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The Business of Piracy in Somalia

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  • Anja Shortland

Abstract

Piracy off the Horn of Africa has grown substantially in recent years: 217 ships reported being attacked by Somali pirates during 2009. Although less than one percent of ships transiting the Gulf of Aden in 2009 suffered attacks, Somali piracy creates considerable economic costs and distortions. Some ships now routinely avoid the region and the estimated additional costs of specialty marine risk insurance for ships using the Gulf of Aden trade route were estimated to be in the region of US$ 400mn for 2009. International naval forces (including missions from the EU and NATO) are present in the Gulf of Aden to ensure the delivery of food aid to displaced people in Somalia, to protect shipping in the Gulf of Aden and to deter pirates from operating in the region. In our research we show that the naval presence has prevented an explosion of piracy in the Gulf of Aden, but does not appear to have had a significant deterrent effect on pirates. Some ship owners gamble that they will not be attacked and do not co-operate with the navy, thereby providing easy targets for pirates. In the meantime pirates' risk of injury, detention and trial in encounters with the navies remains relatively low. In any case sea-based naval operations will have limited success as long as Somalia remains a failed state. However, we show that partial improvements in local stability and governance are likely to increase pirate attacks. Therefore the most promising solution of the piracy problem would be to establish and fund a Somali coastguard. This would enforce both anti-piracy laws and stop illegal fishing off the coast of Somalia, providing new opportunities for economic for Somalia's coastal communities.

Suggested Citation

  • Anja Shortland, 2010. "The Business of Piracy in Somalia," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 6(23), pages 182-186.
  • Handle: RePEc:diw:diwwrp:wr6-23
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    References listed on IDEAS

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    1. Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2011. "Gov-aargh-nance - "even criminals need law and order"," CEDI Discussion Paper Series 11-01, Centre for Economic Development and Institutions(CEDI), Brunel University.
    2. Shortland, Anja & Vothknecht, Marc, 2011. "Combating “maritime terrorism” off the coast of Somalia," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 133-151.
    3. Anja Shortland, 2010. "The Business of Piracy in Somalia," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 6(23), pages 182-186.
    4. Leeson, Peter T., 2007. "Better off stateless: Somalia before and after government collapse," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 689-710, December.
    5. Anja Shortland, 2011. ""Robin Hook": The Developmental Effects of Somali Piracy," CEDI Discussion Paper Series 11-07, Centre for Economic Development and Institutions(CEDI), Brunel University.
    6. Stig Jarle Hansen & Mark Bradbury, 2007. "Somaliland: A New Democracy in the Horn of Africa?," Review of African Political Economy, Taylor & Francis Journals, vol. 34(113), pages 461-476, September.
    7. Varese, Federico, 2001. "The Russian Mafia: Private Protection in a New Market Economy," OUP Catalogue, Oxford University Press, number 9780198297369.
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    Cited by:

    1. Anja Shortland, 2010. "The Business of Piracy in Somalia," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 6(23), pages 182-186.
    2. Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2011. "Gov-aargh-nance - "even criminals need law and order"," CEDI Discussion Paper Series 11-01, Centre for Economic Development and Institutions(CEDI), Brunel University.
    3. Anja Shortland & Federico Varese, 2012. "The Business of Pirate Protection," Economics of Security Working Paper Series 75, DIW Berlin, German Institute for Economic Research.
    4. Singh Currun & Bedi Arjun Singh, 2013. "Regional Dimensions of Somali Piracy and Militant Islamism: Anthropological and Econometric Evidence," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 369-380, December.
    5. Christian Schubert & Leonhard K. Lades, 2014. "Fighting maritime piracy: three lessons from pompeius magnus," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(5), pages 481-497, October.
    6. Shortland, Anja & Vothknecht, Marc, 2011. "Combating “maritime terrorism” off the coast of Somalia," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 133-151.
    7. Inmaculada Martínez-Zarzoso & Sami Bensassi, 2013. "The Price Of Modern Maritime Piracy," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(5), pages 397-418, October.
    8. Singh, C. & Bedi, A.S., 2012. "‘War on piracy’: the conflation of Somali piracy with terrorism in discourse, tactic and law," ISS Working Papers - General Series 543, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    9. Jablonski, Ryan S. & Oliver, Steven, 2013. "The political economy of plunder: economic opportunity and modern piracy," LSE Research Online Documents on Economics 50451, London School of Economics and Political Science, LSE Library.
    10. Edmund Byrne, 2011. "Business Ethics Should Study Illicit Businesses: To Advance Respect for Human Rights," Journal of Business Ethics, Springer, vol. 103(4), pages 497-509, November.

    More about this item

    Keywords

    Piracy; Underdevelopment; State infrastructure;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories

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