Bartamaha (New York): – Somali pirates have driven up shipping costs in the Indian Ocean, resulting in world economic losses estimated at $7-$12 billion (R48-R80 billion) a year, according to a study by One Earth Future Foundation released on Thursday.

Armed with AK-47’s, pirates in rickety skiffs have carried out brazen hijackings, seizing huge oil tankers, cargo vessels and luxury yachts.

The Colorado-based think tank said in the study on the costs of piracy the main direct costs of piracy included ransom, piracy insurance premiums, rerouting of vessels away from risky waters, naval deployments by countries fighting piracy, piracy prosecutions and organisation budgets aimed at fighting piracy.

Navies from the United States, European Union countries, China, India, Russia and Japan have been deployed in joint efforts to fight piracy, adding expenses to their national defense budgets.

The study said Somalia-based pirates were considered responsible for 95 per cent of the cost.

The recent wave of piracy began with seizures of vessels off the Somali coast in 2005. The pirates have since become bolder, targeting larger vessels including tankers on the high seas.

Other areas of piracy risk include the Gulf of Guinea, the Malacca Straits and off Nigeria.

The study, issued on Thursday by the London foreign-policy think tank Chatham House, said about 1600 acts of piracy had been recorded since 2006, causings the deaths of more than 54 people.

Anna Bowden, director of the research project, said: “Some of these costs are increasing astronomically. What is even more concerning is that all these are simply treating the symptoms. Almost nothing is being done to treat the root cause.”

Bowden said ransoms demanded by pirates have skyrocketed. A South Korean company paid $9.5 million (R65 million) in November to gain the release of a tanker, up from $7 million (R48 million) paid in January 2010 for a Greek-owned supertanker, which was carrying $162 million (R1.1 billion) worth of oil to the United States.

The average ransom was $5.4 million (R37 million), compared to $3.4 million (R23 million) in 2009 and $150 000 (R1 million) in 2005.

The study estimated the total of ransoms paid in 2009 and 2010 at $425 million (R2.9 billion). If excess costs incurred in negotiations and delivery fees were added, the approximate amount spent on ransoms could total around $830 million (R5.7 billion) during the two-year period.

The study said about 10 percent of ships around the world have rerouted to avoid pirate-infested sea lanes, which may affect countries such as Egypt, which derive revenue from shipping through the Suez Canal. The study said that Egypt apparently had lost 20 percent of canal revenue because of rerouting by shipping lines.

The study pointed out that it had been difficult to obtain information from shipping companies.

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Source:- Sapa-dpa

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