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Maritime Piracy! To pay or not to pay the ransom?

  Maritime piracy has been one of the oldest forms of robbery in the world and has continually been an issue of grave concern in the maritime industry as it adds up more cost to shipping.

piracy, ransom, sirius star
ransom payments for the Saudi oil tanker credits, U.S Navy

 One particular hotspot for this act has been the seas around the “horn of Africa” where Somalia pirates mostly operate. Reports has it that this act initially began when local fishermen took up the initiative to protect their territorial waters from intrusion by foreign  fishing boats and vessels during the political instabilities in the region.The act has now become a major maritime canker as it has metamorphosized into a well networked activity where pirates are now targeting commercial ships like, oil tankers, VLCCs, container ships etc. It has also become very lucrative with pirates making huge millions of dollars in ransom payments. The “international business times” suggested that, the period between 2005 and 2012 recorded 179 ships being hijacked off the coast of Somalia and the Horn of Africa with an  average ransom payment of  $2.7 million, with ordinary pirates receiving $30,000 to $75,000 each and bonuses paid to those who brought their own weapons or were first to board the ship.

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 One critical factor with regards the act and ransom payments is that,  developments that happen before and after the act takes place makes the pirates and their ring leaders already indebted to the course .  This is because boats might have been rented , payments would also be expected to be made to the militia who controls the ports where a pirated vessel would be kept as well as provisions to take care of the captured crew and as such pirates would go every length to ensure ransoms are paid even if it meant keeping crew for  several years unless rescued by security operations. The success of the act is therefore very paramount on the minds of the pirates and that’s what makes it more dangerous as these gangs are very much interested in the ransom money.

  The payments of ransom however has become a very debatable issue, some international bodies suggest that countries and companies should desist from paying the ransom since that is the main incentive for this act. With the assumption that the refusal to pay ransoms would make the operations of the pirates unprofitable and might be a disincentive to embark on such endeavors.

  On the contrary, some stake holders and governments sometimes consider the ransom money vis-à-vis the value of the cargo, the ship and ultimately the lives involved and go ahead to pay this ransoms. In 2009 it was reported that the  Suadi super tanker Sirius Star  which was carrying crude worth over a $100 million was only released after a ransom of about 3 million dollars was paid on behalf of the ship owners.

  In recent years the activities of pirates have reduced in the region, however that’s not an indication of total eradication of the menace. Regional navies and international bodies have taken up measures to ensure a safe voyage along that region. The stretch of  the sea area in consideration is very wide which means that security vessels may not be at the right places at all  times presenting an extra challenge in patrolling the area.

 In the mean time however , the debate would still continue on whether to pay the ransom or not to pay considering the lives and property at stake.

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  • The payment of ransoms, is really little different to the payment of bribes. Whilst either exist, the incentive also exists for the crime paying, and it can spiral out of control.

    For vessels sailing in known areas of high piracy, there will be huge insurance (P&I) premiums. These premiums are then collectively shared by consumers (imports) and manufacturers (exports), to the overall detriment of the vast majority.

    That in itself should be sufficient incentive for states to do more to prevent piracy within their domains, as ultimately that will benefit the majority of the people who they represent. It is however not easy or simple to do, and steps are and will be taken – but maybe they need to be more intensified.

  • I would like to just make one more point here. Whereas a perception exists that piracy is concentrated around the horn of Africa and West Africa. Statistics show that 75% of all piracy attacks actually occur in South East Asia. It is important to keep this in perspective.

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