January 3, 2010:
After more than a year of warships patrolling the Somali coast, the piracy problem has not gone away. In some respects, it's gotten worse. In 2008, there were 111 attacks on ships, with 38 percent of them successful. Last year, there were 216 attacks, with 22 percent of them succeeding. In effect, the pirates have more than doubled the number of attacks, to take the 12 percent more ships (42 in 2008, 47 in 2009). The warships are interrupting many attacks, but the nations they are from lack the laws to prosecute pirates, so the pirates are free to go out and try again.
Currently, the pirates are holding a dozen ships (and 260 crew) for ransom. The exact amounts of the ransoms are not usually made public, but it appears that the pirates made over $100 million in each of the past two years. This is big, not as big as the billion dollars a year that expatriate Somalis send home each year, but the ransoms are going to thousands of people, not millions. Moreover, less than half the ransom money gets to the pirates themselves (the guys with the guns and grappling hooks in the speedboats). The rest goes to various middlemen and warlords. Meanwhile, there is still a people smuggling business, that carries people from Somalia to Yemen, and brings the smugglers about two million dollars a year. The trip is becoming more dangerous, because many of the smugglers have gone on to the more lucrative piracy trade. This leaves the smuggling boats in the hands of less experienced people.
The piracy trade is costing ship operators several billion dollars a year in extra expenses. Higher insurance (to pay the ransoms) rates are only part of that. Most of the additional cost is for more fuel (to send ships at high speed through pirate waters), danger pay for crews and additional security measures on ships. Then there's the cost of more than three dozen warships and maritime patrol aircraft operating off the Somali coast.
Then there's the political cost. The nations that own the ships, or supply the sailors, have a PR problem each time one of their ships, or citizens on the crew, is captured. There is a popular outcry for something to be done (to stop the piracy). But the pirates know that, as long as they keep the body count real low (very few crew are killed in the attacks or while in captivity), there will not be huge public backing for attacks on the few coastal towns that serve as bases for the pirates (and anchorages for the captured ships). That would be bloody, and no nation wants to go to war with the Somalis (who fight each other, when there are no foreigners to go after.)