Sept. 26 (Bloomberg) -- The deadly assault this week in Nairobi by a militant group from Somalia serves as a reminder of the threats emanating from the war-torn East African country that remains a hotbed for pirate attacks on key shipping routes.
The four-day battle in Kenya’s Westgate shopping mall with the Somalia-based Islamist group Al-Shabaab left at least 67 civilians and security personnel dead before Kenyan forces ended the siege. While Somali piracy has also been curbed by military intervention and enhanced ship defenses, there’s no evidence that the supply of would-be raiders has waned in a state ranked the world’s second-poorest by Central Intelligence Agency.
“We’re in a dangerous phase,” said Philip Holihead, head of anti-piracy measures at the International Maritime Organization. “When there are no attacks people get complacent because it costs money to secure the ships. But take away any one part and you hand the power back to pirates.”
Attacks off the Horn of Africa in seas vital to ships using the Suez Canal and Cape of Good Hope peaked in 2011 before falling 70 percent last year to 62, including 20 successful hijackings, Oceans Beyond Piracy said in its latest annual report. The decline, which has continued this year with only two Somali hijackings, is the result of $3 billion in annual spending on shipboard security and navy patrols, a commitment that’s in doubt amid pressure on company and state budgets.
About 20 percent of world trade goes through the Gulf of Aden between Yemen and Somalia bound to and from Suez, the shortest route between the Atlantic and Indian oceans.
Somali President Hassan Sheikh Mohamoud said this month at the Countering Maritime Piracy congress in Dubai that the causes of piracy have yet to be removed, with poverty and instability continuing to breed extremism. Speaking prior to the Nairobi attack, he said investment equal to just a fraction of the cost of piracy would help make a major difference.
Attacks began to increase in 2005, with high-profile raids including one on A.P. Moeller-Maersk A/S’s MV Maersk Alabama, the first U.S.-flagged cargo ship hijacked in 200 years, according to publicity for a film on the incident starring Tom Hanks on general release next month. The actor plays a captain freed after his captors were shot by Navy SEAL marksmen.
Successful hijackings peaked in 2010, with 44 ransoms paid, totaling $238 million, according to Colorado-based OBP. The international community responded with a show of naval power so effective that patrols are now able to intercept pirates and destroy their equipment “almost at the beach,” according to Jan Fritz Hansen, who chairs the piracy task force at the European Community Shipowners’ Association.
At the same time, shipping lines have adopted measures that include faster speeds to prevent boarding and the deployment of barbed wire, water hoses, lights and lookouts to protect their vessels and nets that entangle the propellers of pursuing boats.
“We have fought very hard and the situation is currently under control at sea,” said Hansen. “But on land there are still poor people and criminals that are tempted by what they see as golden opportunities sailing by.”
The prosecution of captured pirates has benefited from international funding, with European Union aid helping to fund an overhaul of Somalia’s judicial system and prisons.
The net effect has been to impair the ability of pirates to seize oil, bulk and container craft, reducing them to attacks on ships such as fishing boats, where rewards are lower, said Cyrus Mody, assistant director at the International Maritime Bureau, the International Chamber of Commerce’s marine crimes division.
The cost of dealing with Somali piracy was about $6 billion in 2012, including $1.1 billion for military operations such as reconnaissance planes and drones, detachments to guard ships and the administrative budgets of naval operations. The cost of private security measures rose to $2.1 billion as more shipping lines deployed armed personnel.
The price of faster steaming was $1.5 billion, even with reduced observance of guidelines, while re-routing cost almost $300 million, danger money paid to seafarers about $500 million and insurance $550 million, OBP calculates. Ransom payments fell 80 percent to $31.75 million, with the mean amount handed over about $4 million and hostages held for an average 316 days.
While the cost of Somali piracy declined 13 percent overall versus 2011, that was a far smaller decline than in the number of attacks, with the cost per incident jumping almost threefold to $83 million, prompting OBP to suggest short-term solutions may no longer be economically efficient.
With European nations in particular imposing tough austerity measures to bring down deficits, declining defense spending will inevitably hurt the anti-piracy patrols, said Andrew Linington, spokesman for the Nautilus International trade union which represents about 23,000 maritime workers.
While naval operations have been effective, there’s also concern that attacks may pick up with the close of the monsoon season at the end of this month, when conditions will be better for pirates to take to the water, Linington said by telephone.
“Somalia still has intense problems,” he said. “It’s fragile. The problems certainly have potential to reappear.”
Simon Bennett, a director at the International Chamber of Shipping trade body, which represents companies controlling more than 80 percent of the world’s merchant tonnage, said a shift of attention to a growing pirate threat in the Gulf of Guinea off West Africa risks diverting resources from the Indian Ocean.
“All of the resources to fuel a resurgence of piracy off Somalia remain in place,” Bennett said by e-mail, adding that the group is lobbying politicians to retain military safeguards and aid efforts ashore while encouraging shipping lines to keep security measures in place despite the decline in attacks.
Adjoa Anyimadu, an Africa specialist at the Royal Institute of International Affairs in London, said that funding mechanisms which support piracy and process its gains also remain intact.
“People who finance, people who process the ransom and so on, all these structures are still in place” she said.
Still, Emma Gordon, East Africa analyst at IHS Country Risk, said a federalization program underway in Somalia has had more of an impact on piracy than commonly understood, with clan leaders in the key province of Galmudug successfully coopted.
“What we’ve seen is that the leaders of the pirates are more interested in becoming leaders of these federal states,” Gordon said, with this process gradually removing vital funding for attacks and safe havens in which to hold captured craft.
Mohamad Osman, executive director of the Somaliland Counter Piracy Coordination Office, isn’t so sure.
“As long as there are Somali males with access to arms and the existence of unemployment there will always be the threat of piracy,” he said in an interview at the Dubai conference.