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Costly Roger: Somali piracy cost $7bln in 2011

Costly Roger: Somali piracy cost $7bln in 2011
Somali piracy cost the global economy as much as $6.9 billion last year, according to the report of One Earth Future Foundation. That’s more than fifty times the annual budget of Somalia.

­Providing security for ships was the major part of the cost. Shipping companies spend about $2.7 billion on extra fuel so vessels can pass quickly through the high risk areas. They also spent $1.1billion on security equipment and armed guards. Also $635 million were paid on insurance, and up to $680 million were spent re-routing vessels along the Western Indian coast. Crews received an extra $195 million in wages for operating in pirate zone.

Ship owners also spent $160 million on ransoms in 2011 with the average ransom increasing from $4 million in 2010 to $5 million in 2011. The most expensive release of a single ship, the Greek tanker Irene SL, cost $13.5 million.

Governments also spent about $1.27 billion on military operations against Somali pirates while $38 million were spend for pirates’ imprisonment and prosecution. According to the report shipping companies bore 80% of the expense, while Governments paid the other 20%.

The human cost of piracy cannot be defined in economic terms,” says Anna Bowden, the author of the report. “We do note with great concern that there were a significant number of piracy-related deaths, hostages taken, and seafarers subject to traumatic armed attacks in 2011”.  During the last year 1,118 seafarers were taken hostage and 24 were killed.

The economic impact significantly fell compared to 2010, when global economy lost $12 billion with successful attacks reduced to 28 from 44 in 2010. Meanwhile the number of pirate attacks grew from 212 in 2010 to 237 in 2011.

Currently there are three international naval task forces engaged in counter-piracy operations in the Gulf of Aden: Operation Ocean Shield of NATO, Atalanta of EU and the International Combined Task Force 151. There are also independent missions by Japan, India, and Russia in the region.