Somali Pirates Are Hurting The World More Than We Realized

Farah Abdi Warsameh / APIn this photo taken Sunday, Sept. 23, 2012, masked Somali pirate Abdi Ali walks past a Taiwanese fishing vessel that washed up on shore after the pirates were paid a ransom and released the crew, in the once-bustling pirate den of Hobyo, Somalia.

WASHINGTON, Nov 1 (Thomson Reuters Foundation) - Pirates hijacking ships off the Horn of Africa and Somalia from 2005 to 2012 garnered well over a quarter of a billion U.S. dollars in ransom and used the money for criminal activities worldwide, according to a report released on Friday.

The study reveals the pirates engaged in human trafficking arms trafficking, funding militias and money laundering through trade in the stimulant known as khat, particularly in Kenya, as well as other illegal activities that divert money from the legal economy that would otherwise promote economic development.

"Unchallenged piracy is not only a menace to stability and security, but it also has the power to corrupt the regional and international economy," said Stuart Yikona, a financial sector specialist at the World Bank and co-author of the report "Pirate Trails."

It recommends a range of measures to combat the problem, including steps to deal with illegal cross-border cash smuggling, anti-money laundering measures and mechanisms to monitor financial flows through the khat trade.

The study, conducted by the World Bank and the United Nation's Office of Drugs and Crimeand based on interviews with former pirates, government officials, bankers and others countering piracy, estimates that piracy costs the global economy $18 billion a year in increased trade costs. Attacks on ships off the coast of Somalia and the Horn of Africa yielded between $339 million and $413 million in ransom money in the seven years from 2005, it said.

The full report is available here http://www.worldbank.org/piratetrails

(Reporting by Stella Dawson; Editing by Prudence Crowther)