The election of Somalia's first formal government in more than 20 years is unlikely to mitigate risks of piracy in the Gulf of Aden according to a report from Willis.
Thursday, September 20, 2012
The broker estimated that piracy is the second largest generator of income in the African state, yielding $200m annually.
Tim Holt, head of intelligence at Special Contingency Risks, part of the Willis group, said that the financiers of piracy in the region have invested heavily in operations with lucrative opportunities generated for local business.
"A $4m ransom will be injected back into the local economy, benefiting a community that once lived in abject poverty," he said.
"There is little wonder why the practice has boomed when Somali per capita income is $600 and a minimum $10,000 is available for each perpetrator of a successful operation."
Some 90% of the world's trade is transported by sea, and the opportunities remain vast, Holt added.
Hassan Sheikh Mohamud's election as president nonetheless represents a turning point for a country that has been governed for the past six years by a transitional federal government installed by the international community.
The TFG was put in power after the 2006 Ethiopian invasion of the country, designed to quell increasing fears of extremism in Somalia, which was at that point effectively governed by the Islamic Courts Union.
By the time the original mandate for the TFG expired on August 2011, the government ruled little outside the capital Mogadishu, but it was nonetheless extended for 12 months to allow for an electoral process that culminated with the appointment of Mohamud, an academic and civil activist.
The political process in Somalia saw tribal elders nominating MPs, who then elected a president.
Such a system is rife with opportunities for corruption, and Holt noted that tribal elders could be lobbied by the richest in their delegated communities, which may play into the hand of pirate groups.
Patrick Mair, Africa analyst at global risk consultancy Control Risks, noted that this makes Mohamud's victory all the more surprising, as the new president has no established ties with any of the major pirate factions.
"The potential for manipulation of the selection process at every level was very real. There were all sorts of stories going around about just how many dollars it required to buy a seat in parliament," Mair said.
"My own view was perhaps that the incumbent would secure re-election just because he would be able to buy the votes."
Mair attributes the result to widespread disillusionment with the transitional government alongside recognition of the opportunity the election represented.
"That fortunately appears to have outweighed the ability of people to buy the votes," he said.
Also important, Mair said, is that much of the funds generated by ransoms are kept in the pirate strongholds in the north of the country, in the semi-autonomous state of Puntland.
"A lot of that money is circulated around elites in that particular administration which actually has its own government," he said.
"While there is a lot of corrupt and ill-gotten gains in the Mogadishu administration, it tends to be more from donor funds or manipulation of export industries like charcoal."
As a result of such a geographical spread, pirate syndicates have been able to maintain current anchorages, and Holt noted that many have already shown the ability to adapt if necessary.
"There has been a recent acceleration in kidnap for ransom on land of aid workers and tourists who are then transferred to the coast for ransom negotiations," he said. "Some pirates have even begun to offer their services as ‘counter piracy' and ‘negotiation' experts".
What's more, Somalia's new president has already expressed frustration with Western policy on piracy in the region.
"Somalis are confused. The international community is putting a lot of resources towards it. Why not address the illegal fishing in Somali seas?" Mohamud told The Guardian in August.
"People are getting the notion that international forces are there to protect the illegal fishing. The Somali fisherman cannot go to the sea because he will be considered a pirate."
Mohamud also, however, rejected the idea of an amnesty on piracy in the same interview, suggesting it would only encourage further ventures from the pirates.
Any alternative solution should not rely solely on force, Holt argued, with communities in need of an opportunity to earn a legitimate wage that offers a similar quality of life.
The new government, he said, could seek to launch an investment campaign into Somali infrastructure in a bid to drive the primary sector.
"Before this can happen the new government needs to establish a reliable, transparent mechanism for aid disbursement, something that will not happen overnight" Holt added.
Such challenges are not new in the African state. A recent UN report (PDF) found that under the outgoing TFG "systematic misappropriation, embezzlement and outright theft of public resources have essentially become a system of governance".
The report stated that for every $10 in revenue taken by the government in Somalia, $7 never made it into state coffers.
Internal stability also remains a concern; Mohamud survived an attempt on his life on his second day in office.
Explosions and gunfire erupted outside a Mogadishu hotel where the new president was meeting with Kenya's foreign minister on 13 September.
Islamist group Al-Shabab has claimed credit for the attack which saw suicide bombers assaulting the building and eight people killed.
"Until the new government is able to ensure its internal stability, the rest of the world will have to continue its policy of damage limitation on the high seas," Holt said.
There is nonetheless a newfound sense of cautious optimism on the future of the African state following the election of Mohamud.
"It's a positive start, but let's by no means get carried away here because this is a country that has not been governed to any real extent since 1991," Mair said.
"It's good and positive to see something like this happen in the country, but it's going to be a long way to go yet."