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UN seeks action as piracy costs spiral for shipping companies

With pirate attacks, and their associated costs for shipping companies, escalating, the UN wants to bring a more joined-up approach to what has been, so far, an ineffective international response

Piracy costs the global economy around $7bn-12bn a year and is pushing up the costs of using some of the world's busiest shipping routes, says One Earth Future (OEF), a US-based think tank. Most of those costs are incurred as a result of attacks by Somalia-based pirates, whose activities are spreading across the Indian Ocean – although piracy is a worldwide problem.

Around $238m was paid to Somali pirates in 2010 alone, with the largest known ship ransom ever paid, $9.5m, made in November to secure the release of a South Korean oil tanker, says the OEF. There has been no let up in the intensity of attacks, with a number of tankers running into confrontations with pirates. By mid-January, Somali pirates were holding 29 vessels and 693 hostages, according to the EU Naval Force Somalia.

While the ransoms are high, it is the cost of insurance, naval protection and rerouting of vessels to avoid piracy hot-spots that really push up the spend for ship owners and consumers, especially in east Africa, who bear the brunt of higher commodity prices resulting from difficulties moving tankers through the area (see Table 1).

The international effort to tackle the problem has so far made little impact. While a UN-led response has had some success in reducing piracy in the Straits of Malacca, the problem is worsening in the Gulf of Aden, the Indian Ocean and also the Gulf of Guinea, prompting a push for greater co-ordination in the response.

A new programme designed to improve international co-ordination is being kick-started this month, when UN secretary general Ban Ki-Moon speaks at the International Maritime Organisation's (IMO) London headquarters on World Maritime Day, which is themed: Piracy: orchestrating the response.

The IMO, a UN agency, is urging governments in regions where piracy is prevalent to make greater efforts to prosecute pirates and for states, the shipping industry and international agencies to collaborate further to improve naval support and increase political pressure to speed up the release of hostages.

The UN's own approach is also likely to come under scrutiny, given an apparent lack of co-ordination between its own bodies. As well as the IMO, the Office of the Law of the Sea, the Office of Drugs and Crime, and the World Food Programme are among agencies involved in the fight against piracy.

While such efforts to improve co-ordination are hardly new – the IMO's anti-piracy project has been running since 1998 – the IMO hopes the continuing escalation of piracy will produce a more concerted international political response.

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