The Political Economy of Somali Piracy

There are two main arguments, one political and one economic, that can be used to explain the rise of Somali piracy. The first is that Somalia's political vacuum following the 1991 collapse of the government created an enabling environment for illicit activities. The second is that entrepreneurial Somali pirates have created a business model that successfully exploits the incentives driving international maritime trade. The reason the Somali piracy boom did not materialize until 2005 is that local Somalis did not realize the potential of piracy and were not desperate enough until economic conditions deteriorated sufficiently as a result of of illegal trawling and toxic dumping by foreign ships and damage caused by the Indian Ocean Tsunami. The last few years' decline in the number of attacks by Somali pirates is primarily due to the coordinated efforts of navies that police the Gulf of Aden. While these efforts have increased the risk of being caught, and hence the costs of engaging in piracy, they do not address the root causes of piracy in Somalia. Until effective political authority and improved economic opportunities permanently alter the cost-benefit calculations of Somali pirates, the underlying incentives driving Somali piracy will remain unchanged, necessitating extensive and indefinite naval operations.