the rough fishermen of the so-called Somali coast guard are unrepentant criminals,
yes, but they’re more than that. They’re innovators. Where earlier sea bandits were satisfied to
make off with a dinghy full of booty, pirates who prowl northeast Africa’s Gulf of Aden hold captured
ships for ransom. This strategy has been fabulously successful: The typical payoff today is
100 times what it was in 2005, and the number of attacks has skyrocketed. ¶ Like any business,
Somali piracy can be explained in purely economic terms. It flourishes by exploiting the incentives
that drive international maritime trade. The other parties involved—shippers, insurers, private
security contractors, and numerous national navies—stand to gain more (or at least lose less) by
tolerating it than by putting up a serious fight. As for the pirates, their escalating demands are a
method of price discovery, a way of gauging how much the market will bear. ¶ The risk-and-reward
calculations for the various players arise at key points of tension: at the outset of a shipment, when
a vessel comes under attack, during ransom negotiations, and when a deal is struck. As long as
national navies don’t roll in with guns blazing, the region’s peculiar economics ensure that most
everyone gets a cut. ¶ All of which makes daring rescues, like the liberation in April of the
Alabama
do may become more frequent
as public pressure builds to deep-six the brigands. However, the story of the
captured on September 15, 2008, is more typical. Here’s how it played out, along with the cold,
hard numbers that have put the Somali pirate business model at the center of a growth industryRead MoreMaersk’s captain, the exception rather than the rule. Such derring-Stolt Valor,
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