Press Release: Somali Piracy’s Impact on the Global Economy
Nears $7 Billion in 2011 according to Oceans Beyond Piracy Report
COLORADO, USA
─ February 8, 2012 ─ Oceans Beyond Piracy released a report that raises
concerns about the cost of Somali Piracy to the world economy.
Approximately 80% of all costs are borne by the shipping industry, while
governments account for 20% of the expenditures associated with countering
piracy attacks. The report estimates the 2011 economic cost of piracy was
between $6.6 and $6.9 billion.
“The report
assesses nine different direct cost factors specifically focused on the
economic impact of Somali piracy,” explained Anna Bowden, the report’s author,
“Over the past year we have had substantial cooperation from maritime
stakeholders which has helped to ensure the figures are as reliable as
possible.”
The breakdown
of the most notable costs includes $2.7 billion in fuel costs associated with
increased speeds of vessels transiting through high risk areas, $1.3 billion
for military operations, and $1.1 billion for security equipment and armed
guards. Additionally, $635 million is attributed to insurance, $486 to $680
million is spent on re-routing vessels along the western coast of India, and
$195 million is the estimated cost for increased labor costs and danger pay for
seafarers.
The vast
majority (99%) of the billions spent are attached to recurring costs associated
with the protection of vessels — costs which must be repeated each year. This
figure is in sharp contrast to the $38 million spent for prosecution,
imprisonment, and building regional and Somali capacity to fight piracy.
Average ransoms increased 25% from approximately $4 million in 2010 to $5
million in 2011. Although the total cost for ransoms was $160 million for 2011,
money collected by pirates represents a mere 2% of the total economic
cost. While ransoms provide the incentive forSomali piratesto attack vessels and hold hostages, they represent a
disproportionally small cost compared to the nearly $7 billion spent to thwart
these attacks.
“The human cost of piracy cannot be defined
in economic terms,” Bowden added. “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. This happened in spite of
the success of armed guards and military action in the later part of the year.”
Officially launched at a press conference
held at the Royal United Services Institute for Defence & Security Studies
(RUSI)in Whitehall, London, the paper was
presented to maritime experts and international press. The report will be
used to raise important issues for the Oceans Beyond Piracy Working Group,
which is expected to release recommendations for a better coordinated, and
longer-looking strategy against piracy in July 2012.
For more
information aboutThe Economic Cost of Somali Piracy 2011,
contact Anna Bowden at +1.303.709.5498
or by email at[email protected].The publication of the report was made possible through the
support of the One Earth Future Foundation, sponsor of the Oceans Beyond Piracy
Project, which sponsors project initiatives in London and India.
ANNA BOWDEN
Program Manager
One Earth Future, Oceans Beyond Piracy
Office: +1.303.533.1702
Mobile: +1 303.709.5498
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Somali Piracy’s Impact on the Global Economy Nears $7 Billion in 2011 according to Oceans Beyond Piracy Report
The vast majority (99%) of the billions spent are attached to recurring costs associated with the protection of vessels — costs which must be repeated each year.