need to follow that example.

PaulK

The problem with suggesting that the world's navies will solve this is that they are as toothless in action as UN forces. Rules of engagement make it hard to do anything. India was only able to sink that ship because they claimed they were being shot at (by AK47s over a mile away). US, British, and Russian navies would have put the captain under review for firing back when there was no actual danger. India is kind of looking the other way on this.
Solution is some drone-boats with cameras. As soon as the pirates shoot at it, blow them out of the water (self-defense). Of course, it does not help that they just speed away in their inflatables (as happened after India sunk the mother ship), so they are back at it the next day. You also need a plan for capturing them.

SHUN-cms

Anybody in this world lives to maximize their utilities, whether one is a consumer or a producer. In a free market system, one who is best at doing whatever to accomplish its objective (to max utility) should get the most profit - AS LONG AS that does not cause harm to others. In this case, the pirates are illegally gaining profit by HARMING others. Thus, although it may SEEM they are contributing to the local economy (+ve externality), they are actually causing more of a -ve externality. Thereby, local government, and UN must stop them from doing this; furthermore, punish them.

CamilaCMS

What a contrast to the economic downfall that the rest of the world is experiencing. It's interesting that this article points out how some of the cities that have a large population involved in piracy are actually experiencing an increase in demand for consumption. So when piracy is alive and well, hotels and tea houses are also prospering. As good as this sounds, it shouldn't be at the expense of these boats that are being held ransom. If any organization wants to do something about the increase of piracy incidents, there are very plausible solutions out there. First of all, techonolgy for ships is very advanced, including different alarm systems and such. Also, the routes that ships make has a big impact on this underground business. There are certain areas in the world that are very prone to piracy, such as areas near Somalia and narrow passages, such as the Strait of Malacca. The cost of piracy is enormous, and it is only increasing, so governments and organizations need to think about reducing this cost by taking measures to reduce piracy incidents.

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Ben

@ Douglas (8)

I don't think you're quite aware of how cheap merchant mariners are these days. I was one, and I can tell you that given the current labor market, people with Third Class Unlimited licenses are disturbingly common. I don't disagree that it's important to protect people, especially those who do dangerous work, but I do think it's naive to call merchant mariners vital to our everyday life.

Sea trade/commerce is vital to everyday life. Just like defense. Unlike the U.S. military though, there is currently an excess of people both qualified and willing to work in the ocean shipping industry, especially on those larger boats where crew quarters are spacious and the deck stable.

Even if that changes, and we see a change in the supply of merchant mariners, at the end of the day it will be as other posters have indicated: the bottom line will dictate policy. When the pirates begin to cost the countries and industries affected an unacceptable amount of money, only then will you see protections increase. To the people at the top, human beings are just another resource, and their life/freedom is just another number on the balance sheet.

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Marian

I haven't read how the pirates take delivery of the money. Do pirates have Swiss bank accounts? How do exchange a ship for $25 million without getting caught>