Piracy And The Free Market

February 24, 2011

by Russell D. Longcore

One of today’s new stories is that four Americans were murdered by pirates off the Somali coast. The story shows that the various nations and their naval forces are not handling this problem effectively.

I’ve heard some talking heads and their callers state that national military forces should attack the pirates and kill them preemptively. But that’s murder. One of the human rights given to us by our Creator is the right of self DEFENSE, which includes our person, those in our care, and our property. So, just because some small vessels filled with pirates are sputtering around near my ship, that doesn’t give me the right to kill them until they attack me.

In days gone by, letters of marque and reprisal were issued by nations, which allowed civilians to commit acts of piracy under government protection. Letters of reprisal allowed civilians to attack and seize foreign vessels to compensate for financial losses. But that solution doesn’t apply to the piracy issues of today.

In my career as an insurance claims adjuster, I have become very familiar with Ocean Marine insurance, and have handled hundreds of claims over the years. Ocean Marine shipping is the womb in which property insurance, cargo and hull insurance and Lloyd’s of London were born 320 years ago. So, I’m not just pontificating here in this article about a subject about which I have no expertise.

Ocean-going ships fly under the flag of various nations…and for various reasons. Many nations encourage ship registries for tax and revenue reasons. Panama, Liberia and the Marshall Islands (in that order) have the largest numbers of ships registered under their flags.

It is very complicated for various nations to deploy their naval vessels into the waters of the Gulf of Aden and the Indian Ocean, the areas off the Somali coasts. But just in case someone in any national government might read this article, please allow me to proffer a recommendation on how ship security should be done by the free market.

Most of the world’s ocean vessels do not ply the waters in places where piracy is a peril. So sweeping, all-inclusive new laws or military deployment is not necessary for most shipping. A few strategic tweaks in each country’s laws can create a method whereby piracy can be eliminated.

First, nations should make sure that their laws allow ship owners to protect themselves from piracy and attack, including deadly force. That will offer the protection in international law for the free market to solve this problem.

Ship owners should hire a six-man tactical team of mercenary operators that accept an assignment to protect the vessel while enroute from port of origin to port of destination. The team should consist of five operators and one operator/medical specialist that could treat injuries. The owners provide accommodations while on board, including food. The “mercs” provide all tactical needs, including arms and explosives (like grenades and rocket launchers), ammunition and tactical gear. Having a six-man team would allow there to be a two-man patrol on duty for three shifts per day. And in the event of attack, the entire team would respond.

And ship owners might consider offering bounties for pirates, dead or alive.

Private security contractors around the world, such as Xe Co. (formerly Blackwater) and others, are able to fill this need for mercenary soldiers. And should the deployment of mercs on commercial ships succeed in protecting the ships, and thereby cause pirates to cease or slow down piracy, the private companies could find other work for their mercenaries.

The security contractors would be responsible for insuring the mercs against injury or death.

Insurance companies that insure ocean-going vessels could add an endorsement to their policies that will only pay a piracy claim if the ship owner had a tactical team on board to protect the ship at the time of the pirate attack. Otherwise, coverage denied.

The cost of a security tactical team would be determined based upon the size of the tactical squad, equipment deployed and length of voyage. Ship owners that refused to bear the expense of the tactical security team would be risking their ship and their investment. But that would be their choice.

And finally, the cost of the tactical security team would be passed along to the companies that shipped goods on the vessel. The shippers would pass along the increased costs to the consumer, who eventually pays for everything anyway.

The free market can handle the problems of Somali pirates, or any other pirates around the world, if the ham-handed governments will just get the hell out of the way.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.