On 12 October, Somali pirates released the Greek-owned bulk carrier MV Free Goddess along with its crew members, seven months after its hijacking in the Arabian Sea. Reports suggest a ransom of more than $5m was paid to the pirates.

The ship was attacked en route from Adabiya in Egypt to Singapore, just northeast of Socotra Island in Yemen. It was carrying about 19,475 metric tonnes of steel cable.

The release of the MV Free Goddess comes as the risk of Somali piracy starts to diminish, following the release of statistics that reveal a decline in attacks in the Gulf of Aden. But the money paid to secure the release of the ship is a reminder of the financial cost of piracy to the shipping industry, not to mention the human cost suffered by crew members held hostage for months at a time.

Somali piracy

In recent years, Somali pirates have dominated global piracy attacks, with the Gulf of Aden being one of the riskiest stretches of water to traverse. At the time of writing, suspected Somali pirates are holding 11 vessels for ransom with 167 crew members as hostages, according to the International Chamber of Commerce’s International Maritime Bureau (ICC-IMB).

In 2011, at least 3,863 seafarers were fired upon by Somali pirates armed with assault rifles and rocket-propelled grenades. A total of 35 hostages died in 2011, with eight killed by pirates during the initial attack or after being taken hostage. A further eight died of disease or malnutrition and 19 were killed in crossfire when used as human shields or during rescue attempts.

The navy fulfils a critical role and has been instrumental in the reduction of pirate attacks

Captain Pottengal Mukundan, ICC-IMB

However, the tide is turning in the war on piracy, with the ICC-IMB revealing that just one ship reported an attempted attack in the third quarter this year, compared with 36 incidents recorded in the same period last year. There were 70 Somali attacks during the first nine months of 2012, compared to 199 attacks recorded in the same period in 2011.

The fall in Somali piracy reduced overall global figures for piracy attacks to 233 incidents in the first nine months of the year, the lowest number recorded in the same period since 2008.

The declining number of attacks has been welcomed by those involved in the shipping industry. But debates continue over how best to combat piracy in the long term.

Putting aside the evident human cost of piracy, the financial cost to international governments and the shipping industry runs into billions of dollars. A report from UK-based law firm Ince & Co says ransoms totalling $75m-85m were paid in 2010 to release 21 ships.

With reduced incidents of pirate attacks, costs associated with tackling the threat are beginning to fall. Insurance premiums on kidnap and ransom (K&R) products, which protect shipowners against the cost of paying ransoms and recovering crew and vessels, are softening, which will be welcome news for shipping companies burdened by other insurance costs and falling freight rates.

Pricing on K&R products has fallen, which is in part a reflection of the lack of losses seen in the last six months, as well as other factors such as increased competition between insurers, says Michael Sharp, kidnap and ransom underwriter at London-based insurer Beazley. “In the last six months, [the premium cost] has probably halved,” he says.

The decline in attacks has been attributed to three key factors: the use of private security forces on board ships; the implementation of best management practices; and increased support from naval forces.

Despite the apparent success of this three-pronged attack, however, there are growing concerns about long-term counter-piracy efforts. The lack of regulations surrounding the use of private security firms remains a concern. There are arguments that suggest that their presence on the boat could exacerbate violence in the face of armed pirates. 

There are others that are reluctant to see naval forces increasing their level of protection for commercial ships, arguing that the risk of piracy does not warrant the cost burden being shouldered by governments.

Private security in the Gulf of Aden

The use of private security firms is fast becoming the norm among shipping firms active in Gulf of Aden, and elsewhere in the world. Governments that previously opposed them are now accepting their presence.

“Our view is that private armed security is increasingly being used by ships and has proven to be effective,” says Captain Pottengal Mukundan, director at the ICC-IMB.

“About 65-70 per cent of vessels now have armed guards on board and that is a very different risk from the pirate’s point of view,” says Sharp. “[Facing armed guards on board] is their biggest fear in terms of the risk of hijacking a vessel for them.

“Most of the large owners have armed guards on their vessels now and on some of the smaller ships, crew will refuse to go into a region without them. It is almost at saturation point. If you speak to private contractors, their market is highly competitive now and their margins are being squeezed by new competitors,” he says.

The presence of armed guards can help secure a reduction in premiums charged on K&R policies, a clear recognition that they can help reduce the risk of a hijacking.

However, the use of private security also has its downside. While these guards are effective, they are not a long-term answer and a number of issues have been raised about their usage. This includes reports of indiscriminate firing by guards against small boats or skiffs they see as a threat, says Mukundan. He cites reports in Yemen that fishermen have been fired on. “These are issues that suggest [private security] is not a complete answer,” he adds.

He says ship owners themselves are against having private security on their ships. “It goes against all their training and ethos. In certain situations… there is no other way to protect their vessels, so they are being forced to have armed security on board to protect their crew. The crew may not sail without security.”

Mukundan recommends that naval forces maintain and increase their counter-piracy efforts. He argues that naval forces can intercede where private firms cannot, such as to interdict and board pirate mother ships and skiffs, remove their equipment and weapons before they are a threat, hand the pirates over to local jurisdictions for prosecution, and recover vessels that have already been hijacked. “The navy’s response is critical,” he says.

Navy essential in Gulf of Aden

“One of our concerns is that governments may believe that because there is increased use of private security, they can withdraw their naval vessels from the region and that would be a retrograde step. It would be the wrong thing to do as the navy fulfils a critical role no one else can and has been instrumental in the reduction of attacks,” says Mukundan.

The use of naval forces to target pirate mother ships is of great importance, says Gary Li, head of marine and aviation at UK firm Exclusive Analysis.

Mother ships are smaller vessels hijacked by pirates using small boats or skiffs, which are then used to attack larger ships.

“What Nato forces can do is remove mother ships from circulation. Without mother ships, the range and size of the area of operations for pirates is drastically reduced,” says Li.

Naval forces have taken steps to strengthen their presence in the Gulf. In 2008, the EU established Operation Atalanta to improve maritime security off the coast of Somalia and in the Indian Ocean. The naval force has been praised for its efforts in combating pirates and the operation has been extended until December 2014. 

In a report by an EU committee run by the UK’s House of Lords in August, it was recommended that efforts to tackle piracy should not slacken. “It is widely recognised that Operation Atalanta has been a success, but under current political conditions in Somalia, any reduction in effort will result in a renewed upsurge of pirate activity,” said the committee. “There is a need for sustained commitment by the EU.”

The need for vigilance is highlighted by Atalanta’s sighting of a suspected pirate vessel in the Somali basin in early October; its first such sighting in more than three months. The EU Naval Force flagship ITS San Giusto stopped and destroyed the skiff suspected of being used by pirates to attack ships. The EU warship had seen the skiff carrying a ladder and up to 20 fuel drums.

Other incidents recorded in October include the capture of a skiff with a number of suspected pirates on board by a Dutch warship and a pirate attack on a fishing vessel just 330 miles southeast of Mogadishu.

Operation Atalanta is not the only international naval task force operating in the Gulf. Nato Operation Ocean Shield and a US-led multinational force called Combined Task Force 151 also monitor the area, along with individual warships from countries including Russia, India, China and South Korea.

But there are groups opposing further investments by governments in naval operations. UK-based research group Platform released a report in October arguing that the risk of piracy does not justify the current level of state spending. The report claimed marine piracy should not be an area of priority for governments, particularly those in Europe making cuts in key areas such as health or education. Emma Hughes, a campaigner at Platform, says companies looking to ship goods through the Gulf of Aden should pay their own security costs, rather than looking for government subsidies.

“With the profits that oil companies make… [tackling piracy] is an inconvenient expense but not an expense they can’t afford,” she says.

“We found that oil firms were hyping the fight against piracy to get a hidden military subsidy from the UK, the EU and Nato to protect the transportation of oil across the seas. Even at its height, less than one per cent of ships travelling across the Gulf of Aden were attacked,” says Hughes.

She also argues against naval personnel being privately contracted out to commercial companies. This is something the UK’s Chamber of Shipping is lobbying for and which could see UK naval officers being used as private security guards. Hughes says such measures are causing serious concerns among military personnel, many of which have contacted Platform after the publication of its report to express their unease.

There is, however, some consensus surrounding a number of the anti-piracy tactics being used. Both Platform and the ICC-IMB want to see continued implementation of best management practices that have been established by the shipping industry, such as the use of increased radar and CCTV surveillance, and the employment of razor wire or water as deterrents to avoid pirates boarding ships.

Tackling poverty in Somalia

There is also an agreement that more should be done to tackle the poverty along Somalia’s coastline. The UK’s House of Lords report stated: “The EU’s development aid will continue to be necessary for the foreseeable future. It should focus on providing alternative livelihoods for the Somali people to assist with reducing the need felt by some Somalis to resort to piracy.”

There are also suggestions that the discovery of oil in Somalia might deter poverty-stricken citizens from turning to piracy. “A lot of people are losing interest and looking to bigger opportunities such as the discovery of oil in Puntland,” says Li. “Various people are throwing their lot in with this more legitimate and respectable business of oil prospecting.” 

Efforts to improve conditions in war-torn Somalia will not be successful overnight. Although the number of piracy attacks have fallen, recent sightings suggest not all pirates have retired to the shore. With that in mind, the balance between the use of private security firms and naval forces will need to be reviewed.