The ‘money trail’ reveals linkages between Somali pirates and terrorists.

For some time there has been a debate over whether or not there is a connection between Somali pirates and the militant group known as al Shabaab, which has connections with al Qaeda.  A news article carried by Reuters, cites John Steed, the principal military adviser to the U.N. special envoy to Somalia and head of the envoy’s counter-piracy unit, as saying that linkages between the pirates and militants are “gradually firming.”  The means of assessing the linkage has been tracking the flow of money from the pirate groups to the militants.

It is not clear what exactly the money exchange represents.  The report claims that the militants have been very adept at taxing the proceeds of ‘business activities’ within areas that they control.  Natznet Tesfay of Executive Analysis, a specialist intelligence company, is reported as saying al Shabaab was taxing the two major revenue generators in the area, both of which are illegal: piracy and smuggling charcoal.  These are described as “the two biggest games around.”  So, how much money is changing hands?

The Reuters article reports that the average ransom in 2010 was $5.4 million, up from $150,000 in 2005, and that Somali pirates’ gross ‘revenue’ was nearly $240 million last year, (a total increase of 359% over 6 years for an annualized rate of 59.8%). Of that amount, the Reuters investigation identified the following payments to al Shabaab's ‘marine office’:

Feb. 25: $200,000 (4.4%) from the $4.5 million for the release of the Japanese-owned MV Izumi;

March 8: $80,000 (4%) from the $2 million for the release of the St Vincent & Grenadines-flagged MV Rak Africana;

March 9: $100,000 (2.2%) from the $4.5 million for the release of the Singapore-flagged MV York;

April 13: $600,000 (10.9%) from the $5.5 million for the release of the German ship MV Beluga Nomination;

April 15: $66,000 (1.8%) from the $3.6 million for the release of the Panama-flagged MV Asphalt Venture; and

May 14: $100,000 from an unspecified amount for the release of two Spanish crew of the Spanish-owned FV VEGA 5.

The amounts were corroborated by pirates, al Shabaab militants and residents of Haradhere.

The ‘take’ from the ransom monies averaged 4.66% and amounts to $1.146M.  (No data is available from charcoal smuggling.)  This low level of ‘taxation’ indicates that the terrorists have modest aims, for the moment, and are most likely in a building phase as they organize and recruit.  The rapid rate of increase in ransoms will produce funds that may even be beyond their ability to dispense until al Shabaab reaches a more advanced state of development.  While they grow, social charity will ensure a welcome place in the general populace plus a steady stream of recruits and supporters.