November 20, 2008	Thursday	Ziqa'ad 21, 1429

THE lesson from recent years in the Gulf of Aden is that piracy pays, and it is a lesson that has not been lost on the pirates.

Piracy is big business and almost certainly the biggest single business in Somalia’s lawless state. The typical ransom paid is between $1 million and $2m, and the shipowners, lacking any other means of safeguarding their crews, ships and cargoes, have consistently been willing to pay. Most estimates put the total ransoms paid so far this year at more than $30m.

The mechanics of those transactions are fraught with risk. How do you deliver large amounts of cash discreetly to a band of pirates on the high seas? Most maritime security experts involved in the trade are reluctant to talk, but there appears to be more than one method, and the name of the game is cautious improvisation.

Pirates will deliver their initial demand to the shipowners either via radio from the deck of the captured vessel or intermediaries on shore. They can be anywhere in the Middle East or as far away as London.

The negotiation can take weeks. The pirates have become increasingly ambitious, demanding $35m for a Ukrainian arms ship, the MV Faina, captured in September. The owners were last reported to have beaten the ransom down to $8m but the ship remains in the pirates’ hands.

Jason Alderwick, a maritime security expert at the International Institute for Strategic Studies in London, said: “There is usually a coordinator onshore who deals with the dynamics. Money is brought to a prearranged location, which could be in Somalia or Yemen. There is basically a transfer of money bags. The money goes down the line through a series of intermediaries, with the local government, the mayor or chiefs having a direct hand.

Often the intermediaries have been Somali nationals living in Europe, the Middle East or Africa, and the money disappears into the traditional banking system, hawala, which operates through trust and personal relationships, and is very hard to monitor.

In the case of a Spanish trawler hijacked in 2000, the payment was made in London, according to the shipowner.

“There are some law firms that specialise in this and the kidnappers have contacts there,” Inaki Latxaga told a local newspaper earlier this year. “I think anyone can judge for themselves the actions of these firms, because sometimes you have to ask yourself whether the pirates are in Somalia or in London.”—Dawn/Guardian News & Media