Sea Transportation: Somali Pirates And Their Aggressive Agents


December 8,2008: Over the last decade, the Somali pirates have developed an infrastructure of agents and advisors that enable them to negotiate large ransoms for hijacked ships. The pirates themselves belong to about half a dozen gangs, which are based in towns on Somalis northern coast. This is safely away from the Islamic radical ("Islamic Courts") warlords further south. The Islamic Courts have threatened to shut down the pirates, mainly because all those foreign warships off the coast interfere with terrorist activities the Islamic radicals support.

The gunmen who work for the pirate chiefs get paid enough to just get by, and the big money is made if you manage to capture a ship. A dozen or more pirates usually go out on a larger boat (a captured fishing boat) with two or more speed boats in tow, seeking a ship to hijack. Sometimes, several of these larger boats will cooperate to track down and grab a large merchant ship. If a crew is successful in grabbing a ship (and most of these trips, which can last several days, are not), they then bring the ship back to the north coast and drop anchor near the town that is their base. Their boss will arrange for the crew of the hijacked ship to be cared for (either on the ship or ashore) and assign more pirates to guard the ship and crew.

The pirate chief will also bring in an experienced negotiator. These are usually local businessmen, who have developed the proper connections and knowledge over the past decade. Contacting the shipping company that owns the captured vessel is easy, as the ship itself has the contact information, and satellite phones on which to make the call. Most, if not all, of the negotiators have business connections in the Persian Gulf, and this has sometimes come into play during haggling for the ransom, and making arrangements for payment.

The ship owner calls in the insurance company, which then engages professional negotiators. The insurance company and the shipping company will spend $300-500,000 on negotiators, lawyers and cash transportation specialists to carry out the deal. Of late, the negotiations have taken about two months, and a ransom of one or two million is usually paid. This tends to be delivered, in cash, usually via a well armed tugboat coming north from Kenya (where ports like Mombassa have banks that can supply the required amount of currency, usually, per the pirates request, in used, but recent, $50 and $100 notes). The armed cash escorts bring the money to the ship, the pirates haul it ($2 million in hundreds weighs less than 30 pounds) aboard, count it, then leave with their loot. At that point, some of the armed escorts stay with the ship as the crew  fires up its engines and gets them away from Somalia.

The ransom is usually divided according to a previously agreed on formula of shares. This is how pirates have done it for centuries. The pirate chief often gets about half the ransom, and takes care of most expenses out of that share. The pirates don't begrudge the boss his half, because the pirate gang is kept together by this guy, and his personal stash of cash. The pirates who actually took the ship, and the negotiator, get shares that can amount to five percent (or more) of the ransom per man. For a two million dollar ransom, that's $100,000 per man. This is a fortune in this part of the world. You can buy a nice new house, take a wife (or another wife), buy a fishing boat or shop and, basically, be set for life. This payout, in cash, encourages the other pirates in the gang, and everyone in the neighborhood. Parties are usually thrown, and a good time is had by all. Meanwhile, the insurance companies plan their next rate hike for ships that feel they must travel near the Somali coast.




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