11th Aug 2020

'Whatever we do the pirates have adapted'

  • Atalanta at work. European states prosecuted 21 pirates last year at a cost of over €3.5 million (Photo: consilium.europa.eu)

On his first day captaining a new ship, Peter Newton was subject to an attack by pirates. Newton believes he only survived the attack in the South China Sea because he had not yet got around to installing an alarm on the safe in his cabin.

"[The pirate] put me on my hands and knees and said 'if the alarm sounds, you will die instantly.' And I believed him," said the now-retired British captain.

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In the event, the pirates, armed with knives and swords, made off with about €25,000 and Newton went on to sail another 18 years at sea.

But although he describes his experience as "quite terrifying", Newton says the scale and type of piracy today, particularly in the Gulf of Aden and Arabian Sea where Somali pirates typically operate, is of a completely different order.

"The nature of piracy has changed. It has now become big business for pirates. And it's absolutely risk-free for them."

Neil Smith, an analyst from Lloyds agrees: "The thing that has changed with the Gulf of Aden is that the pirates recognize that there is a value for the vessels and the cargo but their main hook is holding onto the crew for ransom."

According to the International Maritime Bureau, pirates operating off the failed north east African state are currently holding 23 vessels and have 439 hostages. The average ransom paid to them in 2005 was €100,000. This soared to €3.7 million last year.

The violence has increased too. Seven people have died this year and over 60 since 2007 in this area lone. Many more seafarers have been held hostage for long periods of time and there have been increasing accounts of torture.

EU response

Things came to a head in 2008, prompting EU and global action. The following year the EU's Atalanta naval operation started to police the waters. Nato-led and international operations are also in place.

While these are acknowledged to have helped, those involved in the maritime industry say it has simply meant the pirates have moved their operations as far as the Indian Ocean, a vast area of water.

"When the high risk area was created in the Gulf of Aden and ships started following the set routes and naval ships were there to protect vessels, the pirates then moved from the Gulf of Aden to the North Arabian Sea, where it has now spread. Whatever we do the pirates have adapted," said Giles Heimann from Imec, representing ship-owners.

The situation is further complicated by the fact that there is reluctance to deal with the pirates that have been caught. Third countries don't want to take them. And when they do the prosecution process is lengthy – it is difficult to legally prove that an act of piracy is intended - and expensive. European states prosecuted 21 pirates last year at a cost of over €3.5 million.

Instead, what increasingly happens is that pirates are caught and brought back to Somali waters where they are released.

High stakes

From an economic point of view, the stakes are high. Some 80 percent of the world's trade is by sea. And, crucially, almost half of sea-borne oil goes through these pirate-filled waters

"It costs ship-owners to harden ships, to pay bonuses for those travelling through the area, in insurance premiums. This ultimately means more expensive goods," said Heimann.

Piracy is estimated to cost the global economy around €5 billion to €8 billion annually, according to Oceans Beyond Piracy, a US-based thinktank. It bases its figures on ransoms, insurance premiums, losses to local economies, security and navy patrols.

Danish shipping company Maersk one of the biggest in the world believes its piracy minimisation costs for this year will run to about €138 million.

Henrik Ehlers Kragh, anti-piracy co-ordinator, says a "number" of the company's ships have been attacked but "all [its] container vessels transiting the Gulf of Aden or the Indian Ocean are affected by piracy."

Psychological stress

The situation has got to a stage where seafarers are openly talking about boycotting the routes.

They speak about the stress of worrying that they might be the next ones to be attacked. There is also the extra workload expected to increase a ship's security, including rigging it with barbed wire, monitoring CCTV, closing all the hatches. And this as ships get larger and crews smaller.

"A massive tanker can have an average crew of 22 to 24. At any one time, about half of them will be off duty. So literally these huge ships are sailing around with just one person on the bridge most of the time," said Andrew Lingington from Nautilaus, representing seafarers.

He added that the official statistics only tell half the story: "Often companies discourage reporting of attacks because sometimes it can lead to complications with the insurance company or delays."

Covered by insurance… for how long?

The insurance industry is also closely following the situation. So far, according to Lloyds' Smith, given the number of ships that go through the area around the Horn of Africa and the number of attacks, it is considered an "insurable risk".

But insurance companies, whose marine policies have always covered piracy, never expected to be paying for ransoms.

They are liable under a clause called 'General Average'. This allows for a ship-owner to claim expenses for actions taken to ensure that a ship reaches its final destination safely, such as throwing cargo overboard to make the vessel lighter.

"The ship-owner is generally involved in upfront negotiations for release of the crew. Once that happens, and the ransom is agreed, because of the nature of General Average, the insurers are duty bound to follow that up by reimbursing the ship-owner," said Smith.

He added that the General Average is an "ancient concept that gets changed very infrequently. So for the industry we have a longterm issue that will need to be thought about and resolved."

Tipping point

But with increasing talk of the situation having reached a tipping point, all are agreed on one thing. The problem has to be solved by doing more on land.

Somalia is one of the poorest countries in the world and has been scarred by civil wars and insurgencies ever since the overthrow of President Mohamed Siad Barre in 1991. The apparently high rewards of piracy can seem an attractive way out.

The EU's response to the piracy problem has been diffuse. The Atalanta naval mission is considered successful as far as it goes but it is not tackling the root of the problem. It provides humanitarian aid to Somalia and is training Somali security forces.

But it is less active about tackling reports of over-fishing by European ships flying flags of convenience. NGOs also point to the dumping of toxic waste in Somali waters by European companies as contributing to the piracy problem.

Siim Kallas, EU commissioner in charge of marine policy, acknowledges that "root causes" need to be fixed first.

But some reckon more action will only be taken when piracy really starts to hurt economically.

"With the world's supply of oil coming from the gulf we have got to keep the waters open and clear. The amount of money it will cost governments to keep these waters open is going to go up and up," said Heimann.

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