Yo, Ho, Ho…A Pirate’s Life for Me?

For anyone who thought pirates were a thing of the past—confined to Disney theme parks and Johnny Depp movies—you haven’t been paying attention!  Although the “golden age” or piracy ended by the mid-eighteenth century, modern day piracy has been growing in recent years, especially off the coast of Somalia and in the Straits of Malacca.  There’s even a modern-day pirate city—Eyl, Somalia —where pirates store their captured ships and plundered cargo while awaiting ransoms demanded for their return.  Pirates generally demand between $300,000 and $1 million for the return of the ship and its crew.

But over the weekend, Somali pirates struck a far larger target.  A Ukrainian ship destined for Kenya was carrying 33 T-72 tanks, other “military hardware,” “an assortment of spare parts for use by different branches of the Kenyan military,” and “a substantial quantity of ammunition,” according to Kenyan government spokesperson and the Ukrainian foreign ministry.  The U.S. Navy is monitoring the situation, and Russian naval vessels are heading to the area.  The pirates are demanding $20 million for the return of the ship and its cargo—a bargain compared to their initial $35 million offer.

The fact that the pirates operate so freely is largely a function of the collapse of the Somali state.  Somalia has effectively been controlled by warlords, and has been without an effective national government since 1991, when a civil war tore through the country.  The internationally-recognized government of Somalia has been forced to meet in neighboring Kenya due to violence and political instability, allowing local pirates and warlords to reign free.  In June, the United Nations authorized member states to send warships into Somalia’s territorial waters to tackle piracy, but little progress has been made so far, as the most recent seizure suggests.

Peter Leeson’s article, cleverly entitled “An-arrgh-chy: The Law and Economics of Pirate Organization” contrasts the political economy of historical pirates with that of today.  It’s also a fun read!

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