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The Pirates' Toll: High Stakes on the High Seas

Stocks in this article: DRYS FREE DSX NMM GNK FRO EXM EGLE





Directly and indirectly, the costs of piracy multiply. Ransoms suffer inflation, the average payout rising from the tens of thousands of dollars just four years ago to $1 million in 2008 to $2 million in 2009, according to figures collected from insurers and other sources by Roger Middleton, a Somalia expert at Chatham House, the foreign-policy think-tank in London.

Merchant mariners' unions push through hazard pay: crews now receive double their normal hourly wage during the time it takes to transit the war zone. Owners hire expensive security guards and station them on their ships -- Blackwater-esque former commandoes or Interpol-ish ex-cops, usually, who stand with flack jackets on forward decks while the ships sail through pirate waters, peering through high-powered binoculars and frowning. One imagines them in their cabins in the evenings, practicing their martial arts. A whole cottage industry of maritime-security specialist firms -- many of them, again, based in Britain -- arises to exploit the burgeoning demands of the skittish shipping executive.

Moves and countermoves: the bandits of coastal Somalia -- harassing the shipping lanes of global commerce -- have drawn the navies of the developed world, some 20 countries at last count. (Even Iran has freelanced a few battleships over to the region to keep an eye on things.)

Meanwhile, an international naval effort called Combined Task Force 151, led by the U.S., has morphed. Shifting world threats have caused its reassignment. Originally created not long after September 11 as one of the naval components to the war on terrorism, it now fights Somali skiffs powered by outboard motors a French warship flanks a pirate skiff in the photo above .



KALASHNIKOV TOLLBOOTH
The success of Somalia's pirates has given rise to a certain kind of portrayal in the Western media. "Cutthroat Capitalism," reads the title for a piece in Wired. "They've come up with a good business model ... with a low cost of entry," writes the foreign relations expert in The Wall Street Journal. Piracy's "flashy new-money culture" has become "entrenched," declares a dispatch in The Washington Post. A new neighborhood of "huge homes" rises in an otherwise miserable hut-and-shack village in Somalia, reports The New York Times. The neighborhood is called "New Boosaaso" and the "minicastles" there cost "several hundred thousand dollars."

An intrepid Reuters' stringer goes into a pirate stronghold -- "stronghold," with its whiff of the medieval, being a favorite word to describe the places where Somali pirates live -- and comes out with the news that there exists a kind of bandit stock exchange; it's possible -- so the story goes -- to buy shares in a gang of pirates. If your company of corsairs returns to shore with a ransom: dividend yield.

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