Ransom on the High Seas: The case of Piracy in Somalia
The pirates in the coast of Somalia came to activity at the start of 2003. The main reason that provoked local Somalis to start attacking foreign cargo ships was the civil war that broke out in 1991. The Somali Civil War leads to an unstable government that lacked on authority, leadership and control to stop the rising attacks between local groups. From there, Somalia went on downhill; its population decreased over two thirds from 1991 to 2011 and by 2008, the United Nations estimated that nearly 3.2 million Somalis were dependent on food aid for survival. These pirates had nothing to live fro before attacking the ships.
If we only think on the business vision and not the ethical one, the company could end up having to pay over 20 million dollars (there were 20 crew members held as hostages) to the families of the workers plus the cargo that they wouldn’t receive back and the extra costs during the process. As we can see this is clearly not the best option for ISC to take, as there are not any advantages at all from it. Another factor that we have to take into consideration if the negotiation is not carried out is the mere fact that ISC does not have any insurance against pirates on the ship that has been captured, placing them in a very delicate situation.
Another possible idea that Martin had was to negotiate using the force. As I have just mentioned before, dealing with pirates is a very delicate situation and any drastic move can lead to the death of the hostages. If the negotiation does not go as well as ISC would like to, they could apply the force from different sources (military, government or private) and solve this problem. Nevertheless, if this plan does not work out to perfection, the pirates will discover this threat and kill the hostages as a message to future negotiations (you have to remember they have nothing to loose whilst you have millions of dollars in hands).
In addition, Martin’s third option involved the U.S. Navy Ship that was fast approaching Odyssey (ISC ship captured by the pirates) to rescue the three American crewmembers that were held hostage. The highly trained Seal Team would likely be successful in attacking and recapturing the ship, however they estimate a 60% chance that one or more crewmembers die. This third option is probably the biggest risk for ISC: if they allow the Seal to carry out their operations, most probably a couple of workers will get killed. The problem is not that to this point, is the amount that get killed as each body has a price of more than one million dollars to the company. So to what extent the amount that they would have to pay for the looses of workers greater or less than the amount they would have paid if the negotiation was carried out.
His last option was to try and capture the...