By Ajai Shukla
Business Standard, 18th Mar 11
In 17th century London, shipping merchants gathered at Edward Lloyd’s Coffee House to pool money for underwriting the risks faced by trading galleons that sailed into pirate-infested waters like the Caribbean Sea. Today, some 300 years later, Lloyds --- now housed in an ultra-modern building in the same area --- is witnessing a dramatic resurgence of the marine insurance business through which it has become one of the world’s biggest insurers. Over the last three years modern-day pirates, operating largely from war-torn Somalia and island hideouts around the Strait of Malacca, have hijacked 174 ships, most of them cargo vessels, earning an estimated US $60 million in ransom annually. The International Maritime Organization says that 30 vessels and 685 crewmen are currently held along the Somali coast.
The pirates follow a simple modus operandi. Operating from a “mother ship”, usually a captured cargo vessel that can remain at sea for extended periods and sail as far as India’s western coast, they are alerted to vulnerable vessels by watchers on the Somali coastline who talk to them over satellite phones. Having identified their target, a boarding party of young Somalis, armed with AK-47s and rocket launchers and equipped with grappling hooks, approaches the unarmed cargo vessel in a small, fast-moving skiff that is powered by outboard motors. The pirates, usually high from chewing the popular Somali intoxicant, khat, compete to board the target vessel. The first man to scale the side of the vessel with his grappling hook is rewarded, usually with a car.
The captured vessel, its crew hostage, is sailed to the Somali coast, where the pirates are in cahoots with the radical, Al Qaeda-linked Al-Shabaab militia that controls much of Somalia. The ransom paid by insurance companies for the release of vessel and crewmen is shared between the pirates, Al-Shabaab and local officials. There is concern that this ransom money indirectly bankrolls Al Qaeda.
Little has been achieved by patrolling the waters around the Horn of Africa by warships from the European Union Naval Force (EUNF), the North Atlantic Treaty Organisation (NATO), a US-led coalition, and by several navies that operate independently, including those of Russia, China and India. Indian naval warships have carried out anti piracy patrols in the Gulf of Aden since October 2008, escorting some 1500 ships. But with cargo vessels reluctant to adhere to the irksome rules of convoying, in which naval warships escort groups of freighters through the Internationally Recommended Transit Corridor (IRTC) --- a piracy prone, 500-nautical mile stretch at the mouth of the Gulf of Aden ---- pirates are hardly short of prey.
Now, according to The Times newspaper, Lloyd’s is leading an initiative in which insurance companies will bankroll a private fleet of 18 armed patrol boats to protect shipping around the Gulf of Aden. Called the Convoy Escort Programme (CEP), this is reportedly being supported by the shipping industry, including the Baltic and International Maritime Council (Bimco), as well as by the governments of UK and the USA.
India has been more successful in patrolling its coastal waters, particularly around the Lakshadweep Islands, where the Indian Navy launched Operation Island Watch last November. After capturing a pirate ship in January and another in February, the navy achieved its most significant success on 12th March, when a naval task force captured a pirate mother vessel, along with 61 pirates.
But there remains concern, as Defence Minister AK Antony told parliament on 14th March, that piracy is moving from the Somalian coast towards the Indian coastline. The reason for this is the bottleneck between India’s Lakshadweep Islands and the Maldives, into which all vessels transiting between West Asia and South East Asia are funnelled. For the pirates, the predictable flow of oil tankers and cargo vessels through this maritime superhighway provides attractive pickings.
The MoD’s annual report, which was tabled in parliament on Wednesday, notes, “The presence of Somali pirates in the waters around our western island territories has been an unwelcome development which requires heightened vigil… The linkages between terrorists based in Somalia and transnational organized crime is also a cause of major concern globally.”
While the MoD focuses on security, the Ministry of Shipping is concerned at the adverse impact on India’s sea trade. Insurance rates to and from India’s west coast were hiked 300% in mid-December after “war risk premium” was extended from the mid-Arabian Sea (longitude 65 degrees East) to the entire Indian west coast. The government hopes to ease insurance rates by delivering greater security around its own patch of the Arabian Sea, but has concluded that it will take a United Nations-led operation to tackle piracy holistically, especially the instability in Somalia that breeds piracy and provides safe havens to the pirate groups.
The MoD’s annual report states, “India is in favour of strengthening multilateral cooperation under a UN framework to meet the complex challenges of maritime security.”