Pirate capital structures

I’m not in the Horn of Africa right now, so Somalia is no longer next door, but this elucidation of the economics of pirating is really outstanding, e.g.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

The punch line is:

When ransom is received, fixed costs are the first to be paid out. These are typically:
• Reimbursement of supplier(s)
• Financier(s) and/or investor(s): 30% of the ransom
• Local elders: 5 to 10 %of the ransom (anchoring rights)
• Class B shares (approx. $15,000 each): militiamen, interpreters etc.
The remaining sum — the profit — is divided between class-A shareholders.

Readings on Somalia

This isn’t exactly on topic, but I can’t help but be interested in the neighborhood in which I’m working, and furthermore I recently visited the Somali region of Ethiopia, upriver from Mogadishu (fascinating). So in that vein, here are a series of interesting recent reads on Somalia, al-Shabaab and piracy.

• Chilling NY Times profile of "The Jihadist Next Door", a good ol' Alabama kid cum al-Shabaab guerrilla leader and recruiting rock star.
  

  Despite the name he acquired from his father, an immigrant from Syria, Hammami was every bit as Alabaman as his mother, a warm, plain-spoken woman who sprinkles her conversation with blandishments like “sugar” and “darlin’.” Brought up a Southern Baptist, Omar went to Bible camp as a boy and sang “Away in a Manger” on Christmas Eve. As a teenager, his passions veered between Shakespeare and Kurt Cobain, soccer and Nintendo. In the thick of his adolescence, he was fearless, raucously funny, rebellious, contrarian. “It felt cool just to be with him,” his best friend at the time, Trey Gunter, said recently. “You knew he was going to be a leader.”

• The hypothesized link between al-Shabaab and Somali pirates is confirmed - the Islamic militants are training pirates in exchange for a share of the booty.


• In "capital markets everywhere" news, pirate capital Haradheere now has a thriving stock exchange.
  

  Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.
  
  "I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony.
  
  "I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."

• Somali pirates are driving up Kenyan real estate prices.


• In breaking news, Al-Shabaab has declared war on Kenya.


• I was also surprised and interested to learn from National Geographic that Somaliland is its own unrecognized but largely functioning state.


• Finally, on the fiction side, I will leave the reams of Ethiopia books I’ve been plowing through for another post, but I have to mention The Zanzibar Chest here. A non-fiction novel/memoir by war correspondent Aidan Hartley, it is harrowing and compelling. The man was truly in the middle of some historical happenings in Africa. My favorite line from his account of seeing the overthrow of Somali dictator Siad Barre in Mogadishu in 1991:

  As a correspondent, I suppose my job was to excite the sympathy of the world for this forgotten and reviled people [the Somalis], but all I can say now is that I have felt it a privilege to observe a people who shot themselves in the foot with such accuracy and tumbled into the abyss in such style.

“Solutions” for wildlife conservation, cont.

To pirates, add military standoffs in disputed territory:

It seems the very adorable Asiatic black bears of Kashmir are one group that is pleased by all the conflict there. Authorities estimate that their population has gone from 800 in 1990 to 3,000 now. They (and other endangered species in the area, presumably) are benefiting it seems from lingering fear of violence, which stops poachers and hunters, as well as the dearth of hunting rifles after the Indian authorities confiscated them as an attempt to quell the separatist revolt that started twenty years ago.

Unfortunately, it doesn’t seem like this particular “solution” generalizes (not to mention the terrible human costs):

It looks like conflict itself is terrible for wildlife, and happens disproportionately in biodiversity hotspots. One study found that 80 percent of the armed conflicts between 1950-2000 took place in these areas important to maintaining plant and animal diversity. Detrimental effects on population and habitat, such as those suffered by the DRC's gorilla population are well known.

The bright side, looking at the Kashmir bear evidence and the Korean DMZ, seems to be that when conflict pauses, the animals benefit as well as the humans.

Tragedy of the commons solved by pirates

Who needs Nobel Prize-winning political economist Elinor Ostrom when you can solve the tragedy of the commons with pirates?

The increasing levels of piracy off the coast of Somalia have caused an unexpected spin-off, raising the levels of fish in the sea.

Fisherman in Kenya have reported bumper catches of shark and shellfish because commercial fishing boats from China and Japan have been scared away.

Now the fishermen are able to catch up to £200 worth of fish per day in an area where the average daily earnings are less than £5.

The massive factory trawlers which used to drain their fish stocks have been scared away and that means there is a huge bounty for local fishermen as well as helping to restore the health of the marine eco-system.

Hat tip to Aid Thoughts (one of the new Africa/aid-related blogs I've added to my RSS reader, given my new whereabouts and the ubiquity of aid here).