Recent reports of a ship being hijacked in the Baltic Sea briefly drew attention from the real piracy hotspot—Somalia. But the problem there hasn’t gone away.

Piracy attacks around the world more than doubled to 240 from 114 during the first six months of this year compared with the same period in 2008, according to the ICC International Maritime Bureau’s Piracy Reporting Centre. 

The rise in overall numbers was due almost entirely to increased Somali pirate activity in the Gulf of Aden and off the east coast of Somalia, with 86 and 44 incidents reported respectively, the report said.

The year’s second quarter saw 136 reports of piracy compared with 104 in the first three months of 2009, an increase of almost a third.

A total of 78 vessels were boarded worldwide, 75 vessels fired upon and 31 vessels hijacked with some 561 crew taken hostage, 19 injured, seven kidnapped, six killed and eight missing. 

The attackers were heavily armed with guns and knives in the majority of incidents. “Violence against crew members continues to increase,” the report concluded.

Patrolling the Gulf

The presence of navies from several countries patrolling the Gulf of Aden has made it more difficult for Somali pirates to hijack vessels leading them to seek new areas of operation such as the southern Red Sea and the east coast of Oman.

The IMB report said that attacks off the eastern coast of Somalia had decreased in recent months after peaking in March and April, with no attacks reported in June. 

But the Piracy Reporting Centre attributed the decline to heavy weather associated with the monsoons that continue into August. 

Roger Middleton, consultant researcher (Africa programme) at the Royal Institute of International Affairs at Chatham House agrees that pirate activity has been temporarily interrupted by bad weather. 

“Their success rate has also been cut by merchant ships taking measures to protect themselves and by altering their routes,” he says. “Advice from Navies and trade organizations is beginning to get through to owners and operators in terms of risk management.”

Curbing piracy

The EU’s NAVFOR task force is helping to curb piracy, according to Clive Stoddart, executive director of Aon’s kidnap & ransom team, but with limited success. 

“Pirates have responded by picking their targets more carefully and/or abandoning their efforts when the navy appears,” he says. “But this is a vast area of sea and evidently very difficult to police effectively.”

Most experts agree that the only sustainable long term solution to piracy in the region is a fully functioning government in Somalia. 

“That government needs to be well resourced and respected if it is to be effective at prosecuting and incarcerating pirates,” Roger Middleton believes. “It must also be more effective at providing alternative economic incentives to piracy.”

Governmental limitation

The political situation is complicated because Somalia’s Transitional Federal Government in Mogadishu doesn’t control Puntland, the part of Somalia which is the focus of pirate activity. 

The northern provinces of Puntland and Somaliland have their own governments, neither of which is recognized by other countries, although there is some international engagement with both on a non-official level. 

Middleton thinks that more international effort should be focused on Puntland, aimed at supporting law enforcement in the area. 

“After all, the Puntland administration is in control of more of Somalia than the TFG,” he points out. “That said, some progress is being made to address practical concerns to do with the arrest, detention and prosecution of pirates within international law.”

Resumption of pirate activity

The anticipated resumption of pirate activity will concentrate shipowners minds on their insurance arrangements, according to Aon’s Stoddart. 

“The marine market continues to cover traditional marine risks and is now charging for the increased war exposure in the region,” he says. 

But the scale of the piracy problem is testing traditional market practices, especially the so called ‘general average’ process, whereby a shipowner whose vessel has been hijacked seeks compensation from different parties, including insurers. 

A shipowner and a Chinese cargo shipper are currently in dispute over how a $1.8m ransom and substantial related costs should be repaid.

“Even though forms of piracy have been in existence for ever, the cost and complexity of the negotiation and delivery of ransoms to Somalia is new to the traditional marine insurance market,” Stoddart says.

“The Lloyd’s kidnap & ransom market is responding to the situation by offering cover and access to advice not offered by the marine market. This has already helped to avoid waiting for the outcome of general average which can be costly in terms of both time and money.”

Last updated on 20 Aug 2009

Source: Lloyd's, August 20, 2009

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