November 27, 2008 / 5:14 PM / 11 years ago

The business case for high-seas piracy: Bernd Debusmann

Bernd Debusmann is a Reuters columnist. The opinions expressed are his own.

A video grab from an undated television footage shows pirates walking on the beach in the town of Eyl in the north of Somalia, November 20, 2008. REUTERS/Reuters TV

By Bernd Debusmann

WASHINGTON (Reuters) - As far as illicit businesses with low risk and high rewards go, it doesn’t get much better than piracy on the high seas. The profit margins can easily surpass those of the cocaine trade. The risks?

“There is no reason not to be a pirate,” according to U.S. Vice Admiral William Gortney, who commands the U.S. navy’s Fifth Fleet. “The vessel I’m trying to pirate, they won’t shoot at me. I’m going to get my money.” Even pirates who are intercepted have little to fear. “They won’t arrest me because there’s no place to try me.”

Gortney’s assessment of piracy’s low risk came in a radio interview that focused on the Gulf of Aden, where Somali pirates have carried out a string of increasingly brazen hijackings. Last week they ventured as far as the high seas southeast of Kenya to seize a Saudi supertanker carrying $100 million (65 million pounds) worth of U.S.-bound crude.

But although attention is focused on the Horn of Africa, piracy is a global phenomenon, relative impunity applies in many places, and a thick legal fog hangs over effective action.

Among questions to keep lawyers busy: Can a naval vessel fire on a suspected pirate ship? It depends. Who would be held accountable for someone killed in an exchange of fire between pirates and private security personnel travelling aboard a merchant ship? Which country’s jurisdiction applies, for example, to a Somali arrested on the high seas and taken aboard a Danish vessel?

“One of the challenges that we have ... in piracy clearly is if you are intervening and you capture pirates, is there a path to prosecute them?” Admiral Mike Mullen, the chairman of the U.S. Joint Chiefs of Staff, explained at a recent Pentagon briefing.

A rough back-of-the-envelope calculation shows that the operation to hijack the Saudi tanker, the Sirius Star, cost no more than $25,000, assuming that the pirates bought new equipment and weapons. That contrasts with an initial ransom demand to the tanker’s owner, Saudi Aramco, of $25 million.

“Piracy is an excellent business model if you operate from an impoverished, lawless place like Somalia,” says Patrick Cullen, a security expert at the London School of Economics who has been researching piracy. “The risk-reward ratio is just huge.”

One way to shrink that ratio would be to place private security guards on vessels that ply shipping routes prone to pirate attack, from the waters off Nigeria to the Molucca Straits and the Horn of Africa. That’s the solution recommended by the commander of the U.S. Fifth Fleet, whose area of responsibility covers 7.5 million sq miles, including the waters off Somalia. Its warships can’t be everywhere.

Even with the additional deployment of warships from France, Britain, Denmark, Russia, India, Japan, Korea, and Malaysia, the navies are looking for needles in a haystack. The pirates launch speedboats from mother ships hundreds of miles off the coast.

BLOW THEM OUT OF THE WATER

Carrying armed guards aboard ships sounds a simple, straightforward solution. They stand watch; they fire warning flares at an approaching speedboat manned by what looks like pirates. If the vessel doesn’t turn away, they blow it out of the water. End of story.

Except if the incident somehow turned into a court case and the ship’s crew and guards had to prove that the men in the approaching speedboat were driven by criminal intent. By some definitions, an act of piracy doesn’t begin until the grappling hooks are thrown over the side and the pirates start clambering up.

In the past, shipping companies, by and large, have been reluctant to add armed personnel to their crews, partly for reasons of cost - a security team can add $30,000 to $60,000 and more to a voyage - and partly because the statistical chance of having their ships attacked or hijacked is relatively small.

The International Maritime Organization puts the world trading fleet at 50,525 ships. In the first nine months of this year, the International Maritime Bureau’s piracy reporting centre in Kuala Lumpur recorded 199 attacks on ships, including 36 hijackings. In percentage terms, this is not much.

But the targets, and the ransom demands, have been getting bigger. The Sirius Star was taken less than two months after the hijacking of a Ukrainian freighter, the Fainu, which carried some 30 T-72 tanks, crates of rocket-propelled grenades, anti-aircraft guns and thousands of rounds of ammunition. That capture made world headlines and raised fresh questions over existing anti-piracy tactics.

Private security firms see new markets and new opportunities. Several British firms have begun teaming up with insurance companies that offer lower rates for ships carrying security teams. Anti-pirate devices now coming into use range from razor wire strung along the side of ships to sound cannon: weapons that beam ear-splitting noise at suspected attackers.

One U.S. company, Blackwater Worldwide, is offering maritime escort services with a 183-foot vessel that carries two helicopters, a crew of 15 and 35 guards. Blackwater says 13 shipping companies have expressed interest.

To make pirates think twice about the risk-reward ratio, nothing is likely to be as effective as brute force. But those who warn that 18th-century methods can be problematic in the 21st can now point to the example set by the Indian frigate Tabar on November 18.

According to the Indian navy, the Tabar had come under fire from a suspected pirate mother ship that had failed to obey a command to stop.

The Indian frigate returned fire, “in self defence.” The ship blew up in a ball of fire and sank.

A week later, it turned out that the suspected mothership was a Thai freighter that was being taken over by pirates when the frigate approached.

(You can contact the author at Debusmann@Reuters.com)

(Editing by Sean Maguire)

Keywords: COLUMN PIRACY/

Wednesday, 26 November 2008 15:41:16RTRS {C}ENDS

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