The Hindu Business Line : Pirates of Somalia

The sanction given to the Indian Navy to operate with a free hand in Somalia’s territorial waters, following the sinking of a pirate vessel by a Navy frigate, is important in the context of making the Gulf of Aden safer for ships. However, more will have to be done if insurance charges are not to rise and make shipping costs in the region more expensive. In view of this, it is somewhat of an irony that leading insurers have described the current unfolding situation as “orderly”, meaning that insurers are till now having no problem in raising premiums for shipping in the area according to the established rules of the game. But the warning has also been sounded that the future is uncertain given the increasing scale of operations of the sea-marauders who are becoming more adventurous.

A clear milestone in the piracy by henchmen of the Somalia warlords who are locked in fierce battle on the mainland — and who are increasingly using the funds so garnered for their land operations — was the hijacking of the Saudi Arabian supertanker, Sirius Star, with its $100 million worth of crude oil. Not only is this vessel the biggest prize as of now for the pirates, it was attacked on the high seas some 450 nautical miles off the Kenyan port of Mombasa, that is, much beyond the 200-mile off-limit Somalian zone which shipping lines have been observing over the past few years because of the growing insecurity. (Along with this large vessel, the pirates are just now holding a heavily armed Ukrainian ship and 10 other vessels pending payment of hefty ransom amounts.) The immediate problem is that the piracy in the region — more than 20,000 vessels pass through the Gulf of Aden each year — has resulted in insurance premiums shooting up to as much as $20,000 for a shipment of cargo, entailing an extra burden of around $400 million.

As of now, leading insurers say that business can be conducted “normally” (under existing schemes of cover) because the pirates have not behaved “insensibly” in that there has been no major incident of violence and casualty. But this could change overnight, especially in the wake of action like that taken by the INS Tabar. It is welcome that New Delhi is contemplating showing the mailed fist to the pirates. But it is also clear that only concerted international co-operation to control the menace — possibly under a UN umbrella — can produce effective results, which is essential if the vital sea-lanes linking the Mediterranean with the Indian Oceans are to be kept relatively trouble-free, both in terms of the physical safety of assets and insurance costs.

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