Remarks by the International Chamber of Commerce (ICC) – Jean-Guy Carrier, Secretary General and Pottengal Mukundan, Director, IMB

Conference on Capacity-building to Counter Piracy off the Coast of Somalia

May 15, 2012

IMO CONFERENCE ON CAPACITY BUILDING IN SOMALIA – 15 MAY 2012
Counter piracy capacity building:
Text of remarks by the International Chamber of Commerce (ICC) – Jean-Guy Carrier, Secretary General and Pottengal Mukundan, Director, IMB

Secretary General, Excellencies, Ladies and Gentlemen,

The ICC would like to thank Mr Sekimizu, the Secretary General of the IMO  for hosting this conference today.
This meeting is taking a fresh look at solving Somali piracy - something that is vitally needed as we move into the 5th year of this phase of Somali piracy. It is necessary for all stakeholders  to seek ways to achieve a sustained solution to piracy off the coast of Somalia.
 
The ICC  is the largest, representative business organization in the world. Its hundreds of thousands of member companies in over 120 countries have interests spanning every sector of private enterprise.

A world network of national committees keeps the ICC International Secretariat in Paris informed about national and regional business priorities. More than 2,000 experts drawn from ICC’s member companies feed their knowledge and experience into crafting the ICC stance on specific business issues.

The United Nations, the World Trade Organization, the G20 and many other intergovernmental bodies, both international and regional, are kept in touch with the views of international business through ICC.

The fundamental mission of ICC is to promote open international trade and investment across frontiers and help business corporations meet the challenges and opportunities of globalization. Its conviction that trade is a powerful force for peace and prosperity dates from the organization’s origins early in the 20th century. The small group of far-sighted business leaders who founded ICC called themselves “the merchants of peace”.

ICC has three main activities: rule setting, arbitration, and policy. Because its member companies and associations are themselves engaged in international business, ICC has unrivalled authority in making rules that govern the conduct of business across borders. Although these rules are voluntary, they are observed in countless thousands of transactions every day and have become part of the fabric of international trade.

For the past four years international trade has faced an unprecedented criminal threat  in the waters of the Arabian Sea/ Somali basin.  Somali  gangs are attacking and seizing merchant vessels upto a thousand miles from the Somali coast, taking them back to Somali territorial waters  and holding the vessel and the crew for ransom for typically 6-8 months. The ICC IMB’s Piracy Reporting Centre reported that there were 237 attacks against vessels  in this area in 2011 with 28 vessels hijacked.  Since the current phase of Somali piracy began in 2008, 3196 crew have been taken hostage.     

The Oceans Beyond Piracy Programme of the One Earth Future Foundation has estimated that the costs  of Somali piracy in 2011 was around USD 6.6-6.9 billion of which 80% was borne by the industry and 20%  by governments. 99.5% of this cost was a recurring cost i.e. only 0.5%  was related to  long term strategies to control it. This is not an ideal use of limited resources.

The current situation with  the suffering  and abuse of seafarers  held hostage (in one case for more than 2 years) , the diversion of vessels away from the direct, most economic route through the Arabian Sea, the additional costs to shipowners in a severely depressed freight market,  and the need to deploy private armed security teams on board in an unclear legal environment is not an acceptable status quo.  Despite the recent reduction in the number of hijackings  the number of attacks continue, the violence during an attack has escalated and there is no indication that this criminal phenomenon is likely to subside.  In these circumstances it is necessary to think of what might make the difference in the short to medium term – a game changer.

Somali piracy exists because some parts of the State of Somalia simply do not function. The resulting administrative vacuum has been exploited by pirates who have been able to “park” hijacked ocean going vessels along this coastline with impunity until a ransom is paid. What might dramatically change the pirate model is if they were denied this space.

Billions of dollars are spent at sea in protecting vessels  every year. But unless we focus on solving the problems ashore in the piracy affected parts of Somalia it is unlikely that we will ever see this problem go away and we could be where we are or worse, five years from now.

There are many ways to head towards this goal.  Some long term measures involve intergovernmental help, and represents usually a top-down approach.  The ICC believes that in addition, there is room for a more practical bottom-up approach which is aimed at generating  commerce and employment, which if successful will drive the political process, rather than the other way around.

The “business” approach requires from the UN and the governments,  measures  to create an environment where business can  invest.  This does not have to wait for a stable political solution in all of Somalia which could take many years yet.  It is aimed at providing the right infrastructure locally for specific projects. Local Somali businessmen and Somali diaspora may be the right people to take these initiatives forward. It is worth noting that despite all the travails of Somalia there are substantial  hundred million dollar businesses which operate successfully in Somalia with representative premises all over the country.  We refer here to the money remittance industry – the only “banking” system that Somalia has  - and the telecoms industry,  which is as good as anywhere in the continent.  These businessmen know how to resolve the business problems in Somalia and run businesses successfully in the local context. With their active involvement we have the best chance of a sustainable commercial solution in the troubled areas of this country. The principle here is to create the right environment and then let business invest and take the business risk. This is what they do best.  It is a cost effective model.

As the world business organisation, the ICC is ready to provide advice and practical assistance to bring this to fruition.  

The main area used by pirates to anchor hijacked vessels is the coastal strip in Central Somalia, an area which has received no Foreign Direct Investment in decades and is now torn by deprivation and recently drought. In such circumstances, it is easier for criminals to subvert the local community to support their activities.

The objective of the exercise is to create local commerce and thus help the local community to assert their views. This has happened in a limited way in nearby areas where local villagers have driven out pirates from their midst. Reports received by the IMB from Somalis suggest that the local communities resent the cultural changes which have been imposed by the pirates upon them in recent years. So the time is right to launch ideas which provide viable livelihoods. The local communities will be receptive.

Before the civil war there were successful  fish processing  businesses on this coast producing fish products which were exported. The seas around the Somali coast are rich in fish, the  raw material for this industry.  It is a natural, sustainable resource which can be easily exploited for economic growth. 

If this can be revived, it would give local employment to the youngsters in this area.  Local communities and fishing villages would not then need to depend upon the pirates for sustenance and would  turn away from them. Without the support of the local community the pirates would not be able to bring hijacked vessels to this area. Without  the space and impunity to hold the vessels, the Somali pirate model simply could not work. 

The end result is precisely what the shipping community is seeking – an end to Somali piracy as we know it today..

In the absence of other ideas for a short  / medium term solution to bring down piracy this is worth taking forward.
The steps towards this may be  as follows:

1) Somalia declares its EEZ under UNCLOS. This was discussed this morning in the presentations by UNPOS and FAO.

2) IUU fishing and piracy are just some of the substantial criminal activities off the coast of Somalia. The UN resolves (similar to the piracy resolutions of the UNSC) to allow countries which have the capability to deploy fishing vessels in these waters to protect Somali fishing interests. This sends a very strong message of support to the Somali people that the international community is taking positive, pragmatic steps to help them. This is an important message if we are to seek their support to drive out the pirates. 

3) Somali owned fishing vessels will fish in security in these waters and supply their catch to the fish processing businesses along the coast.

4) The setting up of legitimate businesses by Somali citizens and Somali diaspora will drive the pirates out and hopefully bring the waters of the Arabian Sea/Somali Basin back to normalcy.

This proposal complements all other measures currently proposed today.

Reviving fishing is one of the ideas. There may well be other practical business proposals which could work similarly.

In our view it is important that the Somali diaspora are involved. Their commitment  ensures the best chances of a sustainable business, essential to the overall objective of ridding this coast of Somali pirates.