Globalization of Maritime Piracy
How globalization exacerbates the threat of piracy
A resurgence of maritime piracy over the past decade has become a significant international security threat that has created economic ramifications for global trade. The rise of globalization has exacerbated the turn to piracy as a form of income and status by widening social divides among coastal communities and augmenting their grievances. In particular, piracy in the waters off the Horn of Africa and the Straits of Malacca provides a valuable look at the effects of economic globalization on political conflict. These examples also shed light on the economic dynamics that shape international actions to stop such illicit activities.
This paper will first discuss how globalization impacted the rise of modern piracy. It will then outline how piracy is affecting economic globalization efforts through a discussion of the primary drivers of piracy in Somalia, and how these drivers relate to economic globalization, namely in the areas of state failure, technological advance, and the United Nations Convention on the Law of the Sea (UNCLOS). Lastly, it will examine the effects of piracy on globalization, and discuss how the fight against piracy is fostering international coordination.
The Rise of Modern Piracy
During the early 2000s, piracy concerns were concentrated along the Straits of Malacca in South East Asia. Since 2005, global piracy has risen exponentially as a result of the activities of Somali and Yemeni pirates off the Horn of Africa, specifically along the Gulf of Aden, which flows into the Indian Ocean. Since the beginning of 2010, piracy in the Gulf of Guinea has also significantly increased, generating concerns of piracy risks on both shores of Africa. Pirate attacks in West Africa now span the coastline from Angola to Nigeria, as well as Togo, Benin, and Ghana.
According to the International Maritime Bureau (IMB) Piracy Reporting Centre, piracy reached a contemporary peak in 2009, with a reported 406 incidents of piracy against ships. In that year alone, 153 vessels were boarded, 49 were hijacked, and 120 were fired upon, as compared to 2008 when only 46 vessels were fired upon. During the 2009 attacks, 867 hostages were taken by Somali pirates. By the end of the year, 263 hostages were still being held for ransom. Since then, the number of pirate attacks has remained at a record high, ranging between 100-300 attacks per year. For example, in the first week of 2014, there were pirate attacks in both the waters of Gabon and Equatorial Guinea, including the piracy of the MT Kerala, a 75,000-ton tanker containing 12,270 tons of diesel cargo. This attack also marked the southernmost expansion by pirates in the Gulf of Guinea. Increased access to weaponry, speedboats, and larger vessels has allowed pirates to expand the range at which they can operate. In 2005, the furthest attack from the Somali shoreline was just 165 nautical miles away as compared to 2011, when the furthest attack was 1,300 nautical miles away. This expansion has allowed pirates to conduct attacks in new areas, including the Red Sea, the coast of Oman, the Mozambique Channel, and deeper into the Indian Ocean, which has significantly increased the ‘risk zone’ for ships. According to Jack Lang, counter-piracy advisor to the UN, such an increase in the capabilities and expanded range of pirates means they are increasingly “becoming the masters of the Indian Ocean.”
This paper argues that globalization aided the rise of modern piracy by contributing to state failure and generating foreign exploitation through increases in shipping trade, subsequent devastation of the Somali fishing industry, and establishment of the United Nations Convention on the Law of the Sea (UNCLOS). Modern piracy emerged not as spontaneous bandit activity, but because of efforts by desperate fishermen to protect waters from being exploited by foreign vessels. Thus, what began as a group’s attempt to protect their own livelihood quickly transformed into an organized enterprise with large financial incentives.
Globalization and State Failure
While globalization has been beneficial for global economic competitiveness, it has had significant implications on the developing world. Scholar Conteh-Morgan discusses the “inclusion-exclusion paradox of globalization,” which describes how developing states “experience state weakness, failure, and even collapse” as a result of the practice, and are therefore unable to extract substantial, if any, benefits from a globalized world. Also, because developing states are increasingly viewed as critical economic players due to their abundance of natural resources and their strategic geographic location, they fall prey to international actors who wish to profit from them. This exploitation has caused states with weak infrastructures to lose overall control of their economies, which has resulted in a further erosion of their politico-economic structure and governance. Such is the case of Somalia.
Somalia provides a detailed example of a developing state caught in the “inclusion-exclusion paradox of globalization.” During the Cold War, the United States and the Soviet Union used foreign aid and Foreign Direct Investment (FDI) to prop up the Somali government and the country’s military dictator, Siad Barre, due to its strategic geographic position on the Gulf of Aden. The strategic interests of these superpowers made Somali an important ‘Cold War battleground.’ As the war came to an end, Somali’s strategic importance diminished, leading to a rapid withdraw of foreign aid from Somalia; in the end, the “superpower rivalry (that bolstered Somali’s foreign aid) [had] been replaced by international indifference”. This dramatic diversion of FDI from Somalia demonstrates how great power politics used Somalia (and the Horn of Africa) as a small arena to leverage power for global conflict, only to eventually strip them of the financial and economic support to which they had become accustomed. This left Somalia’s political and economic infrastructure weaker than it had been prior to the Cold War, and thus increased its vulnerability to piracy.
Somalia’s state failure created severe economic deprivation, but its surrounding waters remained resource-rich and became heavily-trafficked at an increasing rate. If state failure created the space for the emergence of vigilantism and piracy, the characteristics of Somali waters provided avenues for increased globalization pressures that ultimately provoked the piracy response.
Globalization and Maritime Traffic
In addition to its contributions to state failure, globalization has reduced trade barriers and lowered transportation costs, resulting in heightened commercial maritime traffic, and the number of ships at risk to piracy. From 1965 to 2004, estimates of total seaborne trade quadrupled to more than 27 thousand billion ton-miles. Today, more than 90 percent of world trade travels by sea, and more than 50,000 merchant ships and 12-15 million containers are on the world’s oceans at any given time. Also, since the invention of the shipping container in 1956, seaborne trade has become the quickest and least expensive form of transportation. The Gulf of Aden and the Suez Canal have been especially impacted, with the number of vessels that traverse these waters increasing by more than 50 percent to nearly 20,000 vessels and 750,000 tons of cargo annually.
Additionally, in 1994, the United Nations Convention on the Law of the Sea (UNCLOS), took effect, defining and discussing the legalities of ocean waters: internal waters, territorial waters, contiguous zones, and the exclusive economic zones. The most significant territorial zone in the resurgence of piracy is the Somali exclusive economic zone (EEZ). The EEZ extends out to 200 nautical miles from the shore baseline and within this zone the coastal state has “sole exploitation rights over all natural resources.” The UNCLOS is important to the rise of modern piracy because it came into effect just three years after the collapse of the Somali government. The newly defined EEZ led to increased competition among fishermen due to limitations on the waters they could fish, and depleted the abundant tuna supply in Somalia’s EEZ.
Not only did the new EEZ boundaries create increased competition among Somalis which led to a sharp decline in the domestic fishing industry, but the reality of the UNCLOS is that its effectiveness is also entirely dependent on the domestic states’ ability to enforce their UNCLOS territorial waters. The collapse of the Somali government allowed foreign ships to begin illegally fishing within the Somali EEZ “due to a non-functioning government and complete lack of naval force, [meaning] that fishing vessels from Europe and Asia were able to deplete the nation’s fisheries, which some Somalis believe to be the reason for poverty and social decay in their coastal towns.”  Since the UNCLOS does not include any detail on the obligation of self-regulation by states if a state is unable to enforce its own territorial waters, the Somali fishermen had to resort to extreme measures to earn an income and protect their natural resources.
A significant increase in traffic through the Gulf coupled with an anarchic state have made the waters off the coast of Somalia an international “free for all,” with fishing fleets from around the world illegally plundering Somali stocks and freezing out the country’s own rudimentarily-equipped fishermen, according to a 2006 United Nations (UN) report. A second UN report estimated that in 2005 approximately 700 unlicensed foreign vessels were fishing in Somali waters. Overall, the UN estimates that approximately US$300 million worth of seafood is stolen from the Somali EEZ each year, although many researchers speculate that the actual value is much higher. Additionally, the Somali fisherman and the UN have recognized that not only have foreign vessels come into Somali waters to fish but have simultaneously bullied native fishermen, destroying their fishing vessels and equipment. According to the UN Food and Agriculture Organization (FAO), foreign vessels often compete with local fishermen by coming into Somalia’s internal waters, territorial waters, and contiguous zone to fish, damaging any ships that attempt to stop them.
In addition to illegal fishing, Somalis, the UN Environmental Program, Greenpeace Italy, Interpol, and a variety of other sources have reported on evidence of foreign ships dumping toxic and nuclear waste into the Somali waters. A UN environmental report cited “uranium radioactive and other hazardous deposits leading to a rash of respiratory ailments and skin diseases breaking out in villages along the Somali coast.” There is a clear economic incentive for companies to illegally dump toxic waste off the Somali coast as it only costs $2.50 to dispose of one ton of waste in the Somali waters, versus $250 to exercise clean disposal.
Due of the absence of any political governance or organization, monitoring and combating offences is nearly impossible especially with allegations that clan leaders and regional elders have accepted bribes from foreign fisherman and shipping companies to gain access to the Somali waters. In an effort to help combat illegal fishing and dumping in Somalia, Somali leaders have submitted numerous complaints with the UN Environmental Program and the Basel Convention. Additionally, UN reporters have repeatedly suggested an embargo on fish taken from Somali waters; however, members of the Security Council have dismissed these suggestions each time. These dismissals by the Security Council have raised questions about their motivations and interests. The Security Council has repeatedly encouraged the use of naval force in the Gulf of Aden but has continually ignored the underlying causes of piracy.
In 2010, the UN appointed Frenchman Jack Lang as Special Adviser on Legal Issues Related to Piracy off the Coast of Somalia. By early 2011, Lang produced a report for the UN requesting an ‘independent committee’ to complete a full-scale investigation on illegal fishing in Somalia and how to better protect Somalia’s coastal resources. As Lang explained in his report, “one of the reasons advanced for the large-scale development of piracy off the coast of Somalia is the need for the Somalia population to protect its territorial waters and marine resources against illegal fishing, [flushing of fuel bunkers] and dumping of toxic waste by foreign vessels.” Lang also clearly laid out the causal relationship between “the spread of piracy and the absence of action to protect the country’s marine resources.” By April of that year, the UN adopted Resolution 1976, which recognized Lang’s report but failed to create an independent investigation committee or to take any action to address his findings. After the UN Secretary General Ban Ki-moon formally addressed this issue to the Security Council through a Report on the Protection of Somali Natural Resources and Waters, the Security Council cited a lack of
“recent and conclusive studies,” requested continued investigation, and ultimately did not include the Secretary General’s report in their resolution due to strong opposition by “powerful Council members.” Eventually, the discussion faded from the UN General Assembly and particularly the Security Council’s concerns, resulting in empty attempts at an investigation and vague recognition of the problem. These issues—illegal fishing and dumping of toxic waste—demonstrate the financial incentives of economic globalization while deserting the moral high ground. This foreign exploitation of Somali waters quickly created legitimate grievances among Somalis depending on the waters as a source of income.
The Piracy Response and the Piracy Industry
Piracy developed as a reaction by local fisherman to the illegal fishing and ruin of the Somali waters. With the downfall of the Somali fishing industry, the already highly impoverished citizens of Somalia began defending their waters by arming themselves and acting as vigilantes in attempts to push illegal vessels out of their EEZ. Initially Somali piracy was small-scale because fisherman did not have access to advanced weaponry and boats, and defense was the primary focus. Pirates aimed not at hijacking ships, but at collecting taxes for illegal fishing, which were usually provided quickly by the shipping companies. However, these ‘tax collections’ paired with a few successful hijackings in the early 2000s allowed Somali pirates to considerably increase their threat through organized networks and improved boats and payments.
Technological advances, including increased access to GPS devices and Internet, has facilitated greater coordination and organization between clans, allowing pirates to increase their likelihood of a successful attack. The proliferation of technology in the past few decades has increased geographic accessibility, and has encouraged fisherman to switch from sparse fishing opportunities and defensive piracy to this rapidly-growing industry of offensive piracy—which is perhaps the only growing industry in the impoverished conflict areas around the Horn of Africa and the Niger Delta. Now many of the pirates are not just fisherman protecting their fish but are the poor with hopes of striking it rich by becoming involved in large-scale hijackings. The sophistication and intensity of piracy over the past five years has Somali experts like Professor Peter Lehr expressing their doubts about the ‘innocence’ of piracy as a response to globalization and poverty: “Nowadays,” Lehr says, “this sort of thing is just a cheap excuse. The legacy of nearly twenty years of inaction and abuse, though, is far more costly.”
Maritime piracy most often takes the form of hijacking freighters in order to force ransom payments or capturing tankers in order to resell and profit from their cargo. Globalization has played a role in propagating and incentivizing both of these methods of piracy. The high volume of commercial shipping traffic through key waterways such as the Gulf of Aden and the Gulf of Guinea provides more targets for prospective hijackers to pick from. Additionally, the high demand for energy resources around the globe has energy-rich but infrastructure-poor nations constantly scrambling to transport their natural resources to markets. Countries such as Nigeria, facing the pressures of an oil-thirsty global economy, must rely on foreign companies to refine their oil before export or resale. The added transport of oil to and from foreign refineries multiplies the number of opportunities for collaborators to inform pirates of ships’ cargo and destinations. This allows pirate crews to pick their targets in advance, easily plan and conduct capture operations, and distribute their captured cargo with little interference on the high seas. Overall, pirates are able to operate in a target-rich environment with reliable intelligence and, until recently, with relative freedom to operate.
These examples demonstrate the various ways globalization played into the emergence of maritime piracy. In the first place, state failure allowed for a power vacuum in Somali waters. Expanding international trade markets provided incentives for exploitation of Somali fisheries by private companies. In addition, the absence of law enforcement in these waters allowed for rapid depletion of fish populations, cheap and punishment-free pollution, and dumping of toxic waste. This overall exploitation of a failed state provided the impetus for initial vigilante actions. However, the high volume of commercial maritime traffic provided an opportunity that was in turn quickly exploited by these armed groups. Thus, globalization played a role both in aligning the conditions for foreign exploitation and in fueling the armed response that followed.
Costs of Piracy
The threat of piracy and the actual act of piracy generates two primary impacts for globalization: increases in costs and increases in risk. Shipping companies endure high costs from the threat of piracy and exorbitant costs if they fall victim to piracy. An average vessel charter costs US$50,000 per day to operate and transport. If shipping vessels redirect their route around the Cape of Good Hope, South Africa, they add an extra week to their trip resulting in approximately US$350,000 in additional costs. However, if they choose to cut through the Suez Canal and the Gulf of Aden and are hijacked, being taken offline for multiple weeks can result in millions of dollars of losses. In addition to the costs of being taken offline, shipping companies often must pay upwards of US$500,000 in negotiations costs to free the ships, and ultimately have to pay between US$1.5 – 9.5 million in ransom costs, ship repairs and damaged cargo. With the increasing popularity and success of piracy in the Gulf of Aden, ransom costs, on average, have increased over the past 10 years and continue to grow.
While shipping companies endure costs from piracy, global consumers of traded goods eventually absorb many of these costs as well. In a 2013, researchers Tim Besley, Thiemo Fetzer, and Hannes Felix Mueller conducted an empirical analysis to determine the macro-level impact of piracy, which they termed a ‘piracy tax.’ They found that piracy caused an eight percent increase in transport cost for each shipping vessel that would eventually be transferred to the consumer.
The risk of piracy causes companies to perform detailed risk analyses and cost-benefit analyses to determine the safest and most economically-sound route for conducting business. The opportunity costs of these analyses and actual risks generate significant profit losses for shipping companies. Based on the annual report, The Economic Cost of Somali Piracy, 2011 by the One Earth Future Foundation, the estimated cost of security equipment and guards as a result of risk assessments was between US$1.064-$1.16 billion annually. The costs created for the shipping industry trickle down throughout the global economy and demonstrates a mutual interest for both actors, pirates and shipping companies, to support economic development and good governance.
Security and International Cooperation
As international trade continues to increase and the world becomes ever more globalized, there are huge incentives to ensure clear shipping lanes. Because of the importance of certain shipping lanes or ‘choke points’ in global trade, the threat of piracy in these choke points becomes a threat for many nations, particularly global economic players. The widespread involvement in the global shipping industry by many international players generates support for international cooperation in the fight against piracy. As noted by Paul Brannigan, “the shipping lanes off the coasts of the Horn of Africa, West Africa and in the Strait of Malacca between Malaysia and Indonesia are the veins and arteries of the globalised [sic] economy, where north and south, east and west, collide.” The ability pirate gangs have to exploit choke points on these arteries creates an insecure environment and contributes to the destabilization of the region and international waters. Over the past two decades, the growth of modern piracy has continued to create ripples throughout the global economy and international security.
Piracy off the Horn of Africa, although prominent, is not the only global piracy threat. Two other primary hubs for piracy are the Gulf of Guinea and the Malacca Strait. The piracy threat in the Gulf of Guinea (including off the coast of Nigeria, which has risen exponentially since 2010) has caught the attention of the international community and has begun to generate a call for international action to protect the transport of energy resources. Nigeria is the world’s fourth-leading exporter of liquefied natural gas, making it a lynchpin in the global gas trade. Due to Nigeria’s geo-strategic role in Africa and in the global economy, the Economic Community of West African States’ created the Multinational Maritime Coordination Centre (MMCC) in March 2015 as part of its Integrated Maritime Strategy primarily to demonstrate the region’s commitment to maritime security to the international community and to combat potential widespread economic impacts. Additionally, in March 2015, the Council of European Union committed to support the Gulf of Guinea Action Plan for 2015-2020, submitted by ECOWAS. The plan was an effort to create cooperation and partnership in the fight against “combating piracy and other maritime crimes, such as armed robbery at sea, illegal fishing, smuggling of migrants, and trafficking of human beings, drugs and weapons.”  The regional and international response to piracy in the Gulf of Guinea has been radically more active and involved than in Somalia due to the comparative size and impact Nigeria has on the regional economy.
However, in order to really grasp how piracy facilitates international cooperation, we must examine the international response to piracy in the Strait of Malacca. Piracy in the Strait has dominated piracy news since the late 1990s and provides us with insights on ways that international cooperation can help eradicate the threat of piracy. The Strait, which runs 550 miles, is traversed by more than 50,000 shipping vessels carrying one-quarter of the world’s traded goods annually. The threat of piracy in the Strait Malacca was so intense that it was impairing global trade. According to one report, throughout 2005 piracy was so rampant in the Strait of Malacca that the world’s largest insurance market, Lloyd’s of London, declared it a ‘war zone.’
Over the past 10 years, piracy in the Strait of Malacca has been drastically reduced through significantly increased warship patrols in the Strait by regional militaries of Singapore, Malaysia and Indonesia. Between 2004 and 2007 several maritime security initiatives were put in place in the Strait including the Regional Cooperation Agreement on Anti-Piracy, which was signed by 14 countries. This level of cooperation has nearly eradicated piracy in the Malacca Strait with only a few cited hijacking attempts in 2008 and the Chief of Malaysian Defence Forces proclaiming the region had achieved a ‘close-to-zero incident level’ by 2010.
Unfortunately, fighting piracy in the Strait has been significantly easier than in the Horn of Africa because regional nations are “financially incentivized to maintain a bandit-free trade route.” Current efforts in Somalia demonstrate the international cooperation in the fight against piracy. Three major coalitions, Task Force 151 (U.S. Central Command), Operation Atlanta (EU Naval Force, Somalia), and Operation Ocean Shield (NATO Allied Maritime Command), have 20 naval ships stationed in the Gulf of Aden and patrolling the Indian Ocean. In addition to the current coalitions, suggested security solutions include dedicating enough fleets of ships to ensure security for vessels passing through the Gulf, arming merchant seaman to increase their self-defense capabilities, and passive self-defense by employing methods to avoid direct conflict with pirates (such as barbed wire, fire hoses to repel pirates, and route diversion).
The rise of modern piracy can teach us several lessons about how globalization impacts political conflict, and how this in turn affects successful globalization. First, this issue shows us that the culmination of several variables, many directly correlated with globalization, can influence a country’s governance and economic success, which can ultimately cause or prevent the emergence of political conflict. Second, placing the enforcement of critical maritime laws in the hands of the domestic states generates many problems if the state lacks the capability and structure to successfully protect its territorial waters. The case of foreign exploitation of Somali waters clearly demonstrates the consequences of maritime space that is ungoverned and lacking law enforcement. The potential of international trade opportunities due to increasing globalization provides strong incentives for opportunistic actors to exploit these areas, as seen in the case of Somalia’s territorial waters. Finally, the growth of piracy demonstrates the need for international maritime law enforcement and the failure of the international community to self-regulate. Coordinated international norms and regulations are needed in order to form a unified and coherent maritime law enforcement regime that can prevent and respond to these types of criminal activity. As a senior editor at TIME magazine so eloquently stated, “the pirates have never been the only ones exploiting the vulnerabilities of this troubled failed state—and are, in part, a product of the rest of the world’s neglect.” These issues further emphasize the overarching problem exposed by contemporary piracy. “This clash between those satisfying their society’s secondary interests and those simply trying to survive by fulfilling their basic needs can polarize an international community whose members pursue self-serving ends through almost any means.” Alleviating this rift will require international cooperation to not only combat the illicit activities of maritime pirates, but also to recognize the role of globalization as a key driver of this state of affairs and to work toward addressing these underlying dynamics.
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