Sunday, May 11, 2014

Pirate Hijack Thwarted as Report of Cost to Merchant Shipping Released

Misery of Long Term Captives Revealed as Situation on both African Coasts Compared
Shipping News Feature

AFRICA – Oceans Beyond Piracy (OBP), a project of Marcel Arsenault’s One Earth Future Foundation, has released its annual report detailing the economic and human costs of African maritime piracy, a study which in the past has drawn criticism with some critics stating that the costs of maritime crime to freight and passenger interests mentioned are estimated, inflated and sometimes even made up entirely. The report, titled ‘The State of Maritime Piracy 2013’, examines the costs incurred as a result of pirate activity occurring both off the coast of Somalia, as well as in the Gulf of Guinea, and is released just after the most recent attack in the Indian Ocean was thwarted by EU Navfor, thankfully an increasingly rare necessity.

The study finds that attacks by Somali pirates are increasingly rare and that, at between $3 billion to $3.2 billion, the overall economic costs of Somali piracy are reduced down almost 50% from 2012. While attacks by Somali pirates have declined sharply with no large vessels taken in 2013, there are still however at least 50 hostages in captivity who have been held on average for nearly three years under deplorable conditions. At the same time local seafarers and fishermen in the region remain at high risk as pirates continue to target locally operated vessels to facilitate larger attacks. Jens Madsen, one of the report’s authors, commented:

“The efforts of the international community and the shipping industry have considerably reduced the threat of Somali piracy. But we have yet to achieve the goal of ‘Zero/Zero’ – zero vessels captured and zero hostages held.”

The report finds that while the combined economic costs of suppressing Somali piracy at sea are markedly down, there has only been a slight increase in the investment in long-term solutions ashore. Research also shows that the shipping industry increasingly relies on individualised risk mitigation, observed in the decreased use of some of the more expensive anti-piracy measures such as increased speed and re-routing. Shippers are also turning to smaller and less expensive teams of armed guards as the perceived risk of piracy is declining.

The OBP states that just three ransom payments were made to Somali pirates last year, a total maximum pay-out of $21.6 million, and a 32% decline from the previous year. In addition to the actual cost of a ransom payment however, ship owners also incur other expenses attributed to the welfare of crewmembers that were held hostage. These costs can equal the amount of gaining a worthwhile release, therefore increasing ransom related expenditures by 100%, or up to $43.2 million. As these costs usually tend to be covered by insurance policies, the OBP excludes these figures in its total economic cost estimates.

Figures which do count towards the OBP’s estimated cost of over $3 billion attributed to Somali piracy includes $999 million for military operations; $1.18 billion for security equipment and guards; $276.2 million for increased speed (which accounts for extra fuel usage as a cost of evasive measures); $462 million for additional labour related costs as a result of piracy; $12 million for prosecutions and imprisonment; $185.7 million for insurance; and $44.7 for counter piracy organisations.

The most significant trend for Somali piracy in 2013 was the aforementioned continuing decrease in the number of attacks on ships. May 10, 2014 marks two full years since the last successful hijacking of a commercial vessel by Somalia based pirates, due to the counter piracy measures taken by the international maritime community and the sterling efforts of the Combined Naval Task Forces. These haven’t completely stopped pirates from attempting to capture vessels and cargo however as, on April 26, six armed pirates captured a local dhow and her crew. Only to flee the scene after being sighted by an EU Navfor Spanish maritime patrol and reconnaissance (MPRA) aircraft.

In that case the master confirmed his ordeal to members of the Boarding Team from the EU Naval Force flagship, FGS Brandenburg, after the German warship had closed the sea area to investigate the dhow. The master stated that the pirates had forced him and his crew to sail toward the Gulf of Aden, where they had planned to use the dhow as a mother ship to attack merchant ships at sea. Before they left his ship the master said that the pirates had stolen electronic equipment and other personal items from the crew. Speaking about the incident, the EU Force Commander, Rear Admiral Jürgen zur Mühlen, said:

“This event confirms that the piracy threat is still very real. The deterrence and swift action by EU Naval Force has once again denied freedom of action to pirates.”

Reverting back to the report, piracy off West Africa is distinctly different from, and unrelated to, Somali piracy in many significant ways related to historical, legal, political and geographical differences between the two regions, a point we have made here on several occasions. Significantly, attacks off West Africa occur in both territorial waters and international waters. Because of this, security structures differ: only local forces may legally provide armed security within territorial waters, as the continuing trials and tribulations of the MV Seaman Guard Ohio bear witness to.

Given that the majority of piracy-related incidents in West Africa during 2013 occurred within twelve nautical miles of a coast, those incidents fell within a specific country’s jurisdiction and protection. Unlike in the Indian Ocean, where Somali authorities still lack a coast guard or navy with the capability to project power at sea, West African states have both the legal responsibility and in some cases the naval resources to respond to armed robbery, in effect changing the tactics that the pirates need to use, and the regulatory and judicial tools available to counter piracy.

The study finds that a critical lack of reporting in certain regions on both the piracy and maritime crime in general makes analysis difficult, but according to the information the OBP says it has gathered, pirates subjected 73 seafarers to kidnap for tactical ransom. Due to a lack of available information, the report estimates that a total of around $1.5 million was paid as ransom for individuals. Once again, this figure is not included in the total cost as it would normally be covered by insurance.

For those cost categories where information is available, OBP’s total cost estimates for piracy in West Africa are between $566.47 and $683 million, with the cost of military operation estimated between $348.06 and $370 million; the cost of security equipment between $150.9 to $225.4 million; $9.19 million for labour costs; the value of stolen goods ranging from $10.1 to $30.27 million; $40 million for piracy related insurance; and $6.64 million for counter piracy organisations and maritime capacity building efforts. Differing from action in East Africa, the prosecution of pirates in West African waters should be in some ways less complicated than prosecution of Somali pirates because the presence of national judicial institutions clarifies, in principle, who takes responsibility for prosecuting the criminals. That being said, there have been no prosecutions to date of the arrested suspected pirates held in Nigeria, leading to zero costs of prosecutions and imprisonment.

The OBP estimates that 1,871 crewmembers were exposed to attacks within the areas of interest in 2013, with 1,209 crewmembers on ships boarded by pirates. Last year, 279 seafarers spent time as hostages of West African pirates indicating that hostage rates are up from those reported in 2012. Of these 279 seafarers, as stated above 73 were abducted by pirates for the purposes of ransom. These crew members were not held for just a brief period of time while the pirates used the vessel for their own ends, but were deliberately taken off their ships. Madsen continued:

“Piracy in the Gulf of Guinea is fundamentally different to that taking place in the Indian Ocean. We observe not only a high degree of violence in the attacks in this region, but also the lack of a mutually trusted reporting architecture and the constantly evolving tactics of West African piracy making it extremely difficult to isolate it from other elements of organised maritime crime.”

The report notes it is generally agreed the solution to piracy ultimately lies in building up capacity onshore, but it stresses that relatively little investment has been made towards sustainable solutions. Marcel Arsenault, Chairman of One Earth Future Foundation:

“While I am encouraged that more money is being spent on longer-term solutions ashore, these still only represent the equivalent of 1.5% of the total annual cost of the piracy. Until we have more economic opportunity and better governance ashore, we risk piracy returning to previous levels as soon as the navies and guards have gone home.”

Photo: The dhow freed by the approach of friendly forces. Courtesy of EU Navfor