Pirate Stock Exchange Open for Business

For those still peddling the line that piracy is carried out by poor, starving Africans, victimized by evil European fisherman, this article not only provides evidence to the contrary, but speaks to the advanced nature of it in both a business and social sense.

It is a lucrative business that has drawn financiers from the Somali diaspora and other nations — and now the gangs in Haradheere have set up an exchange to manage their investments.

[...] “Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking,” Mohammed said. “The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”
[...] “The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools.”

Reading the article, I almost think I’m reading Global Guerillas. As pirates continue to extend their reach offshore, and Western nations continue to needlessly devise ridiculous non-lethal anti-pirate weapons, despite the fact that the problem of piracy was solved centuries ago with firearms, it would seem naive to believe a few semi-coordinated naval ships unwilling to actually use lethal force will solve the problem. If anything, I’d wager that piracy will actually increase due to the international naval presence as that will drive up the profit margin for successful raids, similar to the failed American War on Drugs where the DEA serves only to maintain and ensure the profitibility of drugs.

Lastly, given a previous Wired article discussion of the international side of the business, this blogger wonders whether such a new “stock exchange” will further internationalize the business past the traditional diaspora connections and secondly, whether this could be an early attempt, or even precedent for similar “black stock exchanges” in other illicit businesses such as drugs, weapons, people and other smuggling for example. If decentralization and internationalization are key driving forces in crime and terrorism, it would seem that “publicly traded criminal enterprise” may be a logical extension. Readers?

About Chirol

Sir Ignatius Valentine Chirol (1852 - 1929) was a journalist, prolific author, world historian, and British diplomat. He began his career as a foreign correspondent and later became editor of the London Times. After two decades as a journalist he joined Her Majesty's Foreign Ministry as a diplomat and was subsequently knighted for his distinguished service as a foreign affairs advisor. Additionally, he wrote a dozen books on foreign affairs including The Far Eastern Question (1896), Serbia and the Serbs (1914), The End of the Ottoman Empire (1920) and The Egyptian Problem (1921). He is generally credited with popularizing "Middle East" in reference to the Arabian Peninsula with his book The Middle Eastern Question (1903). "Chirol" is a US citizen and graduate student studying Defense and Strategic Studies and government contractor. As with the historical Chirol, he has traveled to over two dozen countries and lived abroad for many years. Chirol speaks English and German fluently with basic knowledge of manyl of others.
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8 Responses to Pirate Stock Exchange Open for Business

  1. Thomas says:

    The idea of traditional investment in criminal enterprise is a recurring idea but it cannot be profitable nor even functional in perpetuity. Joint-stock corporations and the other machinations of global finance are predicated on a regulated market. Such constructs cannot last for any length of time without a legal structure to enforce contracts, validate claims, define ownership, regulate trading or simply to stop business people from killing competitors or divestors at leisure.

  2. Chirol says:

    This is true, but those structures essentially exist in Somalia, they are just “informal” according to us since they are illegal by our standards and not government run. But such mechanisms do exist.

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  4. Bill Petti says:

    This is truly a fascinating development. I started writing a comment but decided to make it a post: http://bit.ly/7REZxX

    I have many of the same doubts Thomas does about long-term feasibility…

  5. Curzon says:

    Who says they’re innocents victimized by European fisherman? As inaccurate as that is, it’s at least more correct than the view that pirates are some sort of agents of Al Qaeda.

    As I noted in my previous post on this topic, piracy did originate as a quasi-coast guard of the Puntland that learned through experience the profitablity of ransoming. Kaplan called it the “innocence of piracy.”

    Certainly the most innovative thing about piracy in Somalia is its slick organization, or what I called in my previous post “good corporate governance.” That this careful organization of the piracy business is now spreading to the securitization of piracy profits is a further extension of the careful operation of piracy in Somalia, and something to be watched as it creates a model that can be applied globally for criminal organizations to thrive.

    And of course, I thoroughly agree with you that non-lethal methods of piracy are absurd, and if everyone was shooting to kill, things would be very different.

  6. Chirol says:

    Curzon: Pirates themselves as well as Westerners have claimed they are merely defending their coastal waters against European fisherman as well as other Western companies dumping waste.

  7. Mike S says:

    As a professional mariner who has had to traverse the areas mentioned here I read these posts with some interest. Your view that the problem started with a de facto Coast Guard gone rouge doesn´t stand up to the harsh reality of the fact that the robbing and killing in the area has been going on for a very long time and has been conveniently ignored until they tagged a large tanker whereupon the rest of the world suddenly woke up and said “Wait a minute. That threatens our lifestyle now!” We have been screaming about this problem for years and have been ignored or brushed off as being lost in yesterday because “those things don´t happen in modern times”.
    Thomas your statement that such a group cannot last is wrong. The Barbary Coast pirates maintained exactly such an operation for a very long time until it was wiped out by the US navy in the 1700´s. The British Navy was the best in the game. destroying piracy operations that were in some cases over 100 years old in areas of India and the Caribbean thereby significantly increasing both the security of world trade and the safety of mariners. In both these cases pirates had formed large “exchanges” that even became quasi-governments to facilitate their operations and shared the profits and losses.
    Chirol- The territorial waters of Somalia do not extend to the Seychelles Islands which lie far beyond their 200 nm limit so the argument of protecting their waters is pure fabrication . Furthermore if they were arresting so called polluters and illegal fishermen than why are they A. also seizing dry cargo vessels and bulk carriers who don´t carry such cargo and B. demanding ransom instead of putting them on trial? I would recommend anyone supporting this fallacy educate themselves on the basics of shipping operations and maritime law before believing everything theyhear even if it has been espoused by “Western” sources.
    Curzon- I can´t agree more with your statement re the use of lethal force by the navies involved. There is also however the need to attack and completely destroy the shore bases supporting them. This occured in the Malacca Straits a number of years ago when piracy became a serious problem there and things have gone very quiet in that area ever since. It was also the method used by earlier navies to destroy the pirate empires in various areas around the world.
    International law on piracy is quite clear calling them a threat to all nations and specifically gives any warship the right to deal with them in any manner it sees fit to bring them to justice and eliminate the problem. Were the pirate gangs off Somalia to return to the pile of smoking rubble that used to be their home and base (presuming that they survived a hail of gunfire every time they tried to hijack a ship or any contact with a naval vessel) the problem would die away very rapidly. The only question remains is when the rest of the world will get the guts to do it. Meanwhile we just go on dying and getting injured in this area so the rest of the world can have the things they atke for granted.

  8. Chirol says:

    Mike S: You are guilty of not doing any background research. If you actually had read read the post and the comments, I noted that -others claim- the pirates are just defending their coastal waters making clear that I do not share this view. Read carefully before launching such a rant.