by D.H. | NAIROBI
FOR all the attention Somali piracy has attracted, not least from the armada of warships keeping watch over the Indian Ocean and the Gulf of Aden, the total cost to the world economy appears to have been underestimated. Shipowners, insurers and a handful of middlemen reckoned it was draining an estimated $53m a year in ransom payments. Similarly, governments in the region noticed they were losing millions more by getting fewer tourists and catching less fish. A report published earlier this year by Oceans Beyond Piracy, an American non-profit organisation, estimated the total cost to have been around $6 billion in 2012. But the World Bank has now put an annual price on piracy, during its surge between 2005 and 2011, of $18 billion. That is equivalent to the Somali buccaneers imposing a tax of just over 1% on all the ships passing through the waters they prowled.
Hence the economic sense in fixing the problem. The crisis is not as acute as it was. The number of attacks on ships peaked in 2011 at 243. That was down to 63 attacks and 15 highjackings as of September last year. Merchant ships have got better at fending off the pirates, while foreign navies have been more assiduous. But the piracy has not gone away. The report contends that the focus has been too much on the pirates and too little on its supporters ashore.
While the pirates make $10,000 per hijacking, as much as 86% of the ransom cash goes to their landlubber colleagues, reckon the report’s authors. That money is spent on the suppliers of food and water for the 3,741 crew members who are known to have been held captive since 2005, and on their overseers who also need a leafy narcotic known as qat, a Somali staple. These are the foot soldiers, farmers and local clan leaders who also need to be steered away from piracy—not to mention the kingpins who launder the ransom cash through such places as Dubai.
This in turn means restoring a measure of proper government to a state that has been without it since 1991. The new president, Hassan Sheikh Mohamud, a former civil-rights man selected by Somali members of parliament last year, has been trying manfully. But he faces what a sympathetic Western diplomat calls “the toughest job in the entire world”.
Militants of the extreme Islamist Shabab group are in retreat and much of the country is more peaceful than it was. The capital, Mogadishu, is under the president’s nominal authority and even hosted its first international music festival in a quarter of a century earlier this month. But relations are sour with the northern breakaway statelet, Somaliland, and with semi-autonomous Puntland, in the north-east. Ethiopia controls chunks of western Somalia, while Kenya dominates the southern port-city of Kismayo. Mr Sheikh still lacks authority over most of the country.
He also has scant control over his armed forces and few sources of revenue. Somalia cannot borrow from international institutions because it defaulted on foreign debt during its civil war in the 1990s. But the World Bank’s renewed interest in Somalia may presage a first step towards debt relief. Mr Hassan needs his foreign friends more than ever.
Via: http://www.economist.com/
