Dear Readers,

The PRIORITY news slot this week is actually empty. A first for us.

We were expecting maybe to have a follow up report from India, with news that India's Supreme Court had finally rendered its judgment on whether India has jurisdiction in the Enrica Lexie-related trial of the 2 Italian Marines - but true to prior behavior, the court is still kicking the can down the road. We may see a decision before the end of the month - or we might not. Whatever and whenever, it WILL be "PRIORITY" news.

Nothing else in our opinion really rises to the level of "PRIORITY" news this past week - nothing that we can honestly say even approaches consideration as a "game changer". That left us with a good half of our analysis space free for "something completely different" as the old Monty Python line went. But we resisted the urge to trot out Graham Chapman's iconic British Army Colonel and engage in anything funny.

We decided instead to share with you a briefing paper we developed for a friend and mentor here in DC, a very senior player in the national security community, who's asked us to brief him about under reporting of Somali piracy. He gets our Summary weekly reports and so is up to speed with the view from 30,000 feet (at "the C-LEVEL"), but then again, he's elected to write something about the issue, so we've brought him back down to "Sea-Level" (hint hint - there's a word game in there - the word game in our company's name) and we'veshared with him the view when you are leaning so forward in the field that you "have the weeds in your nose".

Just so he'd not lose his bearings, I provided him with a mid-level recap of the oral briefing we gave him this week - call it the view from 10,000 feet - so he could go from C-LEVEL to Sea-Level and not get lost.

After looking at it with new eyes after sending it along, yours truly realized that for many of our readers, it could be very useful to modify slightly and share with you all in our weekly report.

We realize that in the past 5 or 6 weeks, we've gone from a voice in the wilderness about the problem of under reporting of Somali piracy to a voice that's been independently confirmed by no less than Captain Pottengal Mukundan of IMB and even a NATO representative conversant in piracy problems. And also, we realize that many of our readers are very busy and have trouble finding the time to read each weekly report - so this summary may still be "news" to some of them.

Therefore, please find immediately following a slightly modified version of our recap:

- In past 12 months, best estimates are that Somali piracy is down about 2/3rds - for real (about 60% to 65% - take your pick). While some folks think it's down over 90%. We have established that the discrepancy is due to under reporting. Read on.

- The factors that have led to such, in order of priority, most important to least, first directly, then indirectly:

Directly

- Better coordination & implementation of naval resources. Even though the numbers of warships dipped to a low over the winter (lowest number of surface assets since Spring of 2009), a beefing up of maritime and coastal surveillance by manned and unmanned platforms has led to much greater naval situational awareness. Also, there's been a loosening of the Rules of Engagement, so as to allow intercepts and use of force (especially where the crew can take shelted in a so-called "citadel" or safe room). Such that:

- Pirates stockpiling supplies on beaches and preparing to cast off have been harassed, intercepted and arrested - or even attacked by helicopters in a few incidents; and

- Pirates who've been still able to slip the net and go out to sea face detecting by long range maritime surveillance and more intelligent vectoring by warships based on behavior analysis that distinguishes honest fishermen from pirates trying to hide in plain sight by using hijacked fishing boats (and some of which guidance was shared by NATO in advisories on distinguishing dhows).

- Adoption of armed guards to ride on ships. About 2/3rds of ships are so protected. Some countries, like Italy, only allow active duty Marines on board merchant vessels (France puts it Marines on tuna fishing boats) - while other countries, like the UK, allow private armed guards (usually former Royal Marines).

They may have trouble, weapons-related, to deter pirates at the 1000 meter perimeter (as in, it's hard for an approaching boat to see or hear warning shots at that distance - the flash suppressors on modern infantry high powered rifles hide the flame, smokeless powder hides the smoke, and the noisy outboard engines masks the pops of the firing), but within 250 meters, most pirates get the message and turn back. Some firms are using tracer ammo and having even better success at keeping pirates away. Some other firms, though, are letting pirates in too close - by accident or by intent - and the warning shots quickly escalate into intense firefights. Or the warning shots ricochet and hit the boat - they're aimed the wrong way - directly in line with the path of approach of the small boat, instead of in front but off to the side. The 2 Italian Marines in India may have lined up their warning shots incorrectly and killed fishermen by ricochet - assuming that the boat they were warning off was indeed the St. Antony.

- Adoption of what's called Better Management Practices - now in their 4th edition - or aka "BMP4".

Basically, advice to keep up your situational awareness for pirates as you navigate high risk areas, keep the ladder / stairs in an up and locked position (some lazier ships keep them down and make it easy for unauthorized boarders), keep doors and hatches locked, deploy barbed wire along railings, and most importantly, run at top speed. Most attacks target ships moving at about 20 knots or less - unfortunately, many older ships are not able to go much faster than 11 knots. And then to save fuel, some companies make their ships "slow steam" or even "super slow steam" - and so make themselves inviting targets.

Indirectly

All three above main (maritime) factors, and other lesser ones (maritime), as well as ground-based and particular to Somalia (non-maritime) - related to the all the maneuvering between the new Mogadishu government, AMISOM, the US and UK and EU acting indirectly on land, and war lords and clan leaders as well as politicians jostling for power in a reconfiguring Somalia, have indirectly led to a chilling effect on lending by Somalis and by foreigners to Somali pirates. The traditional Somali piracy business model of repaying all the lenders and creditors and only then going back to lenders for new advances for the new missions (most Somali pirates live pay check to pay check - only the top few gangs saved for a rainy day) broke down under the combined pressures at sea and on land. And has really locked up the machine.

The last 35% of piracy activity has been savings- or cash-flow financed, not lending-financed, which has dried up. And the lending downturn has been more of a "force multiplier" in reverse - it's depressed activity even more than what's happening on the water in terms of the "triad" of repressive factors.

But then again, if and when lender confidence were to return, the "force multiplier" can and will swing back into the positive - and can reflate a 35% problem to well over 50% or more in a very short while.

[ That's why overstating the decline is dangerous - a 50% "reflation" of a less than 10% problem gets you from say 8% to about 12%, while the same ratio for when you are instead at 35% gets you to over 50%.]

More later on this potential.

Reported attacks are down and hijacks of merchant vessels are down to almost zero in past few months - but Somali pirates are still out there. There remains about 35% of Somali piracy - that has not been fully reported.

Contrast that with the misleading reports in the press, that relay, without any critical thinking, half baked reports that Somali piracy reports have dropped by over 90% and so Somali piracy is basically gone, dead, over.

That last 35% of Somali piracy that's still there is being only reported at best 1 time out of 4, if not more like 1 time out of 5 - those %'s by the way are traditional global under reporting rates (prompted by fears of filing a report and having a local regime holding the ship as a "crime scene" and having the delays cost it more than the damage from a failed attack - as well as having reputational damage to the shipper that costs the ship future business - as well as damage from having to pay more for insurance - these are classic reasons NOT to report piracy, that lead to a rate where 75% to 80% of piracy is never reported).

Somali piracy is being under reported in part because it's changed in nature.

Today, more often than not, it's lurking and hiding in plain sight in the form of hijacked fishing dhows, moving around in fishing packs (something that our team - partnered with a top former Joint War Committee underwriter from Lloyds already concluded in the summer of 2011 would be the new trend - and why NATO, over a year later, just released guidance on how to spot a pirate dhow / distinguish it from a legitimate fishing dhow).

The latest version of Somali piracy is also learning how to use intel better (much of it easily harvested from searches online) for more intelligent targeting and less opportunistic attacking. The latest Somali pirate is not on a dhow or skiff just bobbing and waiting forever and attacking whatever goes by - and making himself easy to grab. The latest version of Somali piracy has been carefully probing defenses of ships, increasingly learning how to turn back last minute and not be ambushed by some of the bloodier armed teams.

According to some, the latest version of Somali piracy has even been biding its time until warships leave (something some say is inevitable) and until most shipowners decide that armed guards are no longer needed.

- Consequently, Somali pirates are more likely to attack and hijack Somali or Yemeni dhows in the past months - to use as "mother ships" and so be able to hide in plain sight among thousands of other fishing boats. Problem is that EU military - the "EU Navfor" - and NATO - as well as many other reporting groups, don't consider hijacking of local dhows their problem, so don't include them or their crews in their statistics. Contrast that with numbers, for example, from ECOTERRA.

- Also, in 2010, jittery merchant marine captains were over reporting piracy - finding all sorts of things "suspicious" - which led to the reporting centers, starting with UK MTO, to warn people to calm down. That led captains to hold back even valid reports, for fear of scolding or of not getting assistance the day they'd get attacked for real (remember the "Boy who cried wolf" dilemma?). As a result, the amount of suspicious activity reports filed has shrunk, and the number of suspicious activity reports relayed by UK MTO or NATO Shipping Centre or even by IMB has shrunk even more.

- Also, among the 60% or so of ships with armed guards, fear of criminal or civil liability for shootings that wound or kill innocent fishermen has led to ship masters just moving on and not reporting anything, or if they do, they've downplayed the gun playthey've reported "warning shots, and pirates break off" - even after firefights. This is a growing reason for NOT reporting - especially if 2 Italian Marines held in India for allegedly murdering 2 Indian fishermen in February are tried and found guilty (the Enrica Lexie case).

- Also, there is a growing problem with so called "floating armories" used by private security - rules in many coastal states frown upon if not positively and explicitly ban bringing in weapons to a country. So not a few PMSCs have relied upon the "work around" of picking up and dropping off banned weapons on a ship drifting just outside territorial waters. This solution is getting a lot of bad press, and now states like Qatar and Nigeria have arrested ships and crews that have provided this "gun library" service. Owners have to be worrying too. As a result, we think that private armed guards are even more loathe to talk to the press and let people know which ships have guns, because the question then arises, where do the guns come from? and are they legal? a growing number are not - including guns that British groups rent from Sri Lanka, in violation of British government permitting rules for PMSCs.

- Also, many private armed guards are upset that if and when they do file reports with reporting centers - that are now basically the arms of the European military - they don't get any reports back in return. This is frustrating for former military men to be unable to know what other ships have reported for a certain location - and they get even madder when they don't see their own reports being shared later with others via the centers. The militaries are treating the reports as quasi-classified information, with a "need to know" mentality that is maybe justified because they don't want to let the pirates know what they know, but it unfortunately also freezes out the ships and armed guards. This is the "Catch 22" situation that's driving the former military out there who don't have active classified clearances batty.

ADDITIONALLY

- Also, over all, whether or not armed guards are on board (hence, even the 40% of ships opting not to have guards, more likely than not because they simply can't afford to pay $40K a trip for 4 men for 10 days), filing a report generates more downside than upside. Remember that a ship will probably not get much if any reporting or guidance back in return - and whatever there is usually a week to 2 weeks to even a month old as the sanitized reports take time to go out to the public.

- Ship masters we've debriefed said if they make a call to anyone about a pirate attack, it's only if they've been drifting outside a port waiting a dock assignment to off load or pick up cargo - they want the coastal authorities to provide armed or medical help and/or pursue the attackers. They won't call the unified reporting centers like UK MTO or the International Maritime Bureau because they'll take the report and in the case of IMB, post the attack and its coordinates immediately on line - and pirates will figure out that a wounded ship is adrift say outside of Lagos and go back for another bite, even faster than any help gets to the ship. While UK MTO may keep that information private, but then it'll take them another 5 minutes to call the folks in Oman or Yemen to send help.

Right now, so as to be conforming to all the reporting, you could call up to 5 separate numbers - UK MTO, NATO Shipping Center, Bahrain, IMB's Piracy Reporting Center in KL, and then a regional reporting center in the coastal state. 5 calls that may take a half hour, and for most of those centers, you're first a piece of intel, second a public statistic, and then a ship that needs relaying the call to get help. Ship masters decide instead to make one call - to their CSO - the one that gets help fast (as the CSO is the most invested in the ship and its crew).

NATO Shipping Centre and BIMCO (world's biggest shipping association) both have been asking captains do more than just call their CSOs - they've been asking they all at least also call IMB. That tells us by implication that NATO and BIMCO have been publicly aware of problem since summer of 2012 (while UK MTO has since been since early this year).

ALSO

- Owners get most worried about the immediate impact on commercial viability of their ship(s) because there are too many ships out there all ready looking for shrinking business, and a report that your ship is attracting pirates is like an restaurant owner seeing himself reported for food poisoning in the local paper - but even worse, because from the owner's perspective, they really didn't do anything wrong - they got attacked - they didn't brew poison in the kitchen, after all. But as a result of bad press, charterers will send business to the other ships that are drama-free / not "pirate-magnets" (who wants their cargo container to rot off Somalia, or be delivered with bullet holes in it, or even worse, destroyed by an RPG round?).

This has led to owners pressuring IMB's Piracy Reporting Centre in KL NOT to report the name of ships filing reports or having been hijacked - and so some people are complaining that this is really too much covering up, as the names will have to come out anyway, especially in the case of a hijacking.

- Owners also have to fear that if the ship master calls in a piracy report, they are likely to be "invited" to pull into the next port and file a formal report. The ship will likely be held as a "crime scene" and pawed over - not for days, but for weeks or months. Local criminals will have a shot at stealing even more stuff off the ship as she's tied up in a strange port. Local police may try to shake down the ship for graft to release her "sooner". Ships not only break their delivery contracts doing that and pay fines, they lose the next cargos. The opportunity cost can be significant. So unless the damage to the ship doesn't let her proceed, and/or unless a crew member needs serious medical attention, the ship will sail on and not report.

- Owners worry also about having to pay more for their insurance, if they rake up even just a couple of reports. That's especially true if everyone else is suppressing attack reports.

And ship owners who couldn't afford guards could find that after reporting one too many piracy incidents, their insurance goes up more than they would have paid for guards per transit - so they shut up.

Bottom line, of the 35% of piracy still not repressed by the combination of smarter navies, more armed guards and better respect for BMP, we have to conclude that only 1 out of 4 piracy reports is being filed on average. Maybe even just 1 out of 5.

So today, many piracy reports of actual attacks are not being filed because of many reasons.

In addition, suspicious piracy reports are being suppressed by ship master, or if filed are being either dismissed out of hand by reporting centers, or if considered valid by the militaries internally, are being sanitized out of public reports so as to not let the pirates know that we know where they are - while ships with or without armed guards are being kept in the dark.

Overall, the maritime situational awareness has been seriously degraded by the new reporting environment.

Bottom line, today in many ways we have the fog of war without even a declared war - it's really bad.

We have a 2/3rds confirmed drop in piracy that's being uncritically reported like an over 90% drop - but isn't.

Now even top former military commanders are warning active duty top men and women NOT to buckle under the budgetary pressures and not declare victory and let the politicians redirect the naval assets - either reassign the shrinking fleets or even worse, send the ships home for decommissioning and scrapping.

Even the UK has gutted what's left of the British RN - it's at less than 24 warships. And now unable to station even just ONE frigate year-round off Somalia - this year, because of budget cuts, the British frigate can only do anti-piracy half time - the rest of the time, she has to go to the Western Pacific and patrol there too.

And then serious PMSC CEOs are upset that some cash-strapped shipowners are citing the 90% drop as proof that Somali pirates are down and out and so they don't want to pay a higher risk premium on their insurance and they want to lay off the private armed guards - unless the PMSCs trim their 4 man teams to 3 or even just 2 - and even in some cases make them share just ONE rifle (some are insisting they get a cheaper shotgun). Top PMSC firms are pushing back hard at this penny-wise, pound-foolish approach - and for good reason.

But if and when the cash-strapped owners and budget-conscious governments have their way and stop paying for armed guards as well as warships, we believe that the remaining Somali pirates doing low level activity recon today, vacuuming the Web for open data, doing careful probing attacks, and learning how to observe and hunt disguised as a fishing boat inside a fleet of legitimate dhows, will gear back up and go on the offensive again.

But by then, we believe that the warships will NOT come back - neither the US or the UK have the resources or drive to recommit military resources to push back on piracy. It'll devolve to regional players like India, or then China, Japan, S. Korea, Australia and and other Far East navies will have to step in to fill the void. Especially if PMSCs are let go of too quickly - and they'll have to come back too, as the regional navies can't do it alone.

So we have to keep the military we still have committed to the mission and pressing back hard on the pirates - if there is less than 10% Somali piracy being reported today, there's almost 25% that's still there but not reported.

But that's not the worst of it.

The danger also exists that if Shabaab, the al Qaeda affiliate in Somalia that's recently been denied coastal cities where they imposed their "taxes" due to all the recent UN authorized and US encouraged African military action on the ground, looks to other sources of illicit income, could decide to partner up with pirates and lend experienced militia men and heavy weapons for a share in the ransoms.

This is NOT without precedent. In late 2010, the "moderate" Islamist insurgency Hizbul Islam, after it was kicked out of the southern-most pirate port of Kismayo by Shabaab, rushed militants up to Harardheere, a major pirate hub, to impose its administration and extort a "tax" of about 20% on all pirate ransoms. Many pirates left in a hurry and went up to Hobyo. Hizbul Islam needed the revenues from taxing piracy so as to remain credible as junior partner to Shabaab in any future Islamist government.

And when Hizbul Islam threw in the towel and folded into Shabaab less than a year later, the first thing Shabaab did was to rush up its own militants to Harardheere, and take the town over - again, so as to be able to tax pirate ransoms. Shabaab has generated income not just from taxing legitimate businessmen in the areas it's controlled, it's collected millions from the export of charcoal (banned by the UN so as to throttle Shabaab), and also from pirate ransoms.

There were even reports at one time that Shabaab was going to launch its own dedicated piracy fleet, so it could keep ALL the ransoms so as to finance its insurgency and terrorism (the NYT's Jeffrey Gettelman sourced that one).

So we think that as Shabaab gets cut off from coastal cities and its traditional revenue sources, it will look to other sources - and piracy is sure to be seriously considered by the al-Qaeda affiliate.

Likewise, Somali pirates have usually shied away from partnering with Shabaab, but things could be changing. There's a big culture gap, as pirates are really viewed as the Devil's children by the hard core fundamentalists - thieves, boozers, druggies and whore-mongerers. And pirates know that a lot of the UAVs - especially the one with Hellfire missiles - are really looking for Shabaab, and not them too much. But to ally themselves with Shabaab, they'll be fair game too.

But if we are to believe stories being leaked to us of targeted killings of pirate bosses by Western special forces on covert missions on the ground in Somalia, the calculus of allying with Shabaab has to be changing for the pirates still alive and hungry for more ransom millions. What really more do they have to lose if they ally themselves with Shabaab in a mutual survival pact? How much worse could it get for either by just agreeing this one time to work together to stay afloat?

The Somali faction inside Shabaab may be especially interested in such a collaboration, since they have to be increasingly resentful of the growing influence of the foreign fighters, as the native Somali Shabaab lose their funding and influence as they lose their cities and their tax base. We may therefore see that native Somali Shabaab leaders and native Somali pirate bosses, sometimes even linked by clan, will be inclined to make a pact with their "devil brother" and go raiding.

So we could be losing our military and PMSC shield against Somali piracy just as it finally becomes a real partner of Islamist global terrorism against the West. It's not a certainty, but a possible scenario that we shouldn't ignore.

The solution in our opinion is two fold:

- There has to be continued highlighting of the problem in the world press. We are helping do so.

But pointing out a problem isn't enough.

- The greater community of shipowners, private security and uniformed active duty military, navies, underwriters, and shipping groups, have to work with the piracy reporting groups and fix this problem.

And it's not just a technical / IT systems engineering problem - where an IT solution with take reports real time, deconflict them, sort them, prioritize them, then push them out to folks who can best use them / most need them. We need also to address and pre-empt the many disincentives to reporting.

More background about that second point:

As military budgets don't grow any more and/or even shrink, more duties that were once "national security" and considered the exclusive purview of the USG and DoD and that are now being pushed over to the private sector - while our military is still being expected to jump in to assist when the pot boils over - aren't being handed off smoothly. The military and private sectors have to coordinate better and get better Situational Awareness.

How can the private sector do its bit and protect itself if the reporting system breaks down? and then how can the governments and military really know if and when they should step back in if the numbers are so off?

In fighting piracy, we started with a police action that was dramatically militarized in late 2008 / early 2009 when local policing abilities were overwhelmed. After 4 years now, it's being increasingly privatized as the military has sought a smaller but more effective and prioritized role. But now we have a growing fog of war without a war.

If we don't fix this reporting system, we will misallocate vital military and private resources, and let Somali pirates get a second bite out of the apple. We could even have our opponents in the war on terror sneak in unseen through the back door and take advantage of our blindness. Shabaab may partner with Somali pirates as both, weakened by outside pressures, overcome their mutual hesitations and decide they have no other choice if they want to survive under the unrelenting pressure.

And it's not just about Somalia:

And even if Somalis don't come back, we risk letting pirates off Nigeria wreak havoc on supplies of oil to the world. Remember, the Niger Delta has the Bonny Light Sweet Crude, the rarest of "champagnes" of crude oil.

Our best estimates are that up to 9 out of 10 piracy incidents are not reported off Nigeria. It was shocking when we established that in January in a white paper for a London client - since off Somalia it's only 1 out of 4.

The problem with Nigeria is that:

1) many of the victims of piracy off Nigeria are engaged in some illicit trade already and so won't report;

2) the cops are underpaid and so are crooks anyway as they look for "off the books income", and can and will shake down even victims, adding insult to injury to the innocent victims who DO report;

3) most Nigerian and other sailors attacked by pirates realize that Nigerian pirates are really brutal - Nigerian pirates are only interested in cargo, specifically the oil, and the crews for them are only eye witnesses - and so the sailors take the threat of violent reprisals very seriously and so refuse to talk to cops;

4) and even if they do, again, the cops may very well be on the take and tell pirates which sailors talked and so must be killed. Or if the cops who take the report are somehow honest, then some higher up is crooked and will tell the pirates - even because they are living off a share of the piracy proceeds. Even Nigerian Navy Admirals have been shown to be involved in the illegal oil trade - as well as top ranked national politicians. It's all rotten.

That's how and why you get to a reporting rate that is so low, when it comes to Nigerian piracy.

So if the current piracy reporting system is not fixed before we declare victory and wrap up off Somalia, we'll not only be inviting a possible return of Somali pirates, possibly even joint venturing with Shabaab, we'll likely face amore under reporting off Nigeria.

In GLOBAL RESPONSES TO MARITIME THREATS / KEY news, we focus your attention on two interesting trials with two very different results.

First, in the Seychelles, a judge dismissed the laughable on its face and insulting to the court argument that the accused weren't really pirates but just guys out for fun on the water who had brought along a Rocket Propelled Grenade launcher and were shooting at a ship for "fun".

Call that one of the lamest defenses yet. And also one of the most insulting yet used on any judge.

We commend the Seychellois for dismissing such rubbish.

Second, in France, a judge went the other way and agreed with an equally preposterous posturing by defense attorneys representing 2 Somalis accused of attacking the Le Ponant but acquitted (they had whined about being held against their will by the other Somalis and having participated in the hijacking "against their will" - which frankly, maybe the French judge hadn't heard, but we've heard that argument too many times).

Well, in this case, the French court agreed with the off the wall argument that the 2 accused Somalis lost their will to live / ability to function / suffered irreversible trauma (take your pick), and so the court awarded 90,000 Euros to each - that's well over $100,000 US. Or about 4-5 times what a Somali's average lifelong income is.

And guess what?

The lawyers announced they are going to appeal - because they want 450,000 Euros each for their 2 clients.

That's over $1,000,000 US from the French taxpayer.

Who's going to have to wonder as the judge is so magnanimous with other people's money...

Regardless of what this says about the French legal system, which we really don't care about, we find this decision very troubling in terms of the signal it sends to Somali pirates.

Even if these two Somalis weren't pirates of their "free will", then we have to wonder about how many Somali Pirates will now prefer to attack French ships so they can have it end in a "win, win"if the owners fold, the pirates get a ransom, while if the pirates are captured, they make 10 times if not 50 times more by getting the right soft headed French judge presiding and same sharp lawyers defending them.

We would only like to ask if and when French citizens will be able to file in some courtroom in Mogadishu under the GFS, and attack the individual Somali pirates if not even their larger clan under Western law or even under Sharia law theories and get similar payments for the how hostages have "have lost their will to live / ability to function / suffered irreversible trauma" under the same theory endorsed by French justice?

It would only be just and balanced, after the French judge went so far to be fair - we should expect reciprocity.

And let's not forget people like the widow of the French mariner who was killed in cold blood by Somali pirates because he couldn't get the engine running again on the Tribal Kat catamaran after they boarded it at gun point - will she be allowed to get justice Somali style? A 100 camels for her husband's life, or the opportunity to shoot at the Somalis guilty of killing him by emptying a gun into them at point blank range as they are tied to a tree?

Maybe the French judge should first have done his or her homework about what traditional "justice" is in Somalia, and how modern justice is unavailable, for aggrieved Somalis as well as aggrieved French. And then not only wondered about just how traumatised those 2 Somalis were in the relative comforts of a French prison. And not only how absurd the decision looks as a result, but also unfair to the widow from the Tribal Kat.

And this decision now also potentially puts a bounty on the head all Frenchmen and women at sea...

In GULF OF ADEN / NW IOR PIRACY we direct your attention to our republishing the links to OCEANUSLive, that we introduced last week. The more we study this site and learn about it, as well as exchange thoughts with its creator, Glen Forbes, the more we like what he's doing, and the more we want other people to look at his website and depend on his work. So we'll be running the links to his website every week from now on.

There is also the 2 Seychellois fishermen held hostage by Somalis being released after the government.

What strikes us as a bit off is that $1.5 million US was paid for each fisherman, at least according to some Somali pirate spokesman. More per head has been paid in the past - the Spanish Captain and his number 2 from the Spanish tuna fishing boat Alakrana were quietly ransomed by Madrid for $3.5 million US in 2009, for example. But the Spanish had really made a mash of those negotiations, and after some Madrid judge sentenced 2 pirates involved in the hijacking to over 400 years each, the government was no longer able to negotiate a trade - so Madric had to pay, and BIG. We don't see the Seychellois government having so painted itself in a corner like the Spaniards, nor do we see the Seychellois government having that sort of money.

In SOMALIA & HORN OF AFRICA news, we focus your attention on the latest head of al Qaeda, Dr. Zawahiri, exhorting the al Qaeda affiliate in Somalia, al Shabaab, to stand up to the infidel invaders in the shape of the Kenyans and Americans (memo to the re-elected admin in Washington: al Qaeda is still alive and kicking).

Just in case anyone in the West has concluded that after Shabaab abandonned the port of Kismayo when the Kenyans came in with US assistance, that the terrorist group had hung up its guns, the al Qaeda boss just sent everyone a reminder that Shabaab is still fighting "infidels" like us and our allies.

Think about that if and whenever you go back to read our comments above about why it's so important to get the piracy reporting system fixed, and that if we keep the current system fogged up one, if and when Shabaab decides to team up with one or more Somali pirate gangs, we may not notice for a while (which you'd think would be part of al-Qaeda's agenda - as one wit whose name now escapes us once quipped"the greatest achievement of the Devil was to make us all believe that he didn't exist" - chew on that one for a while).

And also, we point out how after just a brief few weeks traditional as well as new centripetal forces are tearing apart the illusory re-unified "Somalia" that foreign powers convinced themselves and others was feasible.

Kenya's new buffer state, Jubaland, meant to keep the Somali Shabaab and GFS in Mogadishu at arm's length, progresses nicely. It seems, though, that the GFS is none too happy about said progress, as the new leaders are furious at the talk of now a third major chunk of "their country" splitting off (after Puntland and Somaliland).

It further seems that a delegation from Kismayo that was visiting Mogadishu so enraged the new GFS leaders that it's been taken hostage (a good old Somali "negotiating tactic") and are being held against their will.

We think that's not going to intimidate anyone out of Kismayo or in Nairobi, however.

The Kenyans are smart and are not waiting for the UN to lift the ban on exporting charcoal - now that the Shabaab are out of town, and only the local merchants are suffering, the Kenyans are looking the other way and letting the exports out (and not waiting for the UN to lift the ban).

That's going to not only build good will fast with the locals - and endear the Kenyans to them as the GFS in Mogadishu would have only delayed pressing the UN to lift the ban, so as to offer it as a carrot to the secessionists to back off - it's also going to give the new southern Jubaland administration the revenues it needs from taxes.

No wonder the GFS are furious at what's being done to them - they are still powerless inside Mogadishu.

[ And just wait if Uganda removes its forces from AMISOM - it's going to be really uncomfortable for GFS.]

Likewise, the heat continues to rise in Puntland in response to the provovative antics of the former TFG Premier as he tries to woe clans elders and other sources of authority in his old homeland such that they'll turn on President Farole's autonomous regime and join the GFS fold. We reported already a bit about this last week.

This latest news is totally in line with our earlier report about the Premier being trapped in his house in Bosasso when Farole's new Praetorian Guard, the former Puntland Maritime Police Force, surrounded him.

We think that he's not going to do too well - and if he keeps it up, he risks being charged with treason like the Somaliland minister of Sports who went down to Mogadishu last month to discuss arranging a soccer match.

Bottom line, the GFS is getting a lot of resistance to its attempts to bribe, woo and then even threaten the disparate political units that used to be "Somalia" to come back under the same roof.

In RED SEA, ARABIAN SEA, PERSIAN GULF & INDIAN OCEAN we direct your attention to the story about a US unmanned reconnaissance aircraft - also known as a drone - attacked by 2 Iranian aircraft from the Revolutionary Guard. The drone was doing maritime reconnaissance about 16 miles off the Iranian coastline, according to US officials when the 2 Iranian aircraft fired upon it on November 1st.

We were wondering if the Iranians were simply trying to "send a message" to the US without actually downing the drone. We were supposing that shooting such a thing down, moving at 80 MPH, would be relatively easy.

Well, we've consulted with people who know much better about things like this, and they assure us that there is no reason to believe that the Iranians were NOT trying to shoot the drone down. They reminded us that the Iranians already hacked into the guidance system of another drone previously and brought it down inside Iran.

While this latest attempt was probably hostile, it just failed - it was no intentional "near miss". We've been told why it's pretty hard to take a drone down with the ground support sort of cannon on the 2 Russian-built planes. The Iranians probably unloaded a lot of rounds on the drone but it flew through the shells.

So this was a pretty serious engagementa hostile act that technically DID qualify as an "act of war".

While the USG did not jump on the bait, if that is what this provocative act was. But it's a bad omen.

In WEST AFRICA & GULF OF GUINEA news, we direct your attention to the very interesting report that MEND, the very violent insurgent group in the Niger Delta that has been associated with pirate gangs, has threatened the national regime in Abuja with new higher tech attacks if the regime agrees to demands from the Islamist insurgency up north, the Boko Haram. MEND currently has its leader and founder being tried in a South African court for insurrection against the Nigerian state - and MEND wants the trial to stop and him to return.

Nigeria's national regime is so corrupt and incompetent, it's done a bad enough job trying to fight Boko Haram and MEND separately, while also trying to crack down on oil theft and now the spreading piracy problem.

We shudder to think what sort of a mess we might see from Abuja if MEND and Boko Haram were to coordinate their strategies. We could be seeing the implosion of the Nigerian state as the US CIA warned might happen.

In S.E. ASIA & PACIFIC we noticed how many stories there have been this past week about nations making criss-crossing diplomatic overtures to secure the cooperation of a state, but it depends on the threat.

So while Japan is trying to negotiate a diplomatic end with China to the dispute over the islands they contest on one level, Japan is also seeking elsewhere bilateral agreements with states in the South China Sea so as to counter China's growing influence there too.

And we wonder how that is going to play with Beijing -it's not going to please the Chinese. While if we were Filipino or Vietnamese, we would have to wonder, just how useful is a treaty with Japan to push back against China if Japan can't push back against China in its own backyard? At least not without the quiet assent of the USN in the background...So wouldn't it just be better to ignore the Japanese and get stronger support directly from the US?

While on the one hand Australia has been making a fortune as China has been buying raw materials from it for years now, on the other hand, Australia is now also seeking to develop closer ties with India to assure maritime security in the IOR. Australia has been trying to limit China's ability to just move in and buy up mines all over, but this reaching out to India, after the US has been sending US Marines to camp in Australia, something that has provoked China, doesn't look like it will make relations with China any better.

So all these treaties that the players in Asia are negotiating we have to wonder about their real value...

In the COMMENTARY & ANALYSIS, we include 3 interesting pieces2 of which at first we were not going to run, because they have so many warts. But then we reconsidered, and realized that we need to point out to our readers not just the good stuff, but also the not so good stuff. And explain why something is good or not.

FIRST, The Economist ran a piece on the decline in Somali piracy numbers - about a month or even two behind all the main stream magazines or papers. It really had little "news" content in it. It was more "catch up".

It doesn't stray from the official but incomplete numbers from IMB, and so falls into the trap like so many other main stream media that see an over 90% drop in piracy. Instead of more like only 65%.

Especially when the report goes on to say that experts are advising folks at sea not to let their guard down.

That would seem more reasonable advice if 35% of Somali piracy were still around, and not just less than 10%.

It's obvious to us that The Economist, which usually runs more thoughtful stories than its competition, didn't bother to think more about what it was writing and to point out the disconnect of the now "conventional wisdom" where Somali piracy is down 90% but we have to still be scared of it. That question should have been obvious.

SECOND, Stratfor ran a piece that's really no better - but it gets into more trouble than just being a bit stale.

Its main argument is that compared to less than the $200 million in ransoms paid last year to pirates (about $160 million if you need to ask), industry and governments are paying out an inordinate amount to defend against piracy. Which has been obvious to folks for longer than a year now, but which seems to be "news" to Stratfor. Then again, that's a little more thinking than what's in The Economist this past week, but then Stratfor goes on and makes some big mistakes - like focusing too much on the costs of private armed guards.

It first of all uses out of date numbers and claims that teams cost $60,000 US to hire for a transit - that number is over a year old. It then goes and calculates that PMSCs are costing industry $800,000,000 to well over a billion US to industry.First try dividing that in half - so it's more like $400,000,000 to maybe $600,000,000.

And then Stratfor fails to account for how much it costs to operate all the warships deployed to fight piracy.

That's the herd of elephants in the living room Stratfor misses, while complaining about the dog.

Let's back up here for a minute.

We were advised last year that operating a task force of 5 modern frigates - as NATO does for its part, and EU Navfor does as well on its part - is at least a billion USD proposition.

You need to include not just fuel, but also food, water, cost of about 450 men per ship, plus operation of tenders to resupply the ships, plus all the ground support including comms, intel and guidance, not to mention the satellites and aircraft. That does NOT include operating all the UAVs now.

The military were coy with groups asking them for numbers - and only cited the additional fuel costs incurred while operating off the Horn - while all the other costs were hidden in "overhead" because it was reasoned that the taxpayers had already agreed to carry such costs. As in, that's the cost of a modern navy.

In fact, between NATO and EU Navfor, we are spending over $2 billion US a year to repress Somali piracy.And when you also include the Russian, Chinese, and other warships into the total - maybe 10 to 15 to even 20 warships more at any one time - we could be looking at a total that varies between $3 billion to $5 billion a year.

That's roughly 10 times more than what the entire private armed guard industry costs shipowners and shippers.

It's enormous oversight. If Stratfor had caught it, it could have made its analysis much more contemporary, and have addressed issues such as the growing worries from active and retired naval officers that the warships doing anti-piracy duty will have to be withdrawn because of budgetary concerns - while the threat remains.

[ We won't even waste more than a short line here to point out that Stratfor also swallowed the PR defense of the PMPF hook line and sinker before checking independently just how reputable that operation really was.]

Our advice to Stratfor is do more homework before publishing anything on Somali piracy again.

THIRD, the military affairs website DefenceWeb runs the best of all three pieces.

It repeats the official piracy numbers that are incomplete, as do the previous two stories, but then consults with top people at IMO and EU Navfor for their guidance. And the comments they provide are very wise. They urge caution and call the retreat by Somali pirates "tactical", and warn that it could be reversed almost as quickly.

Too bad they didn't have access to our analysis of the piracy under reporting - or even just the latest admissions by IMB or NATO - because if they did, their advice would have been even more convincing.

But give it time - we will not relent in letting people in London and elsewhere know that the Somali piracy reporting system is seriously broken and putting out seriously misleading low report numbers.

And that it has to be fixed before the world shifts its attention and focuses increasingly on Nigerian piracy.

That's it from us for this week's news & analysis digest.

Sincerely yours,

Michael G. Frodl, Esq.

for C-LEVEL Maritime Risks

Washington, DC

http://c-level.us.com

NOTICE v. 3.05 & LEGAL DISCLAIMER v. 1.6 (see below - at very end)

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TOP DEVELOPMENTS IN THE PAST WEEK

PRIORITY -

GLOBAL RESPONSES TO MARITIME THREATS

KEY - UN Security Council extends AMISOM mission, but only until March 7th - will review again then

http://www.atlasweb.it/2012/11/09/somalia-esteso-per-quattro-mesi-mandato-missione-unione-africana-579.html

http://translate.google.com/translate?hl=en&ie=ASCII&prev=_t&sl=it&tl=en&u=http//www.atlasweb.it/2012/11/09/somalia-esteso-per-quattro-mesi-mandato-missione-unione-africana-579.html

KEY - 100 Series Rules to give guidance on self defense - authors talk confidently - others still wonder

http://www.lloydslist.com/ll/sector/ship-operations/article410951.ece

KEY - Somali pirates flown to Netherlands for trial after firing on Dutch Marines off Somalia last month

http://news.ph.msn.com/business/somali-pirates-flown-to-netherlands-after-deadly-firefight-1

KEY - Seychelles judge jails Somalis 18 years - dismisses defense they were just joking around w/ RPG

http://www.maritime-executive.com/article/somali-pirates-who-fired-rockets-at-a-ship-for-fun-jailed-for-18-years

KEY - France gives 90K Euros to 2 Somalis acquitted in Ponant attack case - but lawyers demand 450K

http://www.rfi.fr/afrique/20121108-france-indemnites-somaliens-acquittes-affaire-ponant-piraterie

http://translate.google.com/translate?hl=en&ie=ASCII&prev=_t&sl=fr&tl=en&u=http//www.rfi.fr/afrique/20121108-france-indemnites-somaliens-acquittes-affaire-ponant-piraterie

KEY - Indian coast guard ship hold joint anti-piracy drill with Filipino CG while on goodwill visit

http://www.chinadaily.com.cn/world/2012-11/09/content_15905035.htm

KEY - Japan Vice MoD chief visits Djibouti - discuss SDF using its bases & fighting Somali piracy

http://sabahionline.com/en_GB/articles/hoa/articles/newsbriefs/2012/11/06/newsbrief-07

KEY - Djibouti Navy hosts exercise Cutlass Express - East African navies train on anti-piracy

http://www.dvidshub.net/news/97599/djibouti-navy-hosts-exercise-cutlass-express-east-african-maritime-interdiction-exercise

KEY - Belgium sends warship to assist in anti-piracy ops off HoA - accompanied by war planes

http://www.risaala.net/view.php?id=9359

KEY - Russia & Italy hold regular joint anti-piracy naval exercises in Gulf of Taranto, in Ionian Sea

http://arabic.ruvr.ru/2012_11_07/93827919/

GULF OF ADEN / NW IOR PIRACY

- Latest from OCEANUSLive - provides more complete reporting about piracy incidents

http://www.oceanuslive.org/main/index.aspx

https://mobile.twitter.com/OCEANUSLive?#!/OCEANUSLive/media/grid?idx=5

- 2 Seychelles fishermen, held hostage by Somali pirates for a year, released - $3 million ransom paid

http://www.maritime-executive.com/article/seychellois-hostages-freed-after-year-held-by-pirates

http://www.reuters.com/article/2012/11/04/somalia-piracy-idUSL5E8M31A520121104

SOMALIA & HORN OF AFRICA

- New cabinet in Mogadishu balances rival clans while vowing to fight Shabaab, corruption & piracy

http://uk.reuters.com/article/2012/11/04/uk-somalia-politics-idUKBRE8A30JM20121104

- Shabaab attacks in Kismayo w/ mortars as ships carrying weapons for AMISOM trying to dock

http://allafrica.com/stories/201211050641.html

- US Undersecretary for Political Affairs visits Mogadishu (airport) - new SFG Prez expecting more aid

http://www.monitor.co.ug/News/World/Somalia++US++development++security/-/688340/1611842/-/14dopet/-/index.html

- al Zawahiri, head of al Qaeda, calls on Shabaab to fight the Crusader invaders, including Kenya & US

http://www.adnkronos.com/IGN/Aki/Italiano/Sicurezza/Terrorismo-Zawahiri-agli-Shabab-combattete-contro-crociati-in-Somalia_313868414188.html

- Car bomb in Parliament parking lot kills at least 1 - detonated as group was in session inside building

http://uk.reuters.com/article/2012/11/07/uk-somalia-conflict-blast-idUKBRE8A616720121107

- Charcoal exports, banned by UN, continue out of Kismayo - even now under occupation by AMISOM

http://www.google.com/hostednews/afp/article/ALeqM5iBbSi6nlxUq_dOHwMab3_UCs2KWQ?docId=CNG.b410b9c2ae99c38f77014a244e9bc608.101

- Kenya's buffer state of Jubaland takes shape - GFS leaders in Mogadishu fume & detain delegation

http://allafrica.com/stories/201211110003.html

- Former TFG Premier slammed in Puntland for trying to stir up trouble - no one wants to bend to GFS

http://sunatimes.com/view.php?id=2348

- Uganda's (blackmail) threat to leave AMISOM has observers worried chaos in Somalia may ensue

http://allafrica.com/stories/201211110529.html?aa_source=useful-column

RED SEA, ARABIAN SEA, PERSIAN GULF & INDIAN OCEAN

- Yemeni fisherman organize protest appeal for Eritrean leaders - seek release of 200 men / 900 boats

http://nationalyemen.com/2012/11/11/200-fishermen-detained-in-eritrean-prisons/

- Yemen to raise the issue of compensation for Yemeni fishermen from anti-piracy organizations

http://www.althawra.net/portal/news-24730.htm

- Oman provides anti-piracy training course to police officers - Royal Oman Police Academy hosting

http://www.rop.gov.om/arabic/newsdetails.asp?catgid=1&newsid=1858

- Iranian fighter jets shoot at US drone performing maritime surveillance over Persian Gulf - fail to hit it

http://m.bbc.co.uk/news/world-middle-east-20261091

http://security.blogs.cnn.com/2012/11/08/first-on-cnn-iranian-jets-fire-on-u-s-drone/?hpt=hp_t3

REST OF EAST & SOUTH AFRICA

- S. African Navy not to let up on anti-piracy efforts off Mozambique & Tanzania - Somalis still a threat

http://www.news24.com/SouthAfrica/News/Piracy-fight-No-letting-up-from-Navy-20121108

- Fighting piracy in Africa requires increasing collective maritime domain awareness & intelligence

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=28452greater-maritime-security-cooperation-needed-in-africa-experts&catid=51Sea&Itemid=106

WEST AFRICA & GULF OF GUINEA

- Nigeria's arrest of oil theft cartel leaders leaves vacuum for opportunistic next gen crooks to move in

http://www.lloydslist.com/ll/sector/regulation/article410874.ece

- MEND threatens to attack w/ new high tech weapons if Abuja capitulates to Boko Haram but not to it

http://nigerianewsday.com/national/743-mend-threatens-with-technological-warfare

- Niger Delta lawmakers pass (showy) bill on kidnapping & terrorism - promises terrible punishments

http://allafrica.com/stories/201211080895.html

S.E. ASIA & PACIFIC

- Principal suspect in Mekong River murders, as well as 3 out of 5 accomplices, sentenced to death

http://mobile.shanghaidaily.com/article/?id=515930

http://www.scmp.com/news/china/article/1076185/china-sentences-4-mekong-drug-gang-members-death

- China & Japan pursue diplomatic fix to islands dispute - while PRC boycott of Japan goods hurting

http://www.scmp.com/news/china/article/1075715/chinese-and-japanese-diplomats-continue-talks-over-islands

- Japan seeks bilateral security alliance to address joint security concerns in SCS - as counter to China

http://articles.timesofindia.indiatimes.com/2012-11-05/india/34926149_1_naval-exercises-maritime-self-defence-force-diaoyu-islands

- Australia keen on expanding maritime security cooperation w/ India - IOR to be premier trade region

http://www.hindustantimes.com/Punjab/PunjabAbroadAustralia/Australia-keen-on-developing-maritime-security-in-Indian-ocean/SP-Article1-957156.aspx

- Malaysian Maritime Enforcement Agency, formed in 2005, has reduced piracy in Malaysian waters

http://www.nst.com.my/nation/general/number-of-piracy-cases-in-malacca-straits-down-1.167670

- Sailors on ship attacked by pirates near Indonesia overpower attackers - capture 6 out of 10 of them

http://thestar.com.my/news/story.asp?file=/2012/11/10/sarawak/12300946&sec=

NORTH AFRICA & EUROPE

- Ship overloaded w/ 300 illegal immigrants disappears between Tunis & Lamedusa after distress call

http://english.ruvr.ru/2012_11_09/Ship-carrying-300-disappears-off-Italy/

CARIBBEAN & OTHER

- Russian attack sub detected patrolling within 200 miles of US East Coast - near US submarine base

http://freebeacon.com/russian-subs-skirt-coast/

COMMENTARY & ANALYSIS

- The Economist finally reports on drop in Somali piracy - also relays warning not to let guard down

http://www.economist.com/news/international/21565927-better-deterrents-are-putting-somali-pirates-business-under-strain-hung-drawn-and

- Stratfor finds Somali piracy costs more to defend against than justified - but gets its numbers wrong

http://www.stratfor.com/weekly/expensive-diminishing-threat-somali-piracy?utm_source=freelist-f&utm_medium=email&utm_campaign=20121108&utm_term=sweekly&utm_content=readmore&elq=6fbd6be6dd834022ad106082c463603a

- W/ reports at new low, navies & shipowners want to stand down - but Somali piracy can still rebound

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=28465piracy-is-down-can-we-all-go-home&catid=108maritime-security&Itemid=233

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NOTICE v. 3.05 & LEGAL DISCLAIMER v. 1.6

[ NB: IGNORING THIS NOTICE & LEGAL DISCLAIMER CAN LEAD TO SERIOUS LEGAL LIABILITIES, PENALTIES & DAMAGES UNDER U.S. AND OTHER APPLICABLE LAWS & REGULATIONS. ]

NOTICE v. 3.05

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