Reduce Piracy Off the Coast of Nation

The Citizen (Dar es Salaam)

Rohan Poojara

21 May 2011

opinion

In the last few years, Somali pirates have evolved from a small group of bandits into a network increasingly functioning like a sophisticated global organisation with hijackers, investors, guards, professional negotiators and money laundering agents working in tandem. This efficiency has made it very difficult to counter the threat of piracy but targeting financers and negotiators is part of a more proactive strategy being adopted by the US.

Other countries are also on board with this plan of attack on the financial network of Somali pirates. The Contact Group on Piracy off the Coast of Somalia (CGPCS), a multilateral diplomatic effort consisting of 60 countries is adding a working group that will focus on illicit transnational financial flows. Many nations are also working towards implementing better forensic methods to deny pirate chiefs the ability to benefit from their ransom proceeds. So what is the likelihood of success of these measures?

A comparison to ongoing campaigns against the financial networks of al-Qaeda and Iran’s Revolutionary Guard illustrates some of the benefits of pursuing this strategy and highlights key pitfalls to bear in mind. A Council on Foreign Relations (CFR) report last year highlighted the difficulties being faced by al-Qaeda operatives including a “shortage of food, weapons, and supplies brought about by a dearth of cash” after a crackdown by financial regulators.

Stuart Levey, the Under Secretary for Terrorism and Financial Intelligence, claimed success of the financial strategy in Iran as well in a recent testimony before the House Committee on Foreign Affairs where he stated that: “Iran has dramatically reduced access to financial services from reputable banks, and is finding it increasingly difficult to conduct major transactions in dollars or euros (which is) creating the leverage needed for effective diplomacy.”

However, terrorism and piracy are relatively cheap activities. There are more sources of illicit funds than agencies could potentially crackdown on and like cash-strapped al-Qaeda affiliates, pirates may turn to criminal activities like smuggling and drugs to maintain their status quo. The direct impact of the crackdown on pirate networks, however, would be a forced increase in the scope of their activities from traditional hijacking to terrorist actions.

The US has consistently urged global shipping corporations not to yield to pirate demands for ransoms.

Even Somalia’s own foreign minister, Mohammed Abdulahi Omar Asharq, pleaded with shipping firms to not pay ransoms since they were “institutionalizing hostage taking” by doing so.

However, this advice has not been heeded and the willingness of shipping companies to cooperate with pirates to ensure the safe return of their ship, crew and cargo has resulted in the total ransom amount paid to pirates each year rising from about $3 million to more than $75 million from 2007 to 2010. The average ransom has also risen from $300,000 to more than $4 million in the same period.

So what can we do to force shipping companies to comply?

The potential benefits of this step include forcing ship-owners to choose safer, albeit more expensive, routes and increase employment of self-help measures such as armed guards on board their ships.

However, despite the potential drawbacks, it is essential that we find some way to penalize shipping companies, insurance firms, or other organizations with interest in the cargo that yield to pirate demands since it is our best shot at controlling piracy.

Just as the best way to clean up a red light district is to arrest the Johns as well as the prostitutes, we need to make the countries and companies that collude in the blackmail pay a penalty in order to reduce piracy off the coast of Somalia.

The author is a Research Assistant in the economic policy group of the American Enterprise Institute.

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