The Economics of Piracy and Terrorism

It has been a concern for me, ever since the Western response to the events of the 11th of September, 2001, that so much money and energy is put into trying to eliminate the terrorists, while little is invested into revising the economic structures that spawn terrorism in the first place.

The recent growth of Piracy on the high seas off the African coast is another such case in point. While I was recently at the United Nations, in New York, I attended a report presented by the UNODC (United Nations Office on Drugs and Crime) on the issue of piracy. What was said was, not surprisingly, that piracy is an economic issue.

The typical pirate is a poor fisherman who can no longer make a living from his fishing business due to the breakdown of infrastructure in war torn countries like Somalia. These poor fishermen are recruited by crime lords and are paid $15,000 USD a shot for every successful raid. Quite an incentive for people in this situation! So, the problem ultimately has to be dealt with as an economic issue and as a human rights issue. If you stabilize the economy of these countries; stabilize the government and establish the rule of law, you reduce piracy.

Why does piracy work? Well, the first thing to note is that piracy is not about the cargo the vessels are carrying. It would be too difficult, time consuming and unprofitable to try to sell off the stolen cargo. No, piracy is about ransom. Ransom of the vessel and ransom for the passengers and crew, and insurance companies are more than ready to pay. After all, if the ship is worth a billion dollars, and the cargo is worth a billion dollars, and the pirates are asking for a million dollars, it is well worth the company’s time to pay the ransom to get things moving again.

It is worth noting too that Insurance companies benefit financially from piracy as their premiums go up. They collect around $400 million is premiums to insure vessels and cargo, so paying the pirates a ransom of one million dollars is nothing to them and well worth doing. After all, what the insurance companies really fear is if, as a consequence of failure to pay, an oil tanker is hit by a rocket-propelled grenade, leaving them to pay for the environmental damage of an oil spill, which could break them.

In a similar way, the war on terror is big business for arms manufacturers, upholding the economic structures which give rise to the problems in the first place. Perhaps this is why there is little comparatively invested in revising the economy as, while these issues cost money, they also fuel the current economic model. Money does make the world go around.


About Passionist JPIC Australia

I am a priest with the Passionist Congregation and a part of our Australian Province which includes Australia, New Zealand, Papua New Guinea and Vietnam. I have been ordained since December of 1992. I was born in the Philippines, though am from Spanish decent. I came to Australia in 1972 with my family when I was 11 years old, and we settled in Brisbane. That is where I did the rest of my growing up. On completing high school, I went to Queensland University where I studied for 4 years, completing a B.Sc. with a major in Microbiology. The following year I decided to enter into the Passionist Congregation to study for the priesthood. I trained for 9 years, and have been a priest for 25 years. In my time as a priest I have been Director of the Passionist Family Group Movement in Victoria, Tasmania and Queensland; conducted over 400 Parish Missions all around Australia and New Zealand, but particularly in Victoria and Western Australia; worked in adult faith education, Sacramental preparation for children and parents; Hospital chaplaincy; High school chaplaincy, in-services and retreats. In the year 200 I became engaged in developing young adult retreat teams and training them to carry on our high school retreat programs. I am also chair of our Province’s committee for Justice, Peace and the Integrity of Creation (JPIC). I am also a member of ACRATH (Australian Catholic Religious Against Trafficking in Humans).
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