Wednesday, April 21, 2010

Confusion About New U.S. Counter-Piracy Policy

Last week's decision by the American administration to go after the financial assets acquired by those involved with Somali piracy has led to some confusion about how the government would actually do so and what the wider repercussions of this policy might mean for the commercial shipping industry. The concerns are based on the jurisdictional aspects of U.S. law and just how far the long arm of offices like the Treasury or Justice Departments can be extended. For instance, if monies believed to belong to a suspected pirate are tracked to a bank account in a certain third party nation, can they be seized or frozen? Hard to say, given the opaque nature of international banking. Of course, should some of those assets from suspected criminal activities end up in a financial institution that falls under U.S. regulations, that's a different story.

While the details of how Washington intends to proceed have yet to be clarified, there are already worries about what the ramifications might be for the shipping industry. As AP reports, one of the concerns is whether firms with U.S. interests might be able to pay ransoms to pirate gangs for the release of crew members and vessels taken hostage. Some observers worry that the vagueness in the Executive Order could lead to the prosecution of individuals who pay off pirates in order to free hostages, though the report does quote a Treasury Department official who said they were not interested in actually doing so.

Adam Szubin, the director of the Office of Foreign Assets Control with the Department, told AP, "We are targeting only those individuals and entities that freely choose to support acts of piracy or armed robbery at sea off the coast of Somalia, including through the supply of weapons, financing, communication devices, or small boats and other equipment."

So the key words in Szubin's comments would appear to be whether individuals 'freely choose' to support Somali maritime criminals. Few - if any - of those in the shipping world who pay ransoms would say they do so willingly, though there is a tacit understanding that many consider it part of the cost of doing business in piracy-prone waters. The harsh reality is that the millions of dollars that have been remitted to pirate gangs over the years have helped to sustain and grow the business of attacking passing vessels, as those criminal organizations re-invest in their ongoing operations.

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