Tuesday, November 25, 2008

Black Beard Is Back

For a while, the term 'piracy' conjured up notions like 'use of unlicensed software' and 'intellectual property bootlegging' instead of images of Black Beard or Sir Francis Drake. This is no longer true. High seas piracy is in vogue again. Somali pirates are wreaking havoc with shipping lanes in one of the busiest routes in the world. Having he longest shores in Africa and located at the Horn of Africa, destitute Somalis, who populate a land with practically no government, discovered unto themselves a lucrative business. All ships traveling through the Suez Canal to Europe or USA have to pass through the Horn of Africa. Somali pirates have been increasingly targeting these ships. It was thought, however, that by avoiding that route and going Cape of Good Hope (southern tip of Africa) the piracy threat can be avoided albeit at some added cost. The capture of the Sirius Star last week changes the belief. By capturing the newest and largest Saudi owned oil tanker on its way to the USA with 2 million barrels of oil (1/4 of the Saudi daily production) Somali pirates now showed that the Cape of Good Hope is not off limits.

This strange development (namely, the return of piracy) has broader and a more disturbing significance than meets the eye. It is a telling symptom of the times. We are moving into a world that is undergoing a global power restructuring. Nations that for a few centuries dominated the world power scene and projected a revered image, no longer command the same respect. Others that are bound to take their place are not there yet. In the mean while, chaos ensues. More specifically, the economic troubles of the West is creating a power vacuum that is allowing rogues everywhere to expand their influence unimpeded. The disturbing truth is that the troubles of the West are not simply a fleeting hiccup. There is well-founded concern that as the pirates further hone their skills they (or others like them) might try hand at other locales; most notably the oil shipping highway, i.e. the Persian Gulf.

Economically, this is big news. First, the cost of insurance will rise significantly. Secondly, the market for armed guard and protection services will grow. Consequently, the global cost of goods and transportation will rise. The fact that the price of oil went down following this piracy incidence is scary!

If the piracy business model proves lucrative, others may be enticed to join in. Aided by cheap satellite imagery, GPS equipment, and fast boats, unscrupulous souls, with access to a safe haven, might try larger scale operations. Piracy which plagued the world for many centuries became virtually extinct in the last two due to the hegemonic control exercised by the western nations over most of the globe. Failed states and malfeasant safe havens were either eliminated or held accountable. The current financial meltdown in the West will be accomapanied by the return of failed states and corrupt safe havens of every stripe. Naval protection will be needed. You could buy the services of the US Navy or the Royal Navy, as in the days of old. Or, given the unsophisticated nature of the threat, you could recieve sufficient protection from the Indian,Chinese or Egyptian Navy, for a fraction of the cost.

More foreboding, is what we are currently witnessing a harbinger to the return of old times in a lot of other ways? Will crime rise everywhere, particularly in the west, as cities, states and municipalities falter towards bankruptcy? Will we travel in convoys surrounded by armed vehicles? Will physical security become a major concern? Will the caravan make a comeback?

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