If you were unable to attend our 2010 History Conference, Piracy on the High Seas: Can History Help Defeat Present-Day Pirates?, you missed a thought-provoking speech by Stephen M. Carmel. Mr. Carmel is Senior Vice President, Maersk Line, Limited. He is responsible for all technical and operating activities at MLL. He previously held positions in operations and finance for U.S. Marine Management, Inc. and MLL.
Steve began his career sailing as a deck officer and Master primarily on tankers for Maritime Overseas Corp. and the Military Sealift Command.
In 1979 Steve graduated from the U.S. Merchant Marine Academy and holds a M.A. in Economics and a M.B.A. from Old Dominion University. Steve is currently pursuing a Ph.D. with an emphasis in International Political Economy. He is also a Certified Management Accountant (CMA) and is Certified in Financial Management (CFM). Steve is also on the Chief of Naval Operations Executive Panel (N00K).
Good afternoon distinguished guests, Ladies and Gentlemen. Thank you for inviting me to offer my views on the current forms of piracy in a historical context. I think this is a great topic because trying to understand modern day piracy, and especially Somali piracy, by looking at the past can lead to a distorted view of what’s happening off the Horn of Africa now. It is very possible to learn the wrong lessons from history and distorted perspectives lead to distorted policy. It seems to be very popular amongst the press and talking heads to compare, at least on a high level, today’s situation off the coast of Somalia with that of the Barbary pirates during the tenure of Thomas Jefferson. The quote, often attributed to Jefferson, of “millions for defense, not a penny for tribute” is usually tossed out with gusto during this comparison. The general thrust of that comparison is that the US knew how to take care of business back then, unlike now where we’re letting the pirates win. But, as with much else about equating Somali pirates to those of Barbary, attributing that quote to Jefferson is wrong. Thomas Jefferson did not say that, at least not originally. Charles Pinckney said it in 1798, during the Presidency of John Adams, in reaction to a French demand for what amounted to tribute after they had seized 300 or so US merchant ships – in what became known to history as the XYZ affair. The quasi war with France is what prompted Adams to approach congress about funding a Navy and completing the three ships remaining of the 6 ordered under the Naval Act of 1794. So since one of the central rallying cries of the “Somalia is a modern day Barbary” crowd is suspect, I’d like to explore that comparison a little more, and as many of you that know me and my somewhat contrarian outlook on this whole topic would expect, I find that comparison wanting.
So, what exactly was the situation regarding the Barbary pirates. Since this is a history conference you’ll no doubt get a detailed discussion of that topic from others more qualified than me. In fact I tread into this area with some trepidation given the stature of the real historians in the room. I am an ex-ships master and current participant in international trade professionally, and an economist academically – none of which qualifies me as a historian. So it is with all due respect to Dr. Murphy, Dr. Lunsford, and the other real historians with us today that I’ll make a stab at it and cover some high level issues that I think are worthwhile and have relevance to policy discussions.
First we have the overall position of the US in world affairs. Back then the US was a fledgling nation whose primary concern was survival. We were at odds with the dominate powers in the world, especially France and Britain. As I noted, the French were busier seizing American merchant ships than were the pirates, and demanding tribute to stop the practice. The French actually seized about 3 times more US flag ships than we currently have in our entire foreign going fleet. Overall the US lost over 600 merchant men to all actors of all stripes. Our relationship with Britain was not good to say the least, with the English kicking the US out of the Caribbean / US trade, the dominate trade of the US merchant marine then, and of course our trade with most of Europe was difficult at best. That is why the US headed to the Mediterranean to begin with – we had few other good options for trade and during our time as a British colony we had developed a very profitable trade with Med countries under the protection of the British (including the payment of tribute) so it was a logical place to look.
Now, of course, we are the dominate global player with the largest economy in the world by a long shot. Contrary to the claims of hand wringing pessimists our economy has not hollowed out and we remain the world’s largest manufacturer by a wide margin (it is true manufacturing employment has gone down but that’s because productivity is increasing – doing more with less). We are the world’s third largest exporter behind China and Germany, but we’re third only because our internal market is so large only about 1% of US businesses even view the export market as a target. Unlike the time of Jefferson, where the Med was a significant source of trade, we now do not lack for trade partners anywhere and compete globally. Comparatively little of the flow of US international commerce actually moves through the Somali basin / Gulf of Aden so unlike the time of the Barbary pirates, when having lost access to the Caribbean compliments of the British, the majority of our trade was through the pirates primary op area, today very little of our foreign commerce is through pirate high risk areas. Only about 13% of US oil imports come out of the Persian Gulf region for example, and the oil that does come from that area goes around the Cape, not through Suez simply because that is the best way to do it, not because of pirates. It is interesting to note by the way, that oil markets, normally very sensitive to potential supply disruptions, do not even register a hiccup when a crude tanker is hijacked. So while US crude supplies are not threatened by pirates, it would appear the commodity markets for crude do not consider piracy a threat to the global supply, hence price of oil, either, and commodity markets are excellent leading indicators for where risk is developing in the physical world. Asia is by far the US’s largest trading partner by sea for everything else, and the overwhelming majority of that stuff , along the lines of 80%, goes through the US or Canadian West Coast so goes no where near Somali pirate territory. What foreign commerce of the US that does move through that region does so on ships that are simply too big and too fast for Somali pirates and therefore not at risk– I’ll return to the technology issue in a minute. Our other major trading partner is Europe, and that trade of course is not at risk at all.
The Barbary pirates had a vast and active business, capturing hundreds if not thousands of merchant vessels of all flags. In 1794 alone 11 US vessels with 115 US citizen crew were taken by the pirates prompting the Naval Act of 1794 that started construction of the post-revolutionary war Navy. Churches in the New England area used to read off the names of those taken captive that week at Sunday service. The Barbary pirates, being good business men, had a more or less established rate for ransom, roughly $4000 per person. That rate today would be roughly $1.5 million per person, meaning a total ship ransom in the $29 million range, not the $2.1 million the Somali’s averaged in 2009. The US even lost a US Navy frigate – The Philadelphia – with her captain and crew to the pirates. Remember at the point the US Navy consisted of 6 so that was a significant loss – about 17% of the entire US Navy. Ransom payments and tribute by 1800 were in the $1 million annually range, about 20% of the total federal budget. A similar amount of the federal budget now would be about three quarters of a trillion dollars. Clearly the Barbary pirates were having a large and direct effect on both US citizens and the federal pocket book. If anyone or anything were inflicting three quarters of a trillion dollars of damage on the US economy now I suspect that our reaction would be vigorous and uncompromising. But that is not the case today. The Somali pirates have hijacked exactly zero US flag ships – remembering in the Alabama event the crew was able to resolve the piracy situation on their own. Exactly one US citizen has been held captive for a few days across the entire span of Somali pirate activity. No ransom of any sort has ever been paid for any American citizen to any Somali pirate. So from an activity level perspective as it applies to US interests – the Barbary pirates were devastating, 20% of the federal budget is a big number. The Somali pirates don’t even qualify as an irritant. It’s hard to see how you can say the Somali pirates are winning by this comparison.
Back during the time of the Barbary pirates a State’s flag merchant fleet was very much tied to its ability to trade, being linked directly to overall foreign commerce. While Jefferson is wrongly credited with the line about tribute, he did say “The marketing of our productions will be at the mercy of any nation which has possessed itself exclusively of the means of carrying them; and our policy may be influenced by those who command our commerce”. “It is as a resource of defense that our navigation will admit neither neglect nor forbearance. The carriage of our commodities if once established in another channel, cannot be resumed in the moment we may desire”. Back then it was viewed as an economic security imperative to have a strong merchant fleet – note at the opening I mentioned that the US had over 600 ships seized by the British and French as well as Barbary pirates during that period, a number 6 times the size of our entire current foreign going fleet – the US actually had one of the largest merchant fleets in the world back then. So not only were the Barbary pirates a serious threat to our foreign commerce, the exposure of the US flag, hence US citizens and capital, was far greater since we actually had a merchant marine to hold at risk. US flag ships also carried roughly 90% of the country’s foreign commerce so had a significant role in the country’s economic security. Now our foreign commerce is carried on foreign flag ships with only about 2% or less moving on US flag. We are completely dependent on foreign flag tankers for our imported oil as there are no US flag tankers, either crude or product, that are in the true foreign commerce of the US and the same goes for bulkers for export of our agricultural products – the US being a global leader in this trade. Our total US flag foreign going fleet is now down to about 100 and most of those are not really in the foreign commerce of the US – there is a big difference between foreign going ships and ships in foreign commerce and I’ll expand on that in a minute. If we were to have a merchant fleet now comparable to that during the days of the Barbary pirates it would number in the thousands. What little foreign commerce that is on US flag ships is moving on ships that exist primarily by virtue of military subsidy and our reliance on foreign flag ships would be absolute absent that subsidy, although for practical purposes we are actually at that point now. The few US flag ships that carry our foreign commerce in that area are large fast containerships not vulnerable to pirates. The US flag ships that work in that area that are vulnerable to pirate attack, such as the Maersk Alabama, are smaller, low freeboard, slow speed, and are all engaged in the food aid business carrying cargo reserved for US flag under cargo preference laws. They are most certainly not in the foreign commerce of the US, food aid being an extension of US foreign policy. Therefore, not only is US foreign commerce not under threat from piracy, the actual threat to US flag ships, hence US citizens, is also quite minimal simply because there are so few US flag ships left in international trade.
So from the perspective of direct consequence to US interests, and particularly trade, the Barbary pirates represented an existential threat to the struggling US. The Somali pirates are irrelevant. They do not in any way impact the foreign commerce of the globally dominate US, do not directly cost the US economy a cent, and directly threaten few US citizen seaman, and to the extent US seaman are at risk from pirates, it is due to US foreign policy and cargo preference laws, not considerations of foreign commerce critical to US economic well being.
Moving to a global system effect there is no comparison as well. First many who like to make this comparison note that the motivation between Barbary pirates and Somali pirates, the taking of hostages, is the same. I don’t think that’s quite true. The Somali pirates are a pure hostage for ransom crowd. That means among other things that the hostages always get released and generally are not horribly mistreated, at least as compared to the treatment Barbary pirates subjected their captives to. I am not making light of the experience of those held hostage by Somali pirates – I am simply noting that the treatment of hostages at the hands of Barbary pirates was infinitely worse. Barbary pirates were motivated by a very different business model than the Somali pirates. The primary business model of Barbary pirates was not so much hostage for ransom, as it is for the Somali’s, it was slavery. The hostages taken by the Barbary pirates, almost totally Europeans and Americans, were normally used as slaves either directly by the pirates themselves for hard labor under horrendous conditions such as manning oars on galleys, or sold in the North African slave market. That means that most suffered horribly and relatively few ever made it home. The scale is also different in that the Barbary pirates took somewhere between 1 and 1.5 million hostages over their several century run. More over Barbary pirates took hostages not only from the thousands of ships they pirated, but conducted raids ashore throughout the Med, sometimes in Europe and even as far north as Iceland. Somali pirates would need to be taking 5000 hostages a year to meet that relative level of activity on a pure absolute numbers basis, and many times more than that to match the system level effect the Barbary pirates had. But by contrast the Somali pirates actually pirated, according to MIB figures, 48 ships out of the roughly 33,000 that passed through that area in 2009, taking 846 hostages for ransom – none American – and have, without fail, freed all of them as ransom negotiations conclude. Somali pirates restrict their activities to ships and have never conducted a coastal raid. Barbary pirates were successful most of the time in their attacks while Somali pirates fail in their attacks most of the time, having a success rate of around 25%, largely due to best practices by the merchant ships themselves. Barbary pirates represented a real threat to general commerce in their region of operation; successfully pirated a significant amount of merchant tonnage working in that area and every single merchantman was vulnerable to attack by Barbary pirates. Somali pirates by contrast have attacked less than one third of one percent of traffic in their area of operation, and most ships of the type that carry international commerce are actually not vulnerable to Somali pirates at all. Therefore from a system effect perspective, Barbary pirates represented a true international threat to general economic well being and trade as well as the lives millions, ashore and at sea. For the Somalia case, international trade proceeds apace uninhibited by Somali pirates and therefore piracy has as yet not had a system wide impact. I think this is an important point to emphasize. I am not saying there have not been significant effects on individual businesses. Have some smaller or thinly capitalized companies been hurt or even gone out of business because of costs associated with a pirate incident? Yes. Has the overall system been impaired in any way? NO. The number $16 billion was thrown out this morning as the total cost on the world economy of Somali piracy. While I would certainly take serious issue with that number, we’ll assume for a minute its true. My gut reaction- and it is a gut reaction, I have not research it- is that $16 billion represents the value of cargo that flows through that area every hour, a rounding error considering the total value of maritime trade, so is in reality nothing the system could not adapt to. And it is the overall stability and efficiency of the system that matters, not individual companies and the system is what we should be about protecting. The international military community can not be in the business of protecting the financial health of every individual company. Individual companies are responsible for that. The international community does need to be concerned with overall system stability, something Somali pirates have not been able to upset.
At this point it’s worth noting 2 things tangential to that last discussion. First there is a difference between Tribute – what was paid in the Barbary case, and ransom, what is paid now but those that make the comparison, particularly those armed with the quote about paying for defense but not tribute, don’t seem to get that. Tribute and ransom are not remotely the same thing. In the former tribute is something a sovereign state pays to another as a form of submission and in return for some sort of security against attack by the dominate party. In some instances it actually had a positive impact as when the British and French paid tribute to the Barbary pirates in part as a way to contain competition for trade in the Med by those that could not afford to pay (like the US). Ransom on the other hand is simply a post event economic exchange. It does not include any sort of general acceptance of a condition of submission, and is now a’days paid by private parties, not the government. I am very much in favor of paying ransom when that is the most expedient method of securing the release of a crew in those cases when anti-piracy efforts have failed. I am not in favor of paying tribute. Second, when it comes to paying ransom, a topic in itself that could be the focus of a conference, I believe removing the option to pay is a mistake and one reason is the difference in motivation noted a little while ago. At the moment, Somali pirates are in the hostage for ransom business, meaning hostages make it home. Should the “ransom” part of that model be removed, there is nothing to keep the Somali pirates from actually beginning to do what they stand accused of, adopting pages from the Barbary play book, and moving into the hostage for slavery business among other unpleasant alternatives to the business model they have now. There is of course a very active market in human trafficking – the politically correct term we use for slavery these days – in Africa. While not as rewarding and requiring a more elaborate infrastructure than the ransom business they are in now so they would not be as well off, pirates would still be paid. Hostages, on the other had, would be infinitely worse off as their chances of ever making it home would be greatly diminished, they would suffer tremendously, and those deemed unfit for the slave market simply killed. It is also possible I suppose for the pirates to sell hostages to Islamist militants who would use them for political purposes vice the neater economic purpose now in place. It is worth remembering that there are far worse business models the Somali pirates could adopt which we need to consider when thinking about blowing up the hostage for ransom model by disallowing payment of ransom without having an alternate model in place of our own other than some naive hope the pirates will stop being pirates.
So, at this point we’ve established that Barbary pirates were an existential threat to the US and a threat in general to the international system, having widespread effect. The Somali pirates represent no threat what so ever to the flow of the foreign commerce of the US nor have any effect of consequence on the global system of trade.
Let’s shift from comparing effects to comparing capabilities. The Barbary pirates were outfitted with ships that were as big or bigger, as fast or faster, and manned by more men that their merchant prey. They were even a match for the naval vessels sent to take them on, something that could hardly be said for a Somali pirate today. This is why they virtually always won when attacking a merchant target even though there were not then in existence the convoluted international laws and regulations that now impact the manner in which a merchantman may defend himself. Now the merchant ships are larger, faster, and manned by more men, although more constrained in their potential for self-protection. In truth however, not many ships in international trade really need much as, unlike a merchantman in 1800, speed and freeboard now provide such overwhelming advantage to the merchant that most are not vulnerable to attack. Comparing an attack by a Barbary pirate, launched from a larger, faster and better manned ship to a Somali pirate attack, launched from a skiff by 4 guys doesn’t seem to me to make sense.
Barbary pirates were operating at the behest of the wealthy and powerful rulers of the North African coast, which were linked to, or allied with, the larger and more powerful Ottoman Empire. So they weren’t really pirates at all, they were privateers. Well organized, well financed agents of the local authority acting in a way to advance a larger political agenda. And being wealthy, advanced cultures, they also had something to loose, something to hold at risk ashore, unlike the desperately poor Somali’s. Somali pirates are, as has been said many times, the result of no government at all. They certainly are not organized into some sort of quasi-state operation, instead being driven by clan leadership on a small scale with, at least in comparison to Barbary pirates, minimal funding. In some ways this might make the situation today more difficult as, unlike the Barbary pirates, there is nothing physically we can hold at risk, and no ultimate leader with which one can negotiate, conclude a peace agreement, or intimidate into surrendering on behalf of the pirates.
So, Somali pirates are not a direct threat to US national interests, nor a significant threat to the international system of commerce. Somali pirates are also far less well funded, and far less capable of evolving into a large threat than were the Barbary pirates. This is, in my mind, why the international community has not devoted the same level of effort to dealing with them as did a group of States back in the Barbary days, when the British, Dutch, and French, responding to a genuine threat to their overall economic well being, also ultimately did a fair chunk of the work in ending their activities. Clearly a comparison of Barbary pirates to Somali pirates is not as helpful as a basis for formulating policy as many would like to think.
So this brings us to the final comparison between now and then - and a question that is central to correct policy choices today – “what is the US national interest here that justifies the large expense of keeping US naval ships active in the Anti-piracy mission”. In the days of the Barbary pirates the national interest was clear and compelling – the Barbary pirates represented a significant if not existential threat to the country, threatening the lives of thousands of Americans and costing huge sums of national treasure. Today the answer to that question is much harder to come up with as none of the above applies to Somalia. One argument that comes to mind is that while the foreign commerce of the US is not at risk, there are in fact some US citizens on US flag ships that are – again primarily those ships in the food aid business. They are there as a result of US foreign policy and US law, not as a result of the motivations of foreign commerce and trade. If it is an element of foreign policy that we insert US flag ships and US citizens where they otherwise would not naturally be then it should be incumbent on that same policy to find a way to protect them, no less so than the military accepting the task of protecting, and when necessary rescuing, aid workers as part of that hard mission in Afghanistan. But perhaps the best answer to the “national interest” question goes back to the beginning of my remarks and the dominate role the US now plays in the world order. The US properly has a large role in maintaining the global order which is played out by rules largely written by the US on a field designed by the US and from which the US benefits enormously. In that case though, the real issue is stability in Somalia, and by extension East Africa. There can be no doubt that piracy off the Horn of Africa represents a large threat to regional trade in Africa and therefore overall stability in that area. In fact one argument I often hear about the need to deal effectively with pirates, the potential for it to be funding terrorists, has nothing to do with maritime commerce and again is a stability and order ashore issue. Stability in Africa is of course not a piracy mission, piracy being but a symptom as has been repeated ad nauseum, usually by people who in the next breath note that it is too big a problem and promptly advocate policy treating piracy as the disease, ignoring the underlying dysfunction. Nor is it primarily a naval mission. The national interest related to piracy, and the resulting naval mission, is only valid as a national interest if it is part of a larger strategy of dealing with stability in East Africa – our role as a guarantor of the international order. If we unwilling to admit to such a role and take it on with purpose, which so far we have not, then in the end I myself indeed find it difficult to articulate what exactly our national interest is as it is not a clear as it would have been in the case of the Barbary pirates. We often look to history, as we are today, for help in answering the question “how?” But perhaps the first question we should be looking for help in answering is “why?”