What financial crisis? Pirates, the Iraqi Stock Exchange and cocaine smugglers are thriving

Iraqi Stock Exchange
REUTERS/Thaier al-Sudani
Traders update share prices on a board at the Iraqi Stock Exchange in Baghdad, Oct. 9.

If there is a mantra for the global financial crisis, it’s “nobody is immune.” You can see it in the headlines: “Australia not immune,” “India not immune,” “Sports not immune.”

It’s a mantra of absolute truth, mostly. There are always exceptions — namely pirates, cocaine smugglers and the Iraqi Stock Exchange.

It’s worth profiling these creative economies. It’d be a stretch to say we can learn from them, but you take the good economic news where you find it, no?

The pirate economy: Cash only
You know where to go to watch the Dow jump and dive. Want to see how international pirates are doing? You’ll need the Weekly Piracy Report, published by the International Chamber of Commerce. Recent reports have detailed attacks off the coasts of Nigeria, Peru, Indonesia and Bangladesh.

According to the International Maritime Bureau, the Gulf of Aden area off the coast of Somalia has seen the largest surge of pirate attacks on modern record. In a September report the organization counted over 50 attacks on vessels this year in Somali waters, predominantly in the Gulf of Aden. Nearly half of those were successful hijackings with more than 340 hostages.

Somali pirates have been big news in recent weeks — thanks to the hijacking of a Ukrainian ship called the Faina. The pirates apparently had no idea the cargo they were capturing — tanks, rocket propelled grenade launchers, automatic weapons and loads of ammunition. The shipment may have been bound for Southern Sudan.

Writing in the New York Times, Jeffrey Gettleman explains: “Somalia’s pirates are typically former fishermen who have turned to the more lucrative work of plying the seas with binoculars and rocket-propelled grenades. They travel in light speedboats, deployed from a mother ship far out at sea, and they have attacked tankers as far as 300 miles from the coast. Pirates even tried to attack an American naval supply ship this week. The ship fired warning shots at them. The pirates sped away.”

Gettleman spoke with Sugule Ali, the spokesman for the Somali pirates on the Faina. Asked how the pirates found the weapons on board, Ali responded: “As soon as we get on a ship, we normally do what is called a control. We search everything. That’s how we found the weapons. Tanks, anti-aircraft, artillery … We weren’t surprised. We know everything goes through the sea. We see people who dump waste in our waters. We see people who illegally fish in our waters. We see people doing all sorts of things in our waters.”

Asked if the pirates intended to sell the weapons to insurgents in Somalia, Ali responded: “No. We don’t want these weapons to go to anyone in Somalia. Somalia has suffered from many years of destruction because of all these weapons. We don’t want that suffering and chaos to continue. We are not going to offload the weapons. We just want the money … $20 million, in cash. We don’t use any other system than cash.”

The pirates, who have been surrounded by U.S. and Russian warships, have since dropped their ransom demand to $8 million. For less exceptional cargo, ransoms — which are almost always paid — range from a few hundred thousand dollars to $1 million.

According to one report, attacks off Somalia alone have yielded more than $30 million in ransom payments so far this year.

Remarkably, in a coastal Somali town there is an entire support economy for the pirates, including ransom negotiators and even catering services for the pirates and their hostages.

Iraqi Stock Exchange: ‘It’s become a habit’
In 2004 the Iraqi Stock Exchange opened for business for the first time since the invasion — in an abandoned Italian restaurant next to a popular hotel and only on Sundays and Wednesdays from 10 a.m. to noon. Traders scrawled on poster board with grease pens.

It’s got a better home now, but remains a quaint affair — and successful on its scale. According to USA Today, “Iraq’s fledgling stock exchange has increased 25% this year as improved security fans hope for an economic revival here. Trading volume is small, often less than $1 million a day compared with more than $100 billion a day in the United States. Few Westerners have dared to invest, but the optimism among locals is palpable. Among the 94 companies listed on the Iraqi Stock Exchange are banks, insurance firms, manufacturers and a movie production firm. Hotel stocks led the latest rally on the belief they will be among the first Iraqi companies to attract foreign investment.”

The article describes a room filled with retirees like 61-year-old Abdul Sattar Jubari, a former school teacher. “My wife asked me not to go anymore,” he says. “It’s become a habit, like smoking.”

There has been talk of electronic trading to help connect the Iraqi market to the rest of the world. For now it’s whiteboards — which are far less vulnerable to that enemy of Iraq that never makes the headlines: the constant power outages.

New tool of cocaine economy: submarines
Returning to the sea. Here’s something you may not know: submarines transport fully one-third of the illicit drugs smuggled from Colombia to the United States these days. If the Colombian drug cartels are feeling any pinch at all from our financial crisis, it’s not dissuading them from the enormous expense of building — and sometimes losing — submersible sea vessels that are as long as 65 feet and can carry up to seven tons of cocaine.

The Coast Guard captured two of these subs in five days last month. Here’s what CNN reported about the operations:  “The first seizure occurred September 12, when a Coast Guard team, under cover of darkness, boarded a 59-foot semi-submersible 370 nautical miles southwest of Guatemala. The startled Colombian smugglers reversed the vessel in an effort to throw the boarding party overboard, but the Coast Guard was able to seize the craft, its four-person crew and its 237 bales of cocaine.

“Just five days later, on Wednesday morning, a 60-foot semi-submersible was seized about 200 nautical miles south of Guatemala. As the boarding team unloaded the last few bales, the Coast Guard said, the unstable vessel began to take on water through its exhaust vents and sank. Each boat carried about 7 tons of cocaine worth $196 million.” Watch video of the capture here.

Often times the vessels are built to allow a swift escape for smugglers who slip away. So far the law of the sea is forgiving, but U.S. Drug Czar John Walters says he wants “to criminalize the use of these in the high seas so that it’s not OK to just scuttle them, get rid of the drugs and be free from prosecution.”

Jeff Severns Guntzel writes about the arts and other topics for MinnPost.

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