The shipping has to pay directly to insurers and to private security agencies, and indirectly, through taxations, to maritime organizations, IMO and UN, and navies.
In my article “Oceans Beyond Piracy with record-high lies, again” http://www.odin.tc/files/obp.asp I wrote, that the new study of OBP is meaningless, just because the basic conception of the study, the idea behind it, is outdated and wrong. All the criticism poured on OBP study by many experts, missed the main, basic flaw of OBP’s study – its’ outdated and wrong approach to the problem in general, with regards to latest developments. It means that critics basically, stick to the same understanding of Somali piracy and piracy environment, as OBP and organizations behind OBP.
The situation changed during past 7 months so dramatically, that presently, we can’t evaluate piracy using old criteria. A year ago world shipping massively started hiring private armed guards, as the only solution to the piracy problem. It was their reaction to official failure to provide the safety, the shipping cast aside all the activities of officialdom and navies as something absolutely irrelevant to the real woes of the shipping, and lay its’ hopes with good old market. The success of private guards was just stunning, something nobody involved in the piracy expected. The number of hijacks plummeted to near zero, meanwhile maritime officialdom, UN, IMO and States politicians, together with navies brass, suddenly found themselves looking like idiots with all their Best Management Practice versions, with their “Save Our Seafarers” campaign, conferences and round tables, with aspects of their “Fighting the Piracy” strategy.
The shipping in High Risk Area is much safer now, than it was a year ago. How much of this may be attributed to the private guards, how much to the new political turmoil in Somali, and how much to navies new tactics (if there are any), we don’t know, because all the “experts”, “think-tanks” and involved organizations prefer to analyze situation as if nothing happened, as if situation is not totally different from the one we’ve had before. We have to assume, due the lack of any credible and timely study and the shortness of time in which changes took place, that the recent positive developments were caused mainly, by the massive use of private armed guards, not by navies activities or a war against Al-Shabaab.
Let’s look at some facts, in order to appreciate the difference between the recent past and the present, before coming to conclusions.
During the period August 2011 - March 2012 only 5 vessels were hijacked, against 23 vessels hijacked in the respective period August 2010 - March 2011. We must take into account, that strictly speaking, the latest two hijacks of ro-ro Leila and tanker Royal Grace wouldn’t happen if the situation wouldn’t make the pirates so desperate, that they started to violate the agreements with local and regional traders and shipowners (ro-ro Leila, for example, was trading between Gulf countries and Somali for years, without any trouble).
There are different evaluations of the number of vessels using armed guards, but taking it all together, presently, it can’t be less than 50% of all the vessels transiting HRA.
Obviously, pirates didn’t find the ways to obtain intelligence on the vessels transiting the HRA, with regards to armed guards on board. So much for all the rubbish said and written by hordes of “experts” and brass, about the world-wide intelligence network of the Somali pirates!
Obviously, there are no mystical international crime investors in Somali piracy, or else they’d help their debtors at least with badly needed intelligence.
All the tales of clandestine money flows proved to be one more lie in the long row of all other lies, concocted by the fighters with piracy. Right now there are hardly any piracy money at all, let alone some international criminal money flows.
The less is the number of hijacks, the less is the number of detained pirates with any hope for their conviction.
50% of vessels protected by armed guards reduced the number of hijacks by nearly five times, we may assume then, that 80% and more will simply wipe the pirates out from international shipping routes, leaving them with regional prey only.
All the years previous to year 2011, piracy grew up, together with navies presence and efforts of all those who declared the war on piracy. The losses incurred by piracy also were on the constant rise, but all the figures and statistics were so tangled and outright falsified, that we weren’t able to evaluate true losses and true cost of protection from pirates.
7 months experience armed us with figures and statistics, enough to exactly calculate the cost of absolute safety for the shipping in HRA.
Let’s imagine international community, or UN, or whatever else, will ripe for the new strategy of protecting shipping, not fighting the pirates. Let’s imagine they’ll establish multinational force and facilities, with the main and only task of providing each vessel with team of armed military personnel (AMP).
Let’s assume there are 150 vessels transiting HRA any giving day. Average HRA transit time is 7 days. An average team of 4 guards means we need some 4,200 guards to protect all the vessels in all of HRA, sailing both main routes, E-W and N-S. We need then, a force of some 5,000-6,000 mariners, with some 6-8 flotels (each with 200-300 personnel capacity) as their base. An average daily charter rate for a rather luxury flotel (of the type exploited in offshore) is anything between $30,000 - 50,000. The cost of flotels then, will be some $90 million annually, at the most. I don’t know about US or UK mariners, but Russian mariners will be happy to contract for one year service, not too cumbersome and risky, at some $3,000 monthly, which makes the cost of military personnel some $216 million, if we take an upper range of personnel required, 6,000 mariners. There are other expenses of course, like munitions, logistics, etc., let them be $50, or 100, or 200 million, I just don’t know, but in general, I doubt they’ll add up to more than $100 million. Never mind though, let them be $200 million, that will burden us with, in total, some $500 million annually. And no other costs and expenses! $500 million annually will make the shipping absolutely safe, and all other expenditures unnecessary.
Let’s calculate our savings. No need in war risk premiums, in some annual $100-200 million shipping is paying to insurers for something nobody can explain, because war risk insurance doesn’t cover hijack losses. No need in private armed guards – with an average one-way transit cost $50,000, potentially it is some stunning $1-1,5 billion annually. No losses incurred by piracy itself – some $100-150 million annually (ransom and all other costs including). No spends on security equipment, on double salary to crew and on re-routing.
Nobody knows what is the cost of navies presence in the region, but definitely it’s more expensive than AMP plan. With AMP underway, navies won’t break our hearts any longer with the sad stories about detained and then released pirates, due to the lack of legal mechanism and will to prosecute them, and the lack of penitentiary facilities. No crimes – no criminals, isn’t it? UN and Interpol, together with so-called maritime leaders, IMO, Round Table and ITF, will at last, give up their insane projects to imprison half of Somali population.
I don’t know any other expert or think-tank, who voiced the “Protect from piracy” strategy instead of “Fighting the piracy” as early as year 2009, except myself, modesty aside. In year 2009 I proposed a plan to provide vessels in HRA with AMP by a shuttle method, which was to be discussed at a meeting, headed by the then premier Putin. Plan was rejected. I’ve been promoting the AMP project for the last almost 3 years. I predicted more than a year ago, that the shipping will protect itself, using the only available and effective method of employing private guards. It came true, and last 7 months changed the situation so dramatically, that it needs reaction from all those who’re involved in piracy problem. The feasibility of “Protection from piracy” strategy is now a proven fact, not a prediction or an assumption.
In light of the newly obtained experience and strikingly effective results it brought, all the piracy studies based on old principles and approaches simply lost any practical value, any value at all, actually. We know now, that there is guaranteed method of protecting the shipping from pirates, at much lower cost than all the methods advised by officialdom. We need then, a study, which will make a comparative analysis of “Fighting the piracy” strategy and “Protecting from piracy” strategy, with comparative estimations of all the involved costs of both strategies. There is no need anymore in estimating the costs of ransoms, safety equipment, navies or penitentiary mechanisms, etc., when the exact cost of eliminating the piracy threat, of making the shipping 100% safe from the hijacks can be easily calculated. The latest study of OBP, even if it wasn’t a deliberate and audacious falsification, is wrong just by the ideas behind it. We don’t need researches and statistics of this or that aspect of the Somali piracy in times, when we know and successfully apply the effective method of making the piracy void.
The study should investigate not only the costs of conflicting strategies and define their supporters, but also, highlight the new danger to the shipping, impersonated in a SAMI (Security Association for the Maritime Industry) institution. There is already growing criticism of SAMI activities and ideas. To put it short, SAMI is an attempt to monopolize maritime security market, which is estimated, counting protection from Somali piracy alone, as prospective $1 – 2 billion annually. If shipping will be left on its’ own in protection from piracy, like it was and still is, then, the SAMI will monopolize the private armed guards market, and dictate price and terms. It means, plainly speaking, that SAMI will replace the chancy risk of hijack with guaranteed SAMI’s racket disguised as “protection”. The ongoing policy of SAMI is as clear as the waters of Indian ocean. SAMI is trying to become the official body, which will be dictating the terms of activities and licensing on a security market, of course in favor of SAMI members, who’re mainly British security agencies.
The study should assess the risk for the vessels whose owners still save on armed guards, the percentage of such vessels, and the accessibility of the information about unguarded vessels (general characteristics, routes and dates) to the pirates.
The absence of such a study, or at least, any official recognition of a new situation, is a fact, which once again outlines the true stance on the piracy of those who’re claiming themselves to the shipping’s elite and leaders.
There is little hope for the emergence of such a study, because there are only two communities, two bodies interested in “Protection from piracy” and therefore, interested in AMP plan, those are the communities of shipowners and of seamen. Both are too atomized to be able to order and sponsor such a study, which is to be transformed into a public protest against the activities of the number of institutions and persons, who actually, back the piracy:
Insurers: P&I Clubs, Joint War Committee - Lloyds Market Association (LMA);
IMO - Internationl Maritime Organizations, UN branch;
BIMCO – international shipowners’ association;
International Chamber of Shipping and International Shipping Federation;
Intertanko and Intercargo;
IMB Internationa Maritime Bureau;
ITF International Transport Federation and affiliated trade unions;
A number of individuals, mainly politicians;
A number of national and regional shipowners Associations;
Think-tanks of different origin and structure, ready to produce any study required, with any figures, for a reasonable fee.
The shipping finds itself in a no-win financial situation. The shipping has to pay directly to insurers and to private security agencies, and indirectly, through taxations, to maritime organizations, IMO and UN, and navies. The shipping may and should pay nothing at all, if the States, the international community, maritime organizations and UN should fulfill their obligations to the shipping, i.e. provide the safety of the shipping in most effective way, which is AMP, effective both in protection and in costs.
There is no paradox in a following statement – those shipowners and seafarers, who’ll fall victim to piracy in the future, have nobody to blame except themselves. Many of them signed the well-known “Safe our Seafarers” petition, the creation of the above-listed, thoroughly corrupt and rotted institutions. The petition justifies and legalizes the fraud, which is called “Fighting the piracy” campaign. The meaning of the petition is very simple – we as leaders fight the piracy in ways we choose, you as seafarers, stick to our rules, obey our orders and don’t ask questions. We don’t guarantee you any safety, nor do we pledge to, and you agree with all that by signing this petition.
In the beginning of March The Asian Shipowners’ Forum has called for a United Nations resolution that would see the international body sponsor and manage armed personnel on board ships sailing through pirate-infested waters. The call follows the group’s proposal to Working Group 3 of the Contact Group for Piracy Off Coast of Somalia in Washington on February 28. Once more the shipping demonstrates its total lack of understanding of the situation in general, and lack of determination to fight for its rights. The Asian Shipowners’ Forum is asking UN, organization, whose bureaucrats made a business out of “Fighting the piracy” strategy, and therefore, interested in unprotected vessels protection as much as pirates themselves, why should they positively react to The Asian Shipowners’ Forum call? They surely shouldn’t. There is only one way, quick and sure, to establish the AMP (either UN-managed or a joint effort of several States) and to change the situation in favor of shipping, and I’m doing all I can to make it work.
March 23 2012
® Voytenko Mikhail