Rudy Diaz – PICA CorporationChris Rawley – Cmdr, USNLuke Ritter – Ridge GlobalLarry O’Connell – IMSC, Inc

Panelists

Piracy Profile (Rudy Diaz and Chris Rawley )

Economic Impact & US Response (Rudy Diaz)

Stakeholders (Luke Ritter)

Solutions: (Larry O’Connell and Rudy Diaz)

Information/Predictive Analytics

Technology/Non-lethal Boarding Barriers

Armed Response

Q&A and open discussion among the panelists

The primary objective of the pirate attacks is to

commandeer a container or tanker vessel by

intimidation and/or violence and hold the vessel,

crew and cargo for ransom. The “business

model” is fueled by continually-increasing

ransoms.

Piracy Threat in the Horn of Africa (HOA) stems from the Somali Civil War of the early 21st

Century

Some propose piracy initially became a viable economic endeavor for Somali fisherman

as a response to rampant overfishing from foreign fishing trawlers off the country’s coast

Now it is undeniable that piracy is perpetrated by organized criminal enterprises with

potential ties to Islamic Extremism

Out of work fishermen possessing extensive knowledge of GOA, waters off of East Africa

and the Indian Ocean

Country plagued by civil unrest since 1991

Large male population ranging from 15 -35 years of age with zero economic opportunity

First-hand experience in participating in armed violence

They are not Jack Sparrow Intelligent, skilled seamen who have

historical and institutionalized knowledge of the greater Indian Ocean.

Large population of young men accustomed to violence

Number in the thousands and some intelligences points to seven to ten distinct “gangs” of pirates; they are well funded and well armed (Instigators).

Often portrayed in the media as uneducated and undisciplined rogue element

Yet, they consistently elude over 30 warships from 15 foreign navies CTF 151

The Khat Effect (a flowering plant native to East Africa), an amphetamine-like stimulant

• Pirates have expanded into the Red Sea this year

• Attacks have now occurred on ships at anchorage in Oman

• Some analysts predict attacks as far East as Sri Lanka or even the Straits of Malacca this year

Tactics have evolved over the last three years Utilize mother-ships to extend their range and

logistics Approach container ships with multiple skiffs –

“swarm” working in concert with other gangs The boarding techniques are crude but effective They take control of the bridge first and then

subdue the crew They will kill and have no compunction in

sacrificing their own manpower in an attempt to board a vessel; life is cheap to them

They are armed with Soviet-bloc small arms (abundant in region) to include rocket propelled grenades (RPG) and have been

Incorporate technology such as satellite communications and global positioning devises (GPS)

Their boats/skiffs can reach speeds up to and including 25 knots

Similar dilemma created in the 80’s & 90’s in Colombia re: K&R industry

With 214 attacks reported in Jan-Apr 2011, the year is on pace to see a record 642 attacks by year end, a 31% increase over the previous year

Average ransom payments rose to $5.4 million last year, compared with $150,000 in 2005 according to the One Earth Future Foundation.

Approximately $238 million was paid in ransoms to Somali pirates in 2010 according to Oceans Beyond Piracy.

Further expansion into the Indian Ocean

West African Pirates –on track for a record year of piracy against ships in the Gulf of Guinea

Al Qaeda at sea –driven by links between Al Shabaab and Pirate Action Groups, the threat to shipping will persist in the “caliphate” zone

28 Feb 2011 meeting at IMO headquarters among representatives of countries participating in the anti-piracy campaign off the coast of Somalia and representatives from the shipping industry

They discussed the deployment of sovereign naval forces to protect shipping

The general view was that “the resources currently made available are insufficient to provide the levels of protection for merchant shipping required to cover the vast Indian Ocean region…”

Nine out of ten Somali pirates apprehended by naval patrols are reportedly released because no jurisdiction is prepared to prosecute them

According to the One Earth Future Foundation the annual cost of piracy to the global economy: between $7 and $12 billion

Why the Gulf of Aden: The concentration of merchant ships (an estimated 33,000 per year) operating in a constrained waterway that is relatively close to Somalia’s shore

The U.S Department of Energy estimates that 3.2 million barrels of oil per day transit between the Gulf of Aden and the Red Sea

The Indian Ocean waters off the southeast coast of Somalia are home to busy shipping lanes for trade between Asia and East Africa

According to the General Insurance Research

Organization (GIRO) the average ransom paid

in 2010: $5.4 million; with more than 50

reported hijackings in the last year; total

ransom earnings estimated for 2010 at over

$250 million

The highest known ransom paid to date is $9.5

million, for the release of the South Korea oil

tanker Samho Dream in November 2010

Untold Fuel Costs associated with rerouting

voyages to avoid danger areas

Depending upon the vessel size, war risk

premium for merchant vessels sailing in the

Indian Ocean has reportedly gone up from

$500 per ship, per voyage, to up to $150,000

per ship, per voyage

GULF OF ADEN (Sept. 9, 2010) US Marines conducted a

board and seizure operation after the Magellan Star

was attacked and boarded by pirates Sept. 8.

Eleven crew were rescued and nine pirates were

captured with no loss of life.

The Marines were part of CTF 151, the multinational task

force established by Combined Maritime Forces to

conduct counter-piracy operations in the Gulf of Aden

and the Somali Basin.

The deaths of four Americans Feb 22, 2011, on the

sailboat Quest - first known American casualties during a

Somali pirate attack

The Quest was hijacked 200 nautical miles off the coast

of Oman and the pirates were returning to the Somali

coast when they were intercepted by 4 U.S. Navy vessels

U.S. Navy reported pirates onboard the Quest fired an

RPG at one vessel after negotiations broke down with

an FBI hostage negotiator

Navy SEAL team subsequently boarded the Quest and

found the American hostages had been killed

Somali accounts differ claiming the hostages were

caught in crossfire during a rescue attempt

Two pirates were found dead on board - two others

were killed during the raid. The remaining 14 pirates

were captured and brought to the US where they were

indicted by a grand jury.

Ship owners / Ocean Carriers Primarily responsible for asset protection. Brand reputation at risk on every voyage. If piracy is a 2-

5% problem, is vessel security an Investment, or an Expense?

Shippers Minimal or no control of assets in transit (freight). Pirate attacks delay goods access to market.

Maritime Labor Unions Members personal security at risk on every voyage. Safety is a traditional issue that unions address

with management – what about security?

Insurers• Underwrite vessel and cargo risk. Pirate attacks are Low Probability, High Consequence events for

insurers. Do kidnap and ransom insurance payments fund terrorist activity?

Flag States• Responsible to provide protection for flag state carriers. How prepared are most nations Naval

forces for this mission? What about flag states with no naval forces?

Security Firms• Provide technology and services to a high risk market with weak demand. What are the rules of

engagement / legal issues related to armed conflict in international waters?

The Stakeholders

Best Management Practices Protective measures

including increased speed, “citadels,” etc.

Some success, but pirates tactics evolve quickly

Predictive Analysis

Armed Security Teams

Commercial shippers and private sailors should have access to the best information on the changing threat picture.

To date, threat warnings have focused on:› Sections of the Indian Ocean too broad to be useful› Reporting of events after they have occurred

No mariner will venture far from home without consulting a weather service, yet the current model is to sail blindly into harm’s way.

Analysis of Pirate Action Groups – their behavior over time, their inventory of captured vessels (including those used as “mother ships”), their current operating tempo – and the environmental conditions in which they operate will yield a dynamic picture of the threat significantly more accurate than what NATO and EU NAVFOR publishes, and in advance.

Such analysis, provided to clients sailing in pirate waters, would allow for smart route planning and more efficient use of physical security measures, including armed security teams.

Insurance companies may recognize this approach as a risk-reduction strategy and adjust premiums.

NATO-provided predictions highlight virtually the entire Indian Ocean as high threat areas. While the red circles provide mariners with a rough estimate of threat regions, the prolific nature of highest-risk-category geography makes useful route planning based on this data nearly impossible.

It is also worth noting that for the timeframe listed (19 December), no pirate attacks occurred within NATO’s highest threat regions.

IMSC Proprietary Information

Firearms Improvised Defenses -- Repurposed

Crowd or Burglar Control› Water Cannons› Barbed Wire› Citadels› A Host of Bad Ideas…

Pork Gravy and Ham Hocks Bunker Fuel

Surveillance Lasers Active Denial/Microwave Long Range Acoustic Devices Barriers/Waterline Interdiction Systems Insurance companies may recognize

individual or combined approaches as a risk-reduction strategy and adjust premiums.

International Maritime Organization (IMO)› MSC.1/circ.1405 INTERIM GUIDANCE TO

SHIPOWNERS, SHIP OPERATORS, AND SHIPMASTERS ON THE USE OF THE PRIVATELY CONTRACTED ARMED SECURITY PERSONNEL ON BOARD SHIPS IN THE HIGH RISK AREA.

› MSC.1/circ.1406 INTERIM RECOMMENDATIONS FOR FLAG STATES REGARDING THE USE OF PRIVATELY CONTRACTED ARMED SECURITY PERSONNEL ON BOARD SHIPS IN THE HIGH RISK AREA.

Experienced and professional operators are mostly drawn from the special operations community

Swarming is a counter-tactic to the increased use of on-board security