Somali Economic Stimulus Package! Boat Sales Soar as Money Pours In - 04/15/2009

Until last Sunday and the death of five of their fellow buccaneers, for young Somalis, piracy offered a life of boating fun, camaraderie, adventure and easy money. Last year Somali boaters took in over $80 million in ransom money. Their activities have been a bonanza for the local economy which heretofore had been living on U.S. AID shipments of subsidized grain and an occasional local goat. These young boaters have been buying grand houses, luxury cars, and attracting beautiful wives. In the last two weeks they had gotten a taste of the yachting lifestyle when they hijacked three yachts, one a sailboat with a crew of four and a 3-year old child aboard, another which was a luxury cruising catamaran in the Seychelles, and a third yacht with three men aboard sailing to Madagascar. There are reportedly over 100 of these little, high freeboard pirate ships currently in use.

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Each truck is carrying five freshly-made, 21st-Century pirate ships. Boat builders are working overtime to supply the demand as boat buying fever sweeps the Somali coast.

News reports this past weekend tell us that there are about 1,000 pirates active in Somalia and that they are in league with clan or village elders who endorse their activities. We discovered the report below from Nairobi which seemed to offer particular insight into the Somali situation.

Story from the Associated Press filed from Nairobi, Kenya—

Piracy is a lucrative business in Somalia, a country with no central government, no banks and few merit-based opportunities because of an entrenched clan system.

For Somali men such as those who hijacked an American cargo ship, banditry at sea offers power and potential prosperity in a land so bleak that life expectancy is just 46 years and a quarter of children die before they reach 5.

Pirates are attracted by Somalia's lawlessness and its strategic location. The Gulf of Aden is one of the world's busiest waterways, with 20,000 merchant ships passing through yearly on their way to and from the Suez Canal. Countless fishing boats drop anchor in search of tuna, snapper and barracuda, which are plentiful in Somali waters.

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It’s all part of a self-help job re-training program that has put thousands of people to work. 

The Good Life

"Years ago, our life depended on fishing, but now we have a lot of money. We have luxury cars, beautiful houses and everything we want in our coastal village," said Salah Haji Bahdon, who identified himself as a pirate in a phone interview with The Associated Press from the community of Eyl. The region is where many hijacked ships are anchored while pirates negotiate ransoms.

Bahdon added, "It is like a small paradise where people are oblivious of the problems going on in the other corners of Somalia."

Piracy Reviving Local Economy

In 2008, pirates seized 42 vessels off the country's 1,900-mile coastline, the longest in Africa.

Since January, pirates have staged 66 attacks, and they are still holding 14 ships and 260 crew members as hostages, according to the International Maritime Bureau, a watchdog group based in Kuala Lumpur.

A Needed Stimulus Package

Foreign governments have condemned the seafaring robbers, but Somalis say they are grateful for the growth pirates bring to port towns. Piracy has improved the economy somewhat around Eyl, in the northern Puntland region. Commerce has increased because the pirates bring cash to spend. The pirates have promised to build new schools and better roads, but they have yet to deliver on those projects.


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Abdul Hassan lives in Hobyo, Somalia, a pirates nest. He leads a pirate group that attacked 30 ships last year and grossed $10 million in ransom.

They Will Soon Join the Rotary

The AP called villagers in Eyl who had provided reliable information in the past, and they independently verified that Bahdon and two other men were pirates. The villagers also put an AP reporter in touch with the men. One of the men insisted his pirate gang was not merely a band of ruffians, but a well-organized, business-minded group that also had philanthropic concerns.

"We have leaders, investors, young people who go to the sea for hunting ships and also negotiators in many areas," said the man, who identified himself only as Madobe and said he was in his 20s.

Money Gets Spread Around

He said pirates also have "very reliable support from the people on the ground." And, he added, the pirates give a share of their ransom money to local elders, militia commanders and politicians to curb any threats.

Last year, pirates made off with up to $80 million in ransom money, said Roger Middleton, a piracy expert at the London-based think-tank Chatham House. Those hauls included payment for a Saudi oil tanker and a Ukrainian ship loaded with military tanks, both of which were later released.

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With so much cash around, the local economy has been booming and inflation has set in with some goods costing twice as much as before. 

Hostages Equal Cash

Pirates typically wear fatigues and operate from speedboats equipped with satellite phones and GPS equipment. They are often armed with automatic weapons, anti-tank rockets and various types of grenades. But the heavy armaments have not spared them from failure.

One attempted attack last year fell short when the pirates' ladder was not long enough to scale the side of a frigate they were trying to board. In March, pirates mistook a German military supply ship for a commercial ship and launched an attack. They were chased down and seven pirates were captured by international forces.

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Stay-at-home moms in Bitali, Somalia who rely on Red Cross bags of corn, each of which is supposed to last two families six months.

There are several known pirate groups in Somalia. One is based in the southern port town of Kismayo, which is controlled by Islamic insurgents. Another prominent group is based in the northern Puntland region, and their ties to the insurgency are thought to be tenuous. Middleton said the main relationship between pirates and the insurgency is financial, and they see their hostages as only one thing: a source of cash.