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Report warns Somali piracy threat to world trade

Report warns Somali piracy threat to world trade

London: World trade faces major disruption if Somali piracy is unchecked and allowed to be co-opted by extremists and maritime routes could be gradually diverted, a report released on Thursday said.

London-based think tank Chatham House warned in a briefing paper that the international community needed to take swift action as pirates were rapidly improving their equipment and modus operandi.

Around 60 ships have been attacked so far this year alone. The danger has caused insurance premiums to rise tenfold in a year.

"If the cost of extra insurance becomes prohibitive, or the danger simply too great, shipping companies may avoid the Gulf of Aden and take the long route to Europe and North America around the Cape of Good Hope," it said.

"The extra weeks of travel and fuel consumption would add considerably to the cost of transporting goods" at a time when the price of oil is already putting the squeeze on world trade, Chatham House said.

The Gulf of Aden commands access to the southern entrance of the Suez Canal and is one of the world's most important trade routes. Some 16,000 ships and around 30 percent of the world's oil transits through it each year.

The briefing paper also warned that the threat of a major environmental disaster resulting from an attack by increasingly brazen pirates should be considered.

Pirates took pot shots at a Japanese oil tanker in April, piercing the vessel fuel tanks and causing a minor spill.

"The other worst-case scenario is that pirates become agents of international terrorism," the study said, stressing that previous occurrences of seaborne terrorism in the region should act as an alarm bell.

Chatham House also argued that the ransom collected by pirates was likely used to fuel the war in Somalia and was routed to the Shebab, a hardline Islamist militia listed as a terrorist organisation by Washington.

The think tank nevertheless admitted there was no evidence that the Shebab were directly involved in piracy and even pointed out that the last time Somalia's waters were safe was when the Islamists ruled the country.

"Pirates are no longer simply opportunists; their operations are becoming increasingly sophisticated and are likely to continue developing in this direction if responses do not change," the report said.

Pirates last week attracted the world's attention when they seized a cargo of battle tanks headed for Kenya and Chatham House warned it was only a matter of time before a hostage was executed.

It said that ship owners were often left with no other option than to pay the ransom even though they themselves recognise that complying with the pirates' demands risked exacerbating the situation.

France has carried out raids to capture pirates following the hijacking of French ships but the international community's response has on the whole been undecisive.

Chatham House suggested a number of options the international community should explore urgently to stem piracy.

It said creating a maritime corridor was a two-edged sword, making it easier for foreign navies to monitor shipping but also for pirates to find their targets.

"An effective option may be to create an internationally sanctioned and administered coastguard for Somalia. This could be run by the UN or African Union and established with external funds," the report said.

"The cost of running a coastguard could be met, at least in part, from collecting fishing dues and import revenue. The money and the force could be held in trust for Somalia," it added.

The number of pirates currently operating off the coast of Somalia, with backing concentrated in the northern breakaway state of Puntland, is believed to be upward of 1,000. Most of them are former coastguards. [2/9/08]