What’s the cost of piracy in West African waters?

A decade ago, no ship was safe off the coast of Somalia; men armed with machine guns in small boats would target vessels, including aid ships from the World Food Programme.

The menace of piracy continues to plague the region, impeding its security and economic development. It is also increasing in the Gulf of Guinea, an area that covers 11,000 kilometres of coastline from Angola to Senegal.

Fishing boats are sometimes targeted but most attacks are carried out on oil and gas tankers.

The region produces more than 5 million barrels of sweet crude petroleum per day – a vital source of oil and gas for Asia, Europe and the United States. Nigeria is the largest oil producer in the region. And some believe the region will surpass the oil production capacity of the Arabian Gulf by 2020, making the stability of this region and the safety of oil transport a vital strategic concern.

Off the coast of West Africa, the total cost of piracy has been steadily increasing over the last three years, with the total estimated cost at $818m, according to data from the Oceans Beyond Piracy programme.

Research from The London School of Economics indicates that the cost of this piracy to the shipping industry and end consumers is as much as $3.3bn, which would be enough to employ one million Somalis for one year.

But none of these estimates includes the actual human cost – kidnappings. The International Maritime Bureau says that in the first six months of this year, the majority of hostage-taking took place in the Gulf of Guinea.

“There is a serious threat to security of seafarers in the region and this threat has been there for many years,” Michael Howlett, of the International Maritime Bureau, tells Counting the Cost. “Almost 80 percent of crew kidnappings and 95 percent of crews taken hostage this year have occurred in the Gulf of Guinea.”

Howlett explains that crews are typically taken ashore and are held for a period of six to eight weeks, before being released. He says all shipping is vulnerable.

“It’s difficult to compare East Africa with West African piracy. They are two separate phenomena,” says Howlett. “Somalia was a failed state. In the Gulf of Guinea, you have functioning sovereign states. The one constant, however, is that if you are able to detect an approaching suspicious vessel, you then have an opportunity to raise an alarm, to retreat into a citadel, if needed, and this early warning is something that should be applied not just for East and West Africa but universally when it comes to global piracy. So early detection is paramount.”

What’s behind the rising gold price?

From a record high in 2011, gold appears to have been in hibernation. But as trade wars start to damage global economic growth, central banks begin cutting interest rates and the prospect of conflict is an ever-present threat. The precious metal is trading near a six-year high.

The biggest holders of gold are central banks and last year they increased the volume of their holdings to the highest level since the end of the gold standard, nearly half a century ago.

The US has by far the biggest stockpile worth an estimated $350bn and Russia’s holdings have quadrupled over the last decade. But it’s people in India that are believed to hold the most gold, estimated to be worth around $1.1tn.

Is there extra demand for gold or are investors seeking a safe haven?

“We’ve seen a number of factors that have conspired at exactly the right time to drive gold higher. There have been some more recent factors, related to US interest rate cuts, trade issues, uncertainty with respect to Britain and Iran, and ongoing economic uncertainty, but we can actually trace gold’s strong momentum back to the GFC [global financial crisis],” Gavin Wendt, director of Minelife, tells Al Jazeera.

He points out that in 2008 global spending in the wake of the economic downturn, money printing and interest rate cuts to zero and negative levels in some European countries, provided a “strong macro-picture to drive the gold price higher”.

“This is a storm that has been building, probably for the last 10 to 12 years … we are starting to see the real upside in the gold price now,” Wendt explains.

“Rate cuts typically lead to a weakening in the US dollar. And a weaker US dollar typically results in a stronger gold price and vice versa,” Wendt adds.

“While I say that there’s unlikely to be further rate cuts, I think the economic circumstances in the United States will determine that there will be further rate cuts. Certainly President Trump would very much like to see rate cuts and I think this is what we are going to be looking at. So I think there’s going to be further impetus to the price of gold with likely rate cuts to come – if not in the second half of 2019, but I think pushing into 2020 also.”

|| Warbaahinta WidhWidh Online News Desk ||

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