The Pirate Economy

By Joe Pinsker

As recently as the early 2000s, piracy on Africa’s eastern coast was a small-time affair. Since then, the pirate economy has gone berserk. Somalia’s dilapidated legal infrastructure, along with the defenselessness of cargo ships, meant easy money for a time: the number of hijackings exploded in the late aughts. Nowadays, some pirates are backed by international investors, and others have their own attorneys to negotiate deals. At their peak, in 2011, Somali pirates are estimated to have collected as much as $156 million in ransoms.

Yet last year, thanks to a host of defensive mechanisms, the number of successful hijackings dropped to zero. Even so, the economic impact of piracy is higher than ever: the amount spent on private security last year alone far exceeded the amount paid out to pirates since 2005.

Sources: Best Management Practices for Protection Against Somalia-Based Piracy; BGN Risk; CIA World Factbook (2011); EOS Risk Management; Oceans Beyond Piracy; UN Development Program; UN Office on Drugs and Crime; UN Security Council; World Bank

Editor's Note: We'd like to thank Oceans Beyond Piracy for its help in compiling this piece, and for the use of its data. In an oversight, the organization was not originally credited in the online version of this story.

This article available online at:

http://www.theatlantic.com/magazine/archive/2014/05/the-pirate-economy/359817/