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Somali piracy costs $8.3bn a year, report says

16. May 2011. | 11:18

Source: MIA

Piracy off the Somali coast costs the international community up to $8.3bn (£5.1bn) a year, a new report from the Geopolicity consultancy estimates, BBC reports.

Piracy off the Somali coast costs the international community up to $8.3bn (£5.1bn) a year, a new report from the Geopolicity consultancy estimates, BBC reports.

That sum could reach $13-15bn by 2015, it says. It calculates that a pirate can earn up to $79,000 a year.

"Given the supply and demand for piracy services... there is plenty of room for expansion," the report warns.

The EU Navfor anti-piracy force says 23 vessels and 530 hostages are currently being held.

Geopolicity, which specialises in economic intelligence, forecasts an annual increase of 200-400 in the number of pirates operating off the Somali coast.

Piracy cost between $4.9bn and $8.3bn in 2010, it estimates, taking into account the effect on maritime trade volume, the expanding area in which pirates operate and the more sophisticated tactics used to combat them.

Piracy risks becoming a problem across African, Mediterranean and Pacific Rim waters, it warns.

Total income to pirates and from piracy was $75m-$238m in 2010, the study says. And it highlights the earning potential of pirates in an impoverished country with few other opportunities, no government and no rule of law.

While an individual pirate could earn $33,000-$79,000 a year, the next best alternative would bring in only $500 annually, or $14,500 over a lifetime.

The consulting group highlights what it calls the "Pirate Value Chain" of pirates, financiers and sponsors.

"Pirates are visible and known, financiers are harder to track, and sponsors remain invisible," it says.

Geopolicity says its research charts "largely unknown territory", underlining the "relatively weak application of economics to the problem of piracy".

"The supply of pirates, therefore, is closely related to the expected benefits of being a pirate and the associated risk-adjusted costs," the study says.


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