Piracy off the Horn of Africa: Shifting incentives to induce behavioural change, Part I

1463

Maritime piracy is one of the world’s oldest criminal professions. From the Malacca Straits to the Black Sea, pirates have plagued traders and disrupted commercial activities for centuries. Due to overwhelming international pressure, the incidence of piracy has declined steadily over time.

Yet localised pockets remain in areas straddling lucrative shipping channels, such as the Niger Delta and the South China Sea.(2) Since 2007, the vast majority of pirate attacks worldwide occurred in the waters off the coast of Somalia. Due to the increased violence and sophistication of Somali pirates, and the direct risk posed to international shipping interests, the issue has attracted significant global attention.(3)

This paper supports three fundamental assumptions. First, piracy is intrinsically linked to the broader issue of pervasive insecurity and state failure in Somalia. Second, individuals enlisting as pirates can be categorised as rational utility maximisers, faced with a severe dearth of alternative livelihoods and opportunities. Third, Somali piracy is founded upon a sophisticated and disciplined business model, managed by kingpins that have become important power brokers.

Part I of this paper provides an overview of the trends that are currently shaping Somali piracy, outlines piracy’s root causes, and discusses its consequences for both Somalia and the region. It also briefly summarises the responses undertaken by the international community to date. Part II analyses the incentive structure driving the actions of the various players connected with the piracy industry, and proposes recommendations for alternative long-term measures.

 

Contemporary trends

The waters off the Horn of Africa have become the epicentre of global piracy.(4) Somali pirates launched 219 attacks in 2010, taking 1,181 hostages in the process.(5) These statistics become even more alarming when considering broader trends that have emerged in recent years.

First, the number of attacks has increased exponentially. The 2010 figures represented an increase of 97% since 2008 (111 attacks), and 592% since 2007 (37 attacks).(6) This year (2011) is set to become the worst year on record: there were 35 attacks in January alone.(7) On average, less than one-third of all attacks are successful. However, Jack Lang, the United Nations (UN) Secretary-General’s Special Adviser on piracy, argues that the overall escalation has made shipping channels much less secure: Somali pirates are gradually becoming the “masters of the Indian Ocean.”(8)

Second, ransoms paid to pirates have skyrocketed. Last year (2010) was unprecedented in this regard: pirates received total payoffs of US$238 million, at an average of US$5.4 million per ship.(9) This was a dramatic increase compared to the average ransom payments of previous years: US$1.75 million in 2009, US$1.25 million in 2008, and US$150,000 in 2005.(10) Much of the loot is reinvested in equipment and training.(11)

Third, the area of pirate operations has expanded considerably, partly due to multinational naval counter-piracy efforts in the Gulf of Aden.(12) Assaults 800 nautical miles from Somalia are now relatively common, as pirates search for new profitable hunting grounds.(13) In 2010, successful attacks were staged close to the shores of Madagascar (975 nautical miles away) and India (1,300 nautical miles away).(14)

Fourth, Somali pirates have learned from past experiences, and are adopting increasingly sophisticated and effective tactics. For instance, pirates are using hijacked vessels as “mother ships.” These are often deep-sea fishing boats that serve as floating bases from which to launch further raids.(15) They enable pirates to broaden their scope of action and stay at sea for longer periods.(16) Concurrently, pirates are shielded from pre-emptive attacks by keeping the original crews on board as hostages. Moreover, pirates are utilising advanced GPS technology and weaponry to reinforce their assaults.(17) Piracy is also gradually becoming “industrialised,” with the emergence of true professions for negotiators and interpreters.(18) These developments have been complemented by intensified violence such as simulated executions and longer periods of detention for hostages.(19)

Causes and consequences of Somali piracy

Somali piracy can be traced back to the collapse of Siad Barre’s Government in 1991. Following the erosion of the centralised state’s institutions, power became diffused among several warlords and clan leaders. As the country descended into anarchy, opportunistic fishermen from all over the world took advantage of instability on the mainland to poach Somalia’s rich offshore fisheries: between US$90 million and US$300 million in fish catch was extracted every year from 1991 to 2008 by unlicensed trawlers.(20) At the same time, outsiders exploited Somalia’s powerlessness by dumping toxic waste off its shores.(21) In response, local fishermen banded together to disrupt these illicit activities and protect their own livelihoods.(22) The predatory tactics of early gangs, such as the Somali Marines and the National Volunteer Coastguard of Somalia, can thus be categorised as “defensive” piracy.(23)

Or so the argument goes. Over time, these groups discovered that hijacking ships for ransom could be an immensely lucrative business endeavour. Thus, their seemingly principled justification became a smokescreen for profit-driven motivations.(24) Simultaneously, the successes of early groups attracted the attention of foreign financial backers based in Nairobi and Dubai, who contributed the necessary capital to scale up operations.(25) Protracted insecurity in Somalia provided the ideal backdrop for the proliferation of piracy, enabling the creation of safe havens and ensuring a steady supply of young eager recruits. At present, grievances such as foreign exploitation of marine resources are legitimate, but remain secondary: only 6.5% of all pirate attacks in 2009 were aimed at fishing vessels.(26) Moreover, many of the foreign vessels actually engaging in illicit activities often do so with the tacit or explicit consent of local authorities, and are thus protected from pirate attacks.(27)

Somali pirates truly caught the world’s attention in 2003, as larger cargo ships and fishing vessels were attacked. Attacks escalated until the Islamic Courts Union (ICU) seized control over large parts of south-central Somalia in June 2006.(28) The movement presented itself as a rival administration to the Transitional Federal Government (TFG), and consolidated its authority through al-Shabaab, its militant branch. It endorsed a strict shari’a system, in line with Saudi-inspired Wahhabism.(29) While the effects of its rule are debatable, the ICU did succeed in drastically reducing the incidence of piracy, by cracking down on leaders, occupying pirate strongholds, and portraying pirates as enemies of Islam.(30) After the fall of the ICU in December 2006, pirate attacks skyrocketed, setting new records each year. In November 2010, the Samho Dream oil tanker fetched US$9.5 million, the highest ransom ever.(31)

There are currently two primary hubs of pirate activity in Somalia, providing safe harbours and hostage-holding grounds: Eyl and Gara’ad (Puntland) and Xarardheere and Hobyo (central Somalia).(32) While piracy in central Somalia is primarily a product of statelessness, Puntland pirates appear to enjoy the patronage and protection of state institutions.(33) Yet the emergence of piracy is not inevitable. The self-proclaimed independent state of Somaliland has taken a hardline stance against piracy, establishing a coastguard and modifying its legal code. Despite limited means and resources, piracy off its shores is a rare phenomenon.(34) The importance of good governance and political will by local authorities cannot be understated, and is exemplified by the emergence of a pirate haven in Laasqoray (Sanaag), which is located in territory contested by Somaliland and Puntland.(35)

Piracy has had disastrous consequences on Somalia and the wider region. With respect to Somalia, piracy is no longer simply a result of state failure, but a cause for its protraction.(36) It is too soon to tell whether piracy will strengthen insurgent groups in the south: al-Shabaab still appears to be struggling between moral principles and the lure of easy profits.(37) However, the impact of piracy on both individuals and society is evident. For instance, pirates have attacked World Food Programme (WFP) ships, thereby endangering the delivery of crucial humanitarian aid.(38) Moreover, there have been reports of human rights abuses. These include using hostages as human shields, but also extend to the recruitment of child pirates and to parallel activities such as contraband smuggling and human trafficking.(39) The expansion of the piracy industry also distorted traditional social structures. Large ransom payments granted young men unprecedented status: “they wed the most beautiful girls, build the biggest houses; they have new cars, new guns.”(40) This boosted the rate of recruitment and motivated young pirates to challenge the authority of elders, who are key sources of social cohesion.(41)

Overall, piracy has become one of the largest single sources of foreign exchange in Somalia,(42) and is now intertwined with the wider economy and the livelihoods of many Somalis. This presents the international community with a complex dilemma: even though paying ransoms is typically the only feasible method of freeing hostages, the income will reinforce existing trends and sustain piracy’s vicious cycle.(43) The opportunities to generate alternative incomes and eradicate the phenomenon diminish with each record-breaking pay-off.

The area threatened by piracy is one of the busiest shipping channels in the world, with traffic estimated at 22,000 ships per year.(44) The escalation of attacks has already translated into higher premiums charged by insurance companies. In turn, this has led to higher prices for goods and commodities, which are passed on to end-consumers. While this has clear implications for global trade, it is the developing economies in the region, particularly in East Africa, that have borne the brunt of price increases.(45) Higher ransoms have also affected international shipping companies. While a large proportion of the pay-offs is covered by insurance, this is only one of the costs. Second-order losses include charter rates (estimated at US$3.5 million for an average vessel detained for a two-month period), charges associated with negotiations, physical delivery of ransoms, and loss and damages to the cargo.(46)

 

Current responses

The international community has largely eschewed a purely military response to the piracy problem, barring a few raids by Special Forces. Overall, the cost of violence, including the accidental killing of hostages, would exceed the potential benefit of salvaging a vessel. This does not mean that the world has been completely passive following the re-emergence of piracy off the Horn of Africa. The most visible international counter-piracy response has been the imposition of multinational naval policing forces. These include the European Union’s first naval mission (Operation Atalanta), NATO’s Operation Ocean Shield, and the US-led Combined Taskforce 151 (CTF-151).(47) These operations are primarily tasked with patrolling the seas, escorting humanitarian convoys, and enabling the passage of vessels that provide logistical support to the African Union force (the African Union Mission in Somalia, or AMISOM).(48) Given their overlapping mandates, there has been a degree of cooperation and information sharing through internet-based communication systems such as “Mercury.”(49) Multinational coalition forces are complemented by the individual activities of various states, such as China, India, Iran, Malaysia, and South Korea.(50)

Naval operations have enjoyed mixed success. Their presence and improved response rates have undeniably reduced the number of hijackings in the Gulf of Aden. Between 2009 and 2010, NATO alone succeeded in disrupting 148 pirate attacks.(51) At the same time, these missions have widened pirates’ scope of action and increased the use of ‘mother ships,’ which, in turn, reduced the effectiveness of counter-piracy measures.(52) Consequently, notwithstanding the coordinated efforts of 45 countries and seven international organisations, acts of piracy have increased exponentially.(53) As Lang argues, “the race between the pirates and the international community is being progressively won by the pirates.”(54)

So far, naval deterrence has failed to stem the rising tide. Yet the situation is not entirely hopeless. One positive development was the adoption and enforcement of standardised best management practices by the shipping industry. These include targeted actions to lower the rate of successful hijackings, by either preventing or delaying an attack. Effective measures include: changing security plans of individual ships, modifying vessel structures to include physical barriers such as electric fencing and razor wires, maintaining high cruising speeds, practicing evasive manoeuvres, and using fire hoses to flood skiffs.(55) The Contact Group on Piracy off the Coast of Somalia (CGPCS), a forum to facilitate coordination and information sharing, was responsible for crafting of these best practices. The CGPCS is also in charge of a Trust Fund (US$3 million), which pools funding from individual countries and the private sector for programmes geared towards capacity-building and alternative livelihoods.(56)

There has also been progress on the regional level. The Djibouti Code of Conduct, an inter-regional cooperation agreement to share information and manage capacity-building activities to prosecute suspects, has been signed by 16 countries. Under its auspices, the International Maritime Organisation (IMO) has set aside US$13.8 million to establish information centres in Tanzania, Kenya, and Yemen.(57) These initiatives are complemented by a joint INTERPOL-Europol global police partnership to coordinate investigations and crack down on illicit financial activities.(58) Regional Governments also played their part in prosecuting transgressors. Kenya has already convicted eight pirates, while 98 more await trial.(59) In the Seychelles, 11 pirates have been convicted and 21 are currently on trial.(60) Mauritius and the Maldives have expressed their willingness to accept pirates and prosecute them.(61)

However, the means of these states are limited. The UN Office on Drugs and Crime (UNODC) has taken active steps to plug the gap, implementing capacity-building programmes geared towards building and expanding prisons and courtrooms.(62) Improvements can also be observed on mainland Somalia. In 2010, legal officials from the TFG, the Puntland Government, and the Somaliland Government agreed upon a draft for a common anti-piracy law.(63) This opens the door to the creation of anti-piracy courts within Somalia.

 

Concluding remarks

The primary causes driving Somali piracy can be summarised as: state failure (including political, economic, and legal dimensions), insecurity on land, poor governance, powerful business interests, and widespread unemployment. Over the years, the scourge of piracy has had tragic repercussions for Somalia and the region. Above all, the piracy industry is no longer simply a manifestation of state failure: it has fuelled a self-perpetuating vicious cycle that is further entrenching insecurity.

It is common knowledge that piracy cannot be eradicated without robust, long-term solutions. Nonetheless, despite its good intentions, the international community’s response has been depressingly focused upon the short-term. For all of the encouraging developments outlined in the previous sub-section, the lion’s share of the funding is still limited to naval operations.

Part II of this paper (available here) attempts to identify sustainable solutions to effectively confront the problem. It argues that the international community’s overall objective should be to shift the incentives that make piracy a rational pursuit, by raising the costs and risks of engagement for both commanders and individual pirates.

NOTES:

This article is republished with permission from Consultancy Africa Intelligence (CAI), a South African-based research and strategy firm with a focus on social, health, political and economic trends and developments in Africa. For more information, see http://www.consultancyafrica.com.

(1) Contact Edoardo Collevecchio through Consultancy Africa Intelligence’s Conflict and Terrorism Unit ( [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).
(2) ‘Unstable on land? Also at sea’, The Economist Videographics, 2010, http://audiovideo.economist.com.
(3) ‘6473rd meeting: the situation in Somalia (S/PV.6473)’, UN Security Council, 25 January 2011, http://www.un.org.
(4) So”renson, K., ‘State failure on the high seas’, FOI Somalia Papers, November 2008, http://www.foi.se.
(5) ‘At sea’, The Economist, 3 February 2011, http://www.economist.com.
(6) McDonald, M., ‘Record number of Somali pirate attacks in 2009′, The New York Times, 29 December 2009, http://www.nytimes.com.
(7) ‘At sea’, The Economist, 3 February 2011, http://www.economist.com.
(8) ‘Report of the Special Adviser to the Secretary-General on legal issues related to piracy off the coast of Somalia (S/2011/30)’, UN Security Council, 25 January 2011, http://www.reliefweb.int.
(9) ‘At sea’, The Economist, 3 February 2011, http://www.economist.com.
(10) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(11) ‘An economic analysis of the Somali pirate business model’, Wired Magazine, 13 July 2009, http://www.wired.com.
(12) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(13) Ibid.
(14) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(15) Ibid.
(16) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(17) ‘6473rd meeting: the situation in Somalia (S/PV.6473)’, UN Security Council, 25 January 2011, http://www.un.org.
(18) Ibid.
(19) Ibid.
(20) Kraska, J., 2010. Freakonomics of maritime piracy. Brown Journal of World Affairs, 16(2), pp. 109-119.
(21) ‘6473rd meeting: the situation in Somalia (S/PV.6473)’, UN Security Council, 25 January 2011, http://www.un.org.
(22) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(23) Tharoor, I., ‘How Somalia’s fishermen became pirates’, Time, 18 April 2009, http://www.time.com.
(24) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(25) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(26) Ibid.
(27) Ibid.
(28) So”renson, K., ‘State failure on the high seas’, FOI Somalia Papers, November 2008, http://www.foi.se.
(29) Ibid.
(30) West, S., ‘Somalia’s Islamists attempt to rein in piracy’, Jamestown Foundation, 23 August 2006, http://www.jamestown.org.
(31) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(32) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(33) Ibid.
(34) ‘6473rd meeting: the situation in Somalia (S/PV.6473)’, UN Security Council, 25 January 2011, http://www.un.org.
(35) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(36) ‘Report of the Special Adviser to the Secretary-General on legal issues related to piracy off the coast of Somalia (S/2011/30)’, UN Security Council, 25 January 2011, http://www.reliefweb.int.
(37) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(38) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.
(39) Ibid.
(40) Kraska, J., 2010. Freakonomics of maritime piracy. Brown Journal of World Affairs, 16(2), pp. 109-119.
(41) Ibid.
(42) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.
(43) Ibid.
(44) ‘6473rd meeting: the situation in Somalia (S/PV.6473)’, UN Security Council, 25 January 2011, http://www.un.org.
(45) Ibid.
(46) Kraska, J., 2010. Freakonomics of maritime piracy. Brown Journal of World Affairs, 16(2), pp. 109-119.
(47) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.
(48) Ibid.
(49) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(50) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.
(51) Ibid.
(52) ‘Report of the Special Adviser to the Secretary-General on legal issues related to piracy off the coast of Somalia (S/2011/30)’, UN Security Council, 25 January 2011, http://www.reliefweb.int.
(53) ‘Report of the Monitoring Group on Somalia pursuant to Security Council resolution 1853 (2008) (S/2010/91)’, UN Security Council, 10 March 2010, http://www.reliefweb.int.
(54) ‘6473rd meeting: the situation in Somalia (S/PV.6473)’, UN Security Council, 25 January 2011, http://www.un.org.
(55) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(56) ‘CGPCS Trust Fund’, UN Office on Drugs and Crime, November 2010, http://www.unodc.org.
(57) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.
(58) Ibid.
(59) ‘No stopping them’, The Economist, 3 February 2011, http://www.economist.com.
(60) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.
(61) Ibid.
(62) ‘Counter Piracy Programme’, UN Office on Drugs and Crime, November 2009, http://www.unodc.org.
(63) ‘Report of the Secretary-General pursuant to Security Council resolution 1897 (2009) (S/2010/556)’, UN Security Council, 27 October 2010, http://www.un.org.