Sunday, June 10, 2018

Somalia, Afghanistan at Bay

Nobody ever said that Ricardo's notion of "comparative advantage" covers just legitimate enterprise. Two cases to illustrate this point are the burgeoning opium industry in Afghanistan (which is said to account for nearly half of the country's GDP) and maritime piracy off the coast of Somalia. As with many such cases, the roots are political-economic. After its invasion, Afghanistan has become a disembodied state, with a Western-installed figurehead serving merely as the "Mayor of Kabul" as opposed to being anyone with accepted authority throughout the country. Likewise, Somalia is a failed state without any sort of government as you and I would understand it. The resulting breakdown of law and order in both states has undermined whatever little legitimate industry both states had and has facilitated underground economies currently in the news for unwelcome reasons.

Lacking legitimate forms of livelihood, Afghans have turned to the comparatively advantageous trade of opium poppy cultivation. Although Afghanistan is not blessed with fertile land, opium is easy to grow. Outlying areas where the Afghan "government" has minimal presence and warlords hold sway present, shall we say, commercial opportunities. Given few other opportunities to earn a living, many have turned to poppy cultivation. The location of Afghanistan along the famed Silk Road of yore further enhances trade opportunities for illicit drugs.

While Somalia's geography is of course different, its story is much the same, adjusting for the context. Years of strife have largely finished off whatever fishing industry remained. Nowadays Somali pirates are fishers of men: not in the sense Christ intended but of kidnap for ransom (and other wholesome activities like extorting protection money). Like Afghanistan lying on the Silk Road, Somalia's long coastline by the Gulf of Aden serves as a geographically advantageous source of comparative advantage in conducting an underground economy. (The Gulf of Aden is an important waterway for transporting oil.) The seizure of a Ukrainian vessel flying a Belizean flag of convenience with, among other things, 33 T-72 tanks reportedly bound for South Sudan has captured world attention. Aside from the very interesting question of who exactly the customers for the tanks are, the pirates' stated intention to fight to the death against a flotilla of US Navy vessels adds cinematic elements to the story.

Popular Mechanics details the cat-and-mouse game being waged between maritime authorities and the Somali pirates. Meanwhile, the Guardian has an interesting take on how an entire underground economy has emerged in Somalia centered on maritime piracy. Truly, it is Afghanistan at bay. Here are some excerpts, though read the whole thing if you have the time:
The drama in the Gulf of Aden is the latest and most dramatic of 50 serious attacks on ships in this region in the past year. And in the dusty little fishing ports and towns that dot the coastline, an entire economy has been privatised by the overlapping criminal enterprises whose business is the smuggling of weapons and people, obtaining 'taxes' and protection fees from the foreign fishing boats that ply Somalia's waters, and preying on the yachts and cargo vessels that sail off its coast.

'It is pretty Wild West,' says Alixandra Fazzina, an award-winning photographer who recently spent time in Somalia's lawless ports documenting the activities of the criminal gangs for a book. 'Fishing and taxes on fishing used to be the country's biggest source of revenue. Now they can't even fish. There are no ice factories and no government. So the fishermen have turned to piracy and people and weapons smuggling.'

State writ does not run here. There is no attempt by Mogadishu to fine those illegally fishing in the Gulf of Aden. So sea militias grew up that imposed their own ad hoc fines and taxes, a process that has transformed into outright hijacking and an economy based on criminality.

Boatyards produce not fishing boats but vessels intended for smuggling and piracy. Fuel suppliers and merchants equip the boats. Restaurants have grown up to feed hundreds of hostages taken from the tankers and carriers sailed into the waters around Eyl. Officialdom from top to bottom in areas like the autonomous Puntland exists solely to oil the wheels of organised crime. 'Some of these organisations are quite sophisticated,' says Fazzina. 'They'll use their own CB radio networks to organise the laundering of their money.'

Eyl has become the modern era's equivalent of Tortuga, the historic Haitian base of the notorious Welsh pirate Henry Morgan. It suddenly bustles with the pirates' go-betweens, the accountants and middlemen and negotiators in their four wheel drives, each time a new captive ship is sailed in. Around £17m has been raised in ransoms in the past 12 months.

Most of the money, usually 10-20 per cent of that demanded by the hijackers, is moved quickly along the line to the so-called 'Big Fish' in the clans - in the government of the provincial capital, in Mogadishu and in the Somalian diaspora in Nairobi and Dubai where those behind the piracy are allegedly to be found.
TIME recently interviewed the pirate captain Sugule Ali who is currently demanding a $20M ransom for relinquishing control of the ship. His explanation for engaging in piracy is that fishing has become an unviable occupation, turning former fishermen into bandits of the high seas:
We were forced into this work," he argues, speaking from the Faina's bridge at anchor off the village of Hobyo. "We were fishermen. I used to work in the sea every day. But ships from other countries fish our coasts illegally, destroy our nets and fire on whoever approaches them. We were refused the right to fish. They even dump toxic waste. We couldn't work. So we decided to defend ourselves." Ali insists that piracy would stop if the pirates' fundamental grievances were addressed. "If the world stops stealing our property and harming us, we have a solution," he said. "We will stop the piracy and go back to our normal jobs."
UPDATE: Despite the headline-grabbing events related to Faina, Somalia "only" ranks fourth in the International Maritime Bureau's rankings of high risk areas in 2008 after Nigeria, Indonesia, and Tanzania. However, none of those other countries have degenerated to relying on maritime piracy as a main source of livelihood.

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