Piracy off the coast of Somalia and in the Gulf of Aden is a worldwide problem. Today, ships from several navies patrol the area to keep the pirates at bay.
However, once in a while, the pirates manage to hijack a boat. When that happens, they will only release the ship after receiving a considerable ransom running into the millions of dollars.
However, we do not know as much about these pirates as we think. Here are five shocking facts about them.
Top 1: Insurance Companies Make More Than Pirates
Somali pirates are not the biggest winners of piracy despite receiving millions of dollars in ransom payments.
The investors get most of the ransom money. However, they are not the biggest winners, either. Insurance companies are the ones that rake in the most. They make ten times more than pirates make in a year.
Somali piracy is a $7–$12 billion a year industry. In 2010, it was $9 billion. Somali pirates and their investors did not receive even half of that money. Instead, they got less than 2 percent. In 2010, pirates received $148 million in ransom money.
That year, shipowners paid $1.85 billion in insurance premiums to cover hijackings and another $1.4 billion on security equipment
Top 2: They Avoid Hijacking Ships Owned By Influential Somali
In a lawless society like Somalia, messing with the wrong guys could quickly lead to problems. We already mentioned that piracy came to a sudden halt in Somalia in 2012 when cargo ships started using armed security.
Somali pirates did not hijack any vessels until 2017 when some pirates seized an oil tanker. The pirates had barely begun discussing ransom when they released the ship without receiving any money.
The oil tanker, Aris 13, was transporting oil for an influential Somali businessman. In societies like Somalia, “influential” means that the government will often defend your assets.
The marine force of Puntland, a semiautonomous region of Somalia, did just that when they exchanged gunfire with the pirates. Clan leaders were later brought into the negotiation between the pirates and the marines.
The talks ended with the pirates leaving the ship without receiving a ransom. Somali pirates generally avoid hijacking ships owned by influential Somali businessmen for these reasons.
Top 3: They Protect Illegal Fishing Trawlers
Somali pirates started off chasing illegal trawlers from Somali waters. These days, they escort these trawlers and allow them to catch as many fish as they want.
In exchange, the trawlers pay protection money to the pirates. Somali pirates turned to this new business in 2012 when cargo ships started using armed security.
Many of these illegal trawlers want to get the most out of their money, so they will often to use illegal nets for fishing. Ships from Iran, South Korea, and Thailand are the guiltiest.
The pirates issued licenses to these trawlers for hundreds of thousands of dollars. Ironically, Somali fishers don’t get to catch any fish in the fertile grounds used by the trawlers because the pirates turn the fishermen back.
Sometimes, the pirates even turn around and hijack the same trawlers they are protecting and demand a ransom. Whether the seizures are the result of deals gone wrong remains unknown.
Top 4: They Originally Set Off To Protect Somalia’s Waters
Somali pirates didn’t start as pirates. After the fall of the Somali government in 1991, foreign fishing trawlers freely breached Somali waters to fish.
The more impoverished Somali fishermen, who used small boats and nets, saw their catches decline. Sometimes, the trawlers even shot at the fishermen when they got too close.
At the same time, other foreign ships were dumping radioactive waste in Somali waters. The waste often leaked into coastal villages, causing health problems.
The fishermen rose up and formed groups like the National Volunteer Coastguard of Somalia and Somali Marines (names the pirates still use today) to protect Somali waters.
The fishermen will often seize these ships in exchange for ransoms. Shipowners willingly paid these ransoms because they were operating illegally.
Moreover, they continued paying as the fishermen upped their rates. Recognizing a good business, the fishermen started hijacking random ships off the coast of Somalia.
These days, the pirates are not even former fishermen—just poor dudes trying to make a living. Piracy is Somalia’s most prominent industry for a reason.
Top 5: How Negotiations Work
After boarding a ship, pirates go through the documents on board to find the owners. The information is passed onto a negotiator who could be on the boat or far inland.
The negotiator, who is usually a trusted relative, contacts the shipping company and explains the situation.
The pirate negotiators are often under intense pressure because they must ensure that the pirates receive a good ransom and the shipowners do not end negotiations.
Pirates don’t like holding ships for too long, and the companies need their ships for business. So they will often find that middle ground.
They also have strict demands such as requesting that the ransom is paid in $50 or $100 notes printed after the year 2000.
Several shipping companies have K&R—kidnap and ransom insurance for situations like this. So they call their insurers, which contact a response company.
The response company deals with the pirate negotiator and will usually agree on a ransom without the consent of the shipowners.
Once an agreement is reached, the response company contracts with a private security company to deliver the payment.
The shipping companies remain in contact with their lawyers throughout the negotiations to ensure that they are not breaking any law.
Lawyers receive around $300,000 for their work, while the response company earns $100,000. In all, securing a ship costs another $1 million besides the ransom.
Shipping companies will often recoup the money for the payment and every other paid expense from insurance.
However, the pirates do not release the ship and crew the moment they receive their ransom. They spend time counting the money with their counting machines and checking for fake notes.
They release the boat and crew when they are satisfied that everything is in order.