The Daily Planet: Ahoy, Matey!
September 30, 2008
There’s so much to write about: the failure of the US Congress to pass the bail-out plan, the more general collapse of the international economy, the upcoming debates between Sarah and Joe, etc. And on at least first two, I am well qualified to comment. But I figure you’re reading enough about the financial crisis, so I’ve decided to cover something a bit different in today’s Daily Planet: pirates. Yes, really, pirates. Though not those of the Caribbean, those of the Horn of Africa.
Most people don’t know that in this age of global trade and commerce, the shipping industry, which moves almost all of the goods traded internationally, is still susceptible to pirate attacks. In fact, there are an estimated 300-400 pirate attacks a year (a 75% increase over a decade ago), most of which happen in a narrow strip of water between Malaysia and Indonesia called the Straits of Malacca. At its narrowest point, the Straits are only 1.2km wide, and yet 50,000 ships a year, carrying 1/3 of all international trade (i.e. many things from China destined for Europe), pass through it. Basically the ships are sitting ducks and are extremely susceptible to pirate attacks. Billions of dollars a year are lost via piracy.
Before we proceed, let’s talk about modern pirates for a sec. Do they have hooks instead of hands? Eye patches? Parrots perched on their shoulders? Not that I know of. They are mostly people from poor, and poorly governed, countries, like Somalia. In fact, I wanted to report on pirates today because a story in the Financial Times caught my attention: rival pirates were killed in a shootout off the coast of Somalia. They were fighting about what to do with a Ukrainian ship they had captured. They disagreed, fought and killed several pirates in the process. With guns though… nobody walked the plank. Pirating off the Horn of Africa has increased dramatically in the past several years, in no small part because of the collapse of the Somali state and other political problems in the region. The inability of the Somalian government to patrol its waters increases the ability of pirates to operate.
Pirate attacks range from unsophisticated methods like holding the crew ransom long enough to steal the cash on board, to more sophisticated attacks where ships are commandeered, moved into port, repainted and flown under an alternative flag. This is possible because modern pirates are well armed (with rocket propelled grenades, mines, automatic weapons, etc).
All of this to say that globalisation has its contradictions: while short-selling, over-leveraging, unwound derivatives and other sophisticated risks to the global economy dominate the news, the globl economy is still suspetible to unsophisticated risks like piracy, a practice which has been around as long as boats. So as they say, the more things change…