We meet to discuss a matter that has been a recurring feature of our agenda since 1995. Hopefully this time, we will be meeting to deal with it with some resolve, so that we can remove it from our discussion agenda and place it on our operations agenda, where it should be. I believe a great deal of progress has been made on the matter, a number of meetings have taken place before this one and my appreciation to you for the ground that has been covered, and work done. This is a very important step that we have all taken and it is an indicator of how far we have come in our co-operation at a regional level.
The matter of piracy is a scourge of history and a number of unfortunate developments that have conspired to make this potentially one of the most serious problems for our security, for our economies for some time. A brief summary of this phenomenon on our economies would help contextualise what impact this has on us and the reason we are here.
First, at a global level, piracy is defined as robbery committed at sea including the hijacking of vessels. Piracy has been in existence since maritime trade commenced. In fact, the most famous victim of piracy in recorded history is no less than Julius … Julius Caesar who was himself hijacked around the year 75 AD. The only strategy that may have changed is the weaponry and boats that they now operate. These criminals use extremely high powered weapons and forcefully board a ship to take it over. Some of their strategies consist of intercepting ships at narrow bodies of water, and largely operate in proximity to developing or struggling countries with large trade routes that do not have the military muscle or funds to counter their terrorism. Many times they murder, take hostages, or do whatever is necessary to accomplish their mission.
The impact of piracy on the global economy is easy to appreciate. Approximately 80% of world trade currently travels by sea, representing around 93,000 merchant vessels, 1.25 million seafarers, and almost six billion tons of cargo, a high percentage of it flammable. Since the end of the Second World War, seaborne trade has doubled every decade. Count therefore the potential benefits to piracy.
Over the past five years (2006-2010) there have been around 1,600 acts of piracy which have caused immeasurable harm. In the course of 2010, as the world economy exhibited signs of recovery from the global financial crisis, it had to contend with the realities of intensified pirate activities in international waters.
While it might be easy to appreciate the impact, however, calculating the cost of piracy is notoriously difficult. Estimates from the International Maritime Bureau (IMB) are that piracy costs between $1 and $16 billion per year.
The direct financial costs of piracy are varied and interconnected and cover a range of things; they include ransoms, insurance premiums, the cost of re-routing to avoid piracy-prone regions, deterrent security equipment, naval forces, piracy prosecutions, and anti-piracy organisations.
Ransoms are generally sought by Somali pirates. Pirates in other regions have more often stolen the vessel or cargo, rather than ransoming the value of the seafarers’ lives and their ship. In November 2010, the highest ransom on record, $9.5 million, was paid to Somali pirates to release the Samho Dream, a South Korean oil tanker.
2010 had started on a gloomy note with a $7 million ransom paid in January to release the Greek supertanker MV Maran Centaurus, which carried $162 million of crude oil from Saudi Arabia to the United States. The ransom demonstrated the exponential increase in the price of ransoms in recent years. In 2005, for instance, ransoms averaged around $150,000.15 By 2009, the average ransom was around $3.4 million. And the latest catch fetched almost three times as much, the inflation having occurred in only one year.
The total cost of ransom is estimated to be around double the value actually paid to pirates. The total cost is duplicated by a number of factors, such as: the cost of negotiations, repair to ship damage caused while it is held captive, and the physical delivery of the ransom money, often done by helicopter or private plane. Finally, large costs result from ships being held and out of service. For instance, it costs around $3 million for a cargo ship to be held for two months at a charter hire rate of $50,000 per day. Costs of ransoms for the year 2009 to 2010 came to $415 million.
What I have given you is a very rough global backdrop against which we can contextualise our own problem and the impact on us.
The increase in pirate attacks off the Horn of Africa is directly linked to continuing insecurity and the absence of the rule of law in war-torn Somalia. The absence of a functioning central government there provides freedom of action for pirates and remains the single greatest challenge to regional security. However, this is only the face value of the problem. Piracy in Somalia has its origins as a form of defensive strategy from the last decade - a response by local Somali fishermen to drive out foreign trawlers who were looting the rich fish resources of the country and as a deterrent to the dumping of toxic waste by international companies. The unintended consequence of the expertise developed by Somali fishermen from this defensive strategy is that they have now grown bolder and a lucrative business has been unleashed on all of us.
The cost of excess insurance premiums from transiting around the Horn of Africa is between $459 million to $3 213 million.
Africa’s seaborne trade in 1998 reached 718 million tons and contributed 45% of the region’s GDP. In 2008, Africa’s seaborne trade constituted 91% of the total trade within the continent by volume. Africa has significant challenges relating to transport infrastructure connecting the different states, such is the relic of colonial governance. Africa has to contend with this historical problem of very poor infrastructure between states at present. The African Union has been very concerned about this and has established a commission to help craft a solution to Africa’s infrastructure problems. Air transport, on the other hand, remains limited and very costly. In the meantime, the sea remains our major trading route amongst ourselves. And it will remain the main means of trade in the continent for some time. This we must underline: maritime trade will be the single most viable economic base for our own development for a long time to come.
The upstream oil industry in Africa has reserves estimated at 117 billion barrels or 9.5% of the world’s reserves, and production equal to 12.6% of the world’s output. Africa’s downstream oil industry comprises 44 refineries in 25 countries (few more under construction) with a capacity equal to four per cent of the world’s total. All these require secure seas to thrive.
Additionally, Africa’s fishing ground provides the single most important source of protein to the majority of her citizens. The protection of these marine resources - one of the most natural resources for our people - remains our priority.
It is estimated that Africa’s fishing industry earns the continent around US$ 10 billion annually through internal trade, global exports and fishing licenses to foreign operators. This is apart from fish products being a primary source of food for a significant number of African citizens. Illegal, Uncontrolled and Unreported [IUU] fishing therefore can have dire social and economic consequences.
Between the period of 2007 and 2010, close to 100 vessels were seized by pirate gangs operating off the coast of Somalia; and more than US$ 200 million ransom monies were paid to hijackers.
Effective trading is crucial for economic development. For us, trading is dependent on effective sea transportation. Successful shipping requires protection of sea lines and securing of sea-ports.
The African coastline has an approximate length of 31,000 kilometres, 18,000 of which lies within the Sub-Saharan region. Capacity to protect this cost-line depends on a small fleet of patrol vessels and warships, mainly from South Africa. There is a lack of regional capability to perform 'deep sea' patrols, including the Exclusive Economic Zone [EEZ]. Furthermore, lack of an integrated Maritime Strategy at a regional level doesn’t help in alleviating the impact.
Many countries have gone to great lengths to stop this act of barbarism. They have developed organisations that specialise in this form of act of crime.
Over 27 countries currently contribute naval forces towards piracy deterrence. Most military and naval attention is devoted to the Horn of Africa, where 'the big three' anti-piracy missions are focused: Operation Atlanta, Operation Ocean Shield, and Combined Task Force (CTF) 151. The three military efforts make up over 43 vessels operating off the Horn of Africa and the Indian Ocean.
It is approximated that the costs of these military vessels to be around $1.3 billion per year. Adding in the administrative budgets of the three major missions, along with additional independent expenditures from other nations, the estimation comes to $2 billion being spent on military operations in the region every year.
Piracy affects the cost of trade not merely because particular ships are intercepted when delivering goods. As regions are increasingly regarded as threatened by piracy, unstable, or volatile, entire trading routes are altered, insurance premiums increase, cargo shippers use alternative ports to pick up and deliver their goods, and so forth. A number of nations have also indicated that their fishing sector has declined in response to the threat of piracy.
Given the instability and volatility of regions affected by piracy, foreign investors may look for alternative regions to invest in, or spend their money.
Allow me now then to give you a glimpse of why we, as South Africa, have become so concerned. How does it affect our economy? I give you this glimpse or our concerns, because I am certain each country represented here is directly affected in similar ways which you yourselves can articulate or indirectly affected by what affects another SADC country.
South Africa is considered to have a double geo-political identity. In other words South Africa is a maritime nation. With more than ninety percent of its trade as seaborne, South Africa is dramatically dependent on the maritime transport industry. It is strategically situated along vital sea routes of the world, the South Atlantic, the Indian and the Southern oceans, with a coastline of about 3,000 kilometres along which its marine resources are spread; from the Orange River in the west to Ponta do Ouro in the east. The geo-strategic position occupied by South Africa is the most important factor and is followed in importance by the country’s maritime zones, marine resources, marine ecology and conservation, as well as the maritime trade. All of these factors carry with them immediate national, regional and international obligations.
East London, Richards Bay, Durban, East London, Cape Town, and Saldanha are considered South Africa's six major ports along its coastline. These ports not only provide trade for South Africa but also, its landlocked neighbours. With any obstructions to their trade routes or devastation to any of their ports, South Africa and its neighbouring countries' economy would suffer. With non-stop warnings of piracy moving into South Africa’s waters, it has put its government on high alert.
For some time now, as a region, Southern Africa has enjoyed relative distance from the theatre of piracy. Although the phenomenon has for some time been restricted to the Gulf of Aden, in the past few months, it has become a concern for southern Africa as a region. Our major trade artery in the East Coast of Africa is increasingly becoming vulnerable.
One main reason why speculations point toward pirates moving southward is the recent discovery of oil and gas off the Tanzanian coastline. Six million tons of oil are transported around South Africa's western coastline every month, which makes this a prime target for pirates. This is the reason why South Africa is such a high valued gem, and should take the necessary action to prevent this from occurring. If pirates move into South African trade routes, it will cause a detrimental reaction against many economies.
Inevitably, pirates are emboldened by the lack of credible deterrence to their activities, the latter a consequence of dysfunctional states or even state failure. The challenge we have is that there can be no political agreements with pirates, except to political problems that spawn piracy.
Countries whose trade routes are not interrupted would naturally find no value in collective efforts against piracy in the Gulf of Aden. To some degree, the maintenance of international law becomes secondary as interest in such efforts is largely determined by proximity to troubled waters and the potential impact of piracy on national interests.
There is little doubt that the issue of piracy is beginning to be a serious problem to us. We have subsequently defined maritime security as a threat to the region. A military strategy, which would address operational and funding requirements to deal with piracy is currently under consideration.
We knew a raw nerve had been struck when our economic sustainability interests as a region were threatened when a Mozambican registered vessel was hijacked in December 2010 - and a Liberian registered merchant vessel in January 2011. These were the first incidents of this nature in southern Africa and reflected the extent to which pirates have increased their range towards southern Africa waters.
Our immediate response was a careful consideration of the implications of such an incident for southern Africa, and South Africa in particular - whose major deep water harbours, Durban and Richards Bay are located within close proximity to the Mozambican Channel - the body of water between Mozambique and Madagascar, which carries 30% of the world’s oil supplies and 98% of South Africa’s maritime traffic. The channel is increasingly becoming vulnerable - and such vulnerability is not exaggerated.
We believe we all share in this vulnerability, as piracy is now in our waters.
Threats of piracy are of particular concern to SADC, whose coastline and shipping lanes are extremely vulnerable to maritime crime. Our assessment is that Southern African waters are increasingly becoming an attractive alternative to Somali pirates as they try to avoid the clamp-down of various maritime task forces around the Horn of Africa and the Gulf of Aden - purely by moving into largely unprotected parts of the Indian Ocean. At the same time SADC waters have also become an alternative route for companies wishing to avoid piracy around the horn of Africa by taking the longer and more hazardous route via the Cape of Good Hope.
As SADC’s coastal area do not fall within patrol areas of the international anti-pirate forces, SADC will have to take responsibility for its own maritime security. This is why we are here today. I hope you will conclude our response to this.
Piracy undoubtedly constitutes a serious challenge to the development and stability of SADC member states, given the importance of the region’s international seaborne trade and its vital contribution to regional food-stocks and economic development. The sea plays an extremely important role in both SADC’s economy and international commerce and there can be no doubt that maritime security is essential for SADC’s continued economic and political stability. SADC therefore has both an international and regional responsibility to help promote good order at sea.
In our global economy SADC requires free use of the gateway between the South Atlantic and South Indian Oceans to stay connected to world markets. The importance of maritime trade for economic development and regional integration can therefore not be overemphasised. It this bears repeating. About 90% of the total trade of Africa is seaborne. Ships remain the means to trade between continents and islands. Maritime trade is critical to Africa whose exports are made of largely primary unprocessed commodities. In addition, 30% of the world oil supply passes through the Mozambique Channel annually. Consequently, the ability to trade, the principle of the freedom of the seas and the corollary right of innocent passage for merchant shipping lie at the heart of SADC’s security.
A threat around the Horn of Africa and SADC waters will detrimentally affect SADC’s trade and economy. As an economic community SADC is pursuing the consolidation of the SADC Free Trade Agreement (FTA) to promote trade facilitation and remove non-tariff barriers. SADC is further pursuing the expansion of regional markets through SADC/EAC/COMESA Trilateral Free Trade Agreement (T-FTA). The three regions have a combined GDP in excess $4,680bn. Consequently, SADC maritime security and SADC’s ability to trade by sea with other nations is inextricably linked to economic growth and prosperity.
Maritime security is a regional concern to all SADC Member States. Both SADC coastal states and SADC land-locked states are equally dependant on maritime trade. In many instances, SADC Maritime security is not only linked to trade, but also to other important aspects of their economy such as tourism. SADC countries, even land-locked countries, are dependent on maritime trade for economic prosperity. For example:
Landlocked states import goods via regional harbours. However, with a significant decrease in commercial ships visiting such ports due to piracy, imports are becoming more expensive as ports further south often have to be used.
- Tourism, and even the visits of ocean liners, make an important contribution to the national income of coastal states. The tourism industry on Indian Ocean Island States has been severely affected by piracy, in some instance by a 30% decline in tourism revenue.
- Certain littoral states lose more than one billion US dollar per year as a result of illegal fishing, reef destruction and the depletion of species.
- Piracy also targets hydrocarbons and natural gas exploration and drilling at sea.
- There were instances where vessels carrying gas to Indian Ocean Island States have been hijacked, which has had significant impact on the supply of gas in some areas for periods of up to six months at a time.
Clearly we cannot allow this situation. Clearly there is a need for a policy to combat piracy in SADC waters and to safe-guard the economies of the many landlocked countries.
Piracy on the eastern Coast of Africa will not be stopped unless the root-causes of insecurity in Somalia are addressed. This insecurity exists due to the weakness of the Transitional Federal Government (TFG) in Somalia and its inability to exert its national authority in creating stability, as well as enforcing law and order on land and sea. Stability is a prerequisite for growth and development, which should enable better economic opportunities and alternative livelihoods to the growing 'industry' of piracy. SADC should engage the AU to consider decentralised initiatives for promoting, peace, security and development in Puntland and Somaliland, especially since the TFG is struggling to make headway on these matters from its capital - Mogadishu.
We believe SADC should support the AU’s initiatives and mechanisms to address insecurity in Somalia over the long-term. At the same time it should support inter-regional efforts towards transforming Somalia and combating piracy.
Happily, the recommendations of the Troika Assessment Team and its Draft Action Plan can form the basis in formulating a Regional Anti-piracy Strategy for SADC, since it highlights the importance of capacity-building, legal and judicial instruments, implementation, cooperation, sharing of information and intelligence - on all relevant levels.
Because, indeed, one of the critical success factors to combat piracy is quality intelligence. Improved intelligence will assist SADC Maritime Forces to stop pirate activities and movements. SADC must therefore obtain intelligence that will be able to assist in building the SADC Common Operating Picture.
SADC’s Maritime Strategy must entail a regional partnership with all Member States contributing within their means. Not all Member States necessarily have the essential maritime and military capabilities, but they may still contribute in other ways. Some countries may for example provide land-based equipment such as radars, as well as soldiers to patrol coastlines and islands.
We believe SADC must establish robust Rules of Engagement (ROE) for ant-piracy, which should be largely consistent with the ROE of other regions and task forces.
With regard to the legal framework, SADC Member States should ratify or accede to international maritime conventions/treaties/regimes and the incorporation of these into their national law. SADC Member States should seek to put in place comprehensive legal regimes at national level, consistent with international law, to prosecute pirates.
The current practice of 'catch-and-release' of pirates should be stopped, since it allows experienced pirates to execute more sophisticated acts of piracy. Therefore SADC should strengthen and harmonise regional and domestic legal frameworks for arrest, awaiting trial detention, prosecution and imprisonment or repatriation of pirates.
SADC will have to take responsibility for its own maritime security in cooperation with other regions, task forces, navies and role-players. This is our responsibility. This is our reason for being.
Collective security for SADC remains a necessary pre-condition for our region. I welcome the dialogue for finding a lasting solution and I look forward to seeing a coordinated blueprint on the operationalisation of our joint strategy.
Finally of absolute pertinence to us here, as indicated, no amount of security planning would amount to anything for as long as there is instability in Somalia. We have a particular responsibility to link up with the regional defence forces of that area to ensure we can support stability. We did not need to have waited so long to understand that there was famine in that country. That is what intelligence does. It gives us forward warning and analyses our threats. We could have helped earlier. A famine has now finally been declared by the United Nations and I urge that we respond to this as a regional defence block to support the people of Somalia against hunger and disease. The South African Defence Force stands ready to render any humanitarian assistance we can.
* Address by L N Sisulu, MP, Minister of Defence and Military Veterans at the SADC Extraordinary Meeting on Regional Anti-Piracy Strategy, 25 JUly 2011.