Strategy Page Looks At Somalia And The Pirates That It Breeds

The dock landing ship Carter Hall fired warning shots June 5 on a cargo ship seized by pirates and also on small pirate boats, the Navy said, as a rash of lawlessness flared up on the Horn of Africa. The ship is shown here during vertical replenishment operations in 2006. (Photo from Navy Times)

France And Russia Want To Play Rough -- Strategy Page

October 8, 2008: The piracy in the Gulf of Aden is basically an opportunity for the Somali pirates to extort money from the maritime insurance companies. Since most of the ships moving through the Gulf of Aden are going to, or coming from, the Suez canal, where it costs, on average, about a quarter of a million dollars to pass through, pirate ransoms are seen as a minor additional cost. Last year, the canal took in $4.6 billion, charging large merchant ships several hundred thousand dollars each to make the 12-16 hour transit. The canal fees are worth it, as this shortcut sharply cuts the cost of getting goods from Europe to Asia. About seven percent of all world trade goes through the Suez Canal. Pirates are demanding a million dollars or more per ship from the owners. This has pushed up insurance rates to over $10,000 per ship moving through the Gulf of Aden (going to or coming from the Suez canal). The ship owners just consider that a cost of doing business (like increased fuel costs or the annual bump to Suez Canal transit fees.) The ship owners are keen to avoid crew casualties for the crews, as this will hurt morale, and cause merchant ship crews to demand "danger bonuses" for steaming through the Gulf of Aden. Dead crewmen also means bad publicity, which insurance companies do not like (as they get so much of it already).

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