Piracy and the Economy

Pirating may cause the Nintendo (NTDOY.PK) Wii to be in short supply for Europeans this year. This is not bootleg kind of piracy, but the kind where sailors board ships with guns in hand to hijack your ship. I’ve heard of piracy and kidnapping reports off the coast of Africa for a long time, but they haven’t taken center stage till the MV Faina was hijacked. The mass media and governments don’t mind when rich luxury yachts and ordinary cargo ships get hijacked, but the MV Faina was not any old cargo ship. It was loaded with tanks and ammunition for more killing in Sudan. NATO and Russia responded by spending more military ships to patrol the area, but as I’m writing this article, there was news of another hijacking. Even with all of our modern technology, the seas are still vast expanses of water. When I think of pirates, Spanish galleons filled with gold doubloons and talking parrots fill my head. Why are we hearing about pirates now?

According to the pirates, they were forced into piracy by illegal fishing. Some may think pirating is confined to Somali, because they lack a stable government, but there are also pirates in South East Asia. Their reason is also economic. Pirating is an easier way to make a living. As long as the is an incentive to pirate, there will be pirates.

Economic Impact

Shippers wishing to reach Europe from Asia are considering going pass the southern tip of Africa through the Cape of Good Hope instead of the Suez Canal to avoid pirates. This longer journey will add 3 weeks to the trip and increase the fuel surcharge. The increased patrolling will incur addition costs to NATO and Russia. Shippers are also equipping their vessels with additional anti-pirate equipment, such as security personnel and water hoses keep pirates from climbing on board.

I predict that in the near future, pirating will cease to be an important issue. As the economy is going south, it makes no sense to export goods halfway across the world. Then the pirates will have nothing to loot. Thus, the global financial crisis affects everyone.

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