Thursday, May 19, 2011

Economics of Somali piracy

Jan. 5, 2011. USS Momsen, which supports counter-piracy operations in the Somali Basin and the Gulf of Aden, approaches fishing vessel with medical emergency. Image: U.S. Navy.

This seems to be the season for reports on Somali piracy.

The latest contribution is a May 2011 analysis titled “The Economics of Piracy: Pirate Ransoms and Livelihood off the Coast of Somalia” (PDF) by Geopolicity, a private company that specializes in economic intelligence.

The report concludes that the cost of piracy to the international community in 2010 was between $4.9 and $8.3 billion and is likely to increase to more than $13-15 billion by 2015.

Most of this cost is due to piracy linked to Somalia. Total income to pirates and from piracy off the coast of Somalia in 2010 was between $75 and $238 million.

The cost to international shipping, which includes items such as increased insurance premiums, is much higher than what the pirates actually make.

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