The problem of piracy and other forms of maritime security is actually less severe than many people perceive. Nevertheless, it is a problem that needs to be addressed. To solve the problems around Somalia, the naval involvement should continue, and effective punishment for piracy must be increased. Finally, in order to fight the long-term occurrence of piracy, a land-based solution must be found. Such a solution can only work when the focus is on building institutions and particularly the fight against corruption. There are other regions in the world that may succumb to piracy and where such land-based reforms can prevent piracy from being established in the first place.

Marc Vothknecht

Olaf J. de Groot

English

Research Papers in Economics

 
 
 
Olaf J. de Groot and Marc Vothknecht 
 
© AFP PHOTO/MOHAMED DAHIR 
· What can be done to reduce piracy in 
Somalia? 
 
· What are the factors that make it 
likely for piracy to take root? 
 
· Is there an important role for 
policymakers? 
Summary: The problem of piracy and other forms 
of  maritime  security  is  actually  less  severe  than 
many  people  perceive.  Nevertheless,  it  is  a 
problem that needs to be addressed. To solve the 
problems  around  Somalia,  the  naval  involvement 
should  continue,  and  effective  punishment  for 
piracy must be increased. Finally, in order to fight 
the  long-term  occurrence  of  piracy,  a  land-based 
solution must be found. Such a solution can only 
work when the focus is on building institutions and 
particularly the fight against corruption. There are 
other  regions  in  the  world  that  may  succumb  to 
piracy  and  where  such  land-based  reforms  can 
prevent piracy from being established in the first 
place. 
POLICY BRIEFING 
September 2011 EUSECON Policy Briefing 2 
What Can Be Done to 
Reduce the Occurrence 
of Piracy in the Short 
and Long Run? 
 
 
 
 
 
 
 
 
 
 
 
 
 
Introduction 
In recent years, the occurrence of piracy has received 
increasingly  much  attention,  both  in  the  popular 
media and from policymakers. This is despite the fact 
that piracy is an old phenomenon that has taken place 
for  centuries,  with  a  fairly  strong  surge  in  recent 
decades.  For  example,  Indonesian  pirates  were  a 
powerful and very lethal force in the late 1990s and 
early 2000s. Within the EUSECON project, there have 
been several studies that look at piracy (or maritime 
security),  and  we  use  these  studies  to  answer  a 
number of policy-relevant questions on what should 
and  can  be  done  to  solve  piracy.  In  particular,  we 
address  the  following  questions:  In  the  short  term, 
what can be done to stop piracy in the seas around 
Somalia?  Next,  what  are  the  long-run  reasons  why 
piracy  takes  place  in  specific  locations?  Finally,  are 
there specific policy options to be explored that could 
effectively address the problem? 
The  research  underlying  the  answers  to  these 
questions  was  conducted  at  DIW  Berlin  and  is 
published as Shortland and Vothknecht (2011) and De 
Groot  et  al.  (2011).  Further  research  is  referenced 
both in this text and in these original studies. 
The piracy problem in perspective 
How big is the problem of piracy really? As figure 1 
shows, recent years have not seen the spectacular rise 
in piracy that one would expect, given media reporting 2 | EUSECON POLICY BRIEFING 2 SEPTEMBER 2011  
 
The decision to become involved in piracy is a 
combination of push- and pull-factors 
on this issue. However, it is clear that 
there is a somewhat increasing trend 
in  recent  years.  These  basic  figures 
also hide the fact that over time there 
has  been  a  large  geographic  shift,  in 
particular from the Malacca Strait and 
nearby regions to the Gulf of Aden and 
the western Indian Ocean. Even in the 
waters  around  Somalia,  the  rate  of 
attacks is still only around 1 in 300 or 
less frequently, though. It is also not 
immediately clear from the data that 
the  death  toll  associated  with  piracy 
has decreased. On the other hand, the 
average  level  of  sophistication  of  the 
attacks has increased. 
The objectives of modern pirates are not so different 
from  historical  pirates  (Leeson,  2009):  obtaining 
wealth.  However,  the  methods  for  doing  so  have 
changed. Where historical pirates aimed to obtain the 
marketable  valuables  available  on  board  ships,  the 
focus  of  Indonesian  pirates  during  the  1990s-2000s 
was on obtaining entire ships and cargo to sell. Today, 
the most visible forms of piracy consist of attempts to 
hijack ships in order for the pirates to attract ransom 
fees.  The  optimal  strategy  for  such  pirates  is not  to 
hurt their victims, since this reduces their value. This 
is  important  to  remember  when  looking  at  the 
objective functions of modern-day pirates. 
However, it should also be noted that the majority of 
the  acts  of  piracy  reported  by  the  International 
Maritime  Bureau  are  not  this  form  of  violent  and 
highly  visible  piracy:  the  great  majority  of  pirate 
attacks are what can be referred to as “petty maritime 
theft”. 
Unfortunately,  it  is  also  not  clear  what  the  actual 
impact is of piracy on the world economy. The total 
impact  of  piracy  in  the  financial  sense  is  highly 
debated,  with  Chalk  (2008)  providing  estimates 
between  1  and  16  billion  USD.  This  high  level  of 
uncertainty  is  clearly  a  part  of  the  literature  on 
maritime security that warrants further attention. 
Why does piracy take place? 
From  a  macroeconomic  perspective,  explaining  the 
occurrence of piracy is a relatively easy task. Like with 
most actions of rational actors, the decision to become 
involved in piracy is a combination of push- and pull-
factors. In this particular case, we distinguish between 
opportunity,  means  and  motive.  By  opportunity,  we 
mean  that  it  is  more  likely  that  individuals  become 
involved in piracy when they have easy opportunities 
do so. For example, this means being located near a 
shipping choke point, which gives relatively easy access 
to large number of ships or having large ports with 
many  anchorages,  which  gives  easier  access  to 
stationary  ships  for  petty  theft.  The 
means  of  piracy  are  another 
necessary  condition:  access  to 
weapons, for  example  due  to ethnic 
strife in a country, and access to financing, for example 
from a flourishing drug trade. The motive for piracy is 
mainly  related  to  poverty  and  the  related  low 
opportunity costs. 
The important factor left out of the equation so far is 
the role of the government. Low levels of governance, 
particularly related to low controls for corruption are 
generally  associated  with  high  levels  of  criminality 
(including piracy). However, in order for pirates to be 
able  to  convert  their  loot  into  consumables,  pirates 
need  functioning  markets,  which  are  dependent  on 
0
50
100
150
200
250
300
350
400
450
500
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Successful piracy attempts
Failed piracy attempts
All piracy attempts
Figure 1 Piracy over time (data from the International Maritime Bureau)   EUSECON POLICY BRIEFING 2 SEPTEMBER 2011 | 3 
 
The naval intervention has prevented 
cooperation between pirates and Islamists 
somewhat  good  governance.  At  the  same  time,  in 
order for the state not to interfere with the pirates, 
they also need government officials to be corruptible. 
This  leads  to  the  surprising  conclusion  that  the 
relationship  between  governance  and  piracy  is 
actually  non-linear  (De  Groot  et  al,  2011).  At 
extremely low levels of governance, piracy is unlikely 
to  take  place,  whereas  at  somewhat  low  levels  of 
governance, piracy is expected to be more common. 
The most important mechanism for this conclusion is 
the  role  of  corruption.  In  order  to  reduce  the 
probability that piracy takes root, it is 
vital  to  reduce  corruption  and  any 
land-based  solution  to  the  piracy 
problem should be based on that. 
Does naval intervention help? 
In  order  to  reduce  the  occurrence  of  piracy  near 
Somalia, several countries and international coalitions 
have recently resorted to the use of naval capacity in 
the region. The national navies of India, China, Russia, 
Japan,  United  States  and  others  have  all  taken  to 
defending maritime trade in the region. Additionally, 
both NATO and the European Union have sent patrols 
that focus on the increasing maritime security in the 
waters  around  Somalia.  The  important  question  is 
whether  these  counter-piracy  operations  have  been 
successful or not. In short, the answer is: partly. 
Using data from 2008-2010, Shortland and Vothknecht 
(2011)  find  that  the  increasing  attention  to  the 
problem  of  piracy  seems  to  have  contributed  to  a 
stabilization of the piracy problem in the Gulf of Aden, 
albeit  at  a  high  level.  However,  one  impact  of  the 
mission has been the relocation of new pirate attacks 
from the Gulf of Aden to the Indian Ocean, stretching 
as  far  south  as  the  Maldives  and  the  Mozambique 
Channel.  There  appears  to  be  a  difference  between 
experienced pirates, who follow this strategy and new 
entrants, who prefer the more established, albeit more 
detection-prone, Gulf of Aden. 
An unqualified success from the naval intervention has 
been the prevention of advanced cooperation between 
pirates  and  Islamist  insurgents.  It  is  clear  that  the 
pirates  realize  that  their  involvement  with  Islamist 
insurgents would significantly increase the attention 
they  receive.  This  is  in  line  with  Leeson’s  (2008) 
assessment of historical piracy, in which pirates also 
take care to work on their image in order not to be 
associated  with  less  savory  characters  that  could 
attract more negative attention from the authorities. 
The success of other policies 
A number of the policies initiated by countries, ship 
owners and alliances have been successful. Shortland 
and Vothknecht (2011) find that the threat of trial in 
Kenya reduced the occurrence of piracy in that region, 
and may be shifting it to other regions. In contrast to 
this,  NATO’s  catch-and-release  policy  dictated  by 
international  human  rights  laws  is  not  an  effective 
deterrent.  One  way  in  which  the  catch-and-release 
method could be made more efficient, is by depriving 
the  pirates  off  their  capital.  The  largest  investment 
required to participate in piracy is the expensive high-
powered  motor:  if  this  is  replaced  by  something 
cheaper that can only be used in fishing, this would 
decrease  pirates’  abilities  to  plan  new  missions. 
Finally, there is also no evidence that a new US ransom 
policy that reduces the capacity for ship owners to pay 
the necessary bribes is effective.  
The increase of private protection on board ships also 
does  not  seem  to  have  had  much  effect.  Passive  or 
active measures to reduce the probability of capture 
can endanger the crew, for whom it may be preferable 
to  undergo  the  ransoming  process  rather  than  risk 
getting  injured  or  killed  during  the  actual  capture. 
Having armed guards on board ships is difficult from a 
legal  perspective  as  well  as  from  a  practical 
perspective in the case of flammable cargo, and does 
not  seem  to  have  the  desired  effects  either.  Passive 
safety features, such as barbed wire, bright lights and 
dummies dressed as armed guards, can successfully be 
used  to  stall  pirates  while  waiting  for  military 
intervention to rescue the crew. However, this tactic is 
only  feasible  in  zones  that  have  a  relatively  dense 
naval presence and thus cannot be employed in the 
Indian Ocean. Finally, so-called “panic rooms”, where 4 | EUSECON POLICY BRIEFING 2 SEPTEMBER 2011  
 
the  crew  can  go  into  hiding  seemed  to  be  a  useful 
improvement  when  first  introduced,  but  they  have 
merely led to an increase in the amount of violence 
used during the attacks. 
Policy recommendations 
The most  important  thing  that has  become clear  on 
basis of the body of research is that the solution for 
piracy is on land. The impact of naval interventions is 
relatively small and has mostly led to a replacement 
effect between different regions around Somalia. For a 
land-based solution to work, efforts must be made to 
increase  the  quality  of  governance  in  Somalia, 
particularly when it comes to corruption. This will also 
have  the  positive  side  effect  of  enabling  the  local 
population to develop alternative sources of income, 
which  will  reduce  their  willingness  to  undertake 
piracy. 
From  a  naval  perspective,  it  is  vital  to  increase  the 
disincentive of piracy by increasing punishment. This 
can  be  done  with  floating  courts  to  guarantee  that 
pirates who are caught are indeed punished and by 
routinely replacing the costly high-powered motors of 
ships with motors more suitable to fishing. 
Credits 
This  EUSECON  Policy  Briefing  was  authored  by  Olaf J.  de 
Groot and Marc Vothknecht from the German Institute for 
Economic Research. The views expressed in this briefing are 
the authors’ alone. 
 
 
EUSECON, or ‘A New Agenda for European Security Economics’ is a 
four-year collaborative research project, coordinated by DIW Berlin 
and funded by the Seventh Framework Programme of the European 
Commission. EUSECON analyses the causes, dynamics, and long-
term effects of both human-induced insecurity threats and 
European security policies. 
For more information on EUSECON, please visit our website: 
http://www.economics-of-security.eu 
Or contact us at: 
EUSECON 
Department of Development and Security 
German Institute for Economic Research 
Mohrenstrasse 58 
10117 Berlin, Germany 
Tel: +49-30-897889-277 
© Olaf J. de Groot and Marc Vothknecht 2011 
References 
Chalk, Peter (2008). The Maritime Dimension of International 
Security: Terrorism, Piracy and Challenges for the United 
States. Arlington: The Rand Corporation. 
De Groot, Olaf J, Matthew Rablen and Anja Shortland (2011). 
Gov-aargh-nance – “Even Criminals Need Law and Order”. 
Economics of Security Working Paper No. 46. Berlin: 
Economics of Security. 
International Maritime Bureau (different years). Piracy and 
Armed Robbery Against Ships. Annual Report. Kuala Lumpur: 
International Maritime Bureau. 
Leeson, Peter T. (2009). The Invisible Hook: The Hidden 
Economics of Pirates. Princeton: Princeton University Press. 
Shortland, Anja and Marc Vothknecht (2011). Combating 
‘Maritime Terrorism’ off the Cost of Somalia. Economics of 
Security Working Paper No. 47. Berlin: Economics of Security. 
 

Gov-aargh-nance – “Even Criminals Need Law and Order”.

The Invisible Hook: The Hidden Economics of Pirates.

The Maritime Dimension of International Security: Terrorism, Piracy and Challenges for the United States.

What Can Be Done to Reduce the Occurrence of Piracy in the Short and Long Run?

http://www.diw.de/documents/publikationen/73/diw_01.c.386674.de/diw_eusecon_pb0002.pdf

What Can Be Done to Reduce the Occurrence of Piracy in the Short and Long Run?

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics