Study of Somali piracy falsifications 2012
Frankly, I believed that with evaporating of the Somalia piracy we’ll walk off
the so-called “Studies on The Economic Cost of Somalia Piracy” (SECS further on),
which were diligently concocted by “Oceans beyond Piracy (OBP)” Foundation,
whatever this Foundation really is. I didn’t expect any excuses or remorse from
either OBP staff, or those who initiated and supported those Studies – IMO,
BIMCO and a number of other institutions, which regretfully, represent the
shipping in the eyes of general public.
I was wrong, of course. OBP is very much alive and as shamelessly as ever
concocted a new Study, “The Economic Cost of Somali Piracy 2012”.
Below is the Summary of my Study of this new falsification. I analyzed not all
of the categories of the “cost” of the piracy, but only the most “heavy” ones,
those which constitute the main bulk of the “losses” which unsuspicious of their
mighty evil pirates still inflict upon the world economy. That’s why, for
example, I don’t check the sum of the ransoms – it is vanishingly small in
comparison with billions created by ingenious researches in other categories.
SECS is intentionally entangled, the purpose of it is explained in the Summary.
The first SECS, SECS 2010, was 25 pages thick. Next one, SECS 2011, far
outreached the naivety of the beginning, and was 62 pages thick. This newest one
is again record-breaking, consisting of 80 pages. The less is the piracy, the
more voluminous are the Studies.
From the Economic Cost of Somali Piracy 2012 Foreword:
“We have found that the report fully lives up to the high standards
necessary to earn respect and credibility among all antipiracy stakeholders in
Government and Shipping Industry alike, and for the report to constitute an
informed and constructive contribution to the anti-piracy debate”.
-- Michael Lund, Deputy Secretary General, BIMCO
With this appraisal in mind, let’s begin.
Economic Cost of Somali Piracy 2010 download
Economic Cost of Somali Piracy 2011 download
Economic Cost of Somali Piracy 2012 download
Study of Somali piracy falsifications 2010
Study of Somali piracy falsifications 2012 full report
The OBP researchers already made three Studies, for years 2010, 2011 and 2012.
The backbone of the Somalia Piracy Economic Cost is the number of the transits
through HRA (High Risk Area). That figure determines actual losses suffered by
Each Study is based on absolutely different methodology for calculating the
number of transits. The lesser was the piracy threat, the bigger was the number
There are two basic known statistics to estimate the number of transits – Suez
Canal statistics, and statistics of tanker traffic via Hormuz Strait. According
to these statistics (some 25,000 transits, and that’s the main bulk of HRA
transits), plus rough estimation of other traffics, the total number can’t be
more than 36,000.
There is substantial traffic of other types of cargo vessels via Hormuz Strait,
there is some traffic to/from port of East Africa, but those traffics can’t,
even theoretically, be equal to, not to mention bigger, than the main bulk of
traffic through Suez and via Hormuz.
With all the resources and support they have, OBP researchers could easily get
the lacking statistics on Hormuz Strait and East Africa traffic, but instead,
they invented a new method, which simply can’t be proved or contradicted,
because it can not be checked. All AIS messages sent from the HRA over a sixteen
day period in both 2011 and 2012 were collected by ExactEarth’s satellites and
licensed to OBP for use in this report. They claimed they processed some 1
million AIS signals. According to the data they use, there should be some
132,000 transits through HRA, more than all known traffic in all of Indian ocean,
together with Malacca Strait States local traffic and fisheries! So much for the
accuracy of the one million AIS messages method!
They made the final number as 66,612. How? It goes without explanations and
illustrations of their “methodology”. It goes on trust, so to say. They just
said …we made a fairly significant downward adjustment in the number of ships…
According to OBP Study for year 2012, there are some unknown to shipping and
humankind traffics in Indian ocean, which are equal in volume to the known ones.
It just can’t be explained by a mistake or by applying a wrong methodology. It
can only be explained by an intentional falsification in order to achieve
pre-ordered figure of the so-called Somalia Piracy Economic Cost. I, for my
calculations, applied a figure of 36,000 transits, collecting every traffic I
could think of, and making all possible stretches. The real figure should be
less than the one I applied, but so be it. Just in case, you know.
(See II. The number of transits)
In estimating the cost of Navy presence in Indian ocean, the OBP researchers
didn’t explain and didn’t take into account the difference between the basic
cost of Navy ships and aircrafts, and the cost of their employment in the
mission. According to OBP methodology, the Navy don’t cost anything at all when
not involved in anti-piracy operation. Hence the cost of the Navy presence,
estimated by OBP as some $1,02 billion, is a falsification. We can’t calculate
the real cost, because we don’t know military budgets and spendings. But
whatever that real cost is, it simply can’t be $1,02 billion, claimed by OBP,
because the Navies do cost something, employed in missions or not, sailing
around or being docked in their bases. The real cost is the difference between
regular annual cost of the ship, and the cost of its employment in the mission.
Also, OBP made, from research point of view, a very grave mistake by not
estimating the effectiveness of Navy mission. The truth is, Navies utterly
failed to protect shipping from piracy. Private security and some serious
changes, which took place in Somalia, did the job, not Navies.
(See I. The Cost of Military Operations)
In estimating the cost of the wire protection, OBP researchers excelled
themselves in their findings. They didn’t ask the suppliers of the barbed wire
in Suez or Singapore, they didn’t ask the ship owners, they found in Internet a
company based in California, which sells wire and ornamented fence to luxury
villas, and used the cost taken from that company’s website price-list. OBP
decided it wasn’t enough, and used absolutely unexplained, or to be more exact,
twisted, logic, to calculate the cost of one-transit wire protection. According
to OBP, the cost of wire protection per vessel is $16,000. According to the
information I gathered from ship owners, it falls within the range of $500 –
$4,000. I estimated the cost of barbed wire as $28 -72 million, most probably it
does not exceed $40 million, simply because I applied in all my calculations
apparently exaggerated 36,000 number of transits. Hence the final figures: $28
-72 million against OBP’s $447,888,000. OBP made the wire cost at lest 6 times
more expensive than it really is. Mistake of the researchers? Or falsification
There is one very important subject of War Risk Insurance Premiums. The gist of
the subject is the understanding of those Premiums – are they paid because of
the piracy threat, or because Lloyd’s War Committee made them a must? The
principal question in determining the cost in insurance is the character of
war-risk insurance. As it stands, it’s not a necessary and justified insurance
to be bought by a sensible ship owner, it’s to put it straight, an act of piracy
in itself. Using Somalia piracy as a pretext, London-based insurers enforced on
the shipping war-risk insurance, and enjoy tremendous profits for quite a number
Predictably, OBP didn’t raise this principal question in their 2012 Study, which
actually, makes all their War Risk Premium Cost calculation meaningless.
Nevertheless, I checked their calculations and expectedly, found some, to put it
(See VII. The Cost of Piracy-Related Insurance)
I meticulously studied other types of Costs presented in SECS, such as the Cost
of Increased Speed, or Re-Routing, finding some of them quite amusing. For
example, to prevent any outside check of their Cost of Increased Speed
assessment, they illustrated their calculations by BIMCO’s Curves, provided by
BIMCO specially for the occasion. Those Curves are unreadable and make any check
of the OBP methodology impossible. One has to find the graphics showing the
correlation between fuel consumption and speed elsewhere. I found, and the
results were very interesting.
There is rather simple and realistic approach to estimate the cost of all
anti-piracy measures which could be taken by the ship owner. With the
availability of armed guards and with safety they guarantee – the only guarantee
ship owners actually want – all other measures can be estimated in comparison
with the cost of armed guards, making all the OBP assessments just useless,
unless they were made to achieve a pre-ordered figure of Somalia Piracy Economic
My estimation of the cost of all anti-piracy measures except guards:
(See The Cost of all anti-piracy measures except armed guards)
The Somalia piracy could have been done with at least three years ago. Be the
safety of the shipping real concern of international community, Navies,
politicians, the UN and maritime organizations, they could make shipping
absolutely safe at a cost not exceeding $ 500,000,000. The army of private
guards, employed by a horde of security agencies, in no time came up out of
nowhere, and provided protection for anyone willing to guarantee the safety of
his vessel. The Navies could (should) do it, using the same tactics, long time
ago, at a much less cost and with a privilege of absolute legality. With no
other costs and losses, from ransoms to war risk premiums to re-routing etc.
(See XI. The real Cost of Somalia Piracy)
The study of the money wasted on pirates prosecution, on conferences and working
groups of the UN, explains the roots of the OBP falsification.
Three-year cost of prosecuting: $62,576,587
Three year cost of organization: $ 69,883,953
Total: $ 132,460,540
It’s too lucrative business to give it up easily which naturally, fathered the
OBP Studies and researchers. They’ve been very well paid, too.
Report of the Secretary-General Ban Ki-moon pursuant to Security Council
resolution 2020 (2011) http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2012_783.pdf,
presented on Oct 22 2012 during Security Council meeting, is a fantastic example
of a world-scale lie. Mr. Ban Ki-moon praised for the sharp decrease of Somalia
piracy international efforts, Naivies, Best Management Practice, and down the
list he said, that “The deployment of privately contracted armed security
personnel on-board ships and of vessel protection detachments may also have
contributed to deterring pirate attacks”.
Mr. Ban Ki-moon praised the UN as the coordinator of anti-piracy campaign, he
said many other amazing things, but to appreciate the real role the UN is
playing in Somalia Piracy, we’d have to read the following article:
“How the UN saved the piracy” http://dangerousmagazine.com/project/hijacked-how-the-un-saved-piracy/
Article is written by a well-known US journalist and author, Mr. Robert Young
Pelton, who ran for some time a news agency Somialia Report, but happened to be
too honest journalist and socially responsible person to play into the UN hands.
Mr. Ban Ki-moon referred to, and mentioned among institutions which contribute
most to piracy fighting success, a World Bank. World Bank issued its own Study
on Somalia Piracy Economic Cost, estimating the Cost at some $18 billion. The
World Bank Study deserves a special Study of course. I ran through it, and found
it much more amusing than the OBP’s. Maybe I’ll study it, too, sometime.
For now, let me confine myself by saying that the World Bank has a direct
interest in “fighting piracy roots”, because some of the funds allocated to it
are channeled via the World Bank, hence the riotous fantasies of the
“researchers” hired by World Bank.
(See X. The Cost of Counter-Piracy Organizations)
I ask anyone interested to check my Study, to check the Study prepared by OBP,
and decide whose Study of the piracy costs is more plausible, mine or OBP’s. If
mine’s more trustworthy, then, I invite you to appreciate the following figures:
OBP’s budget expenditure was $889,000 in 2011, which included $25,000 towards
supporting an IMB initiative to develop reporting on the violence experienced by
seafarers during piracy attacks.
(From the OBP Study “The Economic Cost of Somalia Piracy 2011”)
In 2012, OBP spent $775,000 on staff salaries, meeting costs, and other expenses
related to furthering its mission.
(From the OBP Study “The Economic Cost of Somalia Piracy 2012”)
2010 spendings are unknown, but surely they can’t be less than $500,000.
In 3 years the OBP spent on its’ Studies in total, $ 2,139,000.
It took me some 2 months to prepare this Study, I wasn’t busy with it 8 hours /
7 days a week. Some 6-8 hours weekly, plus several phone calls.
Maritime Bulletin is kept afloat, presently, by a crewing agency. Actually, it
means that I’m kept alive, it’s the cost of my survival, nothing more. With the
deduction of apartment cost and facilities costs, I’m left with some $200 - $250
monthly for all the rest, including food, clothes, medicine, fuel for my
motorbike, books, etc. Compare the cost of me with the cost of OBP, some $60,000
monthly budget. Feel the difference.
The cost of my research is some $500.
The cost of OBP research is $775,000.
A question arises, in light of the above. How to appreciate the doings of the UN
(starting from Mr. Ban Ki-moon), of the IMO, BIMCO and many others, including of
course, the OBP researchers? They were, either directly, or indirectly, involved
in inventing the falsification for the purpose of profiting from it. They voice
the falsification throughout the world, and using it as grounds for their
demands, get by now, hundreds of millions of dollars, to fight falsified and
inflated problem. They profit from these falsifications personally.
I am not a lawyer. I don’t know, if the intentional creation of a falsified
Study of a falsified problem, which paves the way for the waste (theft) of
multi-million funds, is a criminal act, or some act of public offence. I guess
though, that it’s criminal.
If that’s the case, who’s to nail the falsifiers, is there any chance of brining
them to justice? I don’t think so.
May – June 2013
Hall of Shame
List of personalities and organizations, which make up, contribute to, or
support three-year long falsification, called “The Economic Cost of Somalia
Ban Ki-moon, UN Secretary-General
Marcel Arsenault, founder of One Earth Future Foundation OEF (with Ocean Beyond
Piracy as one of the projects)
Efthimios Mitropoulos, former IMO Secretary- General
Michael Lund, Deputy Secretary General, BIMCO
Pottengal Mukundan, Head of IMB
Lead Author 2012: Jonathan Bellish, Project Officer, OEF
Lead Author 2010-2011: Anna Bowden, Associate Director, Business Initiatives,
Jens Vestergaard Madsen,
Advisors and Consultants:
Peter Chalk, RAND Institute
Professor Pierre Cariou, World Maritime University, Malmȍ, Sweden
Dr. Adolf Ng, Hong Kong Polytechnic University
Dr. Theo Notteboom, ITMMA, University of Antwerp, and Antwerp Maritime Academy
Peter Sand, BIMCO Chief Shipping Analyst
Cyrus Mody, the International Maritime Bureau (IMB)
Raphael Kahn, Secure-Marine
Michael Frodl, C-Level Maritime Risks
International Chamber of Shipping
International Shipping Federation