economic cost of piracy 2012

5/26/2018 Economic Cost of Piracy 2012

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THE ECONOMICCOST OF SOMALI PIRACY, 2012

a project of One Earth Future Foundao2013

i

This reports calculations were audited by:

Cover photo provided by: NATOs Operation Ocean Shield

Forward

BIMCO has carried out a review of the methodologies and the calculaons of the ECoP 2012 report. We have

found that the report fully lives up to the high standards necessary to earn respect and credibility among all an-

piracy stakeholders in Government and Shipping Industry alike, and for the report to constute an informed and

construcve contribuon to the an-piracy debate.

The ndings of the report underscore the importance of the connued focus of Government and Shipping

Industry stakeholders on combang piracy, and illustrates also well that problems like the Somali piracy problem

can grow extremely costly over me. The implied lesson learned is that there is every reason to tackle similar

upcoming problems swily and with early determinaon to avoid the problem becoming instuonalized and to

minimize the cost of restoring law and order aerwards.

It is BIMCOs hope that this lesson learned is not forgoen but is taken forward by the internaonal community

when dealing with piracy problems elsewhere, currently most notably in the Gulf of Guinea region, where

seafarers are regularly confronted with extremely cynical and oen deadly aacks by local pirates and robbers.

-- Michael Lund, Deputy Secretary General, BIMCO


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a project of One Earth Future Foundaon 2013

ii

Lead Author:Jonathan Bellish

ECoP Research Team:Thaddeus Cummins, Anjuli Manrique, Timothy Schommer

OBP Team:Jim Gray, Liza Kane-Hartne, Jon Huggins, Kaija Hurlburt, Jens Vestergaard Madsen,

Maisie Pigeon, Urmila Venugopalan

Jon Huggins

Director

[email protected]

Ph: +1 303 533 1710

Jon Bellish

Project Ocer

[email protected]

Ph: +1 720 274 8229

More informaon about Oceans Beyond Piracy:For comments on the report:

Jens Vestergaard Madsen

Associate Director

[email protected]

Ph: +1 303 533 1708

ofSomali Piracy 2012


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iii

Table of Contents

Founders Letter..................................................... ivExecutive Summary................................................ 1Acknowledgements................................................. 5Acronyms............................................................... 6Introduction........................................................... 7Scope of Costs Studied............................................ 8Methodology.......................................................... 9

First Order Costs of Somali Piracy 1.The Cost ofRansoms & Associated Costs.......... 10 2.The Cost ofMilitary Operations....................... 13 3.The Cost ofSecurity Equipment & Guards........ 18 4.The Cost ofRe-routing..................................... 20 5.The Cost ofIncreased Speeds.......................... 22 6.The Cost ofLabor............................................ 25 7.The Cost ofProsecutions & Imprisonment........ 27 8.The Cost of

Piracy-Related Insurance............... 31 9.The Cost ofCounter-Piracy Organizations........ 34

Piracy Trends & Takeaways......................... 39Concluding Remarks................................... 40

Appendix.................................................... 41

Endnotes.................................................... 59


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iv

Founders Letter

On behalf of the One Earth Future foundaon, I am proud to deliver the aached report on the Economic

Cost of Somali Piracy 2012. We hope that it can provide useful insights for policy-makers addressing the

challenging issue of how to reduce piracy on the global commons that are the worlds internaonal waters. As a

businessman, I value objecve, stascal informaon as a primary tool to guide my own decision-making, and

I believe that others who have found success in business do as well. I hope that both groups, industry leaders

and policy-makers alike, will nd that the informaon in the report adds value to their own work at this crical

juncture.

In recent reports, we have noted some gaps in our reporng, which come from the inability to isolate second

order costs of piracy to regional economies, the lack of detail regarding individual ship behavior, and the lack of

consistent data on piracy incidents in the Indian Ocean. However, we felt that it was an absolute necessity that

our best esmate of economic costs were available during the height of the crisis, providing some trend analysis

for piracy experts to consider. Future reports will hopefully start tracking the terrible costs borne by Somalia and

other naons along the Horn of Africa.

One Earth Future also reports on the human cost of this crime at sea. Piracy has aected the seafarers caughtup in this violent crime, as well as ordinary Somalis who have suered the negave eects that pirates have

brought to their communies. Some Somali youth, jobless and drawn to the nancial rewards of crime, have

been recruited to piracy by pirate leaders and nanciers. Many Somali teenage lives were lost at sea rather than

earning a living on shore. I believe that reporng on the various costs of piracy has been a crical contribuon to

the publics understanding of this deplorable crime. Hopefully, these reports will call us to collecve acon.

In this years report, it has been important for us to recognize that the internaonal community has developed

and implemented an eecve response to solve the immediate crisis associated with piracy. On one hand

I applaud the unprecedented cooperaon among naons, internaonal organizaons and industry in this

endeavor. Nonetheless, the resulng decrease in pirate aacks has created an opportunity to refocus some

of the piracy migaon eorts at sea. Now we must all turn our aenon to longer-term investment to build

economic opportunity and governance capacity ashore. However, despite the dramac drop in pirate aacks,

we found that over 99% of the cost of piracy is sll incurred at sea pursuing short-term migaon strategies. At a

cost of around $6 billion a year, it is evident to me that we are not yet invesng in a lasng soluon ashore.

As the report also shows, industry is paying dearly to suppress the cost of piracy, contribung almost $5 billion of

the $6 billion spent in 2012. At a fracon of the cost, industry could be much beer served solving the problem

on shore in Somalia. Indeed, members of the shipping industry have already begun considering how their funds

could be put towards sustainable soluons in Somalia. In early 2013, K Line, Maersk Line, Stena, NYK Line,

Mitsui OSK Line, Shell and BP have donated $1 million in support of job creaon and capacity building projects

in Somalia. The group has pledged a further $1.5 million to fund those same eorts. I sincerely hope that other

members of industry follow this example.

To my mind, 2012 marked the end of Phase 1, where piracy was fought through suppression at sea. We hope

that other stakeholders will join us in considering the best way to move into Phase 2, where the internaonal

community partners with the Somali people to achieve success on shore.


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v

My team and I have developed the following quesons to frame our thinking as we move into Phase 2. I invite

the consideraon of and feedback from the community of stakeholders regarding each of these important issues:

1. What is required to nally and conclusively break the back of the piracy business model?

2. Is there polical support to shi crisis response assets that support piracy suppression at

sea to eorts in support of longer term development and governance ashore?

3. How can we reconcile the apparent mismatch between Somalias goal of marime

security (focused on protecon of natural resources and crime at sea) and western goals

of countering piracy?

4. Is there a way to incenvize even greater cooperaon between marime industry,

internaonal organizaons and regional governments?

5. How can the internaonal community best support the Somali desire to control the

Somali peoples marime resources?

6. What role will marime stakeholders such as ag states, industry, import/exporng

naons, and regional countries and organizaons play in the transion from Phase 1

(Suppression) to Phase 2 (Long Term Investment)?

7. How do we convince the internaonal community to remain invested in Somalia?

8. How can we convince philanthropists, industry, and the Somali diaspora that the me is

right to invest in Somalias future?

For our part, I have personally commied to help develop some economic opportunies ashore through the

creaon of Shuraako. This new iniave brings together prospecve investors with promising entrepreneurial

projects in Somalia. I am also supporng eorts to create favorable condions for investment and to encourage

the eecve governance of nancial instuons involved with Somali remiances. I invite other governments,philanthropists, business leaders, and members of the Somali diaspora to join us in invesng for a permanent

soluon for the benet of the Somali people.

Lets not kid ourselves: suppressing piracy and solving piracy are very dierent things. In the end, piracy can only

eecvely be solved on shore. It is me for our eorts to move on ground in Somalia, providing hope in Somalia

by providing opportunity. Only when Somali teenagers have greater access to jobs than to guns will they turn to

work rather than piracy.

It is not just piracy which hangs in the balance, but Somalia and part of humanity along with it. I am convinced

that we will all be back at square one if we refuse to help, if we weaken our resolve, or if we fail in this mission.

Sincerely,

Marcel Arsenault


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vi


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a project of One Earth Future Foundaon2013

1

Executive Summary

Ocan Bn Pac (OBP), a pjc f h On Eah Fuu funan (OEF) pa pn h

annua an f h Ecnc C f Sa Pac 2012 (ECP 2012). Th a an, k h n

f , cn nn paa, c ca an fun ha a pac c h a

cn n $5.7 an $6.1 n n 2012. Ou a h u f xnv ach, uppn

cnun f an an xnv au npnn pac xp. A n$5.7 an $6.1 n,

h c f pac h a cun f aun $850 n, 12.6% f 2011.

Total Cost of Somali Piracy in 2012$5.7-6.1billion

Security Equipment& Guards29%

Re-routing5%

Insurance10%

Ransoms & Recovery1%

Prosecutions& ImprisonmentLess than 1%

Military Operations19%

Increased Speeds27%

Labor8%

Counter-piracyOrganizationsLess than 1%

Wh 2011 a chaacz a hap p n Saa-a pac aack an hjackn a -a,

2012 a ak h cnnuan f cnn pc uccfu p pac a a. Th pc

ncu a a a nava pnc, upp h cnnuan f xn pca ana f h

can fc. Wh a av pu a ap h can nav, ncun h k

n an, h c aca h h nava pnc a a h ncu a a.Th a nu ccv pn pac a ak a cnnuan f cn pacc

n n h h 4thRvn f h B Manan Pacc (BMP4), hch ap n Auu 2011.

Th Hh Rk Aa aca h h a vn f BMP a an cnn huhu h a,

hch c h an ha h an f Saa-a pa aack ha na ach h znh.

A na fac an h p n Sa pac n 2012 a h nca pnc f a ua. In 2011,

OBP a ha aun 30% f hp p pva a cu. In 2012 ha pcna a v

upa 50%. Fna, h ana f Auac Infan S (AIS) aa ha cau u v u

a f a-ca cca hppn ac n h Inan Ocan f 42,450 v an 66,612

an p a.

A nn av, h c f pac pp au 12.6% nc 2011. Hv, h a u,

cn h h ncan p f p pac aack n h 2012, an ha h p ncn c

h nnana cun ha n aaca.

Th va ncan c van f 2012, a cpa h ncu un 2011:

Increased per incident costs: Bn 2011 an 2012, h nu f ap an hjackn f

uch aca han h c f can pac. Th a uana nca n h p

ncn c f pac. In 2011, $28.6 n a pn p pa aack, an n 2012, ha nu

189.0% $82.7 n.


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2

Increased cost of armed guards: Th

pronounced increase in the cost of piracy

ca a a u f h nca nu

f a ua u pc chan

v ann h HRA. Bn $1.15

an $1.53 n a pn n a

ua n 2012. In 2011, ha u a

$530.6 n. Th v ncac a h u f an nca

ppn f hp pn a

ua (30% n 2011 an a a 50% n

2012) a a a v a f h

nu f cca an huh h

HRA ach a. Cnn f ha a

hca fac, h c f a

ua nca 79.7% n 2012.

Decreased cost of increased speeds: Th

ac c ucn n n 2012

ca f a ca n h c f fa

an huh h HRA. In 2011, an

a $2.7 n a pn n av

pa p, u ha u a n

$1.53 n n 2012. Th v

$1.17 n a ca c

f a cn n h ppn f hp

an a av pa p a

a a ucn n h aun hch h

ava pn hp a av

h cnca pa v. Th

a a un Sa AISaa, hch a anaz cacua h

a c an a a a u.

Consistent rao of Recurring Costs vs.

Investment: In 2011, a a

ha appxa 99.5% f h a c

f pac a pn n h cun c

f v pcn. Th u n

ak cna h n nv n

pcun an un na an

Sa capac uc pac. In p

f h ucc achv a a n ucnpac aack an hjackn, h a

an cnn h a a u.

In 2012, 99.4% f a fun pn

n cun uppn c, h h

ann 0.6% nv n n-

pvnn un.

Impactson theSomali Economy

Th a ECP n ncu cn -

na pac f a pac uch a c n

u an a. Hv, OBP u

n ncu h pac f Sa pac n h S-

a pp. I hu n fn ha h a

f h vc f h an ccu-

n f Saa h.

Ma pac ha va nav c-

nc pac n h Sa cn. Th

nca f n cnan an h hpn

Sa p, hch can c a uch a $1000

p cnan. Th nca c a p

vnu u -un f hpn nh-

n p uch a h n Dju. Th, h

ccnc pac a h accnc

c f pc nan, hch nav ac h

Sa pp a .

In an h a-a pac, pac ha

a nav pac n Sa hn, h fa -

n u a h pac an a ha. Fna,

Saa u f u vnu u apcv cu ha. Ma pac can

cnu ha pcpn.

A h cnc c f Sa pac fa h -

pc h nnana cun, hu x-

pc h cnc c h Sa pp

fa a .

An xap f h unuzan

f Sa a uc


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3

Wha f a f ua f h nn f ach f h nn c ca cn:

Ransoms and Recovery: In 2012, OBP a ha $31.75 n a n an pa

Sa pa. Th pn an 80.1% cn n an pa f 2011, hn $159.62 n

a pa. Th ucn n an u h nu f v capu an a n

2012, a a a ava an han h pvu a.In an h an pan

f, h ca c aca h pan an an cvn h v ncun h

c f vn h an, aa cau h v h h, an h c f na,cnuan an an f a a 100% f h vau f h an hv,

nn h a c aua h pan f an an cv f v $63.5 n

n 2012.

Military Operaons: Th ncna c f v pn (ncun cnnaanc aca

an Unann Aa Vhc), v pcn achn, h anav u f nava

pan, an SHADE (Sha Aan an Dcncn) n aun $1.09 n n

2012. Th u pn a 14% ca f h $1.27 n p n 2011. Hv, f

h ca c a a u f a cnvav h u cacua h c f UAV

pn. Opana, h aj chan ha k pac n 2011 an 2012 a ca

n nava a p h h nava n EUNAVFOR Opan Aaana, NATO

Opan Ocan Sh, an h Cn Tak Fc CTF-151 an a cpnn nca n

h a pv npnn p ncun Chna, Ina, Japan, Rua, an Suh Ka.

Security equipment and guards: Th a c f cu qupn an ua n 2012 a a

fa hn h an f $1.65 an $2.06 n. Th c f cu qupn f a a 11%,

f aun $578.7 n n 2011 $514.6 n n 2012. Bcau f a a accpanc f a

ua h Fa Sa an hp n an pa, h c f a ua uch

aaca, up 79.7% f 2011 2012 hn kpn h nu f annua an huh h

Inan Ocan cnan. Hv, u v a f annua an u n a aac

nca, h n $1.15 an $1.53 n pn n a ua an n 2012.

Re-roung: Shppn cpan pn $290.5 n -un an h Aaan Pnnua an Inanca a pp akn a c u huh h HRA. Wh B Manan Pacc

cn ha v -u, appa a huh f hp n an pa a acua

n . Th u pn n -un n 47.9% f h aun a n 2011. Hv, h

ppn f hp ann aun h Hn f Afca ha ch -u n pp 10%. Th

f h ucn h u f a chan n h, h f ank an uk ca

cn cana f -un.

Increased speed: In 2012, OBP a ha hppn cpan pn an xa $1.53 n n fu

c aca h an a fa han pa p n pvn pa aack. Wh

h a n chan n h nu cnan f nca p huh h HRA, h

a c f h pacc pp 43.3% f 2011, h h a ana c a $2.7

n. Th $1.17 n ca h a n au f a nn c cn cn,an h u f a ucn n h ppn f hp n huh h Hh Rk Aa a nca

p an a p n h ava p f h hp an a fa han pa p. T

cacua h c f nca p f 2012, an cn h p n cpanc, OBP uz

a Auac Infan S (AIS) aa pv ExacEah an cn OBP f u n

h p.

Labor: Th a-a c aua a pac ncu h c f haza pa a

a h c f pan afa h a v n h ha. Haza pa aca h h


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4

Innana Baann Fu an, hch a c n pacpan v h h

u pa h ann h Hh Rk Aa. Th c a $471.6 n, up ncan

f h $195.1 n a n 2011. Th nca h u f a v a ha

70% f afa ann h HRA a n haza pa, a n IBF hp a

aann, a pp h 30% au n 2011. Th v aupn ca a h u f

cnvan h h An-Ean Gup, a an hp anan cpan. Haza pa a

ac h v a f annua an n h Inan Ocan. Thu a f h v a

c nca c a a u f v h a pp chan n a pacc.

Prosecuons and imprisonment: In 2012, h c f pcun an pnn a $14.89 n,

n 9.2% f h u p n 2011. Bkn n fuh, h c f pcun a $8.84

n, n 24% f 2011, h h c f pnn nca 26.67% f 2011 $6.04

n n 2012. Th ucn n pcun c appa a n u a ca n

h nu f upc pcu, h h nca n h c f pnn c h n

an aca h pnn a pa. M n pa pn n 2012 han

a.

Insurance: Th c f nuanc f 13.3%, f $634.9 n pn n 2011 $550.7 n

pn n 2012. Th fa aua h nca pnc f pva a ua aa

chan v an h un pu cun. Mv, u a hh nu f xpnvv ann h Suz Cana n 2012, h c aca h Wa Rk pu h.

Cnn f ha chan n h cpn f h nu pp, h c f pac-a

nuanc f 14.9%.

Counter-piracy organizaons: Th c f vau cun-pac anzan, ann f Un

Nan anc npnn NGO, a $24.08 n n 2012. Th u pn a 13%

nca f h $21.3 n p n ECP 2011. Th anzan ncu n h cn a

h Tu Fun Supp Inav f Sa Cun Pac h Ca f Saa, h Un

Nan Oc f Du an C (UNODC), h Cnac Gup n Pac h Ca f Saa

(CGCPS), h Dju C f Cnuc, h Un Nan Dvpn Pa Saa, EUCAP

NESTOR, Rna An-Pac Pcun & Innc Cnan Cn (RAPPICC), h PaT

Pjc, an OBP.


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5

Acknowledgements

OBP ha an xp an akh hank f h uanc an up h pucan f h p.

W u k hank Chan Sh f ExacEah, n n f h hp n cnn h AIS aa, u a f

h nvaua aanc n nn h aa n ua f an han h xp n nu pacc

an AIS ua. W u a k hank Rapha Kahn f Scu-Man f h nh n h ak

f v f-pcn haa, a a Anuj Chpa a An-Ean Gup f pvn uch vaua

nfan n h afan a ak. Onc aan, OBP u k hank Mcha F f C-Lv

Ma Rk f cnnun pv u h h a n pac-a n.

Fna, pca hank a u h Bac an Innana Ma Cunc

(BIMCO), an pca Chf Shppn Ana P San, f cnucn

uch a huh au f ECP 2012 nn. P n v ach f

ECP 2012 nn c cn, qunn u aupn h aan an

pvn upn u h hn h xpnc cun n fav f n

. H k v h nh f h a f ECP 2012 a a a a

h na puc.


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6

Acronyms

AIS Auac Infan S

AMISOM Afcan Unn Mn Saa

ASIS PSC.4 Acan Sc f Infan Scnc Pva Scu Cpan Opan

BIMCO Bac an Innana Ma Cunc

BMPv4 B Manan Pacc (vn 4)CGPCS Cnac Gup n Pac h C f Saa

DWT Da Wh Tnna

EUNAVFOR Eupan Unn Nava Fc

GCC Guf Cpan Cunc

HRA Hh Rk Aa

IAMSP Innana Acan f Ma Scu Pfna

IMB Innana Ma Buau

IMO Innana Ma Oanzan

INTERPOL Innana Pc Oanzan

ISO 28007 Innana Oanzan f Sanazan: 28007 Gun f PMSC

TF Innana Tanp Wk Fan

K&R Knap an Ran Inuanc

LMA L Mak Acan

MOU Manu f Unann

MMSI Ma M Svc In

MSC HOA Ma Scu Cn, Hn f Afca

NATO Nh Aanc Ta Oanzan

OBP Oceans Beyond Piracy

OEF On Eah Fuu Funan

PAG Pac Acn Gup

PaT Pjc Pac an Ma T a a Chan f Ma Ta ScuPMSC Pva Ma Scu Cpan

PCASP Pva Cnac A Scu Pnn

RAPPICC Rna An-Pac Pcun & Innc Cnan Cn

SAMI Scu Acan f h Ma Inu

SHADE Sha Aan an Dcncn

TFG Tanna Fa Gvnn

UAV Unann Aa Vhc

UN Un Nan

UAE Un Aa Ea

EUCAP NESTOR Eupan Unn Capac N

UNCTAD Un Nan Cnfnc n Ta an Dvpn

UNDP Un Nan Dvpn Pa

UNODC Un Nan Oc f Du an C

UNPOS Th Un Nan Pca Oc f Saa

UNSCR Un Nan Scu Cunc Run

VLCC V La Cu Ca

VPD V Pcn Dachn

WFP W F Pa


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7

Introduction

Aun 2005, Sa pa an hjackn cca v ann na h Hn f Afca a an aan

a. A cnan f aph an a ack f cnc ppun n h huan f Sa,

f h un n, u a na n h nnana c. In kpn h a

pac nnana chaac, a u nnana an v cun f akh ncun

nvua vnn, na anzan, nvnna anzan, h hppn nu, an

f cv c uh h c.

Ov h nx va a, h akh p au ann f nava pa v f-

pcn pcun pa capu a a n hp f uppn pa acv. F h va

a f h nnana , h ua uk an unca. In fac, pa aack an hjackn

a nca f 2005-2011, h h nu f hjackn pakn n 2010 an h nu f va

aack pakn n 2011.

I a n h pnnac a f pa hjackn 2010 ha OBP a Ecnc C f Pac p.

In ha a, OBP u a f nf a an puc avaa nfan cncu ha

a pac c h a cun n $7 an $12 n. In 2011, OBP hn h an

an nca acc nu an vnn n, hch u n a na an u

a f $6.6 - $6.9 n.

Th a 2012, hv, a a a chan n h a pn aan a pac. Bn nava

pan, pv nnana cnan, cnnu vanc f nu pacc, an nca

u f pva a ua, h nu f hjackn pp 50% f 2011, an ap aack f

ju v 70%. Thu h cnc, cpav n h pa f h cun f akh appa

hav v h a h aan a pac u f h c anan pha an n an a f

uc a Afcan pac nu.

Th a Ecnc C f Pac p cnnu u upn h h vp nc h 2010

p nc aan cacua h c f a pac h nnana cun, cncun ha pac

c h a cn n $5.7 an $6.1 n n 2012.

Thuh h nu f aack an hjackn n an h h c f pac va, h uk n

n pv. Th cau h ncnc f pac f uch fa han h c f can h p.

In fac, h c-p-hjackn an h c-p-ap 68.6% an 199.5%, pcv, n 2011 an

2012. In 2011, $250.0 n a pn p uccfu hjackn. In 2012, ha nu $421.4 n.


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8

A n juna pu , h cpanc u ha h pa p f h px h

hppn hu ncn.1

Th van n u ha cnnun h cun appach cun-pac

cnca unuana n ha a a n pha f uc pa aack an hjackn. I

v aa f h-, c anan appach pac an a a n-, uana

un. Bf unakn h c cacuan f 2012, an vv f h cp f h c u an h

h u an h na u hu cn.

Scope of Costs Studied

ECP 2012 c f pac u ncu h c c f a pac f h ppcv

f h nnana cun a a. Wh p, cn ppun c pv ha h a

ncan an a aua a pac. Th u n cn nvn a h

h nanc pa acn up. In cnn hch c ncu, ECP k av u cunn an

n h f cnvav c a. Th cp f ECP un n a :

First order: c a nuha f cn c cau h a pnpcca n pac ah han an nc a a u f pac. An xap f a c

a an pan, h cn c ncu ucn n a u.

Direct costs: c c a c ha u n x u f a pac. Th c f an,

pac-a nuanc, cu qupn an ua, -un, nca p, xa a f,

an pcun an pnn a a c c.

Opportunity costs: a ncu n h cnc c f pac a ppun c, pv ha

h a ncan an a aua a pac. Th c a h ha u x

a f h pnc f pac, u u pu h pucv u. Th c f a

pan an cun-pac anzan a h ppun c ncu n ECP na

cacuan.

No double counng: an f h c f pac a pa na f h pa ha ncu

h c c ha pa cnu. ECP cnzan f ha fac an av u cunn

huhu h p.

From the perspecve of the internaonal community: a ac cnc uh ha n nvua

c anh nc. ECP k a h c f a pac f h ppcv f h n

nnana cun, xcun h an pa an h h p f pac. Th av

c a ncu n h ua cacuan vn huh h cu a chaacz a nc

f anh ppcv.

Exclusion of pirates costs: pa acn up (PAG) n fu, f, fh a, an khat, anh pvn, cnuc h pan. Th c a n ncu.

Conservave esmates: vn ncp nfan, hn n u, ECP n h f a

cnvav c a.

ECP ana cnuc h a f va an. F, ECP k pv nfan van

akh an h puc a a an h cnc c f h a pn pac. A uch,

a pn nfan n a a p h cn u f uc h an a a uana


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9

an qua un. Scn c an c n h pa a n qu f h pup.

Scn, an h pn f cn c ha u f pac a pp h fc

na p hu a a a f pcuan. Rah han accn accuac, h cn c

a u n. Th, cn c, h n ncu n h a c cacuan, a c n

h vau ca u huhu h pap phaz h panc h cun f akh.

Fna, ECP n n na h c f pac n h n f h nnana cun. I an

a cn upn c ncu h van akh, an cnvav c a c

ha a.

Th cn ncu n c an ppun c an xcu c ncu h pa

hu nu vanc, accuac, an pacca u h cun f akh.

Methodology

Snc h a f ECP 2011, h hav n va u kn quanf h cnc c f pac

h a cn. Each ha c f a n anzan h n aa f xp, an ach

ha akn a n appach cacuan h c f pac.

On pap, Th B, Th Fz an Hann Mu, a h c f pac anazn

hppn cnac n h uk ak an cncu ha h fa u Sa pac n

$0.9 n an $3.3 n.2Anh, Sa Bna an Inacua Manz-Zaz, u h av

f a a h a-a c f pac a aun $24.5 n.3Fna, P.J. Mk k

2010 aa an app a pa vau chan appach cncu ha pac c n $4.9 an $8.3 n

n ha a.4OBP c a f h c f pac u, a ach k a h p n ach

n, huh n ncpa, cncun.

A a n h cn cncnn h cp f c u, OBP n cn c c an,

h avaa, ppun c f a pac. Evn hn h c, h hca

cu nhn n cacuan h c f Sa pac an chann. Th va aj f h aa hacu u cacua h c f Sa pac c h vnn an h hppn nu.

Oca ac a pac a f an fa n, an kn aun ha an k v f

u h.

F h pa, u an c f anazn hun f p, n ac, an h pn

uc, akn akh f nu, vnn, an cv c, an un px n h ap.

Each cn f h pap c h h u an n an hca nc n

a a pap an h a. Wh h xcpn f cn, h 2012 h v a

ha u n 2011. Th n n cau h h u n 2011 a a na un n, u a

a f app app cpan f c chan n 2011 an 2012.

Th pa chan n h a funana n appach akn cacuan h c f -

un an nca p. Th chan hav pv h accuac f u h an pv

u nv nh n akh. Th uc f h pvn v 1 n AIS a

cc ExacEah a an pv OBP f u n u ach. Th aa ha pvn

xcpna ufu n vn ECP a a nv ana. Th a f h h u

cacua h c f -un an nca p un n a n h cn.

Anh aj chan n h 2011 an 2012 vn f ECP h a nu f cca


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10

an n h Hh Rk Aa ach a. La a, OBP u 42,450 a h a a. Thuh h u

cu fun n va n uc, va pac xp ha u ha an a f 42,450

h . Th a, h nucn f AIS aa ca h xp. A a u, hav v

u a f h annua nu f cca an n h HRA 66,612. Y h u n u

n v p nanc. F xap, cnnu u 42,450 cca an n h c f nuanc

cn, a ha h apppa a f hp ha ak u Wa Rk an Knap an Ran

Inuanc. Mv, u h vn a a f 6,575 cca an ujc -un. Th

u pn n uk ca an ank ha pa huh h Suz Cana. Th chan a cvaanc n a nu f cn ha n c a chan n hav, u a u n accua

c cacuan va.

A aa, nv npu f a c a cnnu hn u h n hp f pucn

ncan pc a n h fuu.

First Order Costs of Somali Piracy

1. The Cost ofRansoms and Associated Payments

Ava ha uan uan: 316 a

Ava an pa: $3,968,750.00

Ta an pa: $31,750,000.00

Th a f a h aca ppn a paachu capu h n

f a n h Inan Ocan h v n h pac c

a an cnc c. Th u p h fac ha, a a a, h

pan f an u a n facn f h a cnc c f pac.

In 2010 an 2011, h c f an cp ju v 2% f h a

c f pac; n 2012, an a up han 1% f h a c.5

Bh h nu an h ava vau f an hav pp n ach

f u p. In 2010, 44 an pa an $238 n, h an

ava f uh $5.4 n p an.6 In 2011, h nu f an

pa a uc 31 an a $159.62 n, h h ava an

pan fan $4.97 n.7 An n 2012, h nu f an pa

pp aan n 8, avan $3.97 n an an $31.75

n.8Th chan n a an c v n 2012 pn a

pcpu 80% ucn f 2011 a.

Th a va fac ha hav cnu h hap ucn n an pa, ncun nca nava

pa, nhanc nnana cpan, ahnc nu pacc f v f-pcn,

an h u f a ua aa chan hp. N n pc ha achv h ucn n a Afcan

pac an. On a cnc, cpav, nnana up h ak f can a pac,

h n h hh a an hn h EEZ f h a a f h Inan Ocan. T ha n, h Pac

Ran Tak Fc a up f 14 nan upp 17 nu up a p h h

a a f ach[n] a pn h pa a n n a p f an pan an hu

aann h pacc f knappn f an.9

Total Cost ofRansoms Paid

2012

$63.5Million


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11

Hv, p nan an

pan n a a a h un.

Onc a hjackn ak pac, h hppn

cpan h afa a n

h ha a n an x cu

pn. On n han, hp n an

pa n h ppua

a cc f hjackn an paan pan. On h h, hppn

cpan u a h can uc

h huan c f pac nun h

af a f h afa. Sp

fun pa a an nc afa

hav n akn n a huanaan

pn. In u, huh h Pac Ran

Tak Fc n a ha n

n ach, h 80% ucn n

an vau f 2011 2012 h

ha h nnana cun

vn a ha a.

Ran n x n a vacuu; h a ua a funcn f h nu f uccfu hjackn. I

hf unupn ha h nu f hjackn f 20 n 2012, a 28.5% ucn f h 28 hjackn

v n 201110. Th ucn n ap aack a vn a h n 62 uch ap, n f

189 n 2011. Dvpn n h ucc a hav n x. In 2012, h pa ucc a a

24%, up ncan f h 13% p n 2011 u n f h 27% p n 201011.

Y h ac cncnn pa ucc a a cpca u f pn. Mup pn

cn, h cu f nuhn pa f na hn,12an an a nnc

unp pa acv13a v uc h

nu f p ap. Th, f cu, haa c c n h p vu acua pa

ucc a. Du h pn cpcan, h

ha can a ha n f phnna

ccun. Eh h nnc unp pa

aack nca fa aaca f 2011 2012,

h pa h a acv pan n h

HRA huh a n nu a aapn h

pv nnana pn n nc 2010.14

On aanc, h vnc u ha nca

unpn n 2011 an 2012 h an

v f h vaanc n ucc a n 2010 an

2012.

Y pac n a pu cnc phnnn, an

huan c aun. In u 2011 p n ha

h aun f pn nan an a n

h , a n ha k cnnun. In 2011, k an ava f 178 a,15 aun x nh,

f a an na an a hp a. Wh h nu f an pa ha ca

aaca n h a a, h ava f an nan nca 312 a.16 S, h

Ransoms Paid2010 - 2012

2010 2011

20

40

60

80

100

120

140

160

180

200

$159.62Million

$176Million

2012

$31.75Million

Somali PiracyHijackings, Boardings, and Attempts

2008 - 2012

2008 2009 2010 2011 2012

20

40

60

80

100

120

140

160

180

200

220

Hijackings Boardings Attempts


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12

nan ak uch n. In h ca f h Panaa-a Buk Ca,

M/V Orna, h c an v h f 674 a. Whn a $600,000 an

a na na n Oc 19, 2012, n 13 f h 19 c

a; h h 6 an n capv.17

Th M/V Ornaa n h n an uan ha u n a paa a

f h c. ThAlbedo, a Maaa-a cnan hp, a hjack n

Nv 25, 2010. A 20 nh n capv an a $1.2 n anpan, n 7 c a. 15 c an

h.18Gna pakn, h n uan ha uan a n h

ca f a - hp n, p ackn aqua nuanc cva.

Un cn, h n nn hjackn an an ncn a h n

nfau Iceberg I. Th Panaa-a RO/RO v an 24

c hjack n Mach f 2010.19 Ov h cu f h na 3 a

n capv, h c a p hav u v pchca an

phca au. On c a a a hav c uc jupn va n Oc

f 2010.20 Th ann c an h v f n a Dc, 2012 fn a cu

pan aunch Punan Ma Pc Fc. Accn avaa uc, n an a pa.

OBP cnnu ak a u appach an an an ha ack an accun f ach nvua

an pa n 2012, h uch aa a avaa. Hv, hu n ha h an a n

ca p. Rah, h u nvaa c f h pa hv h a a a au

h an h na. Shp n an nuanc cpan, n h h han, n pf n

a h vau puc cau uch cc cnacua qu an a a

u f a a h h u ak f an cu h u- pa. B a

f an pa n 2012:

RANSOMS PAID IN 2012

Ship Name Date Hijacked Date Released Days Held Ship Type Ransom Amount (millions)12

Free Goddess February 7, 2012 October 11, 2012 247 Bulk Carrier $5.7

M/T Liquid Velvet October 31, 2011 June 5, 2012 218 Chemical Tanker $4

MV Olib G September 8, 2010 January 8, 2012 487 Chemical Tanker $3

MT Fairchem Bogey September 20, 2011 January 12, 2012 114 Oil/Chemical Tanker $8

MT Enrico levoli December 27, 2011 April 23, 2012 118 Oil/Chemical Tanker $9

Leila February 15, 2012 April 11, 2012 56 Roll on, Roll off (RO/RO) $.25

Albedo November 25, 2010 July 31, 2012 614 Container Ship $1.2

Orna December 15, 2010 October 19, 2012 674 Bulk Carrier $.6

TOTAL $31.75

A n n u pvu p, h cah vau f h an n h n c c f a uccfu

hjackn. Oh fac ncu h c f vn h an, aa cau h v h h,

an h c f na, cnuan an an f.22Ana, accn h Cpu Shppn

Cha, hp n an pa ncu n $10,000 an $50,000 n aa hu an ca p

aack.23Fna, h a hh c aca h havn hp h u f vc. F xap, a a cha

h a f $17,500 p a, a uk ca h ha f x nh cu c a uch a $3.15 n n

unaz a an.24 In, accn Sphn Akn f Inc & C., h xc c f havn hp h

178Days

2011AverageHostageNegotiationTime

312Days

AverageHostageNeg

otiationTime2012


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13

ha f nh n n pna a a a $20 n f a $4 n an. Each hp n an

nuanc cpan hf u cnuc a ca c-n ana hn nan f a hp a.

Th ncnv v n h an pc an a u a ana nan u cna h

h hh c f havn hp u f vc, an h cna pac n h c.25

A hjackn cu hf c a hppn cpan up v h vau f h an pa n aca

c. Mv, cau h an f n pa an nuanc cpan, h aca c

h huan an cnc a ha hp n an pa v an av h an panf. Wh ha a; hppn cpan hav a n ncnv kp an pan a a p.

Th ak f an a, an pa a a kn aa f h n a. Cnn h ajc

f an vau n a a h nanca ncnv unn h pa np, a a v

h a . Fuh cpcan a h fac ha Sa pa a n unn n

h pp n f h . Bn cuua nc, pan pa nanc, an na ack

f un acun, Sa pa hav avn a nn n an an. On f h pa

f ha h au nhn ha can an h cncu a an nan. Th

pchca apc a anh a f cpcan h pc f nan a an.

In u, h h c f h an f an h anca c aca h an pan a fac

n h c f an n 2012. Bcau h an na fa an nuanc cpan, h $31.75

n n acua pan uc f h a nuanc c. Rah han un h p

a ha f v a pn n h an, v a pn n aca c, u a uch

cnvav n--n a. Un h cacuan, h c f an n 2012 a $63.5 n, p vn

n an c an anca c.

Costs not included:As menoned above, industry analysts have cauoned that OBP has not represented the full

value of costs associated with ransom payments. Some industry esmates place this number as high as ve mes

the cost of the ransom payments themselves. However, OBP could not nd compelling and publically available

evidence to support this higher rao. Therefore, OBP considered the true rao of ransom costs to associated

costs to be too speculave, and including a higher rao than one-to-one would run counter to the conservave

methodology used in this study.

2. The Cost ofMilitary Operaons

Ahuh h aj f p pac c a n nu,

vnn ak a uana cnun h h

aan a pac. Th a v f vnn

c fa ha aca h a a

pan h Inan Ocan. On an vn a

un 2012, h n 21 an 30

v pacpan n a Afcan cun-pac

.26Th v pan an aa

ha au 2 n qua aun n an haf

h z f cnnna Eup.27Th pa funcn

f h nava pn ncu: pana pa n h

Guf f An an Sa an, annanc f h Innana

Rcnz Tan C, cn huanaan a v, an pnn p aack.28

Th hav n va nn vpn n h a fn n 2012. Th a a ucn n

h a p h EU Opan Aaana (f 5-10 v n 2011 4-7 n 2012),29an NATO

Opan Ocan Sh (f 4 n 2011 n 2 h n f 2012).30Th ucn ca an an

nca n a p npnn nav f Chna, Ina, Japan, Rua, an Suh Ka, hch

Total Cost ofMilitary Operations

2012

$1.09Billion


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14

han cpna f h ca Aaana an Ocan Sh

p fc. Scn, Opan Ocan Sh an Opan

Aaana ha h ana xn a, un h

n f 2014.31Th, EUNAVFOR n a xn ncu

Sa a an nna a, hch a h Eupan

fc cnuc n h c a f n an. Th f

h n ccu n Ma 15 an a a a a pa

c a.32Th aack a upp h Sa TFGa a a UN Scu cunc un. EU NAVFOR n

f n Sa , an n Sa nju.33

Accn a L L uv, 64% f hppn

pfna fav h an a pan.34

F h pup f h u, pac-a a

c ncu h anav u f h

h nava n, h pan c f ufac

v, h uvanc achn, an UAV,

pnn c aca h v pcn achn,

an h c f Sha Aan an Dcncn (SHADE) n. A hn , h a a

c n 2012 a aun $1.09 n.

A. Administrave Budgets of Naval Operaons

Th a c u h anav u f h h nava pan EUNAVFOR

Opan Aaana, NATO Opan Ocan Sh, an CTF-151. Each f h n ch

cp f nana nava a, u ann h jn pan ha n anav c.

F xap, Opan Aaana fun huh h Eupan Unn Exna Cn ATHENA

nancn chan.35Th chan cv cn c uch a h pana haqua, h fc

haqua na h ahp, canu vc, an anp.36Th a uaz ach

f h h n, h a anav c, an h pa fun n 2012:

Mission Description Costs and Contributing Nations

European UnionOperation Atalanta

EU NAVFOR-Operation Atalanta was launched on December 2008, in accordancewith an EU Council Joint Action. The mandate of the mission is to:

Deter, prevent and repress piracy and armed robbery off the coast of Somalia Protect World Food Programme (WFP) vessels delivering aid to Somalia Protect the vessels contributing to the African Union Mission on Somalia

(AMISOM) Protect vulnerable shipping off the Somali coast Contribute to the monitoring of shing activities around the Horn of Africa

In 2012, Operation Atalantas mission was extended through December, 2014.

Administrative Costs 2012: $11.4million,12contributing nations include:

Belgium Croatia France Germany

Greece Italy MontenegroNetherlands Norway SerbiaSpain Sweden Ukraine United

Kingdom

NATO OperationOcean Shield

NATOs Operation Ocean Shield has been patrolling the waters off the Horn ofAfrica since August 2009. The mission is to contribute to international effor ts tocounter maritime piracy while participating in capacity building efforts in theregion.

NATO Allies agreed on March 19, 2012 to extend Operation Ocean Shield foranother two years until the end of 2014.

Administrative Costs 2012:~5.7million,13contributing nations include:

Canada Denmark Greece ItalyNetherlands Norway PortugalSpain Turkey United Kingdom

United States

Total Cost ofMilitary Operations

2011 & 2012

2011

.5Billion

1Billion

1.25Billion

1.5Billion

.25Billion

2012

$1.27Billion

$1.09Billion


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15

Combined TaskForce

CTF 151 is a multi-naval task force established in January 2009. It conductsoperations under a mission-based mandate of the Combined Maritime Forces(CMF). Its goal is geared toward deterrence, disruption and suppression of piracyoff of the coast of Somalia and the Gulf of Aden. The CTF headquarters is locatedin Bahrain.

Administrative Costs 2012: ~5.7million,14contributing nations include:

Australia Bahrain PakistanRepublic of Korea Singapore

Turkey United Kingdom United States

A , h a anav c f h h nava n a aun $22.8 n n 2012. Y h

anav c f h n pa n cpan h va c. F xap, accn a n

a pnav h h an annu, h EU NAVFOR pan c a

c $1.96 n a a,40f hch $11.4 n cn anav c.41Th an f h

cpanc ha h pana c f h n a aca un h pncp ha c h

h fa. F xap, h fu an pnn c f a Danh ahp pan a pa f NATO Opan

Ocan Sh u n h vnn f Dnak an, p h fac ha h Danh a n

qun n u a pa f an nnana pan. Thu n h anav c c av

a ha c. F ha an, h va aj f c ncu a a u h pn an

pan f ufac an upp v.

B. Cost of Naval Vessel Deployment

In an h anav c c av, pn f ufac v an ann uvanc

aca c h ncan c. T n h c f nava v pn, cn v

fu c an a pan c. W ap a h c f puc avaa nfan

uzn h cnvav nu. F xap, cun h p nu f v

p n a a a, vn huh x k ha h acua ava a cna hh.

Ana, n cn ana c aca h h an f h Inan Ocan h

a cun f n an vc-va.

T a h c aca h fu cnupn, cnv fu u n cn un f

aun an p up a fu cnupn fu pc. W una cacua ach

v fu cnupn pcca cau xac nfan a n avaa. Rah, u puc

avaa nfan n can ca f vhc an u h ac a px f a vhc n a vn

ca.42

Vessel TypeAverage Number

DeployedAverage Pre-Tax Fuel Price

(per gallon)Adjusted* Daily Fuel

Consumption (gallons/day)Total Annual Fuel

Cost

Frigate 8 $3.97 21,641* $206,191,189

Destroyer 7 $3.97 49,091* $409,271,667

Auxilary 2 $3.97 12,360* $29,441,520

Patrol/Reconnaissance Aircraft 6 $3.97 6,335** $45,269,910

Helicopter 4 $3.97 190*** $905,160

TOTAL 27 89,617 $691,079,446

*24 hours/day, 300 days/year **5 hours/day, 300 days/year ***4 hours/day, 300 days/year

T cacua a pan c, an h an a nf cun h nvua h

na kn f nava pan ha h nh pan c f a fa $1,564,400 h an

ava f 230 a n a. F ha cacuan, au ha h pan c f a v a

uh ppna h nu f afa aa an cncu ha h a pan c f a nava

a n 2012 a $335,865,600.43


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16

Vessel TypeAverage Number

DeployedSailors Aboard

Frigate MonthlyCost

Cost Adjustment Annual Operating Cost

Frigate 8 230 $1,564,000 1.0000 $150,144,000

Destroyer 7 280 $1,564,000 1.2174 $159,936,000

Auxilary 2 121 $1,564,000 0.5261 $119,747,200

Aircraft 6 11 $1,564,000 0.0478 $5,385,600

Helicopter 4 2 $1,564,000 0.0087 $652,800

TOTAL 27 $335,865,600

C. Cost of UAV Deployment

Anh c aca h a pn ha a unann aa vhc (UAV). Thuh

a aa ha va nan p UAV n h cun-pac , cu kn h an

UAV a n p f pac, a pp -a pup. I a cu kn h

ppn f ach UAV n h ha ca cun-pac pan ah han anh

pup.

T kp u cacuan cnvav, au ha n n f ach knn UAV pn n h n

u f pac an ha 50% f ha UAV h hu ca nn paca acv.

Country Model Number of Units Hourly Cost Duration of Mission per day Total Operational Cost

US Reaper 1 $1,456 12 $6,377,280

US Robotic Helicopter 1 $1,804 4 $2,633,840

US Global Hawk 1 $1,458 12 $6,386,040

South Korea Hermes 450 1 $1,351 12 $5,917,380

TOTAL $21,314,540

Th a u f h a ncan cnvav han h u a a,44an hav

u n a a UAV-a c f $21.31 n n 2012.

D. Cost of Vessel Protecon Detachments

In an pfn cun-pac pan f aa h n a, a a pn

h pnn ua WFP an AMISOM hp pc h huanaan n f pa aack.

Cun ha hav pv VPD ncu, u a n : Nhan, Ena, Gan an Fanc.45

Ana, Fanc an Ukan pv v pcn ann 12 p f Uana v a VPD

f AMISOM.46Th VPD pc an ava f 40 WFP an 32 AMISOM hp ann h HRA ach a.47

Program Ships per year Cost per VPD team(of 10)

Cost per VPD team(of 18)

Total Cost VPD team(of 10)

Total Cost VPD team(of 18)

WFP 40 $151,667 $273,000 $6,066,680 $10,920,000

AMISOM 32 $151,667 $273,000 $4,853,344 $8,736,000

TOTAL $19,656,000 $19,656,000

T cacua h c f a VPD, u h p c u f $273,000 f an 18-pn VPD f h

Nhan an au ha h axu z f a VPD, h h nu a z n 10.48


24/80



17

Ahuh h $273,000 u a appa hh hn cpa h $34,500-$46,000 p-an c f

PCASP, h p-ua c a qu a. B a f xap, f an 11.5 a an h fu ua aa,

h c p ua p a aun $1,000. B u cacuan, ha a an u p a VPD a a

a f $1,318.84 p ua p a. Thu h an nc n c n PCASP an VPD c f h

nu f ua p, n a nc n p-ua c.

E. Cost of SHADE Meengs

T cna h vau nava n n h Inan Ocan an Aaan Sa, nnana nav n h

Sha Aan an Dcncn (SHADE) chan. Eah n 2008, SHADE a

chan a a pvn cpan an cnan an h a fc pan n h n

h cnn n nav n up an pvn fuu pa aack. Th n a

h h Cn Ma Fc (CMF) an a h n Bahan v h nh.

SHADE Meeting Meeting Date Meeting Location Attendees Total

23rd Meeting March 16, 2012 Bahrain 145 $171,290

24th Meeting June 17, 2012 Bahrain 145 $171,290

25th Meeting September 18, 2012 Bahrain 110 $136,940

TOTAL $479,520

F h pup f h u a n apn cacua h c f h n hv. W

n cn h c aca h ann, anan, haqua, pnn. In h ,

n cn h av an accan c aca h qua p Bahan. Dun 2012,

h 26thn chu f Dc a ppn un Janua f 2013. Thf, h n 3

n h 110-145 an n 2012, cn a a f $479,520.

F. Total Cost of Military Operaons

Total Cost of Counter-Piracy Military EffortsTotal Administrative Budgets $22,800,000

Total Cost Military Vessel $1,026,945,046

Total Cost of UAVs $21,314,540

Total VDP Costs $19,656,000

Total Cost for SHADE Meetings $479,520

TOTAL $1,091,195,106

Takn h, h anav u f h h cun-pac n, h c f ufac v,

cnnaanc aca, an UAV pn, h c f VPD, an xpn a h h SHADE

n n 2012 aun $1.09 n. Appxa 94.5% f h a c a pn n ufac v

an cnnaanc aca pn.

A $1.09 n, h aun pn n a appa hav ca aun 14% f 2011.

Hv, h p ca h u f an x cnvav appach UAV u a a u

cn h h ava nu f v pan h Inan Ocan cnan f 2011, p p

ha h nu a hav nca.49


25/80



18

Costs not included:There are many costs associated with the deployment of surface naval vessels that could not

be suciently isolated for this report. These costs include the cost of food, addional manning and supplemental

training for the crew, port rights, logiscs for supplies, intel support and addional maintenance and ship

availability costs. Michael Frodl of C-Level Marime Risks esmates that all of these costs together result in a cost

of $200,000,000 per U.S. frigate per year. Thus if all incremental costs of a vessel deployment could be isolated

and included in this calculaon, the total military cost could be as much as $3 billion.

3. The Cost ofSecurity Equipment and Guards

Th h van f h HRA av hp n a h n

vc n pcn hv f pa. Such f-pcn

c a a c. In 2012, hp n pn h n cu

qupn han h n 2011 an ncan n a

ua.

A. Security Equipment

B Manan Pacc f Pcn aan Saa BaPac, Vn 4 (BMP4) an h nu ana f v f-

pcn.50Wh a cpanc a a a 80%,51h au

hav pa a za n h ucn f uccfu pa aack.

BMP4 cn h fn f-pcn au ha a

h ac ha a k cv.52Exap f h f-

pcn au ncu:

Wachkpn an Enhanc Vanc

Cn f Acc B, Accan

an Machn Spac

Wa Spa an Fa Mn

Manuvn Pacc Upp Dck Lhn

Saf Mu Pn an Ca

Enhanc B Pcn

Phca a (uch a az an c a

Aa

C Ccu Tvn

Pcn f T an Equpn

Pva Ma Scu Pnn

SECURITY EQUIPMENTType ofEquipment

Unit Cost perShip

Units perYear

Rate of Use(Low)

Rate of Use(High)

Total Cost (Low) Total Cost (High)

Razor Wire $7,998.00 2.00 80% 80% $447,888,000.00 $447,888,000.00

Water Cannons $118,755.00 .20 .25% .83% $2,078,212.50 $6,927,375.00

Electried Barriers $39,585.00 .33 .75% 2.5% $3,463,687.50 $11,545,625.00

Warning Signs $4.50 1.00 80% 80% $126,000.00 $126,000.00

Acoustic Devices $21,000.00 .20 5% 15% $7,350,000.00 $22,050,000.00

Sandbags $1,424.16 1.00 80% 80% $39,876,480.00 $39,876,480.00

TOTAL $500,782,380.00 $528,413,480.00

Total Cost ofSecurity Equipment & Guards

2012

$1.65to$2.06Billion


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19

Th h u cacua cu qupn

c n 2012 uana a ha u n

2011. W cn h ava p hp c f

ach hp hann au, h a a hch ach

un u hav pac, an h a

pcna f hp pn ach au.

Hv, h chan ha u nan va nca n h aun pn n cu

qupn. S f h chan a, uch

a an nca un pc f az 53and an

ajun n h c f acuc vc. Oh

chan a. F, a cnvan h a

anufacu f c a n ha h

c f h a ncan hh han

a n 2011 ($39,585 a pp $1,529) an

ha h a f u a ncan (0.75%-

2.5% a pp 5%-15%). A, h c f a

cannn a a h c ax. Th un,

huh xpnv, a u a a ppn f hp ann h HRA an can ha an hp.

Fna, a a fa ncan na ajun n h nu f hp ann h HRA ach a,

a n Can Gup a ha h a aun 35,000 nua hp n h Inan Ocan ach a.54

In a, h a an f $500.7 n $528.4 n pn a a 11% ca f 2011

a f $530.8 n $626.5 n.

B. Armed Guards

An h ncan chan n 2012 a h nca u f a ua aa chan v.

Th n accun f a a ppn f h ucn n p pa aack, a n hp pn

a ua ha n uccfu aack a. Y h nca n un f a uac a an nca c.

La a, a ha 25% f h hp ann h HRA p a a f a ua a a

a f $50,000 p an.55Th u n a a c f $530.6 n pn n a cu n 2011.

Dvpn n 2012 hav cau u aju u aupn.

Ran h a f a ua u, a an f 38% 60%.56W f ha an a a f

PCASP u f 50% h apppa f 2012. I pn h an f a uv an a

pcca c a vnn uv an an nu pnav.57Rp f h c f a cu a

a va, h a ann f $772.95 $2,569.73 p ua p a.58Excun h

nu an axu a an avan h a a p-ua c f $1,115.94.59Th h

a u n u .

Anh cnan ha ca n pa a h nu f ua acua p hp n p

an. BIMCO GUARDCON u ha a cu a hu cn f a a fu ua.60Y cncn

hav n a ha hp n hav n pn a a n hp f achvn c avn.61

Bcau h hch uch ucn a akn pac unca, pv a an f ava a

z n h an fu ua p hp p an.

Total Cost ofSecurity Equipment & Guards

2011 & 2012

2011

1B

illion

1.5B

illion

2B

illion

.5B

illion

2012

Estimated Cost Range


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20

Total Transits Rate ofPCASP

Ships w/PCASP

Cost per Transit(3 guard average)

Cost per Transit(4 guard average)

TOTAL(low)

TOTAL(high)

66,612 50% 33306 $34,500.00 $46,000.00 $1,149,057,000.00 $1,532,076,000.00

Fuh an h c f pva cu h v a f h nu f an huh h Inan

Ocan ach a, hch u n an a ha n $1.15 an $1.53 n a pn n a ua

n 2012. Cnn f ha hca chan, h c f PCASP aa nca 79.7% f 2011.

C. Armed Guard Accreditaon

Th na apc f cu qupn a c ha aca h a ua accan. Ou

h an vua unchan f a a. W cacua h ava c f hp n h

Scu Acan f h Ma Inu (SAMI), h a f uch anzan, an up ha h

nu f .62

SAMI Members Cost/Member TOTAL COST

186 $3,947.40 $734,216.40

Th a c f $734,216.40 pn a 152.6% nca f 2011, u ha nca a n

xpan h 144.7% nca n SAMI hp.

Hv, h c f cu ua accan n ncu n h na c a. Th c f

accan, k h c aca h unnn a PMSC, a pa n h cn an a hf

capu n h $38,500-$51,333 p-an f ncu av. Rah, SAMI hp ncu a an

xap f h a nu ha hav n pn h ha f a pac.

In u, h a c f cu qupn an ua n 2012 a n $1.65 an $2.06 n.

Costs not included:Costs associated with controlling access to the bridge, upper deck lighng, safe muster pointsand citadels, alarms, closed circuit television, and the protecon of tools and equipment were not included in

this secon. This is because much, if not all, of the hardware necessary to engage in these types of vessel self-

protecon was likely present aboard most merchant vessels irrespecve of marime piracy.

4. The Cost ofRe-Roung

In an hp hann au, anh acc hp n an

pa u av pa aack h -un f hp

huh h HRA. BMP4 a ha h hppn cpan

pn pv uanc h v Ma n

h cn un huh h Hh Rk Aa an

a f h pac ha.63Th cn cn h

c aca h v -un av pa

aack n h HRA.

In u 2010 p, c ha

a hn h av cn pacc

f avn h HRA ah ann aun h Cap f G

Total Cost ofRe-Routing

2012

$290.5 Million


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21

Hp ah han huh h Suz Cana, n h R Sa, an huh h Guf f An an h HRA.64In

2011, hv, fun ha h nca pnc f a ua, pa xpan aa f pan,

an nca vnu f h Suz Cana a u ha h p f xnv -un a n n

ccun.65Th v aa f un aun h Cap f G Hp appa hav a huh 2012,

a h pnc f a ua ha nca, pa aack an pa huhu h Inan Ocan, an

Suz Cana vnu an vua unchan f 2011.66

Th a p, k a a, hf h a f f -un hchan v an na h Aaan Pnnua an h Inan can, ah han akn h h

p u aun h Hn f Afca an ah huh h HRA.

Ou h f cacuan h c f -un a uana a ha u n 2011. W n

cn ana cha an fu c f ank an uk ca, a cnanhp a capa f

uch fa p an -u a a ncan a han ank an uk ca. On ncan

nc n u h ha ah han un nu a av a h pcna f hp

-un an h Inan ca, u AIS aa pv ExacEah. B xann fu paa n

an h c u f h Hn f Afca S Lanka an cpan h u h f a 2008

u ha cca hppn pan n 2003 an 2004 (avaa n Appnx D), fun ha

49.6% f chan v na n -un pacc. Na, unnn h a cacuan un AIS aa

f 2011 u n 60% f hp -un n ha a, xac a n h upp an un

a n 2011 ECP f 50% an 70%.

Th fn cha uaz u cacuan:

Vessel Type Vessel ClassAdditional distance from

re-routing (nm)Additional time from

re-routing (days)

Number of vesselsthrough the Suez

Canal

Proportion of vesselsre-routing

Tanker Handysize 760.045 2.64 1819.5 49.61%Tanker Aframax 760.045 2.64 1819.5 49.61%

Bulker Handymax 760.045 2.64 1468 49.61%Bulker Panamax 760.045 2.64 1468 49.61%

Vessel Type Vessel ClassAdditional Charter Cost (per

voyage)Additional Fuel Cost (per

voyage)Total Annual Charter

CostTotal Annual Fuel

Cost

Tanker Handysize $33,779.78 $46,651.56 $30,491,449.84 $42,110,216.80Tanker Aframax $44,335.96 $79,200.00 $40,020,027.92 $71,490,192.84Bulker Handymax $25,070.93 $44,000.91 $18,258,525.67 $32,044,750.41

Bulker Panamax $25,070.93 $51,952.88 $18,258,525.67 $37,835,970.36$290,509,659.51

Thu n 2012, appxa $290,509,659.51 a pn n -un. Th u pn a ncan

ca f ha p n 2011, u n a a aun f ha ca a h u f a uc

ppn f hp -un. Th a u a vn u h h n hp ha

pa huh h Suz Cana a pp a hp n h Inan Ocan cn cana f

-un. Th cau n hp ha n h HRA huh h Guf f An a fac h h chc f

hh ak a c u huh h HRA -u an h Inan ca.


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22

Costs not included: OBP only considered re-roung opons originang or terminang in the Gulf of Aden. Other

potenal re-roung opons such as transits around the Cape of Good Hope, or other variaons within the HRA

could not be isolated to piracy causes, and therefore were not considered.

5. The Cost ofIncreased Speeds

Th cun vn f h nu-vp B Manan Pacc

(BMP4) c h pacc f ncan p n h HRA a n f h

cv a fa a pa aack.67In fac, BMP4 cn ha

a hp av a a p f a a 18 kn hn ann h HRA. Th

vnc upp h cnan cau, k h pn

f a ua, n hp akn v 18 kn ha v n capu

pa.68Y h fnv au, k a h, c a a c hp

n an pa. Th cn cn h c f nca p

huh h HRA un a Auac Infan S (AIS) aa

an f h ExacEah Cpan.

Accn nu ana, h c f nca p can ncan n h cun a f hh fu pc. F xap,

a ha n v a cu ca (VLCC) ha an h HRA

un Oc 2012 an a 17.9 kn, 5.1 kn av a

p f 12.8 kn, ncu $88,681.74 n ana c p a.69

Such pcc aa pn a avaa a h u f a aa an

f ExacEah. AIS an auac ackn u f nfn an can

v un cnc na ha ncu nfan n hp p, p, an pn. A AIS a

n f h HRA v a xn a p n h 2011 an 2012 cc ExacEah a an

cn OBP f u n h p. Th aa a cc ap hppn ac un h u

an n nn an, a a h n p n h an.

Thuh a fu xpanan f h h u cacua h c f nca p h hppn

cun avaa n Appnx E, a f accun f h a ach u cncun n . F,

paa h AIS a cnann hp p an nn f h cnann p v un

an pn. Thn, un aca a, c-fnc h f a MMSI nu, a

cn n u n AIS ann, ha ha hp p, p v un, an hp nn

f ach cca an f h HRA n h xn a n qun. T nz h aa, cn

hp p, hp h, an p v un un a f n c cuv pv ana a BIMCO.

Th cuv a hp p hu fu cnupn f ach f h n hp ca n qun.

T n h fu c pcca aua pac, h pa cun p ha acan.

T h, u h u f a 2012 qua p uv cnuc RS Pau Mak nn haVLCC ank cun a an ava a f 12.8 kn an ha cnanhp avn a an ava

f 15.1 kn.70Bcau uk an ank a a a p, 12.8 kn a u f h pa p

f uk ca. F ach hp h aa a avaa, k h nc n h p p

an h pa p, an cacua h c f ha nc un h c cuv pv BIMCO. Th

pna u a a f:

Total Cost ofIncreased Speed

2012

10 15

0

52 0$1.53 Billion


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23

Tankers Containers Bulkers

Raw Number 909 1719 1719

Raw Number (Fast) 520 720 1106

% Above Optimal 57.21% 41.88% 64.34%

Cost per Fast Ship $25,895.92 $29,750.05 $63,247.25

Aggregate cost $13,465,880.34 $21,420,035.38 $69,951,457.59

Bcau u aa n cn f 16 a u f h a, h aa ha annuaz accun f a

cca an hn h HRA, hch u n h fn a:

Tankers Containers Bulkers

Number 20736.5625 39214.6875 39214.6875

# Above Optimal 11862.5 16425 25230.625

% Fast 57.21% 41.88% 64.34%

Cost per Fast Ship $25,895.92 $29,750.05 $63,247.25

Aggregate cost $307,190,395.33 $488,644,557.20 $1,595,767,626.22

I a hav c appan ha h nu f p uk ca nca h nu f p

cnanhp. Th u h fac ha h AIS a n nuh n h p f

hp, nnn nc n h ca u n va n fu c. T cpna f

h cnc, cacua a ca hp a f h cnanhp an pf h a cacuan

a cn a f h a uk ca. Thn, un nfan f h Suz Tan Auh,71

an ppn f 27.59%, 34.66%, an 37.76% ank, uk, an cnanhp, pcv. Th

u n h fn c a:

Ship TypeProportion in

Suez

Number ofTransits in

HRA

ProportionSteaming Faster

than Optimal

NumberSteaming Faster

than Optimal

Average Costper Fast-

Steaming Ship

Subtotal

Tanker 27.59% 16539.6 57.21% 9461.64837 $25,895.92 $245,018,124.62

Container 37.76% 22635.4 41.88% 9480.80252 $29,750.05 $282,054,340.94

Bulker 34.66% 20776.1 64.34% 13367.316 $63,247.25 $845,445,964.25

TOTALS 59951.25 32309.7669 $1,372,518,429.81

Thu f 100% f hp an h HRA h h AIS anpn unnn, h 59,951 v an u

hav u n $1.37 n n c u nca p n 2012. Hv, huh BMP4 a ha

cn ha AIS n huhu h Hh Rk Aa, a ha h Ma ha h cn

ch h AIS f h v ha u nca h hp vuna.72Cnvan h h

faa h hp ackn an pn pacc ha u v ha appxa 75% f hp pan h HRA h h AIS anpn ch n, u ha a can ppn aun 10% ca h

MMSI nu, nn up nu p hp p an. A akn h ajun, cncu

ha 66,612 an huh h HRA hav u n $1,525,020,477.56 n fu c f fa han pa

an n 2012.

Dp h n xac cncun, h AIS aa an an pfc au f nu an

pacc n h HRA. Th u f va an. F, AIS pa n nnna fa

npu n h anpn, ncun fa up MMSI nu an an ca n.


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24

Scn, ac u u n fau nfan. Fna, u p ch n a

huh h HRA h h AIS anpn ch n. Mv, h a vaa uch a cun, n,

an hu cnn ha ac a hp fu cnupn a ha a n capu n u aa.

Nnh, u u a n n h u pvu a ha $2.7 n a pn n nca p n

2011, pca hn h up aan u nn ha h h ppn f hp pn an h aun

hch h p pp f 2011 2012. Mv, u nn ha h a v 65,000 annua an

huh h Inan Ocan ach a (a pp h 42,450 a n 2011) n n h a vn h faa h v ackn an pn pacc. Thu p h hcn nhn n u

h, u u fa hn ana accpa a ha hav n n xp n

h .

In an pvn nfan n h c f nca p, h a AIS aa u n h cn

h h n n hp a cp h BMP4 cnan ha hp ann h

HRA hu av a a p f a a 18 kn, a a h c f h u an n nn

an n an pacc.

Th cha ak paa u a pn au BMP cpanc. Th ha n a hp a

qua a a a 18 kn. In 2011 an 2012, h ppn f ank an a av 18 kn

a n 5% an 6%, h h ppn f h ca hp avn a h BMP cn p

a av 20%. Scn, h ca n h ppn f hp ha uc h p n 2012 a uch

pnunc n h ca hp han ank, h h f n a 24.3% ucn an h a

n a 6.3% ucn.

Proportion Steaming at or Above 18 knots by Year

Tankers Other Cargo Ships All Ships

2011 5.75% 27.21% 20.02%

2012 5.39% 20.59% 15.33%

Ana, uch ha n a au h pac f nn an n a pac.73Hv h

fn cha u ha h ana vaan hav na pac n an pacc:

Proportion Steaming at or Above 18 knots, Monsoons Versus Interim Periods

Tankers Other Cargo Ships All Ships

2011 Monsoons 4.64% 26.77% 19.19%

2011 Interims 6.65% 27.56% 20.67%

2012 Monsoons 5.01% 21.01% 15.41%

2012 Interims 5.78% 20.18% 15.26%

Thuhu 2011 an 2012, h ppn f hp an a av 18 kn chan v n

pn nc n h u an n nn an an h n p nh an. In h pa a, h pnunc c ha h nn an ha n an

a a 2% nca n ank an a av 18 kn un 2011. Th ava v chan n

nn an an n p a un 1%, an f hp av a av 18 kn un

n p han nn an n 2012. Th n a ha h u an n nn an

hav n pac n a pac; n a ha h appa hav n pac n cca

an pacc.


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25

In u, h a AIS aa u n h cn u ha hp n an pa pn $1.53 n n

nca p n 2012, cn ha ank a a a a av 18 kn han h ca f

hp, an a h cncun ha h cn an n f nn an ha pac n cca

an pacc.

Costs not included: According to the Cyprus Shipping Chamber, merchant vessels undergoing a pirate aack

incur between $3,000 and $6,000 in addional fuel costs per aack74. These costs stem from the increased

fuel required to engage in evasive maneuvers. Using the Cyprus Shipping Chamber esmaon, these evasivemeasures cost between $246,000 and $492,000 in 2012.

6. The Cost ofLabor

6 afa k

383 afa h ha

Anh c chan ha ha c a a u f

ca pa acv h Hn f Afca h

ucn n h nu f ha h an k

pa. Wh n afa f cu h a pa n an, h 82% ucn n pa-a

ha faa n f 34 n 2011 6 n 201275

a n ha a ucn n vnc a a n

ccun. Ana, h nu f ha h

pa pp f 1,118 383 n 2011 an

2012, a uch c 66% ucn.76

Thuh h huan c f pac afa cann an hu n n,77h cn fcu n n

h cnc c aca h afa a, na haza pa an a pa un capu.

A. Hazard Pay

Th a vau cnacua ch ha hav n vp cpna afa f h ana

k f ann h a Afcan HRA. Th f h a fak a upn n h Innana

Tanp Wk Fan (ITF) an hp n huh h Innana Baann Fu (IBF).78Th

a ap nnana an un h ITF/IBF fak a ha []h Safa ha pa a

nu qua 100% f h ac a f h uan f h hp a n a Wak Opan aa ujc

a nu f 5 a pa.79Th ITF cp f 600,000 afa , an f h an h

Inan Ocan an Aaan Sa.80

Scn, h vnn f h Phppn qu ha a cnac h Fpn afa pv f haza

pa f 200% f a an n hn ann h HRA.81Th cpnan ch a ca h

Phppn Ova Epn Anan n 2009,

82

v n 2011,

83

an ca n 2012.

84

Bn160,000 an 250,000 f h appxa 1.37 n afa a f h Phppn.85

In an h a ca ch c av, an h afan cnac cnan a haza

pa pvn. Accn a an chan , a a afa a unnz an c un a

ccv aann an (CBA). Mv, a a f h CBA f h ITF a n pvn f

100% ana haza pa.

Total Cost of

Labor2012 $471.6 Million


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26

La a p n cn h haza pa cn f Fpn vnn an ITF aann knn

pa n h HRA, cncun ha 30% f afa cv haza pa.86Hv, cnvan h

Anuj Chpa an h a An-Ean Shp Manan hav u v ha a ncan

upa. Thuh h cu f u nvan, an a p unann f h hch

afa a n haza pa. In fac, 90% f Inan afa, 95% f Fpn afa, 90% f S Lankan

afa, 80% f Ukanan afa, 60% f Pakan afa, 95% f Maaan afa, an 95% f

Innan afa cv haza pa.87Th n c n k cv haza pa a h

f Chna, Rua, Mana an h Afcan cnnn. F h u, cncu ha a a 70% fafa ann h a Afcan HRA a n cv haza pa.88

Hazard Pay in 2012

Hazard pay per transit through the HRA $10,000

Transits per year through the HRA 66,612

Percentage of vessels disbursing hazard pay 70%

Hazard pay in 2012 due to E. African HRA $466,284,000

Th h vn a a a h cncn h c p an aua haza pa. La

a, k an ava a p-hp a f $2,100 an up h 7 a ha ak n ava an h HRA. F h aupn, cncu ha haza pa aun $14,700 p an.89

Hv, fuh cun h An-Ean hav u n a ucn n ha p-an a. Th

ncan vaan n h c z an an uan ha u n a haza pa c ann f

$3,000 $19,000 p an, h an ava c f aun $10,000.90Th $10,000 u u f

2012 cacuan. Aan, u v a f h nu f annua an n h Inan Ocan fuh

v h a c f haza pa upa.

A , a $10,000 p an an h 70% f v ncun haza pa c, h a c f a Afcan

pac-a haza pa n 2012 a $466,284,000.

B. Capvity Pay

Th nau f pac-a a c ncu h hppn nu chan n h vn f a uccfu

hjackn. An a uccfu pa aack, n h a av na v a pp cn c

f pac. Hv, n h vn f a uccfu hjackn, afa a p n pu pucv u

ah.

F xap, f h ava a c p an $10,000 f hp h n u haza pa an

$20,000 f h hp ha , n h ana $10,000 p an n haza pa a c f pac an a

hjackn. Onc a hp akn, hv, 100% f h a c aua pac f h uan f h

ha uan. Cpan u pa h afa a hu cvn an f h n f h a.

Merchant Vessel # of Hostages Days in 2012 Months in 2012 Monthly Labor Rate SubtotalMV Free Goddess 21 247 8.10 $84,000.00 $680,262.30

MT Liquid Velvet 22 157 5.15 $88,000.00 $452,983.61

MV Obib G 18 8 0.26 $72,000.00 $18,885.25

MT Fairchem Bogey 21 12 0.39 $84,000.00 $33,049.18

MT Enricco Livoli 18 114 3.74 $72,000.00 $269,114.75

MV Leila 15 56 1.84 $60,000.00 $110,163.93


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27

MV Albedo 23 213 6.98 $92,000.00 $642,491.80

MV Orna 10 293 9.61 $40,000.00 $384,262.30

MT Royal Grace 22 304 9.97 $88,000.00 $877,114.75

MT Smyrni 26 235 7.70 $104,000.00 $801,311.48

Base Wages $4,269,639.34

Hazard Pay (35%) $1,046,061.64TOTAL $5,315,700.98

Rah han un h p cacuan ju c cacua capv c, c u a n,

accua fuan. A a n h pcn ucn, haza pa n u a a,

h a pa h pa c. Thu h p-haza pa a c acua han c

h haza pa, a p-haza pa a c ncu h a aa f hh ank c aa

h v. Nnh, a c ca h z f h c. W hf k an ava nh

p-haza pa a c f $80,000 f 20 c, aju h nh a c accun f chan n c

z, an cacua ua a n c z an uan f capu. W hn up h a a c

35% cacua ana haza pa.91

Th cn au ha n a-ca chan v (a pp hn v an ca h)

cnnu pa afa a n h vn f a ha uan.92I fuh au ha, n accanc h

h pcn cn n haza pa, ha 70% f chan v u haza pa afa ann h

HRA. Un ha cacuan, h a c f capv pa a $5,315,701 n 2012.

Bn haza pa an capv pa, h a c a n 2012 a $471,599,701. Ahuh h u

pn a ncan nca f ha p n 2011, h nca a u n pv

h a pp a c nca. Cnn f h hca chan, a c

an vua unchan n 2011 an 2012.

Costs not included: Administrave costs associated with negoang and administering hazard pay and capvity

pay are not included in this secon.

7. The Cost ofProsecuon and Imprisonment

Pac h c f unva jucn un

nnana a, ppa u communis hoss

omnium(h cn n f a) Cc n h

cnu B.C.93Tu nnana chaac, a a 40

cun nvv n capun, nvan, n,

an pnn pa n 2012.94Th c f n pa

a hav pp h pa a, u h c au

pnn nca. Bf vn n 2012 c fac,

a nu f vpn n h aa f pcun an

pnn a h nnn f cnx.

In a a p, cu Jack Lan ppa f a pcaz xaa

Sa cu a n Auha, Tanzana upc pa.95Accn a n

Sca Gna Rp puh n 2012, ha a ha n uppan n

nvvn nnana a c an-pac cu n Saa, Sch,

Total Cost ofProsecutions

& Imprisonment2012$14.89

Million


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28

Kna, Mauu an Tanzana.96Innana aanc c f h Un Nan an M Sa,

hch upp vau n f c pcun f ann pnn cnucn pn, h

ca ca cnucn h acua juca pc.97Th pjc xpc c $30.49 n n

a 2012 an -2014, f hch $9.38 n ha aa n cnu.98

Th UNODC ha akn h a n h capac-un n panaz h na a

a.99T ha n, h UNODC ha n kn h Kna, Sch, Mauu an Tanzana a

h pacua p f cnucn fa an cn pac a an nun af an cu pnnf pac pn, h pvn a ac v f aanc n Saan an Punan.100Th

pa k a ncan h capac pcu pa hn h n, a pp

anfn h h Un Sa h Eupan Unn f c pcun.

Country Pirates Held Completed Trials # of Suspects Region

Comoros 6 0 0 Africa

Kenya 164 2 11 Africa

Madagascar 12 1 14 Africa

Maldives 41 0 0 Africa

Oman 32 2 20 AfricaSeychelles 124 4 37 Africa

Somalia & Puntland 308 unknown unknown Africa

Somaliland 94 unknown unknown Africa

Tanzania 12 0 0 Africa

UAE 10 1 10 Africa

Yemen 129 1 4 Africa

India 119 unknown unknown Asia

Korea 5 0 0 Asia

Malaysia 7 1 7 Asia

Belgium 2 2 2 Europe & Japan

France 22 1 6 Europe & Japan

Germany 10 1 10 Europe & Japan

Italy 20 2 20 Europe & Japan

Japan 4 0 0 Europe & Japan

Netherlands 33 1 9 Europe & Japan

Spain 8 0 0 Europe & Japan

USA 28 2 2 North America

TOTAL 1190 21 152

In 2012, h c a pcun a $8.84 n, n 24% f h $11.66 n p n

2011.101A a f 2012 p pcun c pn n Eup, hch h 7 pac a a an

ava c f $1,174,484.86 ach.102I hu n, hv, ha Knan an Sch pcun

a n ncu n h a, a h c a n h UNODC an capu n h cn cncnn

cun-pac anzan.103Sa, Sa an Inan pcun c a un-accun f u h

unavaa f van aa.


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RegionPirateTrials

Average Costper Trial

Total Trial CostPirates

Imprisoned

Cost peryear of

imprisonment

TotalImprisonment

Cost

Total RegionalCost in 2012

Africa 5 $227.97 $1,139.86 644 $730.00 $470,120.00 $471,259.86

Asia 1 $7,313.96 $7,313.96 131 $375.51 $49,191.81 $56,505.77

Europe 7 $1,174,484.86 $8,221,394.00 99 $47,793.60 $4,731,566.40 $12,952,960.40

N. America 2 $307,355.00 $614,710.00 28 $28,284.00 $791,952.00 $1,406,662.00

TOTAL 16 $8,844,557.82 902 $6,042,830.21 $14,887,388.03

Ova, h ucn n pcun c appa u p a ca n h nu f upc

pcu. Excun h pcu Saa an Ina, 232 pa pcu n 2011, an 152

pcu n 2012.

Wh pnn c a cncn, u h an unchan

f 2011. W an h h nu f pa h a p h UNODC.104

W hn uac h h Kna an Sch, paa an

n, an up ach n an h a ava

pnn c f ha n. F ha cacuan, cncu ha $6.04

n a pn n ncacan n 2012. Th u, up 26.67% f

2011, u an nca n h nu f pa an n

Eup. In 2011, 72 pa vn nnc n Eup a a c f

$3.47 n; n 2012, h 99 pa vn nnc a a c f

$4.73 n.

Th ucn n pcun c ccun an an nca n

pnn c hhh an pan pc cnan. Wh

pa pcun a av h- ppn, pnn

a ah n n. In 2012, nnc an f 2 a f,

h an ava nnc f 8.66 a.105

An a p-a anfan, a cn pcu a upc pa cu

pna c a c, n- cn pn ha

pa. Snn an acn upn an pn cnvc pa

n h n hf paaun. Sch, Saa, Kna, an

Mauu hav aa n uch an.106

Th anh u a nncn ha n ac c p ,

u nnh h nnn, a k ha pcan n h uv an n c f

pac a. Th u a ack f cnnc n nncn ha, accn a 2012 pap n Eun

Knvch n haf f OBP, u vaanc n au an nncn n n cun an

appa una h v f h pa nvua acn.107In an pan qun f

qu an fnan accu f h a c, h v vaanc n nncn a na

h n c f pac pcun va. 108

I cu pc h fuu f pcun an pnn c cau h a n fc

ha cu v fuu c h upa an na. On fac vn up fuu c h pv

juca ana n aha n na a k Sch, Kna, Mauu, an Tanzana h

h hp f h UNODC. Gna pakn, pv qua c a an nca pc, an pcun

a n xcpn. Anh pcuav fac vn pcun an pnn c upa u

Total Cost of

Prosecutions& Imprisonment2011 & 2012

2011

10Million

15Million

20Million

5Million

2012


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30

a ucn n h cach an a a, a a a f h can a Afcan pac.109Rucn

h cach an a a u nca u n an nca a f pcun, h a cpnn

nca n c. Incan h nu f pac pcun an h qua f h pcun u

c vpn, u h u c a a c.

Th a a va fac ha cu v fuu c na. F, a h aa f Nh Acan

an Eupan pcun an a na una u c. Evn aun ha pv

juca ana u nca h p-pcun c n na a, h a u ncan han h Acan an Eupan cunpa. Scn, h UNODC an h U.S. Sa

Dpan hav nv n v cnfncn qupn ha cu aca h c f n

appaanc n h n.110Th f chnca cnc hu uh a v un. Fna,

h ccn an han f vnc cn an huh h nn f INTERPOL

an h fhcn k f RAPPICC.111Th, h cnc hu v h c f a pac

pcun vn fa.

PIRACYPROSECUTIONSIN 2012

3

2 TRIALS

4 TRIALS

UNKNOWN # OF TRIALS

0 TRIALS IN 2012(But held t rials in 2011)

1 TRIAL

TOTAL COSTOFTRIAL

& IMPRISONMENT

AFRICA........................$471,259.86

ASIA............................$56,505.77

EUROPE.......................$12,952,960.40N. AMERICA.................$1,406,662.00

$14.89Million

UNITED STATES

COMOROS

KENYA

TANZANIA

MADAGASCAR

MALDIVES

OMAN INDIAUAE

ITALY

GERMANY

NETHERLANDS

BELGIUM

FRANCE

SPAIN

YEMEN

SEYCHELLES

SOMALIA & PUNTLANDSOMALILAND

MALAYSIAKOREA

JAPAN

In h n, h cvn f h juca apc f h a h aan a pac hu au

h p-pcun c, h nava cach an a a, an h n c ha u f

pcua . Sp a cun una pv h c.

Costs not included:The cost of prosecuons and imprisonment paid for by the United Naons is not included in

this secon. This is because those costs are captured in the secon covering counter-piracy organizaons.


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31

8. The Cost ofPiracy-Related Insurance

Pac h ca f Saa cnnu p a k hp ann h

Hh Rk Aa (HRA), an hp-n cnnu nu hv aan

ha k. Lk a cpan kn a k, hp n pa pu

nuanc cpan cv nanca n h ca f an accn.

Th n a pac ha an nca n nuanc c cn

h nca k u a p hjackn. Th cn k cacuanuanc c ha can au a pac.

Cacuan h c f pac-a nuanc an a cu an

cnnu a ak a a n 2011. Thuh h npu cv h nuanc

nu a a ha pvn ua, h a a h pa f pa-

a nuanc cnnu unaa. Dnan h p n pcpn

a a 2012 L L ak uv nn ha 53% f pnn v

ha h nuanc nu a pn f pac, h 24% an

h ha an an h ann 23% unu.112Th cpanc

unu a h pva an nvuaz nau f nuanc cnac, an h ha can

n ac h nfana an.

Th pa f f pac-a nuanc a Wa Rk an

Knap an Ran (K&R) nuanc. Ahuh p ha h

ha f pac ha u n nca hu an ca pu,

uch a c nca f x u a cn c f

pac u h cp f h u.113

War Risk Insurance: h f f nuanc pa cv

h c f nju h c an aa h v h

avn n h a k aa.114In an h c,

a k pan a cv h pan f an.115

A hp ann h a k aa u pucha a k nuanc.

Th a k aa n h L Mak Acan (LMA)

Jn Wa C n Lnn.116Wh h n xcpn f h

n f Dju xcun an, h pac-a a k aa

an unchan n 2012.117

Th a h a f h nu uc h a k pu.

Th huh a n ca nu avaa hp-n h

n a pac a ca. Th cn an ana cun

f h pucha f K&R nuanc. Th h a cun avaa

h h p a ua n fn f h v. In an,

cpanc h h a nu anan pacc

(BMP4), hch ha n an pan u nu

pa, fqun a qun f unn.118

Kidnap and Ransom Insurance:K&R pc a paa f a k pc an cv h an

pan an h ana c aca h ha nan, ncun cnuan f,

a xpn, an h a c.119

Total Cost ofWar Risk and K&R

Insurance2012

$550.7Million

War Risk InsuranceK&R Insurance

Total Cost ofWar Risk and K&R

Insurance2011 & 2012

2011

200Million

300Million

400Million

500Million

100Million

2012


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32

In nn ach hp K&R pu, nu cn fac uch a p, fa hh (ncun

hh an n aa un va), an hh h a a ua pn n a.120

Ba pakn, h n n pu a chan ha n x. Th nuanc nu n a nh,

an a a nvua na. A a u, ana an cna hav p a ca

un f h ca n p aack, h h hav pc ac-h-a a nca u

h cnnu k an qun au unpn.121Thu u an a f 0.10% f h hu

vau f a k nuanc, an h $12,500 an $7,500 an f K&R cv app an anhh an fa hp an unchan. A unchan a u aupn an a k nuanc ha

100% f nu hp-n cv a 50% n ca nu an ha 50% f nu hp-n cv a 50%

cun f puchan K&R cv.

On hn ha ha can chan, hv, h nca pnc f PCASP n a chan v.

Th ha u n a a cun avaa hp pn a ua, a a an nca n h

ppn f hp qua cv uch a cun.122La a, a ha appxa 25% f h

hp ann h HRA cv a 30% a k cun f h u f a ua.123Th a a

ha 50% f hp cv a 40% cun f h u f a ua. Ou a f 50% a h n

f nu a ha n 50% an 60% f a hp ann h a Afcan HRA p a

ua.124

In h, h h a n cun h nu pnav an uz n h 2011 p

an a unchan, h nca pnc f a ua ha a a aua nc n

h va c f nuanc.

In 2012, u cacuan u ha h hppn nu pn aun $550.7 n n a k an K&R

nuanc, n 13.26% f h $634.9 n p n 2011.125Ahuh u a v a f

66,612 f h nu f v ann h Inan Ocan huhu h f h p, cnnu

u h a f ECP 2011 ha aun 42,450 v an h Inan Ocan f h pup f

nuanc. Th cau , huh n a, cca v ann h HRA pucha pac-a

nuanc. Th fn a uaz u nn:

WAR RISK INSURANCEShip Type # in HRA Hull Value

Tanker 9,171 $41,000,000.00

LNG 2,016 $26,000,000.00

Carrier 7,442 $30,333,333.33

General Cargo 3,397 $23,666,666.67

Container Ships 15,310 $23,666,666.67

RO/RO Ships 688 $23,666,666.67

Car Carriers 2,525 $23,666,666.67Passenger Ships 217 $23,666,666.67

Other 1,701 $23,666,666.67


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33

Group 1(No Claims Only)

25% of Ships

Group 2(No Claims/K&R)

25% of Ships

Group 3(No Claims/PCASP)

25% of Ships

Group 4(No Claims/K&R/PCASP)

25% of Ships

Ship Type # of Ships Rate per Ship # of Ships Rate per Ship # of Ships Rate per Ship # of Ships Rate per Ship

Tanker 2293 $20,500.00 2293 $10,250.00 2293 $12,300.00 2293 $6,150.00

LNG 504 $13,000.00 504 $6,500.00 504 $7,800.00 504 $3,900.00

Carrier 1860 $15,166.67 1860 $7,583.33 1860 $9,100.00 1860 $4,550.00

General Cargo 849 $11,833.33 849 $5,916.67 849 $7,100.00 849 $3,550.00

ContainerShips

3827 $11,833.33 3827 $5,916.67 3827 $7,100.00 3827 $3,550.00

RO/RO Ships 172 $11,833.33 172 $5,916.67 172 $7,100.00 172 $3,550.00

Car Carriers 631 $11,833.33 631 $5,916.67 631 $7,100.00 631 $3,550.00

PassengerShips

54 $11,833.33 54 $5,916.67 54 $7,100.00 54 $3,550.00

Other 425 $11,833.33 425 $5,916.67 425 $7,100.00 425 $3,550.00

TOTAL COST OFWAR RISK INSURANCE:$365,499,212.53

K&R INSURANCE

Ship Type # in HRA K&R Rate % w/K&R Subtotal

Tanker 9,171 $12,500.00 50% $57,317,597.25

LNG 2,016 $12,500.00 50% $12,600,735.86

Carrier 7,442 $12,500.00 50% $46,512,466.25

General Cargo 3,397 $12,500.00 50% $21,232,239.93

Container Ships 15,310 $7,500.00 50% $57,412,102.77

RO/RO Ships 688 $7,500.00 50% $2,580,000.67Car Carriers 2,525 $7,500.00 50% $9,469,453.00

Passenger Ships 217 $12,500.00 50% $1,354,579.11

Other 1,701 $10,000.00 50% $8,505,496.71

TOTAL $216,984,671.53

Th p-an cn n h c f pac-a nuanc vn kn n h f chan n

h akup f hp ann h HRA n 2011 an 2012 ha v v up h c f nuanc.

Accn UNCTAD 2011 Review of Marime Transport, h ava hu vau f a hp ann h

Suz Cana (u px f h p f h a 42,467126an huh h HRA ach a) a $24.0

n.

127

Y n UNCTAD 2012 Review of Marime Transport, h ava hu vau a a a $26.6n, pnn a 10.8% nca.128

In an h na nca n hu vau, h ppn f xpnv hp xpnv n

a ncan hh n 2012 han 2011. F xap, ank, hch a h xpnv f a h hp

ann h Suz, pn 19.7% f a ac n 2011 an 21.6% f h a ac n 2012. Sa,

uk an cn ca, h nx xpnv ca f hp, cnu 15.6% f a ac n 2011 an

17.52% n 2012. Cna h h h a f h xpnv hp uch a na ca hp, cnan

hp, pan hp an h hp hch a pcv ppna ca f 11.04%, 5.33%,


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34

8.17%, an 22.91% n 2011 an 2012. Bh f h fac pu upa pu n h c f pac-

a nuanc. Th upa pu a han cun a h nca u f PCASP.

In fac, a cnn f h chan n h cpn f chan v n h HRA, h ca n

nuanc c n 2011 an 2012 u a fu 14.9%, a pp h 13.3% ucn v.129

Th c f pac-a nuanc pn a c ca f 2011. Th p an nca n

h a vau f h nu pp n h HRA. Th va cn u pa n h nca uf PCASP aa chan v. If h na n n p ap an hjackn cnnu,

hu xpc h pac-a nuanc c cnnu can n h fuu.130

Costs not included: The cost of hull insurance is not included in the secon on piracy-related insurance because

hull insurance is considered to be a normal cost of the shipping industry. Depending on the specic policy in

queson, piracy may have a direct eect on hull insurance premiums. However, OBP was not able to conclusively

discern what proporon of any given hull insurance premium is directly aributable to piracy risk.

9. The Cost of Counter-Piracy Organizaons

In an h fun cnu c vnn an nu, vacun-pac anzan v a f h u h h aan

a pac. S f h anzan a IGO pfn h ca

u an h a NGO pan a nfa , u a f h pv

vaua npu h a aan pac, an a f h ncu c h

n . Th cn c h n f ach cun-pac anzan,

n van vpn n 2012, an a h annua a pn n

ach anzan.

A. Trust Fund to Support Iniaves of States to Counter Piracy o

the Coast of Somalia (Trust Fund)

Total Contribution to the Trust Fund, 2012:$5.83 million

GermanyItalyQatarSpain

$2.5 million

Japan $2 million

UAE $1 million

Norway ~$333,333

Wh a ana f h f-x a cpn h Cnac Gup n Pac h Ca f

Saa (CGPCS), h Tu Fun a ah n Janua 27, 2010 h Un Nan Sca Gna,Ban K Mn. Th Tu Fun ha upp h nav f h Un Nan n, na h Un

Nan Dvpn Pa (UNDP), Un Nan Oc n Du an C (UNODC) an h Un

Nan Pca Oc f Saa (UNPOS). Th jcv f h Fun hp fa h xpn aca

h pcun f upc pa, a a h acv a pnn h Cnac Gup

jcv an can pac n a apc.131 A h CGPCS 13thPna Sn, pacpan n

ha h h ha n a ucn n h nu f aack an hjackn n 2012, h unn cau

f pac an n pac. Bcau h an a a h fa an v, CGPCS akh n,

nn funn an pana upp nca.132

Total Cost ofCounter-PiracyOrganizations

2012

$24.08 Million


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35

Th Tu Fun ha appv n-vn pjc a a vau f $11.95 n, ncun nav a a

nhnn na cna juc an a nfcn h pac n Saa, Kna an h

Sch.133A 10thn n Mach 28, 2012, h Tu Fun Ba appv n pjc vau

a $1.37 n. Th n pjc upp h a f pa n Kna, Mauu, Sch an h

Un Rpuc f Tanzana an pv fuh aanc h UNODC Pac Pn Tanf Pa.134

A f Dc 2012, $16.5 n ha n cnu h Tu Fun, f hch $12.12 n ha n

u.135

Hv, h c au h Tu Fun n h u n a n h xpnu a n a vn

a. Rah, a n h nan cv n a vn a. 136In 2012, Gan, Ia, an Qaa na

a cn $2.5 n,137Japan na $2 n,138h Un Aa Ea na $1 n,139and

Na na appxa $333,333.140Th n h a c au h Tu Fun $5.83

n n 2012.

B.

Of a h Un Nan anc can pac, h UNODC pn h , h n an uc,n h u. In fac, h UNODC Cun Pac Pa (CPP) cv 67% f h Tu Fun a

acan.141Thuh h UNODC na ana a a Kna n pcun an pnn pa, ha

n xn cv v ana na nan: Sch, Mauu, Tanzana, Mav an Saa.142

Total Financial Contribution to UNODC, 2012: $6.74 million

Australia $2 million

Denmark ~$4.62 million

Germany $120,000

Th CPP upp h na an an pcu pac upc n accanc h nnana

ana f juc, h u f a, an pc f huan h. T achv h a, h UNODC CPPfcu n h fn aa:

An fa an cn a n na cn h un a uana cna juc capac

a pac an h u c

Pvn huan an cu pnn n Saa upan Sa pn an facan p-

a anf

Suppn pc, ca an pn ua ann a a pvn nca qupn an

ca aanc a a f h p nu a h ana f fan an

cnc143

Th va u f h UNODC CPP $55 n.144

Hv, h cn n cn n cnuna n 2012, hch aun $6.74 n, h $2 n cn f Auaa,145appxa $4.62

n f Dnak,146an $120,000 f Gan.147

C.

Total Cost of Contact Group Meetings, 2012: $765,242

15 total meetings: $765,242(12 working group meetings and 3 CGPCS plenary meetings were

held during 2012)


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Th CGPCS a ah n Janua 14, 2009 fn UN Scu Cunc Run 1851. I a faca h cun an cnan f acn an a an anzan upp pac h ca f Saa.148Th nnana fu k a h pvnn f pac h Saca huh a u-akh pc ncun pnav f nu, vnn, nnanaanzan, an cv c. Th CGPCS ha v Wkn Gup ca pcc u f pacnc:

Working Group 1: cha h Un Kn, WG1 pn f cv pan nava

cnan an un juca, pna an a capac n na a. WG1 h p a a h IMO haqua n Lnn.

Working Group 2: cha Dnak, WG2 pv a an juca uanc h CGPCS, Saan anzan n a apc a cun-pac. WG2 na h p a nCpnhan.

Working Group 3:cuncha h Rpuc f Ka, WG3 fcu n nu-pcc uuch a v f-pcn. Th up c p a; Wahnn DC an Lnn hh c f 2012.

Working Group 4: cha Ep, WG4 cncna n puc pac, pn aan f hp f pac h Sa ca. Th up c n 2012, n n NY an h cn

n n h UAE.

Working Group 5: cha Ia, WG5 k a nfn an upn h nanca nkuz pa. Th up h un 2012, c n Lnn an nc n R.

Th uk f pac a funn aua h CGPCS u h Tu Fun an capu av.Hv, h a ana c aca h ann h 15 CGPCS n h n 2012. Tav anaccan c a h n n ncu n h a, u h p n c va pnn nn uan, z, an nnana av qu. Th a uaz u nn:

Category Meeting Date Meeting Location Duration Attendees % Intl Travel Meeting Total

WG 1

3/21/2012 London 1 150 25 $34,848

7/12/2012 London 1 150 25 $34,84811/14/2012 London 1 150 25 $34,848

WG 23/5/2012 Copenhagen 1 100 95 $76,986

9/17-18/2012 Copenhagen 2 100 95 $101,686

WG 32/28/2012 Washington, DC 1 100 35 $51,290

9/25/2012 London 1 150 25 $34,848

WG 43/28/2012 New York 1 150 25 $42,9086/26/2012 Dubai 1 50 95 $42,458

WG 53/5/2012 Lo

economic cost of piracy 2012

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