As the saying goes, there is a silver lining in every cloud. So, if you happen to be in the vicinity of the Horn of Africa that lining means that the maritime security business in the Indian Ocean is booming as ships turn to private military security companies (PMSC) to help in the fight against piracy, according to a report released on August 12.
Just how good is it? Some key findings from the report, "Pirates and privateers: managing the Indian Ocean's private security boom" published by the Lowy Institute, an Australian think tank, are:
Over 140 companies now provide armed protection for ships in the Indian Ocean. At least 2700 individual contractors are employed as armed guards on ships and 18 floating armouries are operating in waters near the Gulf of Aden.
40 private armed patrol boats are now, or will soon be, operating in the Indian Ocean. The most sophisticated of these private navies is outfitting three large boats in Singapore -- each with a crew of 20, capable of carrying 40 private marines, and equipped with a helicopter and drones.
Additionally, there are plans for more than 2000 European military personnel to be privately hired to shipping as vessel protection detachments.
These numbers are likely low. According to the report's author James Brown, "[And] this number is increasing. A large British PMSC increased contractor employment by 150 per cent last year and plans to employ a total of 1000 this year. Hundreds more staff are employed providing support services for the industry on land."
In short, "One way or another, the counter-piracy fight is becoming a private one." This is more than a little ironic, because piracy was one of the earliest acts of criminality to unite sovereign states in common opposition.
According to international law, piracy is commonly held to represent the earliest invocation of the concept of universal jurisdiction. The crime of piracy is considered a breach of jus cogens, a conventional peremptory international norm that states must uphold. Those committing thefts on the high seas, inhibiting trade, and endangering maritime communication are considered by sovereign states to be hostis humani generis (enemies of humanity).
Yet in a privatizing world every public menace represents a private sector opportunity. The report states that security group G4S last year flagged piracy-related maritime security as a 'big commercial opportunity'. For the sake of the maritime industry let's hope it does a better job of providing armed guards aboard ship than it did in provided qualified personnel for the London Olympics.
Who knows, perhaps Mitt Romney's old firm, Bain Capital, will get into the act, as some firms have been successful in raising tens of millions of dollars from investors to finance private navies.
According to the report, this may be a case where the cost-effectiveness rationale for using private sector contractors is actually valid. Two factors seem to be driving the push to more widely use PMSC.
The report states:
First, the rising costs of insurance. [...] Since 2008 the Lloyd's Joint War Committee, a coordinating body of Lloyds London underwriters, has designated Indian Ocean piracy regions as a 'war-risk zone', increasing insurance premiums for ships that transit. Concurrently, underwriters have offered to reduce premiums for ships that hire private security and take out separate kidnap and ransom insurance. In some cases, underwriters will not issue kidnap and ransom insurance unless a ship hires armed guards.
The second factor was the escalating cost of capture by pirates. The average ransom is now $4.58m and captured ships and crew are held for an average 158 days. Shipping companies lose millions in foregone chartering income while their ship is held to ransom. They also incur high costs in hiring specialist ransom negotiators, ransom drop experts, and support for crews once released. Hiring a PMSC for $50,000 is a comparatively small price to pay to substantially reduce these costs. Some ships can recoup this cost simple by slowing their speed through pirate-infested areas and saving on fuel.
Not all the PMSC action is aboard ship. An entire service industry is emerging to support the guards.
Shipping logistics agencies facilitate the movement of personnel, weapons, and equipment on and off ships. Companies collect piracy intelligence, and some run operations rooms tracking armed teams and providing constant piracy updates. Some PMSCs subcontract to medical evacuation companies and a small number maintain in-house medical evacuation services for their contractors. New companies provide bespoke insurance for armed teams, advise shipping industry clients on how to vet PMSCs, and offer certification for individual contractors. A new online marketplace connects armed teams offloaded due to sudden shipping schedule changes with other ships seeking their services at short notice.
One of the more noteworthy developments in the maritime security sector is a more offensive type of protection, as opposed to the more defensive ward off pirate attacks after they commence.
At least 40 private armed patrol boats have been, are, or will soon be operating in the Indian Ocean. They operate by establishing exclusion zones around the client ship and challenging suspicious boats that approach them. Some firms offer boarding teams on these escort vessels, with team members who are 'well versed in waterborne operations and have experience in boarding/ counter boarding drills, waterborne interdiction and maritime/amphibious warfare'. Private armed patrol boats are attractive to shipping companies because they do not require weapons-carriage on company ships and thus do not compromise their right to innocent passage through territorial waters. Also, any consequences of firing weapons are outsourced to the captain of the private armed patrol boat.
Yet even if such patrol boats are operationally successful they could be questionable under international law. The report states that they could be defined as pirates because they use aggressive force on the high seas without government authority.
Policy discussions on the boom in private counter-piracy have largely ducked the issue of private navies. As more vessels operate in the Indian Ocean, this will become a pressing issue. Some private armed patrol boat operators surveyed for this analysis have stated they would be willing to respond to non-client ships under attack. If unchecked, these fleets could be more akin to seaborne vigilantes than to private incarnations of naval counter-piracy forces.
Another noteworthy development is that governments are now privately hiring out their soldiers to provide security onboard commercial ships. Such privately hired military teams are known as vessel protection detachments, or VPDs.
The Netherlands, France, Spain, Belgium, and Italy all offer private shipping companies the opportunity to hire VPDs for use during transits of the Indian Ocean. Other countries are considering whether they should do the same. [...] The shipping industry has voiced a strong preference for VPDs to conduct shipboard counter-piracy, rather than contractors from maritime PMSCs. This is based on the logic that national militaries can move weapons and personnel through transit ports more easily, and that military personnel have better protection from prosecution, and more certain legal status, than private contractors.
But this approach also poses problems; one of them being is that they are often more expensive than private alternatives and often in short supply. Furthermore, VPDs are an explicit alignment of national military power with private commercial interests. When national militaries patrol the piracy high-risk area in warships, they are patrolling for the common good and able to respond to any vessel under attack. When military personnel embark upon an individual ship as a VPD, they are only able to provide protection to that particular ship and do not contribute to the wider counter-piracy fight
To be sure, placing marines on a private ship is cheaper than escorting it with a warship. But it makes separating state and commercial interests difficult. The use of national militaries as guards on board shipping also creates substantial ambiguity about their identity, and raises a raft of political and legal problems. Port officials may be unclear as to whether military detachments are fulfilling other functions, such as intelligence collection, when they enter port on a civilian ship. States may choose to treat civilian vessels carrying VPDs as warships instead, with wider implications for legal and diplomatic status.
When militaries hire their personnel out as VPDs, they cede a degree of authority over them to the civilian ship captain and shipping company. In effect, VPDs have their movements dictated by shipping companies rather than governments, and are under the command of the civilian ship captain. This means the state may suffer the consequences of private decisions and opens up the possibility that a private ship might be perceived as an instrument of state policy. What happens to the ship will have direct implications for the national government.
While the report offers several conclusions for improving the status quo it concludes that:
The use of maritime PMSCs to guard against the piracy threat seems to have been effective, yet the practice is not without risks. The boom in PMSCs responding to the piracy threat in the Indian Ocean raises serious questions about the quality of the contractors. The shipping industry has already acknowledged 'significant competence and quality variations... across the spectrum of contractors'. The legal status of armed PMSCs and, in particular, private armed patrol boats, is murky. The proliferation of PMSCs seems already to have contributed to breaches of international conventions on the movement of weapons. It is extremely difficult to prosecute illegal behaviour by private contractors or the companies that support them because their legal status is unclear and there are so many overlapping jurisdictional issues associated with their use. In particular, the possibility of private armed patrol boats intercepting and perhaps boarding other civilian vessels raises significant legal questions, and there is significant potential for accidental confrontations at sea.