Economic Cost of Somali Piracy

Oceans Beyond Piracy a project of the One Earth Future Foundation, has released its third annual report on the economic costs of Somali Piracy.

For the majority of the last decade, "young Somalis in sometimes tiny boats have wreaked havoc among Indian Ocean shipping, seizing vessels and sailing them to pirate havens where they remain until millions are paid in ransoms."

These ransoms are part of the burden the international community faces when confronting the piracy crisis, and the report finds that maritime piracy has "cost the global economy between $5.7 and $6.1 billion in 2012." The costs have fallen by approximately $850 million from 2011, due to "the continuation of consistent policies to successfully repress piracy at sea." These policies include the stable naval presence provided by coalition forces as well as the increased presence of armed guards. However, "combined with the significant drop of reported piracy attacks in 2012, [this] means that 'per incident' cost to the international community has risen dramatically."

Nine cost categories are examined in the report, including:

• Ransoms and Recovery
• Military Operations
• Security equipment and guards
• Re-routing
• Increased speed
• Labor
• Prosecutions and imprisonment
• Insurance
• Counter-piracy organizations

In the words of Marcel Arenault, the founder of the One Earth Future Foundation: "Let’s not kid ourselves: suppressing piracy and solving piracy are very different things. In the end, piracy can only effectively be solved on shore. It is time for our efforts to move on ground in Somalia, providing hope in Somalia by providing opportunity. [...] It is not just piracy which hangs in the balance, but Somalia and part of humanity along with it."

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