|Source: World Bank|
The study estimates that piracy costs the global economy about $18 billion annually in increased trade costs -- an amount that dwarfs the estimated $53 million annual ransom paid since 2005. Piracy has significantly harmed tourism and exports of fish products from the region.
The fact that pirates can anchor their hijacked vessels along the Somali shoreline reflects their ability to win support from government officials, business people, clan elders, militias, and local communities. The pirate bosses split an estimated 70 to 86 percent of piracy proceeds with these stakeholders, without whose support anchoring hijacked ships would not be possible.
On-shore interventions such as local economic development or law enforcement will help discourage young Somalis from becoming pirates by increasing the attractiveness of alternative jobs or by promising long prison terms in the case of capture. At the same time, pirate bosses may simply offer higher pay to poor, unemployed Somali young men to take the risk of capture or death at sea.