News / Africa

Somalia's Piracy Has Major Global Costs, but Also Incentives

Guards stand outside the prison that houses 70 pirate inmates, in the breakaway northern republic of Somaliland, March 2011. (file photo)
Guards stand outside the prison that houses 70 pirate inmates, in the breakaway northern republic of Somaliland, March 2011. (file photo)
Nico Colombant

Recent research indicates piracy from Somalia is costing the world economy billions of dollars, but also bringing lots of money to pirates and Somali communities.

A recent report by the U.S.-based One Earth Future Foundation on costs related to Somalia piracy is prompting questions about how to more effectively curb these activities.

The report said Somali pirates cost the shipping industry and governments nearly $7 billion last year, with lots of money being spent for ships to go faster, to pay ransom when crew and cargo are captured, and for security operations.

These include naval missions by several countries, which effectively have pushed most of the pirate attacks out of the Gulf of Aden, to the much wider and more difficult to control Arabian Sea and Indian Ocean.

A leading expert on piracy, Roger Middleton, said while in recent months, the number of hijackings has dropped, the attacks have become more and more profitable for those behind them.

“For all the success of naval operations, and some of them have been very successful, piracy is a more profitable enterprise in the last year than it was the year before, and the trend seems to be upwards for ransom payments,” said Middleton.

These payments now average about $5 million - making piracy usually well worth the risk, according to Middleton.

“You can make $10,000 as a pirate, at the most basic, lowest level for one successful hijacking. If you do three of those in a year, you are doing very, very well by any standards anywhere in the world," said Middleton. "Put in mind that the estimate for Somali gross domestic product per head is about $600 per year, and for many, many people it is much, much lower than that, and the economic incentive is absolutely clear. Piracy is the best career you can have.”

He said the semi-autonomous Puntland region of Somalia has just enough stability to allow a criminal enterprise such as piracy to flourish, while not enough governance to stop it.

Middleton made his comments at a recent gathering of the Institute of International and European Affairs in Dublin, Ireland.

Last month, a study published by the British think-tank Chatham House said several populated areas of Puntland were benefiting from investments funded by piracy, with increased electricity, housing construction and vehicles.

Many of the lower level pirates are former fishermen who have been quoted as saying they were not making enough money to feed their families anymore.

In the past two decades, boats from around the world took advantage of the lack of law and order in Somalia’s waters, as well as agreements with authorities, to operate large-scale fishing, making the catches of local fishermen smaller and smaller.

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