DPRK Merchants (1)* vs. Somali Pirates (1)

UPDATE: Well I am very surprised. Someone (probably a Singaporean) paid the ransom for the North Korean crew. According to the AFP:

Somali pirates on Tuesday freed a chemical tanker with 28 North Korean sailors on board after receiving 3.5 million dollars in ransom, a maritime official said.

The Virgin Islands-owned, Singapore-operated MV Theresa VIII was hijacked on November 16 some 180 nautical miles northwest of the Seychelles.

“It was freed today. The crew is safe,” said Andrew Mwangura, the head of the East African Seafarers Assistance Programme.

Mwangura said a 3.5 million-dollar ransom was paid to free the tanker.

The European Union naval force off the Somali coast confirmed the payment of a ransom.

“An unknown ransom was exchanged on the morning of 16 March and the ship is now underway and heading out to sea,” the EU NAVFOR said in a statement.

“No immediate assistance has been requested but EU NAVFOR will continue to monitor the situation,” it added.

The ship had been moved between the pirates’ stronghold coastal villages of Garaad and Harardhere in northern Somalia.

Its captain, whose nationality was not revealed, died a few days after the hijacking in which the pirates opened fire.

The MV Theresa VIII was headed to the Kenyan port town of Mombasa, its initial destination, Mwangura said.

The Somali pirates, who raked in at least 60 million dollars in ransom money last year, currently hold at least six ships and around 120 seamen hostage.

There is also a DPRK flagged vessel that was hijaked by Somali pirates in February.  As best I can tell, this vessel is still being held for ransom.

ORIGINAL POST: In October 2007 the US Navy assisted some North Korean merchants in their victory over Somali pirates.  In a grudge match this week, however, the North Koreans succumbed to the new Somali pirate team.  The score is now 1-1.

According to the BBC:

A chemical tanker with a crew of 28 North Koreans has been hijacked by pirates in waters off Somalia, the EU’s naval force (Navfor) says.

The MV Theresa VIII, a Singaporean-operated tanker, was taken on Monday in the south Somali Basin, 180 nautical miles north-west of the Seychelles.

It had been heading for Mombasa, Kenya, but was diverted north, Navfor said.

The MV Theresa VIII, the owner of which is based in the Virgin Islands, is a tanker of 22,294 deadweight tonnes, said Navfor, the EU naval force operating in the region to protect shipping.

Some thoughts:

1. Globalization in action: The ship is owned by someone in the Virgin Islands, managed by a Singaporean company, operated by a North Korean crew, and taken hostage by Somali pirates.

2. As sad as it sounds, hiring North Korean crews might be an effective anti-piracy strategy.  Here is why: Pirates hold (a) the ship, (b) the cargo, and (c) the crew as hostages to be traded for ransom. Using simple expected value calculations, this means that the rational pirate will pillage if:  [P(probability of success)] x [$(a+b+c)] > the next best opportunity to earn income.  This ignores risk tolerance, but you get the idea. If you lower the $ value of the payload by hiring workers who will not earn a ransom, then the expected value of the captured ship falls and fewer pirates will attack.  If this plays out in a way that the Somalis lose money on North Korean crews (because who is going to pay their ransom), we should expect to see more shipping companies hiring North Korean crews and painting North Korean flags on their vessels! Old ships + North Korean crew + agricultural goods = waste of time for pirates.

*  win with assistance from the US Navy.

Share