If Somali pirates only conjure up images of rag-tag brigands roaming off the coast of Africa attacking ships and taking hostages, you’re missing half the story. It turns out that Somalian pirates are investing their ransom monies in their communities.
Anja Shortland, a British economist, argues that piracy is driving economic development in Somalia, in a report recently published by the U.K. think tank Chatham House. She says it has led to a development boom in a country that has no functioning government and is one of the poorest in the world.
For instance, piracy creates employment for Somalis, whether as guards and crew, or as cooks and traders. Wages for day laborers are up. The north of the country, where ransom investment is most concentrated, has seen increased investments in cattle and in commercial development.
Somali pirates took in about $250 million in ransom money, according to Shortland. By comparison, remittances from Somalis living overseas are sizable, estimated at $1.3-2 billion a year, but they generally are used to cover basic household expenses. It’s also getting more challenging to send this money to Somalia. For instance, Somalis in the U.S. are finding it more difficult to send money home after a Minnesota bank that was a key provider of remittance services decided to close down the accounts of Somali money transfer companies, citing fears of running afoul of terrorist financing regulations.
In the U.K. and other nations, Somali piracy already generates considerable attention — and controversy. Currently, over thirty nations are monitoring the seas off the horn of Africa, an endeavor that is estimated at $7-$12 billion in 2010 alone. Yet these missions have ‘failed to strategically deter piracy’, Shortland argues. So she’s making a case for economic incentives.
Reducing piracy, she believes, is not an sea-faring military issue but rather a land-based economic challenge that should focus on “replacing piracy as a source of income.” Exactly how this would happen, however, is another matter.