Malacca Strait threat growing, insurer report says

Here's why the rates are going up: Malacca Strait threat growing, insurer report says

Pirates in the Malacca Strait are using the tactics and weapons of Islamist militants, says the security report that prompted insurers to give the sea lane a war risk rating and boosted transport costs there.
A copy of the report, prepared by London-based Aegis Defence Services for global insurers in July, was obtained by Reuters.
Its findings prompted the influential London-based Joint War Committee (JWC), which commissioned it, to add the strategic sea lane to a list of 21 high risk areas.
That decision drew strong criticism from the multi-billion dollar maritime industry and littoral states, who say the threat is overblown.
The JWC meets with Aegis, insurers and shipping associations in London on Tuesday to discuss the rating decision.
The Aegis report says the modus operandi and weaponary employed in some pirate attacks closely resemble those used by extreme Islamist groups in the region.
"Pirates in the Strait are now largely indistinguishable from terrorists, in terms of tactics employed and weapons used, as well as their potential to cause significant damage to shipping," the report said.
It also identifies the Malacca Strait as a terrorist target, pointing to the threat of the Jemaah Islamiah (JI) militant group.
"The JI regional terrorist group, closely linked to bin Laden's al Qaeda network, has absorbed his economic targeting agenda, has had, and may be trying to regain a maritime capability, and has shown interest in the traffic in the Malacca Strait," it said.
"Sinking or damaging a major vessel in the economically strategic waterway of the Malacca Straits would risk seriously disrupting global maritime trade."
Piracy in the strategic channel, which carries a quarter of the world's trade, has grown more serious in the last two years, the report said.
"Recent tactics and a number of worrying incidents suggest an increased interest in attacking ships in the Strait, and a serious intensification of the weaponry and techniques used," it said.

I think that's what I've been trying to get at, too.

Update: And this is the source of my disagreement with Strategy Page's assessment (see entry of 13 August) as a nuisance (actual quote: "Thus piracy is a problem, but more of a nuisance, than a situation that threatens the viability of seagoing commerce."). While I agree with Mr. Dunnigan (and Mr. Dragonette, et al, over at the Office of Naval Intelligence) that most reported piracy (80% says Dunnigan) is misdemeanor level theft by dirt poor wretches, it wouldn't take too much for that remaining 20% to develop into something far worse. In fact, given the normal workings of the "80/20 rule," we probably should spend 80% of our effort to stop that 20% from escalating. After all

The value of the Pareto Principle for a manager is that it reminds you to focus on the 20 percent that matters.

Update: Curious headline at the Christian Science Monitor "Three nations coordinate flights to spy on Malacca pirates" here. Perhaps "to counter" or "to thwart" might be more appropriate.

These concerns have forced the three principal states sharing the Malacca Strait, Singapore, Indonesia, and Malaysia, to propose adding aerial reconnaissance to a joint naval patrol program put into place last year. While critics doubt this latest step, announced this month, will dramatically improve security, the measure represents a greater willingness among the three countries to work together.

"If you look at the political context of the region, there was friction. To get the Malaysian, Singaporean, and Indonesian navies together was a very big step," says an official at the Maritime and Port Authority of Singapore, who requested anonymity.

Sovereignty has been a key sticking point in the effective patrolling of the Strait of Malacca. Both Malaysia and Indonesia have been wary of signing on to any program that would require a curtailment of their sovereign rights over areas of the waterway, which some 50,000 ships pass through every year. Singapore, however, has been more open.

I very much doubt Singapore has been more open to a "curtailment" of its sovereignty, but it has been willing to work with others to prevent problems in the straits. Much of the problem is legal - seizing a ship in the Malacca Strait probably does not meet the legal definition of piracy, as set out here. And what criminal charge can Indonesia bring against "sea robbers" who capture a ship in Malaysia and drive it into Indonesian waters? The crime itself was performed in Malaysia and not Indonesia, unless Indonesia has a law against possessing a stolen ship. In any event, it looks like a lot of treaty work needs to be done.

Update 17 Aug: Alert reader Steve emails a reports from LLoyd's List regarding the meeting of the Joint War Committee at which ship owners and governments pressed them to back off their recommendation (note that the JWC ondoes not set rates, it only establishes areas that insurers might want to consider raising rates due to higher risk levels)

Specifically, the committee affirmed that the Malacca Strait would remain on the list "until it was clear that the measures planned by government and other agencies in the area had been implemented and were effective".

Judging by the flurry of activity in the area by the local governments, the Malacca littoral states are feeling the spur. (Thanks, Steve!)