OK, OK, that’s not quite what Chatham House are saying in their new report Treasure Mapped: Using Satellite Imagery to Track the Developmental Effects of Somali Piracy. But check out some of what the report does say:
The data analysis indicates pirate incomes have widespread and significant positive impacts on the Somali economy. Although only a fraction of ransoms is exchanged into Somali shillings, the appreciation of the Somali shilling resulting from the injection of US dollars benefits people relying on imported food staples such as rice. There are clear trickle-down effects for casual labourers and pastoralists because of higher cattle prices.
Or this:
Piracy has created employment and considerable multiplier effects in the Puntland economy, even if a significant proportion of the proceeds is invested in foreign goods or channelled to foreign financiers. The distribution of ransoms follows traditional patterns in Somalia, involving considerable redistribution and investment in urban centres rather than coastal villages.
But here’s the real punchline:
The total cost of piracy off the Horn of Africa (including the counter-piracy measures) was estimated to be in the region of US$7–12 billion for 2010, while ransoms were said to be in the region of US$250 million. Even if Somali communities received all of the ransom money, replacing this source of income (for example with a combination of a foreign-funded security forces and development aid) would be considerably cheaper than continuing with the status quo.
A negotiated solution to the piracy problem should aim to exploit local disappointment among coastal communities regarding the economic benefits from piracy and offer them an alternative that brings them far greater benefits than hosting pirates does. A military crack-down on the other hand would deprive one of the world’s poorest nations of an important source of income and aggravate poverty.
