Piracy REPORT:
Analysis
Here Come the Navies
Australian Report Examines Industry and Government Entry into Maritime Security
By ROBERT YOUNG PELTON 09/16/2012

Piracy studies tend to be heavy on the "need for regulation" side and light on the "fix piracy" side. One area where undisputed success has been shown has generated few studies. The use of armed guards aboard ships to deter pirate attacks is a solution that appears to not only have a 100% success rate but is hard to argue the pros and cons. It is important to speculate on potential risks and typically there is plenty of data to grind through to come to a prognostication.

A recent report by James Brown, part of the “Privateers in Australia’s Conflict and Disaster Zones research project” was funded by the Australian military. Brown is a former Australian Army officer with degrees in economics and strategy.

His focus has been on the use of private security contractors and his previous work did not display bias or agenda other than to better understand the sector.

Despite that lack of bias on land based private security, this report unfairly sets up the private maritime security industry as being problematic. His point is that government military entering the same sector will be more problematic.

He states, “Already private contractors and vessel protection detachments have shot and killed suspected pirates.” Fair enough. Killing "suspected pirates" may be a problem but other than the one incident, the author does not provide sufficient data to back up or illustrate that claim. Killing "actual pirates" is not a problem since the law of sea and the use of deadly force is on the side of the crew and security team that is being pirated. Despite the UN's attempt to make piracy a social disease, it is against the law to rob vessels at sea and killing pirates is a justifiable reaction. Laws governing piracy at sea are actually more problematic if the pirates surrender or are arrested.

Armed Security Guard At Sea
©Somalia Report, all rights reserved
Armed Security Guard At Sea

One Incident Does Not A Trend Make

The only negative incident Brown can cite is the case of Italian marines aboard the MV Enrica Lexie, an Italian-flagged oil tanker whose guards fired on fishermen, killing them after mistaking them for pirates. Massimiliano Latorre and Salvatore Girone said they fired two warning shots at what they thought were pirates, but were arrested for murder when it turned out that two Indian fishermen were killed. The Italians were eventually released on bail by the government of Kerala, India. What Brown doesn't tell you is that this incident happened about 10 to 20 miles off the South Western coast of India, 2,200 miles from Somalia and nowhere near the focus of his study. There is no evidence offered of problematic private security operators at sea. Quite the contrary, his numbers show the opposite to be true.

There is a lack of focus on the use of deadly force by Somali pirates who fire on commercial vessels manned by unarmed mariners from a wide spectrum of nations. To hold up one government created maritime security incident as problematic but ignore thousands of violent potentially violent attacks repelled is typical of the academic view of piracy where legislating legal entities somehow solves the actions of illegal ones.

Ship owners do not have to make contact or after action reports public and there is no proof either way that private security guards are a problem. So an assumption that they are, seems to go against academic due process. With 2012 recording few pirate attacks, no hijacked commercial vessels and the problem of piracy appearing to be on its way out, there may be even less reason to even debate the hypothetical concept.

There are still over 200 hostages in the region and there are numerous emotional and financial repercussions of sailing in that region, but focusing on complicating the solution rather than solving the root problem is counterproductive.

Organizations and governments are becoming more pragmatic about piracy. Statistically the UKMTO and other organizations have responded to Somalia Report’s criticism and began listing all kidnapped ships and mariners. It is slowly dawning that perhaps ship owners have abandoned their responsibility to kidnapped mariners and governments may have to save them.

Piracy is effectively over as a major threat to shipping but only because the presence of armed guards have denied the pirates the cash flow needed to fund new efforts. The ultimate discussion of who is responsible for protecting and rescuing crews, cargos and ships has yet to be addressed as an action item. So families and mariners are supposed to be content with hypothetical discussions like this.

The next real step is to focus on rescuing the growing number of land-based hostages, many of them taken off ships and left to their fates on land. Pirates are criminals, (never terrorists because that would prevent the payment of ransoms) so it makes sense that a direct response by putting armed on ships was the most logical and so far, the most effective response to pirate attacks. Reading the report it is clear the the shipping industry will never turn to their host nations to actually free their citizens or property so why would they seek their oversight? They chose flags of convenience and hired guns. Brown turns his attention to the “18 month boom” in the use of private security aboard commercials vessels. Before this period it was actually an accepted practice to provide armed guards on slow, high value ships, it just didn’t get much publicity. The insurance company mandate for security on ships. The government prodding in support of the industry came only after the tactic proved 100% successful.

Another glaring omission is the lack of data that actually helps the reader understands Brown’s main focus “The boom in PMSCs responding to the piracy threat in the Indian Ocean raises serious questions about the quality of the contractors.” There is no data in this report that defines the "quality of contractors" nor adds to the debate or decision making. We don’t hear from ship operators, insurance companies, security personnel, captains, pirates or even freely available legal experts. So even his helpful forays into state provided military security does not have the statistical data to make any point, good or bad.

Enter the Vessel Protection Detachments, or VPDs

Brown predicts that "by the end of next year almost 2000 naval personnel may be operating in the Indian Ocean under private hire to protect commercial interests." That is a stunning number if one compares that to the 2700 private hires in the region. Granted the navies won't be working on the cheap or in small numbers but it could dramatically change the effectiveness and cost of anti-piracy operations.

Private companies have been offering this service for ships that do not or cannot have armed guards on board for years but the ship owner was free to choose whether a small sniper team or a large fast vessel alongside would do the job better. If governments get involved it might open up a whole new set of problems.

The report says that, "The Netherlands, France, Spain, Belgium, and Italy all offer private shipping companies the opportunity to hire VPDs for use during transits of the Indian Ocean." The UK is missing perhaps because, "Almost one-third of piracy ransoms paid last year flowed through the UK and the majority of maritime insurers and PMSCs are based in London." The UK government is the main hub for both the security industry and the ransom payment industry.

Where this report does open a Pandora's box is the examination of the military getting involved in providing onboard security.

Vessel Protection Details or VPDs are a government hybrid that hope to extend the reach and legality of military support on commercial vessels. He brings up an example of Dutch government demanding that the ship owner pay half of the cost of the ten man teams the put aboard vessels. "So far, the Dutch have deployed 26 VPD missions and plan on deploying 100 teams with ten personnel each this year, and 175 next year. Total operating costs for Dutch teams are estimated at US$29m this year, of which shipping companies are expected to pay approximately half."

The problem is that very few shipping companies operate with the flag of their host nation and even less want to be dictated to how to secure their ships. If anything, it would seem logical that a government forcing local shipowners to hire their government to protect them is going to drive more business to the flag of convenience countries.

Although Brown does not provide any new research he has an unbiased view of the existing data and the report is worth reading because it makes the point that having the deterrent on board the targeted ship is better than a Naval presence designed to deter. Brown correctly points out that putting national military under the direct control of a commercial ship captain is an invitation to disaster; essentially making a commercial vessel a warship.

“The private hiring of national military personnel (VPDs) is potentially even more problematic, raising a range of legal and political questions.” He explores this area enough to raise more questions than answers. This government forged solution may be more of a problem as he admits that VPD’s are, “often more expensive than private alternatives and often in short supply."

The report suggests that the apparently unregulated private sector now interface with the government sector to create a byzantine world of regulation in a lawless region even though the one incident were Italian armed forces who directly worked for the government of Italy.

Any discussion of private maritime security is always tainted with assumptions on the use of private security in Iraq. Assumptions that "cowboys" and violent acts translate directly from a war zone to the ocean are assumed. Despite numerous videos showing massive violence used by navies against pirates, there is still an obsession with private security companies using minimal force at sea and only when under attack.

What is missing from this report most is perhaps the most obvious. That pirates are essentially out of business because the multi national shipping industry fixed the problem of attacks themselves. They might not actually need to be told by governments how to run their ships safely.

The shipping and insurance industry, frustrated by years of inaction, promises and ridiculous solutions from governments simply came up with a solution that appears to work. His final takeaway that “There is a legitimate and long-term role for private companies to provide security at sea. But their use requires more regulation and coordination than we have seen thus far” is not supported by any evidence.

Brown’s premise that the government may have to regulate its own entry into the maritime security business does have merit based on the past inability of international governments to defeat piracy over the last decade.

Funny Numbers

Brown says, “No less than 26 per cent of civilian ships transiting the Gulf of Aden officially declare the use of armed PMSCs onboard,” which is misleading since just under half of ships have armed guards according to the UKMTO which actually briefs ships in Jebel Ali, UAE. The number may be much higher since ships do not have to register and there are a number of escort and regional security providers aboard ships.

Also the figures he presents are sometimes without context. It would be correct to say that “$4.58m and captured ships and crew are held for an average 158 days” but there are a handful of ships currently in pirate captivity that would generate that type of ransom. Of the six commercial ships held by Somali pirates, only the Liberian flagged Suexmax tanker Smyrni will reach a ransom of over $10M and the MT Royal Grace and MV Free Goddess may get $5M the rest have been abandoned like the Iceberg or Albedo or ransomed on the cheap like the Orna, all captured in 2010. If the current inventory is ransomed it would only generate a meager $20M. Dramatically less than the $140M supposedly collected by pirates in 2011.

Brown estimates that 2700 armed guards are operating onboard commercial ships. He also uses the figure "Individual contractors earn up to $500 per day and companies can charge out contractors for $1000 per day.”

Much like Oceans Beyond Piracy’s reverse "cost of piracy" calculator in which they confuse profits with costs, Brown’s own numbers don’t quite jibe.

One Earth Future took a WAG and guessed that “1 billion dollars per year on private armed guards." They also estimate that about 50 percent of commercial ships transiting across the Indian Ocean now have armed guards.

Brown figures that half that number use private security. He guesses that only 26% of the 23,000 ships that transit the Gulf of Aden for three days have minimum four man crews on board. That would be 5980 ship transits generating 23,920 days at a thousand dollars billed day is $23,920,000 per day (a typical transit can be 4 to 7 days) just for the minimum transit labor manpower cost and $100M for a four days GoA run.

Clearly these are not meant to be hard numbers but its a long way from Brown's stingy estimate to OBP's ridiculous estimate. Someone needs to check their math. Or fess up to not knowing the actual numbers. The reality is that the threat of piracy in the GoA at it's highest was less than one per cent and much lower now. Conversely the use of armed guards has increased along with the general drop of contact by pirates in the region.

The estimate of 2700 of private operators will be joined by 2000 military operators create a doubling of actors in the region also seems a little hard to believe.

The truth, once again, is that nobody knows the truth or the correct numbers.

The report has plenty of numbers that can be read as the author wants you to or as conversely defeating the point of the author: "9 out of 10 failed attacks by pirates on merchant ships were repelled by armed PMSCs" or "One company reports over 90 encounters with pirates, 18 of which were resolved through the firing of shots" but none bring clarity to the industry. The take away should be that 72 of those encounters were resolved with no action, BMP drills or simple warnings like magnesium flares. That would seem to be a good thing if the vast majority of pirate encounters are deterred by private security are peaceful.

The take away of this report seems to be that the last entity that should be involved in anti-piracy security should be the government so why should they be encouraged to regulate what appears to be a successful response to violence at sea?