Date: Wed, 16 Apr 2014 23:34:55 +0200
Explaining the Economic Geography of Somali Piracy
16 April 2014
Why have some parts of the Somali coastline become havens for
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while other areas want nothing to do with it? For Anja Shortland, the
evidence is clear - a lack of infrastructure and economic development can
make piracy more profitable than 'legitimate' forms of trade.
By Anja Shortland for ISN
High seas piracy and kidnap and theft from ships in territorial waters have
occurred with varying intensity all over the world. Piracy responds to
economic opportunity in the form of slow-moving, unguarded, high-value
ships, crew and cargo. It often occurs at choke-points and crowded
anchorages in poor countries with weak governance, particularly at times of
economic stress. Piracy has been tackled successfully where littoral states
(or the international community) have prioritized counter-piracy at sea or
cut off pirates' access to land-based infrastructure, which is necessary to
turn pirate loot into cash.
Nevertheless, many areas which fit the stylized facts about piracy do not in
fact produce pirates - even when no state resources are mobilized to prevent
it. This begs the question: what factors determine whether pirates are an
accepted part of the local economy? Piracy is most profitable where pirates
can take a ship to port, unload cargo for sale and acquire new papers for
selling the ship. Hijack-for-ransom requires long-term protection
arrangements as well as food, water and fuel while the ransom is negotiated.
Kidnapping of sailors requires safe houses for the hostages.
Criminologists have established that criminal markets experience a clear
separation of labor. The criminal underworld is governed by specialized
providers of private security. These can be mafias, prison gangs, corrupt
officials or informal and traditional governance providers in failed states.
Criminals use these "protectors" to ensure that their loot is not stolen by
other criminals, that contracts between criminals are enforceable and that
disputes within or between gangs can be resolved without violence. Criminals
pay well for these essential services and protectors can govern (and tax)
all manner of business within their territories. If a protector is effective
and fair, even licit businesses may come to rely on informal governance,
especially if the state is weak or perceived to be corrupt.
The protector therefore does not usually engage in crime - his business is
protection. As in any business, the protector is interested in maximizing
profit as well as the longevity of his enterprise. Protection is a
contestable monopoly: only one protector can operate in a specific
territory, but territories can change hands - usually in costly gang wars.
This means that a protector cares about his standing in the community as
well as his profits, leading some mafias to avoid protection of drug dealers
or prostitution in their territory.
Kismayo vs. Gharadhere
This leads us back to the issue of piracy: where will a pirate find a
protector for his loot? Who will arrange a berth in the port, provide
documents for illicit cargo and ensure that the pirate sees a profit from
the sale? Will hostages be fed and safe while the ransom is negotiated? In
the Somali case - who will guarantee that the original pirates and their
financial backers still have a claim on revenues two years into ransom
negotiations? If no protection can be obtained, there is no point in
investing in and risking piracy in the first place.
Somali piracy is particularly useful for shedding light on the role of
protectors' decisions in making piracy possible. Pirates found protection in
only a very small number of locations on the Somali coast - even though,
geographically, a much larger number were suitable. This is because the
protection of piracy is fundamentally incompatible with trade protection. No
pirates were ever tolerated in or near the harbors connecting the Horn of
Africa to the greater Indian Ocean economy. Somalia is a
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for livestock from and (untaxed) consumer goods to Kenya and Ethiopia,
generating revenues far in excess of the livestock and charcoal trade from
Somalia itself.
For example, Kismayo, which was under stable Islamist rule for many years,
never tolerated piracy. In 2006 the
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Courts even conducted punitive raids on the pirate heartlands at Hobyo when
pirates interfered with the regional dhow trade. The local protectors in
these communities simply made the calculation that the cash flow from
protecting trade would exceed (and be more stable than) that from piracy. At
the same time, a strong stance against piracy - which is forbidden under
sharia law - enhanced their standing in the local community.
The choices made in Kismayo can be contrasted with those made by Islamist
administrations at Gharadhere, a remote settlement in central Somalia and
one of the busiest pirate anchorages from 2009 to 2011. Gharadhere was taken
over by Islamist militias in 2010, but the local Al Shabaab representative
left the community free to continue the piracy business in exchange for a
"development fee" charged on pirate ransoms. Farther up the coast, pirate
bosses grudgingly paid a "non-interference" fee to avoid a damaging dispute
over protection with Al Shabaab.
This difference can largely be explained by the economic viability of trade
vs. piracy protection in the two places. Unlike Kismayo, the harsh and arid
climate of the Puntland and Galmudug coasts restricts the local economy to
subsistence fishing and herding. The area is also cut off from regional
trade flows by a complete lack of road infrastructure. Trade protection,
therefore, was simply not an option in Gharadhere. This led local clans to
allow piracy in order to generate employment and to share in the profits.
Tellingly, when the president of Puntland was asked to tackle piracy in his
home town of Eyl, the one thing he repeatedly asked for was a road
connecting the town to the capital, which would have transformed its
economic prospects.
Combating piracy
What does this mean for combating piracy? While it is possible to tackle
piracy at sea - as the massive
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military and private security in the Indian Ocean demonstrates - it remains
unclear whether that approach is cost effective or applicable elsewhere.
Another option is to tackle piracy through better governance and law and
order. Piracy in the Malacca Straits, for example, largely stopped when
Indonesia eliminated pirate havens by regaining control of Aceh province,
clamping down on corruption and paying its harbor masters and coast-guards a
living wage. But this approach is not possible in places where the
government simply does not project power and is unlikely to be able to do so
in the foreseeable future - such as the Niger Delta and much of the Somali
coast.
Here, alternative economic opportunities must be provided to key
stake-holders in local communities in order to encourage them to undertake
counter-piracy efforts. This bargain need not be explicit: if local
communities gain more from
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from piracy, they will switch voluntarily. The road to Eyl and the
participation of local communities in the Niger delta's oil revenues can
turn the protectors of pirates into coast guards - and without the need for
any further input or enforcement from the international community.
Piracy is unique among
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because it is incompatible with trade. Although this uniqueness recommends a
developmental approach to counter-piracy, it also implies that such an
approach cannot be expected to eliminate drug trafficking, gun running,
unlicensed fishing, people-smuggling and other varieties of maritime crime.
In fact, because these crimes can occur alongside regular trade, the
development of trade infrastructure to combat piracy could actually
facilitate them. Revenue sharing and the economic integration of backward
and remote areas will promote state-building in the long run, but there is
no "developmental" alternative to good governance and law and order for
dealing with maritime crime more broadly.
Further reading
Anja Shortland & Federico Varese, 2012. "
<http://ideas.repec.org/p/diw/diweos/diweos75.html> The Business of Pirate
Protection," Economics of Security Working Paper Series 75, DIW Berlin,
German Institute for Economic Research
Shortland, Anja & Vothknecht,
<http://www.isn.ethz.ch/Digital-Library/Articles/Detail/?lng=en&id=178715>
Marchttp://cdncache1-a.akamaihd.net/items/it/img/arrow-10x10.png, 2011. "
<http://ideas.repec.org/a/eee/poleco/v27y2011is1ps133-s151.html> Combating
"maritime terrorism" off the coast of Somalia," European Journal of
Political Economy, Elsevier, vol. 27(S1), pages S133-S151.
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Dr. Anja Shortland is a Reader in Political Economy at Kings College London.
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