by Quy-Toan Do, Jean-Baptiste Blanc, Aurélien Kruse, Trung Dang Le, Andrei A. Levchenko, Lin Ma, Farley Mesko, Claudia Ruiz, and Anja Shortland
The global fight against piracy in Somalia has centered on prosecuting pirates and mobilizing naval forces. But to get to the root cause of the problem, the international community must focus on helping the nation build a functional political system, according to a new World Bank study. “Piracy is a symptom of the breakdown of Somalia’s political system,” says Quy-Toan Do, a senior economist in the Bank’s research department and lead author of the report. “Go after the system, not just the pirates.” Thus, to end piracy off the Horn of Africa, the study urges a paradigm shift away from perpetrators and toward the enablers of piracy. With a limited number of suitable coastal areas available to anchor hijacked ships, piracy would be less profitable if Somalia removes access to safe anchorage points or significantly raises the price for coastal access. In addition, the central government can offer incentives – along with built-in monitoring mechanisms – to encourage local stakeholders to stop pirate activity and learn from the success and failure of Afghanistan’s policies targeting opium poppy production and Colombia’s against coca production. At the heart of this policy agenda lies the need to better understand the political economy of resource sharing, so that winners and losers are properly identified and compensated. The lessons from the study go beyond piracy eradication and speak to the fundamental issue of state building in Somalia.
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Response: Too soon to celebrate? Somali piracy will likely resurface
by Currun Singh
I have followed Somali piracy ever since it surfaced in 2005 and now monitor the situation from my perch overlooking the shores of Tripoli. Libya, the tides remind me, shares many attributes with Somalia: over the past two hundred years, both have suffered through Italian colonialism, military dictatorships, and American naval interventions against piracy – and both are currently held together by thread and prayer. At this critical juncture, the World Bank’s recent report on Somali piracy sets out to explain some of Somalia’s piratical and political enigmas and to calculate piracy’s global costs.
I was impressed by the report’s meticulous calculation of piracy’s damage to global trade, tourism, and fisheries, which hurts Somalia and its neighbors the most. What more, the report artfully exposes the local institutions that enable piracy, focusing on the political economy of anchorages. But the ensuing “paradigm shift” proposed, which seeks to rally enthusiasm for federal state-building and the securitization of development, is uninspiring for those of us who, since 1991, have witnessed a different government wax and wane every year and have become inured to a permanent state of war stoked by foreign interventions. Rather, I see the report’s analysis evoking another “paradigm shift,” one that effectively dismantles the international community’s trigger-happy approach to counter-piracy.
The report’s econometric analysis posits a “sizable” and “unambiguous” negative effect of piracy on trade flows: trade destruction of 7.4 percent along shipping lanes through the Arabian Sea, alternatively interpreted as a 1.1 percent ad valorem tax and amounting to an annual dollar cost of US$18 billion. This interpretation appears reasonable, but methodologically, the accompanying robustness checks render a different picture. For example, when defining the affected region very narrowly (trade wholly within the Indian Ocean), the piracy coefficient is small and statistically insignificant, and when the estimates are based on a continuous indicator of piracy, the effect is actually positive and statistically significant, implying that piracy actually increases Indian Ocean trade. One possibility is that trade flows themselves may affect the incidence of piracy, and that the gravity model employed does not account for this endogeneity. Indeed, the authors report in the annex, “All these robustness checks confirm that there is no consistently significant negative impact of piracy on world trade.” So while piracy probably damages trade flows and the novel methodology confers many advantages – chiefly the measurement of all piracy-related costs, not just those that can be directly observed – the conclusions are exaggerated and refinement of the model is needed.
The subsequent analyses of piracy’s effects on tourism and fisheries are the first of their kind and policy-relevant. Using a difference-in-differences specification, the report calculates a 2 percent drop in tourist visits to Middle Eastern and African countries affected by piracy (relative to visits to other countries) and a 6.5 percent drop in arrivals to affected East African countries. The results further indicate that piracy mainly discourages big-spending OECD tourists. These results are robust at least at the 90 percent confidence level and often at the 99 percent level, even after accounting for potential spoilers like Kenya and Madagascar, where domestic political unrest may have also discouraged tourism. Notably, tourists who would have visited piracy-affected regions are now going to West or Southern Africa instead, and those who still make it to East Africa are spending up to a fifth less.
The authors then assess the impact of piracy on fisheries exports and tuna catches. Piracy-affected countries have experienced slower growth in exports of fishing products relative to the rest of the world, implying a 23.8 percent annual reduction in exports thereof. This is partly because of a fall in production: since the onset of piracy, the annual tuna catch in the western Indian Ocean has dropped by 26.8 percent relative to the eastern Indian Ocean. These results are corroborated by analysis of fleet relocation and the rerouting of exports, as well as by various robustness checks. The authors are well aware of the limitations of this study: illegal fishing and non-tuna products cannot be fully accounted for, nor are data available from much of the Horn, including Somalia, Eritrea, Djibouti, and Sudan. Nonetheless, a critical result of the analysis is that there is no evidence of overfishing off the Somali coast. Overfishing by foreign trawlers is a historical justification for Somali piracy, and the report finally puts this reasoning to rest with its contrary finding of the underutilization of fisheries. Still, the real problem was not whether there was overfishing, but who was fishing Somali waters, so this finding is unlikely to satisfy Somalia’s moral economy or popular imagination.
The report argues that given how destructive Somali piracy is to global industry, there ought to be sufficient political will to find and implement a solution. The catch is that the reverse is truer: there is insufficient political will to stamp out piracy because of its myriad local and international beneficiaries, from the marine insurance industry to navies to Somali communities. Usefully, the World Bank report pulls the curtain on piracy’s backstage: the political economy of anchorages – and not just its directors and technicians, but also their historical and cultural scripts. The authors contend that counter-piracy strategies that alter market returns on pirate labor and finance – like capturing and prosecuting pirates – are the beggar’s share of the bargain: only 14 percent of ransom proceeds go to pirates and their investors. 86 percent is funneled into rents for holders of political capital: government officials, militia commanders, religious leaders, and clan elders. The freshest part of this chapter is its contention that the political economy of anchorages explains the where and when of piracy: that is, the degree of centralization/fragmentation, ethnic composition, and resource distribution of different Somali regions – especially vis-à-vis their experiences with colonialism and Islamism – explains why pirates have thrived in some anchorages, like in Puntland, and not others, like in southern Somalia. My only disappointment about this analysis is that it leaves me hungry for more, because the emerging discipline of piracy studies is want for it. Specifically, I am eager to know how shared ideas about clan institutions, legal traditions, and livelihood strategies have precipitated the necessary conditions for piracy to remain afloat.
It is the final chapters of the World Bank’s report – an assessment of existing counter-piracy strategies and a few recommendations – that unsettle me. Scattered through the report are mentions of the “coincidence” of the plunge in piracy and naval interventions which “are believed to explain” this plunge. Such unwarranted implication for a report of such statistical rigor is telling. Anja Shortland (one of the report’s contributors) and Sarah Percy, among others, have documented elsewhere the unintended and counter-productive consequences of naval operations, including pushing pirates out of the Gulf of Aden deep into the Indian Ocean and forcing them to become more sophisticated, innovative, and violent. The same goes for arming merchant ships, which while increasingly popular and deemed effective, also provokes “legal, practical, and ethical” anxieties. Given that armed action is the backbone of global counter-piracy, these trends should have been brought to the fore in the World Bank’s report. While sea-based operations against the small fries are a piece of the puzzle, they are also at odds with the report’s central thrust: that attention should be shifted away from the perpetrators and toward the enablers of Somali piracy.
The “paradigm shift” proposed – that the incentives of piracy’s political enablers on land be appreciated and reshaped to make piracy unprofitable – follows naturally from the World Bank’s analysis. But it is hard to take seriously the call to forge a political contract among the various stakeholders and governments involved. I do, however, accept several of the report’s suggestions, namely that a granular political analysis of specific anchorages is a logical next step and that information should be shared among counter-piracy agencies. Mostly, I would like to see the incentive-compatible mindset, which would incentivize piracy’s enablers to stop enabling it, finally penetrate global discourse and practice. Still, it is hard to be optimistic. The World Bank report invokes the global war against poppy and coca production as guiding models for counter-piracy, a proposition that any Afghani or Colombian farmer would find laughable. Opium cultivation is on the rise again in Afghanistan’s western and eastern provinces, and the international counter-narcotics strategy amounts to an expensive game of Whac-A-Mole. Similarly, the Andes Mountains suffer the efecto cucaracha: when law enforcement against the coca bush is stepped up somewhere, the pest simply crops up further down the slopes. Drugs, in fact, are a good reminder of the intercontinental value chain of organized crime: Colombian coca leaves are fed to Mexican cartels which in turn are killing themselves to sate American pangs for cocaine.
In fact, these models suggest that Somali piracy is unlikely to end soon and will likely intensify. After all, Barbary corsairs menaced the Mediterranean from the shores of Tripoli for centuries, and it took the United States two wars to realize that naval action does not stop pirates. We have forgotten that lesson, and two hundred years later, Libya is still a playground for armed militias. I hope Somalia soon finds a political solution that alleviates its famine and violence, but I’m not holding my breath, nor should the World Bank. The report is an ambitious and triangulated attempt to answer some important questions, but I wish it treated more rigorously one of the most urgent questions: the mysterious plunge in piracy over the past year. One possible reading of the report is that the rewards and complexity of piracy will likely impel it to resurge. In the meantime, I’m putting my money on thread and prayer, and an extra splash of common sense.
Currun Singh is an international security expert. He lives and works in Tripoli, Libya.
For a recent Special Section of Global Policy's print journal focussed on piracy please see: Contemporary Maritime Piracy: responding to a Wicked Problem, edited by Christian Bueger.