Trophies of piracy

Trophies of piracy

Somali pirates earn 157 times more than the average salary in the country, which, according to a new study, makes piracy a very profitable business in this South African state. The pirate can earn up to $ 79,000 a year: a striking contrast to an average annual income of $ 500 in Somalia, as noted in the report "The Economy of Piracy: Pirate Redemption Near the Coast of Somalia."

Notes and observations 2646 04 августа, 2013 internet

This study, conducted by the firm on economic and political consultations Geopolicity, highlights the price of piracy for global shipping and the benefits of financiers who support illegal operations.

Somali piracy cost the world $ 8.3 billion in 2010, taking into account the payment of ransoms, insurance premiums, ship redirection, the presence of military, piracy courts and the death of crew members. It is expected that these costs will increase to more than $ 15 billion by 2015, given the restoration of shipping, the geographic expansion of pirate attacks and the use of more advanced tactics.

Piracy is the nascent industry in which pirates, financiers, sponsors, security guards and insurance companies earn money, the total income of pirates was estimated at $ 75 to $ 238 million last year, and could rise to $ 400 million in 2015.

According to experts, in the world now operate 1500 pirates, and their numbers are replenished for 200-400 people a year. This means that up to 600 piracy incidents per year by 2015 are threatened by international waters.

Pirates are part of a long and complex chain, which also includes sponsors, arms suppliers, accountants, engineers, drug dealers, government officials and money transfer operators. Also recently, it turned out that insurance companies and private security firms also benefit from piracy.

"Being a pirate is a very risky business, although in an unstable state with an inefficient government, financing piracy is a relatively safe investment in the long run," says Peter Brookfield, Managing Director of Geopolicity. - The worst scenario for a financier is the loss of boats and equipment. The worst scenario for a pirate is death. "

Piracy will continue to grow because of the profits it promises for pirates in this volatile state, where there are so few legitimate alternatives to work, unless the price of piracy is outweighed by income, the study said.

Armed Somali pirates in the village"Given the risk of being killed, wounded or convicted and the cost of all these options, we come to the conclusion that people involved in piracy have made the right decision, at least financially. The cost of piracy is very low. Especially when comparing it with the nearest alternative to living in poverty, the potential cost of piracy is much lower than the income from a non-piracy honest life.

Improving the quality of life of Somalis and increasing the chances of pirates to die, injured and imprisoned, it will be possible to affect the reduction in the number of pirates. In the current situation, figures show that piracy is financially justified, and the number of pirates will continue to grow, "said James Lloyd, an economist at Geopolicity.

According to Brookfield, cases of piracy will expand significantly beyond Somali waters, given the growing income gap between pirates and civilians. For the shipping industry this means the need to incur additional costs. Insurance premiums for shipping companies with vessels operating in the Gulf of Aden increased by 30-40% in 2009-2010. MaerskLine, one of the largest shipping lines, expects that the costs associated with piracy will double in 2011 to $ 200 million, including insurance premiums, crews' surcharge for risk and redirection of vessels from risk zones.


However, according to the study, the costs and benefits of civil shipping, insurance companies, naval forces and private security firms exceed the ransoms and incomes of pirates and their sponsors. Pirates receive only 30% of redemption money, while the remainder goes to financiers, sponsors and other accomplices. "Most of the money goes into expanding the scale of piracy, it is without doubt a growing market. For pirates who were once fishermen, piracy has now become an alternative way of life, "says Mr. Brookfield. About 40-50% of redemption money is transferred outside of Somalia, using informal money transfer systems, which makes it difficult to track them.

The report assesses the success of pirate attacks at a level of 22-40%, which is a threat to 22,000 ships and 30% of the world's oil supplies that pass through the Gulf of Aden.

Why is piracy such a problem in Somalia?

Somalia is a fragile state, whose government fell in the early 90s. The origins of piracy can be traced back to the social, political and economic turmoil of that time. With the fall of the regime, no president was able to take control of the country, which disintegrated the national army, followed by political fragmentation. In the absence of the army and the central government, the fishermen took on the role of guards of the country's coast from illegal fishing and dumping of waste, eventually inclined to piracy in order to feed themselves.

"However, addressing the issue of piracy is not just a problem for Somalia, as financial intermediaries and suppliers are located around the world," the Geopolicity report says.

Who becomes a pirate

Summerhouse of Somali piratesJohnny Depp portrayed the romantic image of an ominous but cute pirate, while reality in Somalia is much tougher. Pirates are former fishermen and former militia, many of whom are just teenagers whose territory was destroyed by illegal toxic waste and illegal fishing by foreigners, says Farah Ali Jama, finance minister of Puntland State in Somalia. The pirates began to resist this activity, but soon began to abduct ships and crew and demand ransom to make a living. This turned out to be financially attractive, but a risky activity, an alternative to poor life for young people, who had almost no options for legal earnings. And these young people are just pawns in a dangerous international game, according to politicians.

"People outside of Somalia have made it an industry. They use Somali children for their illegal purposes. These guys are just toys, "says Muhammad Abdullahi Omar, the foreign minister of Somalia.
It is estimated that the coast of Somalia is terrorized by about 1,500 pirates. London Bureau IMB reported that the pirates in 2010 stole a record number of ships - 53 and 1 181 members of their crews, most of them in waters outside of Somalia.

Economy based on piracy

Growing business, piracy, creates an asset for the country without a central government, bringing income to previously poor villages and building a kind of economy, but this happens at the cost of destroying clan traditions.

Coastal villages earn by feeding pirates and their hostages while they wait for the end of the talks, pirate wives get compensated before their husbands go to work, local negotiators get paid for making shipowners pay ransom, dropping it from the air to land or at sea, and financiers invest in pirate teams that are sent to seize ships at sea.

Somali pirates offshore
"Pirate financiers spend about $ 30,000 on a pirate group that" hunts "in the Indian Ocean and about $ 10,000 on pirates operating in the Gulf of Aden. To protect themselves and their activities, pirates pay local police up to $ 10,000 per month to protect themselves from competitors or an external threat, "says Rudolf Atta Allah, head of WhiteMountainResearch.

The paid ransom is a major source of income. Coastal villages, the mainstay of piracy, receive about 5% of the total redemption payments simply for allowing the ships to anchor in the coastal strip.

Although piracy has created an informal economy in Somalia, this is not a long-term activity, as pirates are hired for a couple of months at a time.

The negative impact of this illegal economic system is significant. Possessing purchasing power, these young people devote themselves to social taboos - alcohol, drugs, prostitution and growing cruelty, not paying attention to local traditions and the instructions of elders. The result of this is the country's further slipping into chaos and catastrophe.

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