The time between 1690 and 1730 is known as the golden age of piracy. Especially in the Caribbean regions pirates got encouraged to seize mainly Spanish ships and cargo. So did the English queen grant many letters of marque to pirates. But after the war of the Spanish succession some pirates kept on seizing ships and cargo for private benefits, thus, piracy became a problem – the ocean routes were no longer save and therefore the insurance premiums were increasing. As a consequence of this the governors of the affected colonies started to fight piracy, mainly through bounties and executions. So they managed to get rid of the piracy problem and could start to benefit from trade again which enhanced their development.
Then, for a long time, maritime piracy was very insignificant. But after the end of the cold war it started to proliferate again. The reason is that with the end of the cold war the quantity and frequency of warships traversing the oceans decreased, which was preventing the piracy beforehand. Nowadays maritime privacy is a problem especially in so called “chokepoints” like the Strait of Malacca and the Gulf of Aden, geographically constrained waterways next to underdeveloped or developing regions (see Fu et al., 2010).
Even if there are some terrorists trying to finance their activities with the captured goods or ransom money from piracy, the main delinquents are individuals from coastal regions who are experienced in boating but are not able to find any jobs lately and therefore suffer from an economic deprivation. This may be a result from overfishing or a decline in trade.
Nonetheless this increased piracy leads to a reaction from the shipping companies. While they set up their ships against unwanted entering and hire ex-marines to patrol on their ships to protect them (which just leads to more violence from the pirates), their main reaction is geographical re-routing, a shift in the shipping routes. So a decrease in traffic in the affected regions can be observed (see Fu et al., 2010).
Unfortunately this behavior has negative externalities: First of all there is a general effect. The ocean routes through the Strait of Malacca and the Gulf of Aden are the most efficient ones. The alternative routes are longer and therefore less efficient. As a consequence of this the cargo is longer aboard which leads to higher transportation costs. This costs are passed onto the consumers since they have to pay higher prices for the affected goods. The second effect is specific for the underdeveloped or developing regions next to the constrained waterways. With less ships passing their waterways they get constrained from trade since less ships make for their ports. So they get to benefit from international trade to a lesser extent which hinders their development. Additionally jobs connected with the former trade get lost. This affects especially dockworkers or other individuals who are experienced in boating which may intensify the piracy problem.
Summarizing there is a maritime piracy problem in chokepoints since the shore-based regions are underdeveloped or developing. For developed regions there does not exist such a problem. But the regions are hindered in their development as a consequence of piracy. So in order to help them develop one has to help them get rid of the piracy problem which then is likely to prevent piracy.
One can expect other countries to care for the problem since all countries are affected from the general effect. The benefits from re-routing back to the most efficient ocean routes may exceed the costs for the actions taken against piracy. Legally they are allowed to do so from the Convention on the High Seas, but if the pirates are in territorial waters the country has to accept the actions which can be expected to be the case since the country has the highest benefit from the actions as a result from the specific effect. There are at least three different kinds of actions that can be taken to fight piracy:
One may use bounties and executions. This method already worked some centuries ago, so it can be expected to work again this time. As a side-effect the money spent on the bounties reaches the people in the coastal regions and is likely to help them start a business and, thus, enhance development. Unfortunately this action is very inhumane and therefore not advisable.
One may use money or other kinds of development aid. This action can help the countries develop and curb economic deprivation. This, then, would make piracy fade away. But it can be seriously doubted that development aid works if simultaneously piracy hinders the development.
One may make warships traverse the affected waterways. This has already prevented piracy during the cold war. This action will cause the highest costs which may cannot be covered from the benefits from re-routing back. Additionally the action has to be taken over a long time frame, but during this time the regions are able to develop which prevents piracy afterwards. Furthermore it is unclear how bloody this action will end, since in contrast to the cold war piracy has to be curbed first before it can be prevented and the experience with ex-marines shows that deterrence actions may lead to more violence from the pirates.
In my opinion action 3 seems to be the best option against piracy, since it is the middle course between humanity and probability to work. What do you think about it?
Fu, X., Ng, A.K.Y., Lau,Y.Y., 2010.The impacts of maritime piracy on global economic development: the case of Somalia. Maritime Policy and Management 37 (7), 677–697.