Somalia piracy 'costs up to $30m'

Piracy off the coast of Somalia has cost up to $30m (£17m) in ransoms so far this year, a report has said.

The study by UK think-tank Chatham House said the number of hijack bids had more than doubled to 61 in 2008.

The report said ransoms received were in the range of $500,000 to $2m per ship and that the pirates were becoming more aggressive and assertive.

Pirates are currently demanding $20m (£10.9m) for a Ukrainian ship carrying 33 military tanks bound for Kenya.

'Very serious'

The Chatham House report said: "Total ransom payments for 2008 probably lie in the range of $18 to 30 million. Inflation of ransom demands makes this an ever-more lucrative business."

The danger and cost of piracy meant shipping could be forced to avoid the area and divert around the Cape of Good Hope instead, it added.

"Extra weeks of travel and fuel consumption would add considerably to the cost of transporting goods," the report said.

"At a time when the price of oil is a major concern, anything that could contribute to a further rise in prices must be considered very serious indeed."

The pirates were said to be using portable air-defence systems, rocket-propelled grenades, GPS systems and satellite phones to carry out their activities.

Military presence

The report criticised the lack of international action, despite the presence of US and French military bases in the area and the UN Security Council pledging to take action against the pirates.

The Ukrainian ship, the MV Faina, carrying a cargo of Russian-made T72 tanks and ammunition, has been moored off the coast of Somalia near the town of Hobyo.

The US Navy destroyer USS Howard has made visual contact with the vessel and is monitoring the situation. A Russian warship is on its way to the region to protect the country's citizens and ships.

Somalia has given the go-ahead for foreign powers to use force against the pirates.

Somalia's president Abdullahi Yusuf said in a radio address: "The government has lost patience and now wants to fight pirates with the help of the international community."

French Defence Minister Herve Morin has said at least eight EU countries - Belgium, Cyprus, France, Germany, Lithuania, the Netherlands, Spain and Sweden - have offered ships for a new force to help protect shipping in the area.

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