Mr Sharmarke Ahmed Ismail

Sharmarke Ahmed Ismail From Great Somalia to piracy The cost of Somali piracy Picture by European Naval force Sharmarke Ismail April, 2015 Centre for peace, research and development CEPRAD 1 Sharmarke Ahmed Ismail About the author Sharmarke Ismail is a researcher at CEPRAD; He studied MSc Development Management at the International Development Department, School of government and society-University of Birmingham. His main fields of interest are Peace, Conflict and State fragility. Centre for Peace, Research and Development is a leading advisory firm in the Horn of Africa that formed to help reform and improve institutions and performance. The views expressed in this publication are those of the author(s) and do not necessarily represent those of the CEPRAD. Abstract: Somali piracy threatened the international trade root, which affected the global business. This article provides the main reasons that Somalia became anarchy and gave save heaven to piracy. Secondly, it also examines the motives of Somalia piracy; by addressing causes rather than symptoms. Thirdly, it explains how piracy affects the Somali livelihood and remittances. Therefore, the article argues that piracy damaged the global trade but harmed one of the poorest communities in world. The aim of this article is to contribute to the debate of piracy and the way it hampered Somali people and to unveil how the world neglected Somalia’s state building and now international community is paying the price as piracy cost international economy about $6 to $7 billion per year. Keywords: State failure, piracy, Somalia, Somaliland, cost of Somalia piracy, remittance, and livelihood. Why Somalia failed? It is no doubt that lack of central government is the principal factor that made piracy a safe haven for Somalia coast. It is important to highlight the main reasons that caused Somalia to fail from the civil government to current political situations. The causes for these failures are both internal and external which has contributed to the destruction and on-going failure of the Somalia state (Samatar et al, 2009). The first Somali government formed in 1960 until 1967 was labelled as civic in the time of the cold war. This government was neutral to both East and West conflict, the US was however not content with the Soviet’s military support for Somalia. Between 1967 and 1969 the Somalia government has become pro-western. This led to Russia designed military coup (Samatar et al, 2009). Moreover, the civilian government proved to be inefficient corruption and failed to create any kind of national political culture (Roberg, 2003). The Italian colony of Somalia and the British Protectorate of Somaliland united as a single state in 1960 and became the Somalia Republic (Brook, 2012).Although 2 Sharmarke Ahmed Ismail southern Somalia was under trust territory but British Somaliland was based on clan representation under the colonial government nevertheless, they were united because of the political elite’s quest for unification (Edeko, Sunday E, 2011P:22). Somaliland protectorate and Italian colony of Somalia had two different judicial system, different currencies, different organisation and conditions of service for the army, police and civil service. The government institution both at central and local levels were differently organised and had different powers (Edeko, Sunday E, 2011P:22). Somaliland experienced political isolation in early state building. Moreover, south domination appeared in the first state building when all key political position took by southerners Such as president, prime minster, foreign minister, interior minister, police chief and military chief. This has led that referendum on the constitution held on one year later of the Somalia union on 20 June 1961 was largely refused by majority of the Somaliland districts comparing to the Somalia regions (Walls 2009). Somaliland people felt that Somaliland constitution was not considered. This also led that young British-trained military officer’s attempted coup (Walls, 2009). “The years between 1960 and 1969 in Somalia were marked by “clan party politics”, (Brooks, 2012 P:2). In 1969 General Siad Barre’s armed forces overthrew the democratically elected leader Abdirashid Ali Sharmarke, as he was assassinated by one of his security guards whilst visiting drought stricken Las Anod District (Northern Somalia) (Mohamed, 2009).“In an effort to hold back a rising tide of dissent, the dictatorship attempted to foster a sense of nationalism by “reclaiming” the contiguous, culturally identifying Somali territories. The ensuing war and defeat by Ethiopia over control of the Ogaden populated by ethnic Somalis but ruled by Ethiopia acted rather to hasten the end of the Barre dictatorship”, (Wall and Kibble, 2010 P:38) After Somalia was defeated by Ethiopia in 1978 Siyaad regime increased his cruelty against his own people (Samatar et al, 2009). Bare’s invasion in Ethiopia ended in catastrophe, costing his regime and eventually, Somali people, who are paying the price. Insurgent opposition movements began after 1977 war where Ethiopia had upper hand; and in response to the government’s corruption, autocracy, and abuse of human rights, this has resulted in Civil War, The Somali Nation Movement (SNM) was one of the opposition groups which had much support from the Isaaq clan that dominated the old British Protectorate (Walls and Kibble, 2010). Barr’s ethnic favouritism has created tension between Somali clans (Leeson 2007). Foreign AID The GNP of Somali had 58% of it being covered by foreign aid during mid-1980s (UNDP, 1998, p.57). Foreign aid funded above 70% of the operating budget of the state (Mubarik, 1996). Almost all the education budget of Somalia was funded by this foreign aid before the central government broke down (UNDP, 2001, p 120).In the last 10 years of this government 90% of the total recurrent expenditure of the state was spent on administration and military, whereas the social and economic services consumed only less than 1% of the total GDP (Mubarik, 1997). This was ill-famed government indulged in brutality and corruption. The senior politicians of the state had been involved in looting state-owned firms, defalcating government money and indiscriminate brutal killing of the most vulnerable class of the civilians. One of the 3 Sharmarke Ahmed Ismail worst human rights records that took place in Africa in the 21-century was committed by the regime of Siyad Barre according to the report of the UN development Programme (UNDP, 2001, p 42). The channelling of foreign aid had encountered huge obstacles due to the collapse of the government institutions. Foreign aid which created around $2.8 billion in 1972 to 1989 was the only main source of financial system the Somali people had relied on, and it covered 90% of the capital investment. Therefore Somalia had become the largest recipient of foreign aid in the whole of Africa and second largest in the World after Israel (Reno, 2003). Somali-Ethiopia war It was March 1978 when the Ethiopian leaders have decided to make their own bid for Soviet aid and soon afterwards the Ethiopian counter-attack has been apparent in the territory of Somalia in the aftermath of this decision. The outcome of the offensive attack Barre's government waged on Ethiopia had become apparent decades after the collapse of his regime in 1991. The civil war that took place within Somalia in 1991 was a great opportunity for their enemies, and Ethiopian leaders took advantage of this opportunity to keeping Somalia fragile and chaotic. This was because keeping Somalia in this situation is thought to be fundamental to Ethiopia’s own security and national interests (Reno, 2003). In 1991, when the Soviet Union broke down, “so too did the polarization of the world”. United States not had any more interest for Somalia and so US withdrew their support (Mohamed, 2009). This had enabled the Bare regime to survive and rule. When United States ended all financial aid to the Bare regime, Bare was no longer able to defeat his oppositions (Mohamed, 2009). Somalia turned echoes. In January 1991, Siad Barre's twenty-one-year rule ended. The USC, composed of militants from the Hawiye clan-family, replaced him. The insurgents, however, did not stabilise Mogadishu rather they took revenge, it seemed that they lacked discipline and political agenda.(Mohamed, 2009) Moreover, the US led force of 35000 troops intervention intended to open road for food could get to the poor population. While feeding the poor was successful. Conversely, this intervention lacked of political agenda to rebuild Somali government (Samater, 2009). Thus , US’s humanitarian policy changed to military mission when ordered to arrest Aideed (Mohamed, 2009).Attempting to arrest Aided resulted in the death of 18 American soldiers which ended the withdrawal of the American force (Samatar et al, 2009). The US re-engaged with Somalia after 9/11 under the framework of the so-called ‘war on terror,’ choosing to back certain factions and further militarising the political competition on the ground. In 2005, a coalition of groups calling themselves the Islamic Courts Union (ICU) established security, law and order in most parts of Somalia for the first time in 16 years. Islamphobic neo-conservative elements in the Bush administration used this opportunity to sponsor an Ethiopian invasion of Somalia that was disastrous for both African countries (Gunasekara, 2012). Somalia has suffered on-going conflict which its solution was not succeeded due to the 4 Sharmarke Ahmed Ismail extravagantly funded internationally brokered ‘top down’ (Wall and Kibble, 2010).Today, Somalia, is paying the price for the failure of top-down model. When Somalia gained its independent from the colonial in1960, the though was Somalia will be successful a modern nation-state than other African countries as Somalis shares language, religion, culture , and kinship traditions, after these homogenous society collapse about thirty years it puzzled the whole world (Walls, and Kibble 2010). . New phase of Somali civil war The fear of new phase of Somali civil war could be between central government and regional administration (Balthasar, 2014 P: 9). The conflicts will not only be central and regional administration but conflict between regional administrations is more than likely to happen and more difficult to solve compared to Mogadishu and regional administration. Now, the country is divided into mini states/ autonomous state based on tribal rather geographical. These mini states are a danger to the state building process in Somalia while central government’s involvement is weak. There are three main reasons that theses mini-states are a danger to state building. First, the natural resource of Somalia is managed by tribal mini-states, who are taking advantage to exploit Somali natural resources as these mini state leaders do not want to share with other Somalis, resource distribution in between central government and regional state is a major challenge. Typical example, Kenya’s opened a liaison officer in Kismayo without asking any permission from the FGS, and signed a contract Italy based Eni over a territory that definitely belongs to Somalia (Balthasar, 2014P:8).Secondly, it hampers Somali citizenship, while these mini states are based on tribal, and these will lead to loss of identity and citizenship right. Thirdly, foreign governments can intervene easily and can take advantage by negotiating with head of these mini states without central government definitely and can exploit Somali natural resource as well as to maintain balance. In fact Somalia needs a strong central government, so international community must strongly support the central government. Rebuilding a functioning state of Somalia seems a long way. Understanding motives of Somali piracy Efforts to stem piracy began during ancient times in Crete, Athens, and the island of Rhodes, which were the first to include piracy in their maritime laws. During the middle Ages, pirates were one of several thorns in trade between countries (Rashid, 2009). To address this and other issues, northern cities in Germany and German merchants in the Netherlands, Belgium, Luxembourg, England, and the Baltic banded together to form the Hanseatic League. Eventually, some countries established admiralty courts to enforce maritime laws (Rashid, 2009). 5 Sharmarke Ahmed Ismail For nearly a decade now, Somalia has been synonymous with piracy and lawlessness. However piracy in Somalia constitutes for 15 per cent of the global piracy and theft which took place in the sea for the period of 2005 to 2010. The remaining 85 per cent being accounted for by the Far East (23 per cent), South East Asia (19 per cent), Rest of Africa (17 per cent), Southern Asia (9 per cent), South America (8 per cent) and the Rest of the World (2 per cent). Even within the Continent, piracy in the rest of Africa accounted for only 25 per cent of global incidents: 2 per cent more than Somalia (Odeke, 2011). So why has Somali piracy monopolised global attention? The answer lies in the country’s geographical location as well as the scale of the damage that it causes to the merchant shipping and world trade compared to the mere numerical comparison of reported piracy incidents. For instance, over the same period, more than 250 shipping vessels and 500 crews worth 1.5 billion US dollars of cargos was hijacked because of piracy off the Somali coast alone (Odeke, 2011). Geography is also exacerbated as the vessels which transited in the Suez Canal between the Arabian Peninsula and the Horn of Africa became an easy target for Piracy due to the ships having no armed crew (Kontorovich, 2009). Piracy in Somalia has substantially affected international trade. As 16000 ships pass through the Gulf of Aden each year towards to sues canal in Egypt, carrying myriad Asian goods and oil from Persian Gulf region to Europe and North America (African Development Institute, 2009). The pirates in Somalia have once again turned international attention to the problem of maritime piracy which existed earlier. According to Intentional Maritime Bureau, at least 219 attacks took place in 2010 in the area, 49 of these were successful hijackings. Somali Piracy has caused aggressive attacks to the ships travelling along the Gulf of Aden and Somalia’s east coastline towards the Indian Ocean (Ploch et al , 2011P:4). The increase behind piracy in the Horn of Africa is due to the fact that Somali is a war torn country without any rule of law. With no functioning central government Somalia gave pirates the freedom to operate and the greatest challenge to the region’s security (Ploch et al, 2011P:4, Samatar et al , 2011). What gives save haven to the pirates is lack of law enforcement capacity in Somalia; as pirates hold their hostages captive for as long as the ransom negations lasts which can be up to two months (Ploch et al, 2011P:4). What makes the situation worse is that Somalia’s lack of coastal security allows illegal international fishing and maritime dumping waste, that leads to weaken coastal communities’ economic prospects, allowing economic and political lure for pirates (Ploch et al, 2011P:4, Samatar et al , 2011). Foreign fishing vessels illegally have been exploiting Somali’s marine resources since the 1990s when Sayid government overthrown and Somali state collapsed. Somali coastline line become unprotected and attracted many foreign ships that are equipped high –tech, and they abused the maritime Somali resource that belong to the war-ravaged nation and its people (Dini, n.d). High-tech foreign fishermen 6 Sharmarke Ahmed Ismail harvest more fish than their traditional fisher of Somali counterparts. This, as predicted, has led to high tensions between Somali fishermen and foreign fishermen. It was obvious that foreign fishermen have taken advantage the political crisis of Somali and the absence of national navy in Somali (Dini, n.d). This radically affected the local Somali fishermen livelihoods as the inability to catch fish and sell the surplus, resulted in local families not being able to purchase food. And this led many Somali fishermen to find another profession that would earn a living wage in the war-torn country (Beloff, 2013). Moreover, many Somalis experienced health concerns as a result of illegally dumped harmful waste that began washing up on the local shore of Puntland (Abdullahi. 2008). These health problems exacerbated the already dire economic situation, increasing the lure of piracy as means for survival (Beloff, 2013 P:48). Moreover, foreign fishermen were deliberately destroyed fishing nets of Somali local fishermen and Somali fishermen become hosted by foreign fishermen whenever they went out to fish in their own country’s territory (Dini, n.d). Additionally, foreign fishing vessels were describes as enemy entities that are use intimidation against the local Somali fishermen. This result the ability Somali fishermen to fish and earn their livelihood. This caused that Somali fishermen to stop foreign fishing vessels from coming Somalia water as their basic livelihoods is endangered by a larger foreign fisher fleets (Dini, n.d). Revenge against the illegal fishing activities of the foreign fishing vessels was believed as not only suitable action but also the only ways available to these local fishermen to protect their livelihoods and the marine resources belonging to Somali and its people (Dini, nd). Foreign fishing vessels were freely employs a variety of unsustainable practices such as “nets with very small mesh sizes and sophisticated underwater system” that destroyed Somalia’s coastal fisheries (Lucus, 2013).In between 1991 and 1999, Ocean Training and Promotion estimates that more than hundreds foreign vessels involved in illegal fishing practice in Somali coast. The destructive effects of foreign fishing ships have been recorded not only in deep fish stocks, such tuna, but also inshore catches, like lobster (Lucus, 2013). An industrial fishing trawler from European African Asian that illegally exploits Somali water, which is contains African’s third richest fisheries (Samatar et al, 2011). Numerous estimations indicate that some 700 foreign vessels loot Somali fish worth anywhere from 150 million to 450 million per annum (Samatar et al, 2011). The largest foreigner’s vessels that fish the Somali fishes illegally off the Somali coast were Yemeni fishermen, who also demolish and steal Somali fishing nets in order to fish or catch more fish (Beloff, 2013).The foreign fishing vessels is not only Yemen but France, japan, Kenya, Korea, Pakistan, Saudi Arabia, Spain, Srilanka, Taiwan(EDEKO, Sunday E, 2011). These countries mainly fished large deep fish area including tuna swordfish, and Spanish mackerel and also sardines, anchovies and mackerel (EDEKO, Sunday E, 2011). In the last 15 years Somali fishing industry has collapsed due to the heavily fished by these countries (Middleton, 2008). 7 Sharmarke Ahmed Ismail Although, there is no studies about the effects of illegal foreign fishing effect on the population after 1991, but there is signs that several important species have suffered sustainable decline (Edeko, Sunday E, 2011). For instance, in Puntland 80 per cent of the lobsters stock is believed to have vanished and in some areas number of plentiful shark species have totally extinct (Edeko, Sunday E, 2011). For example, Mudug fishermen have been the most vulnerable from foreign exploitation in their coastal fishing ground (Weir, 2009). In order to Somali fishermen combat this illegal fishing means, so then Somali fishermen uses small boated and basic weapons, to capture the foreign fisher men and not allow them to go back (Beloff, 2013).Foreign fishermen will only release as long as they paid a considerable fine, thus it is believable to assume that piracy in the region began with Somali fishermen who threatened to attack foreign sailors if they did not leave their water (Beloff, 2013). Adapted by Emmanuel N. Sone December 2010 Somalia—Piracy Trends 2004–2009. For those who once made a living from fishing, have now turned to piracy as they see this is the only way they could earn a living (Bowden, 2011). However, latterly, the obvious motive of most pirate group is to make a huge profit “pirate economy” and this has grown considerably in the past two years (Ploch et al, 2011P:4). Furthermore, a lot of people do not believe the reason for piracy is due to illegal fishing, such as veteran and African journalist Peter Eichstaedt who believes piracy does not start because of illegal fishing but from the interests of those who are involved in it and those who benefit from it (Beloff, 2013).Others believe it is because of poverty spreading and lack of state actors who do not have the skills to organise a stable economic life which has turned fishermen to illegal activities so they can survive (Scholvin 2009: 1). Somali pirates have constantly claimed that there were forced into piracy by the demise of fishing and the practice of dumping toxic waste at sea , but it is not the 8 Sharmarke Ahmed Ismail main reason as only small fraction of traditional fishermen turned to piracy (D. Duda& T. Szubrycht, 2009). Defining Piracy “The 1982 UN Convention of the Law of the Sea (UNCLOS) defines maritime piracy as acts of violence carried out for personal gain “against a ship, aircraft, persons or property in a place outside the Jurisdiction of any state.” (Lucas, 2012P:56).Maritime piracy is defined as a crime committed aboard a ship or an aircraft, by a person or group of people that are not employed by a government entity. (EDEKO, Sunday E , 2011 p:22). Who are the Somali pirates? The three main types of pirates after Somalia collapsed from 1991 are first, “resources pirates” they included companies from , Asia, Europe and Africa vessels that have exploited Somali fish chaotically , who take advantage of destruction of Somali government.Secondly, “defensive pirates”, former government coast guard determined to combat the predators before local fishermen joined the fight as they see that fishermen could not able to tackle this problem .This group intention were to protect their marine resource and later joined by the fisher men (Samatar el al 2011).Finally, “ransom pirates”, criminal that imitated the defensive pirates as they argued to be protecting the Somali marine resource and water, however, that vial was no longer able to cover up their true character and motivation, which was purely in hunting of ransom (Samatar el al 2011). As they crossed significant area of the western reaches of the Indian Ocean well beyond Somali waters compared to the defensive pirates (Samatar el al 2011). These are the pirates that are attracted the media as they earn about 35 million annually in exchange of their victims (Samatar el al 2011). Pirates are made from three different types’ organised levels. These are 1. The brains of the operation that have experience at sea. These are usually former fishermen. 2. Former militia men who may have took part in the civil war. 3. Those with technical knowledge such as computers and hi tech equipment such as satellite phone, GPSs and military hardware which pirates need to operate (Hunter, 2008, EDEKO, Sunday E, 2011) . 9 Sharmarke Ahmed Ismail The cost of Somali piracy Effect of Somali livelihood, remittances, regional and global economy Effect of livelihoodAround 40 per cent of the attacks of piracy were on vessels carrying large bulk goods and general cargo. The majority of the vessels that come under attack carry the world food supplies such as rice and grain. The attacks on these vessels have a huge consequence on the price of food because of cargos being delayed or worse lost (Bowden, 2010). Inflation of piracy can be classified into two where ships do not want to go Somali coast and artificial inflation caused by the pirates in the region they based on. In countries such as Somalia the price of food and humanitarian impact has been affected by inflation as a result of piracy as nearly half the food consumed in Somalia is imported. Piracy has increased the cost of the shipping industry as large ransom payments are usually made as well as damaged caused to ships and cargoes. There is also a delay in the delivery of cargoes and increasing maritime insurance premium rates, as a result it is the consumers who pay the price of these costs (Ploch, 2011). These extra costs have had a macroeconomic effect on the region’s trade and the tourism as well as the fishing industry and the price of food (Bowden, 2010). A report recently carried out by UNCTAD, the cost of insurance premium for cargoes that travel via the Gulf has increased from 0-0.5% to 0.05-0.175 % in May 2008.The payments for kidnap and ransom have allegedly increased as much as 1,000%. The extra costs as a result of piracy have been passed on to the consumers as shipping companies recover their losses by increasing the price consumers pay for the goods (Mbekeani and Ncube, 2011). In 2010, the main concern was that increase in food price in places like Mozambique and Somalia could lead to social unrest, riots and potential conflict as a result of quick increase in food price since November 2009 (Bowden, 2010). The Somalis who live onshore where flood of pirate money has fuelled price inflation which has sent the cost of food and other communities increased, while the use of drugs such Khat and alcohol has massively increased ( Murphy, 2012).These transactions between pirates and local ports it is no doubt that price of goods are drastically increase and inflation does affect the value of good and service for the coastal cities, and this artificial inflation is specifically effect those live in the coast, but not for the region as whole (Beloff, 2013). Economist believes that inflation stem from a variety source in the region of Horn Africa; the in prices and money supply to the cities does not cause the price increase and the reasons behind the rise of price of food, security, bribes etc. Arise from ships not want to land and unload their goods in Somalia because of the fear that they will be hijacked by the pirates (Gilpin, 2009). Hence, the aggregate demand of Somali in the horn Africa has not changed but what is has changed is aggregate supply has dramatically declined. Even though it can be ignored the artificial inflation by merchants in the pirate cities, the overall Somali economy is damaging from decline in aggregate supply of goods from around the world (Gilpin, 2009). 10 Sharmarke Ahmed Ismail Life has become very expensive for those living in the regions where pirates operate. This is due to the fact piracy has brought large amounts of US dollars into the economy and this resulted in fluctuation in exchange rates (Hunter, 2008). “It is no doubt that number of local business benefit, but the piracy asset bubble and visible expenditure change of the models of the pirate gangs suggesting that this economy activity is unlikely to be sustainable”(Gilpin, 2009 P:). Piracy discouraged domestic and foreign investors because of “impunity and crime” (Gilpin, 2009). There is a rumour which indicates piracy has caused property prices to rise sharply between 2007 and 2008 (Gilpin, 2009).A significant boom in construction has been seen in many areas. In areas where piracy is more intense, huge rates of inflation can be seen. This is mainly due to large amounts of US dollars injected into the economy (Hunter 2008).There is no doubt that pirates are amongst the wealthiest in the community and there is hearsay that they do support the local economy but only a small amount of this reward makes its way back into the local economy (Anderson, n,d). Somalia has fallen victim to piracy as the money earned from pirates goes back to the Somali economy through legal trade exchange of goods, unfortunately, the majority of these money which is secured through piracy, is not being invested in Somalia and worst still, it is not invested in the Horn of Africa (Anderson, n,d).“The international architecture of the laundering of the money delivered for ransom remains hazy, but it is suspected that there are connections to members of the Somali diasporas, notably in Dubai and Doha” (Anderson, n,d). In fact, Somali piracy may bring in 50% more than the livestock exports which are officially the country’s biggest earner of foreign exchange (J. Peter Pham, 2010).Moreover, piracy damaged non crime economy as piracy business dominated (Gilpin, 2009). Generally, piracy supporting Puntland development is really disappointing. And community witnessed there is no real increase in their economies development based on real wages. However, piracy contributed food price to rise in town predominantly used by pirates and the local wages have decreased. The people who are exclusively benefit economically are the pirates and those who funds, clan leader, warlords and the bribed Puntland government workers. Additionally, their benefit does not support the local people in Puntland who are really suffering from the piracy trade (Beloff, 2013). Effect of remittances Research examined how piracy affected Somali Diasporas found that piracy had negative impact on Somali diaspora. First, as piracy caused inflation, displacement and fluctuation to the Somali shilling, this had an impact on diasporas both Europe and East Africa particularly Kenya (Ismail, 2013). As the price of the commodity has risen the Somali people were unable to buy essential such food. Diasporas increased their monthly remittance to the families and friends to cover the 11 Sharmarke Ahmed Ismail extra price caused by piracy activities. This has affected Diasporas income as they increased their monthly remittance to their family. This had affected their lifestyles by shortening their holidays and other leisure’s due to the problem caused by the piracy (Ismail, 2013). Secondly, piracy created new dependency, as many fishers lost their livelihood as the sea became a dangerous place due to the piracy activities. Many feared they may be mistaken for pirates. Some fishermen even turn to piracy as a way of earning a living. This had an effect on Somali diaspora. Many Diasporas claims that they send money to support their families and friends keep them away from joining piracy (Ismail, 2013). Thirdly, Diasporas in Kenya claimed that due to the security threat of the piracy they send more remittance so relatives can move to areas not affected by piracy (Ismail, 2013). Remittance is important to the Somali livelihood and economic generation that provides 40 per cent of the Somali populations about 3.8 million people (Tran, 2012). Economic cost of the piracy and the Impact of the region The cost of Martine piracy to global economy in 2012 is 6.1 billion although it fell by 12.6% from around 7 billion in 2011.Figure 1 illustrates the cost of the piracy 2012 and the reasons of the cost including re-routing, security equipment, increased speed, labour prosecution and imprisonment, counter-piracy organisations, ransom and recovery, and insurance. However, despite the fall of the pirates’ attacks, the study found that 99% of the cost of piracy is still incurred at sea for short –term mitigation strategies. So it is apparent that international community are not investing long term solution for a Somalia ashore (Bellish, 2013). In 2013, the cost of Somalia piracy to the global economy fell by half at only 3.2bn due to effort of international community and shipping industry have noticeably reduced the threat of Somali piracy (Madsen et al 2013).However, small amount of money spent on Somali piracy has been used for long term solution onshore (Madsen et al 2013). All in all, Kenya has had its fair share of economic pain from the impact of maritime piracy. Figures calculated by Inchcape Shipping Services which is based in the Horn of Africa has estimated on four occasions that the expense of the shipping industry in Kenya alone is around 300-400 million US dollars annually (Otto, 2012). Import and export costs has significantly increased because of piracy additional charge which has to be included in shipping tariffs as insurance companies having to pump up their charges to justify the risks associated with “traversing in pirate invested waters” (Otto , 2012).For example, a container imports at 330 000 teu (twenty foot equivalent units) in 2011, which is estimated at a cost of $200-300 per container because of piracy surcharge, totalling to an extra expense of almost $100 million. However, the negative effects to the Kenyan tourism industry are linked to the activities of the pirates cruise business (Otto, 2012). 12 Sharmarke Ahmed Ismail (Bellish,2013) Figure 1 More than 35 cruises arrived in Kenyan ports in 2008 and many hope this number would increase to 50. Unfortunately from 2008 onwards the number of ships operating in Kenyan waters has dropped to zero (Otto, 2012). Some people believe that Kenya bears the economic impact of the Somali piracy. Kenyan Shippers Council estimate the cost of imports has increased by $23.8million and exports has increased by $9.8 million per month. The consumers are the paying the price of these costs (Bowden, 2010). Tourists visiting Kenya particularly Mombasa has fallen by 95% between the months January and April 2010, as estimated by Kenya Tourist board. Similar happen to the Seychelles as their tourism industry has been severely damaged by the piracy, particularly for activities such as boat charter (Bowden, 2010). In some area there is construction boom due to the huge money injected dollar into the economy which also led inflation in Somalia (Maouche, 2010). Moreover, piracy has affect Kenya in many ways as it promoted the construction and created a safe haven to Somalis in both Nairobi and Mombasa suburbs (Otto, 2012).As pirates are investing Kenya, particularly property this produced property to rice out of the reach of locals so benefit of the Kenya as the result of piracy is ambiguous (Otto, 2012).This also led inflationary effect on the market (Otto, 2012). Not only inflation but, In Kenya, piracy has threaten Kenya’s tourism industry and it led a reduction of cruise ships as few ships dock in Mombasa (Mbekeani and Ncube, 2011) 13 Sharmarke Ahmed Ismail Figure 2 (Bellish, 2012) Macroeconomic cost to selected countries Table1 Country Egypt Kenya Yemen Nigeria Seychelles Total Macro Costs Indicated loss per year $642 million $414 million $150 million $42 million $6 million $1.25 billion (Bowden, 2010) In summary, early state building of Somalia which was based on great Somalia dream in 1960 when Somaliland protectorate united Italian colony is the main pillar of the Somali collapse that has produced Djibouti to choose not to unite with the two. Moreover civilian government were marked as corruption, nepotism and inefficient. Worst still, the military regime was worse than the civilian government, with poor human right, divide and rule and corruption. 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