MOGADISHU, April 11, 2013 – Although piracy episodes off the Horn of Africa have fallen in the last 12 months, a new World Bank analysis of its human and economic costs says that “Somalia cannot ‘buy’ its way out of piracy; nor can the international community rely solely on its law enforcement agencies to defeat pirates whether at sea or land.”
Launched in Mogadishu with the support of the Somali President, Hassan Sheikh Mohamud, the new report—The Pirates of Somalia: Ending the Threat; Rebuilding a Nation— suggests that a sustained solution to ending piracy will only come with the recreation of a viable Somali state that can deliver essential services throughout the entire country to reduce poverty and create opportunity. It will also need to recognize the complexity and volatility of local politics in shaping how to deliver better health, education, nutrition, and other services to Somalis, especially those living in areas where piracy flourishes.
“As this report shows, the solution to Somali piracy is first and foremost political,” write Makhtar Diop, the World Bank Group’s Vice President for Africa, and Kaushik Basu, the World Bank Group’s Chief Economist, in a Foreword to the new report. “This report affirms that beyond its firepower and financial resources, the international community can and should assist Somalia with generating knowledge—knowledge of how local power dynamics shape the rules for sharing resources, how they drive clan, and sub-clan relationships, and ultimately how they determine national political stability—to find solutions to the piracy problem.”
Piracy costs are significant
In one of the most detailed assessments of the international and regional costs of Somali piracy, the World Bank says that, because of its scale, geographic scope, and violence that have created considerable public anxiety throughout the world, piracy costs the global economy roughly US$18 billion a year in increased trade costs— an amount that dwarfs the estimated US$53 million average annual ransom paid since 2005.
Not only has piracy imposed a hidden tax on world trade generally, it has severely affected the economic activities of neighboring countries. Since 2006 East African countries have seen a marked decline in tourist arrivals and fishing yields. In the booming tourism sector, spending in East Africa since the surge in pirate activities has grown 25 percent more slowly than in other sub-Saharan African countries. Similarly, exports of fish products from piracy-affected countries compared to other regions have dropped by 23.8 percent since 2006, in part due to falling production. Total catches of tuna in the Western Indian Ocean have declined by 26.8 percent as vessels relocated to safer fishing grounds.
Somalia itself has also suffered considerably from the impact of piracy. Increased trade costs are estimated to cost the country US$6 million annually; and this figure does not take into account that Somalia cannot develop and expand its maritime trade and fisheries as long as pirates are allowed to operate in its waters.
In terms of the human cost of Somali piracy, as many as 3,741 crewmembers of 125 different nationalities have been captured, with detention periods as long as 1,178 days. As many as 97 sailors may have died either during the attacks, in detention after poor treatment, or during rescue operations.
On the Somali side, the toll is also high; hundreds of pirates are believed to have died at sea.
Somali piracy business is unique
Since Somali piracy is largely a hijack-for-ransom business, it relies heavily on onshore support for infrastructure that provides food, water, fuel and the leafy narcotic khat to the militiamen who guard the hijacked ships throughout the ransom negotiation process.
Somali pirates therefore need to secure regular access to the coast and protection against national and international law enforcement and competing criminal groups. The fact that pirates can anchor their hijacked vessels freely along the Somali shoreline reflects their ability to win support from government officials, business people, clan elders, militias, and local communities. In these anchorage locations, the pirates have been able to use a mixture of pay-offs and physical coercion to secure unhindered access to the coast for long periods. It is estimated that commanders and instigators in the Somali piracy business split 70 to 86 percent of piracy proceeds with these stakeholders, without whose support anchoring hijacked boats would not be possible
“By better understanding how piracy has been enabled in towns and communities along the Somali coast gives the new government in Mogadishu and the international community a much better idea of the development policies and alliances that will be needed to end piracy in these hotspots and to re-establish a thriving new Somali state in East Africa,” says Bella Bird, the World Bank’s Country Director for Somalia, South Sudan and Sudan who is working closely with the government on its plans to re-establish essential services to the Somali population and bring the country onto a path growth and prosperity.
Current anti-piracy approach needs change
The 300:1 ratio of piracy’s global cost to the pirates’ annual ransom payments offers a powerful reason for international support for Somalia. Current onshore or offshore policies for curbing Somali piracy are either ineffective or likely unsustainable. Onshore interventions such as local economic development or law enforcement initiatives are intended to discourage young Somalis from becoming pirates by increasing the attractiveness of alternative jobs or by promising long prison terms in case of capture. As the reports cautions, however, pirates will simply offer higher pay rates to poor, unemployed Somali teenagers and young men to take the risk of capture or death at sea. While heavily-armed naval patrols and better security onboard commercial shipping are believed to explain why piracy plunged in 2011 and 2012, these measures are effective only as long as they stay in force.
“Because of the high cost of these counter-measures, in the long run they may simply be unsustainable,” says report lead author Quy-Toan Do, a senior economist in the World Bank’s research department and the World Bank’s Vice Presidency for Africa. “Given how piracy off the Horn of Africa depends so heavily on onshore operations to sustain itself, any long-term solution therefore will involve forging a political contract with local power holders—a shift in attention, in other words, from the perpetrators to the enablers of piracy.”
To view the full report please visit: http://www.worldbank.org/africa/piratesofsomalia