Grim warning over Somali piracy threat
Piracy off Somalia threatens global shipping
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Thursday, 02, Oct 2008 11:03
Piracy off the coast of Somalia should be of "grave concern" to the international community because of the threat it poses to global inflation, a thinktank has warned.
Chatham House's report on piracy around the Horn of Africa, which has doubled in 2008, issues a grim warning about the economic impact of the insecurity the piracy is bringing.
Insurance premiums for the Gulf of Aden have increased tenfold as a result of the increased risk and shipping may be forced to divert around the Cape of Good Hope, it says.
This would increase already high inflationary pressures by adding to the cost of manufactured goods and oil from Asia and the Middle East, hitting the struggling global economy.
A captured Ukrainian ship currently at the centre of an armed standoff in the region is testament to the problem. Pirates aboard the MV Faina are demanding a $20 billion (£11.3 billion) ransom.
The report also warns there is an increased risk of a major environmental disaster because of the piracy and adds that Somali pirates "could become agents of international terrorist networks".
"There are a number of options for the international community but ignoring the problem is not one of them," the report warns.
Among the options it recommends are organising shipping into a "safe lane", providing a coastguard for Somalia, establishing a large naval presence, refusing to pay ransoms or doing nothing.
Unsurprisingly it does not recommend the latter.
"The potential for an environmental disaster, a terrorist attack or major disruption of trade and subsequent increase in oil prices makes the case for preventative action a strong one," it concludes.