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Thursday 5 November 2009
Pirates turn ancient trade into model modern business
When Zhang Zuyue, chief of the Chinese Shipowners’ Association, describes the pirates plaguing the Somali coast as “a beaming new star” in the ancient trade of piracy, he is not exaggerating.
Pirates turn ancient trade into model modern business
Greg Torode Chief Asia correspondent 28 October 2009
When Zhang Zuyue, chief of the Chinese Shipowners’ Association, describes the pirates plaguing the Somali coast as “a beaming new star” in the ancient trade of piracy, he is not exaggerating.
As shipping firms across the region know to their cost, the pirates are proving to be a menace as cunning as they are successful.
Some 40 countries, including China, have sent warships to an international armada patrolling vital sea lanes around the Horn of Africa and into the Gulf of Aden - waters that link Asia to Europe and carry much of the oil used by China and Japan.
Yet the anti-piracy patrols have failed to stem the tide of attacks. International Maritime Bureau figures show pirate incidents have risen steadily from 35 in 2007 and 111 in 2008 to 178 so far this year.
And the attack on the De Xin Hai last week shows just how emboldened and sophisticated the pirates have become. Carrying 76,000 tonnes of coal from South Africa to India, the bulk carrier was attacked as it passed 550 nautical miles northeast of the Seychelles - far from the area covered by the international armada and a sign that pirates are extending their reach by using so-called “mother ships” as staging posts for attacks.
The location meant the De Xin Hai, commanded by a captain of more than 30 years’ experience, had yet to cross to the 60th meridian - the point at which ships are advised to take anti-piracy measures, such as posting extra lookouts and preparing fire hoses. Fully loaded and riding low in the water, it was a soft target.
The pirates shut communications and steered the ship to the ancient fishing port of Hobyo, one of three strongholds on Somalia’s east coast.
In Hobyo, the pirates typically rest easy. Hostage crews are kept under armed guard, fed relatively well and have access to basic medical attention if needed. On occasion, caterers have even been arranged to provide Western or Asian food - a luxury in a country with one of the most malnourished populations in all of Africa.
“For the pirates, it’s all about the hostages,” said Roger Middleton, a specialist in Somali piracy at Chatham House, an independent London-based think tank. “They are the ultimate bargaining chip. It’s not about the ships and the cargo ... they know that owners and insurers will pay to keep crews safe.”
The pirates certainly act as if they know time is on their side. The De Xin Hai joined six other vessels in detention; one, a Taiwanese fishing boat, has been kept since April. Previous negotiations over six China-linked vessels - including a Hong Kong- registered freighter - seized last year lasted as long as three months.
It could be argued that on many levels, the pirates have created a compelling business model.
They have found a niche that is durable - the Horn of Africa leads to the Red Sea and Suez Canal and draws 20,000 ships annually. While a small number have started to head around the Cape of Good Hope at the southern tip of the continent to avoid trouble, it is hardly expected to become a key route, given the extra costs and time involved in an industry notorious for its tight margins.
They also have some intriguing comparative advantages. A failed state, Somalia has essentially been in a perpetual state of anarchy after years of civil war eroded any hope of effective central government. A so-called transitional federal government is in place yet no one is pretending it is in control. Warlords, gangs and various tribal leaders represent constantly shifting authority in the political and administrative vacuum.
That means the pirates can largely operate in a sub-legal twilight world, untroubled by law enforcement as long as they stick to Somalia. Some captured during naval operations at sea have been sent to Kenya, the Seychelles and even the US for trial, but most remain at large.
As one naval attache described it, they live in coastal areas unstable enough to keep people away yet safe enough to enjoy their ill-gotten gains in relative comfort.
Once fly-blown fishing villages have sprouted large white villas, SUVs and satellite dishes - all signs of the pirates’ wealth. Any youngster growing up has two options - the poverty-stricken life of a Somali coastal fisherman or that of a pirate.
Middleton estimates that pirate groups snared US$80 million in ransoms last year and have almost certainly topped that figure this year.
As Rand Corporation piracy expert Peter Chalk told the Los Angeles Times: “The risks of being caught are very low (and even lower in terms of being successfully prosecuted) while the potential rewards are enormous - at least in a Somali context.”
The revenues also provide tools of the trade - state-of-the-art global positioning systems, radars and, of course, the automatic weapons and rocket-propelled grenades that would make any attempt to storm a pirate stronghold risky, particularly if the intent was to save hostages.
The success of the enterprise is so great that even the cunning ideological recruiters of al-Qaeda, active elsewhere across the Somali political vacuum, have made no headway into the pirate strongholds.
“We went looking long and hard to see if there was any relationship between the pirates and al-Qaeda,” said one Western diplomat involved in security issues.
“It seemed a natural fit, and a possible source of funds. But there is nothing, nothing at all. We get the strong sense that the business is so lucrative, and the pirates [are so] happy with their profits, that they have no interest in complicating matters by working with terrorists ... Right now they can survive. If they were suddenly linked to terrorists, they would face a lot more international heat.”
Their isolation is an advantage in other ways, too. Attempts to trace financial flows and ransom payments are thwarted by pirates’ use of long-established tribal money- moving networks that avoid electronic transactions.
Against such an array of advantages, no one pretends the Somali piracy problem is going to be solved soon. It is something the shipping industry realises as it takes the short-term approach of pay-offs instead of holding out for a longer-term fix.
Even if current negotiations go well, China is enmeshed in a problem that poses new challenges, amid both international scrutiny and domestic pressure.
“China’s military is facing an unprecedented situation here,” said Gary Li, a researcher on the PLA at London’s International Institute of Strategic Studies. “So many of the challenges we know that they are going to have to face in the future are present ... whether it is questions over command-and-control issues and intelligence gathering to how it will handle domestic pressure demanding the use of force. It is going to be fascinating to watch this play out.”
One thing already clear is that Beijing does not want to sit on the sidelines and leave leadership to traditional naval powers such as the US and European Union, which both lead flotillas off Somalia.
On Friday next week, China will host a hastily arranged meeting with other states involved in the anti-piracy armada. It is expected to seek far greater levels of intelligence sharing and co-operation between forces.
“Now it is involved, China doesn’t want to hang around,” one Asian diplomat said. “It wants results and is prepared to risk showing leadership to try to get them.”
3 comments:
Pirates turn ancient trade into model modern business
Greg Torode Chief Asia correspondent
28 October 2009
When Zhang Zuyue, chief of the Chinese Shipowners’ Association, describes the pirates plaguing the Somali coast as “a beaming new star” in the ancient trade of piracy, he is not exaggerating.
As shipping firms across the region know to their cost, the pirates are proving to be a menace as cunning as they are successful.
Some 40 countries, including China, have sent warships to an international armada patrolling vital sea lanes around the Horn of Africa and into the Gulf of Aden - waters that link Asia to Europe and carry much of the oil used by China and Japan.
Yet the anti-piracy patrols have failed to stem the tide of attacks. International Maritime Bureau figures show pirate incidents have risen steadily from 35 in 2007 and 111 in 2008 to 178 so far this year.
And the attack on the De Xin Hai last week shows just how emboldened and sophisticated the pirates have become. Carrying 76,000 tonnes of coal from South Africa to India, the bulk carrier was attacked as it passed 550 nautical miles northeast of the Seychelles - far from the area covered by the international armada and a sign that pirates are extending their reach by using so-called “mother ships” as staging posts for attacks.
The location meant the De Xin Hai, commanded by a captain of more than 30 years’ experience, had yet to cross to the 60th meridian - the point at which ships are advised to take anti-piracy measures, such as posting extra lookouts and preparing fire hoses. Fully loaded and riding low in the water, it was a soft target.
The pirates shut communications and steered the ship to the ancient fishing port of Hobyo, one of three strongholds on Somalia’s east coast.
In Hobyo, the pirates typically rest easy. Hostage crews are kept under armed guard, fed relatively well and have access to basic medical attention if needed. On occasion, caterers have even been arranged to provide Western or Asian food - a luxury in a country with one of the most malnourished populations in all of Africa.
“For the pirates, it’s all about the hostages,” said Roger Middleton, a specialist in Somali piracy at Chatham House, an independent London-based think tank. “They are the ultimate bargaining chip. It’s not about the ships and the cargo ... they know that owners and insurers will pay to keep crews safe.”
The pirates certainly act as if they know time is on their side. The De Xin Hai joined six other vessels in detention; one, a Taiwanese fishing boat, has been kept since April. Previous negotiations over six China-linked vessels - including a Hong Kong- registered freighter - seized last year lasted as long as three months.
It could be argued that on many levels, the pirates have created a compelling business model.
They have found a niche that is durable - the Horn of Africa leads to the Red Sea and Suez Canal and draws 20,000 ships annually. While a small number have started to head around the Cape of Good Hope at the southern tip of the continent to avoid trouble, it is hardly expected to become a key route, given the extra costs and time involved in an industry notorious for its tight margins.
They also have some intriguing comparative advantages. A failed state, Somalia has essentially been in a perpetual state of anarchy after years of civil war eroded any hope of effective central government. A so-called transitional federal government is in place yet no one is pretending it is in control. Warlords, gangs and various tribal leaders represent constantly shifting authority in the political and administrative vacuum.
That means the pirates can largely operate in a sub-legal twilight world, untroubled by law enforcement as long as they stick to Somalia. Some captured during naval operations at sea have been sent to Kenya, the Seychelles and even the US for trial, but most remain at large.
As one naval attache described it, they live in coastal areas unstable enough to keep people away yet safe enough to enjoy their ill-gotten gains in relative comfort.
Once fly-blown fishing villages have sprouted large white villas, SUVs and satellite dishes - all signs of the pirates’ wealth. Any youngster growing up has two options - the poverty-stricken life of a Somali coastal fisherman or that of a pirate.
Middleton estimates that pirate groups snared US$80 million in ransoms last year and have almost certainly topped that figure this year.
As Rand Corporation piracy expert Peter Chalk told the Los Angeles Times: “The risks of being caught are very low (and even lower in terms of being successfully prosecuted) while the potential rewards are enormous - at least in a Somali context.”
The revenues also provide tools of the trade - state-of-the-art global positioning systems, radars and, of course, the automatic weapons and rocket-propelled grenades that would make any attempt to storm a pirate stronghold risky, particularly if the intent was to save hostages.
The success of the enterprise is so great that even the cunning ideological recruiters of al-Qaeda, active elsewhere across the Somali political vacuum, have made no headway into the pirate strongholds.
“We went looking long and hard to see if there was any relationship between the pirates and al-Qaeda,” said one Western diplomat involved in security issues.
“It seemed a natural fit, and a possible source of funds. But there is nothing, nothing at all. We get the strong sense that the business is so lucrative, and the pirates [are so] happy with their profits, that they have no interest in complicating matters by working with terrorists ... Right now they can survive. If they were suddenly linked to terrorists, they would face a lot more international heat.”
Their isolation is an advantage in other ways, too. Attempts to trace financial flows and ransom payments are thwarted by pirates’ use of long-established tribal money- moving networks that avoid electronic transactions.
Against such an array of advantages, no one pretends the Somali piracy problem is going to be solved soon. It is something the shipping industry realises as it takes the short-term approach of pay-offs instead of holding out for a longer-term fix.
Even if current negotiations go well, China is enmeshed in a problem that poses new challenges, amid both international scrutiny and domestic pressure.
“China’s military is facing an unprecedented situation here,” said Gary Li, a researcher on the PLA at London’s International Institute of Strategic Studies. “So many of the challenges we know that they are going to have to face in the future are present ... whether it is questions over command-and-control issues and intelligence gathering to how it will handle domestic pressure demanding the use of force. It is going to be fascinating to watch this play out.”
One thing already clear is that Beijing does not want to sit on the sidelines and leave leadership to traditional naval powers such as the US and European Union, which both lead flotillas off Somalia.
On Friday next week, China will host a hastily arranged meeting with other states involved in the anti-piracy armada. It is expected to seek far greater levels of intelligence sharing and co-operation between forces.
“Now it is involved, China doesn’t want to hang around,” one Asian diplomat said. “It wants results and is prepared to risk showing leadership to try to get them.”
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