The Business of Piracy in Somalia

Piracy off the Horn of Africa has grown substantially in recent years: 217 ships reported being attacked by Somali pirates during 2009. Although less than one percent of ships transiting the Gulf of Aden in 2009 suffered attacks, Somali piracy creates considerable economic costs and distortions. Some ships now routinely avoid the region and the estimated additional costs of specialty marine risk insurance for ships using the Gulf of Aden trade route were estimated to be in the region of US$ 400mn for 2009. International naval forces (including missions from the EU and NATO) are present in the Gulf of Aden to ensure the delivery of food aid to displaced people in Somalia, to protect shipping in the Gulf of Aden and to deter pirates from operating in the region. In our research we show that the naval presence has prevented an explosion of piracy in the Gulf of Aden, but does not appear to have had a significant deterrent effect on pirates. Some ship owners gamble that they will not be attacked and do not co-operate with the navy, thereby providing easy targets for pirates. In the meantime pirates' risk of injury, detention and trial in encounters with the navies remains relatively low. In any case sea-based naval operations will have limited success as long as Somalia remains a failed state. However, we show that partial improvements in local stability and governance are likely to increase pirate attacks. Therefore the most promising solution of the piracy problem would be to establish and fund a Somali coastguard. This would enforce both anti-piracy laws and stop illegal fishing off the coast of Somalia, providing new opportunities for economic for Somalia's coastal communities.Piracy, Underdevelopment, State infrastructure

"Robin Hook": The Developmental Effects of Somali Piracy

Naval counter-piracy measures off Somalia have failed to change the incentives for pirates, raising calls for land-based approaches that may involve replacing piracy as a source of income. This paper evaluates the effects of piracy on the Somali economy to establish which (domestic) groups benefit from ransom monies. Given the paucity of economic data on Somalia, we evaluate province-level market data, nightlight emissions and high resolution satellite imagery. We show that significant amounts of ransom monies are spent within Somalia. The impacts appear to be spread widely, benefiting the working poor and pastoralists and offsetting the food price shock of 2008 in the pirate provinces. Pirates appear to invest their money principally in the main cities of Garowe and Bosasso rather than in the backward coastal communities.Somalia, piracy, cash transfers, economic development, remote sensing, satellite imaging

The Role of Politics and Institutions in LDC Currency Devaluations

This paper examines political, institutional and economic determinants of exchange rate performance in less developed countries in the 1990s. It models exchange rate depreciations as two separate processes, firstly a process determining whether a currency is devalued and secondly a process determining the size of devaluation. The paper utilizes the most recent political and institutional data as well as a new index of central bank governor turnover in the 1990s to examine the relative importance of political and economic factors. While institutional and political factors dominate the probability of devaluation, the size of devaluations is mainly governed by economic factors.exchange rate systems; less developed countries; speculative attack; fundamentals; institutions

The Pirates of Somalia: Coastguards of Anarchy

This paper analyses the underlying factors driving piracy off the coast of Somalia and examines the effectiveness of the international naval anti-piracy mission with respect to its declared aims. We show that while the navies perform well with respect to their short-term aims, they failed to contain the escalation of the piracy problem through 2009: pirates have been diverted from the Gulf of Aden into the Indian Ocean and the Arabian Sea. Evidence from domestic conditions in Somalia suggests that economic development and greater stability might in fact aid pirates.

Are Americans More Gung-Ho Than Europeans? Some Evidence From Tourism in Israel During the Intifada

Analysis of cross-sectional data on tourism to Israel during the Intifada period reveals some of the factors driving the behaviour of tourists from different countries. A large part of the heterogeneity in the observed response of different nationalities can be explained by socio-economic characteristics, some of which suggest differences in attitudes towards the risk associated with violence in Israel. Analysis of time-series data reveals the relative importance of different dimensions of violence in explaining the decline in tourism.

Combating "Maritime Terrorism" off the Coast of Somalia

This paper evaluates the effectiveness of the international naval mission in the Gulf of Aden from 2008-2010, both in terms of its counter-piracy and its counter-terrorism objectives. We draw on arguments developed in the literature on terrorism and law and economics, detailed statistical analysis and a large number of in depth interviews. Counter-piracy operations are a qualified success - their main effects are the stabilisation of attacks at a high level and the substitution between the relatively well protected transit corridor in the Gulf of Aden and the open sea. However, the counter-piracy measures appear to deter pirates from forming alliances with Islamist movements and may therefore make a major contribution to international security.

"An Eye for an Eye, a Tooth for a Tooth." A Study of Political Violence and Counter-insurgency in Egypt

This paper analyses a newly collected time-series database measuring the dimensions of violent political conflict in Egypt. Attention is focused on the interaction between politically motivated attacks by Islamists and the counter-insurgency measures used by the Egyptian government. The intensity of security force activities responds immediately to all kinds of Islamist violence, regardless of the target of the attack. However, there are significant asymmetries in the way that the different forms of Islamist violence respond to the different security force activities.Egypt, Islamist violence; counter-insurgency; political rights; civil liberties

How does Political Violence Affect Currency Substitution? Evidence from Egypt

In this paper we estimate a time-series model of the financial asset portfolio shares in Egypt, distinguishing between assets of varying degrees of liquidity and between domestic currency and foreign currency deposits. While financial liberalization and financial stability are found to have encouraged domestic residents to increase the share of their portfolio composed of domestic currency assets, these effects have been offset by an increase in the number of violent political incidents arising from conflict between radical Islamic groups and the Egyptian state. Greater violence has led to lower domestic asset demand and substitution into foreign currency deposits. The link between political events and financial outcomes provides a rationale for economic policy interventions by Bretton Woods institutions in response to increases in political instability.Egypt; Currency Substitution; Asset Demand; Political Violence; Radical Islamism

Combating "Maritime Terrorism" off the Coast of Somalia

This paper evaluates the effectiveness of the international naval mission in the Gulf of Aden from 2008-2010, both in terms of its counter-piracy and its counter-terrorism objectives. We draw on arguments developed in the literature of law and economics, detailed statistical analyses and a large number of in depth interviews. Counter-piracy operations are a qualified success: their main effects are the stabilisation of attacks at a high level and the substitution between the relatively well protected transit corridor in the Gulf of Aden and the open sea. However, the counter-piracy measures appear to deter pirates from forming alliances with Islamist movements and may therefore make a major contribution to international security.Piracy, Somalia, counter-terrorism, law and economics, deterrence, naval intervention