Financing Rebellion Through Maritime Piracy

Guest post by Ursala Daxecker and Brandon Prins

In June 2008, a floating production storage and offloading vessel (the Bonga) owned by oil giant Royal Dutch Shell was attacked by more than 20 armed militants 120km off the Nigerian coast. The attack was both violent and extremely costly, forcing Shell to shut down one of its primary oil fields in the Gulf of Guinea. The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the attack, which was only one incident among many the group took credit for in 2008. Shortly after the Bonga incident, insurgent leaders and government officials came to the bargaining table and agreed to an amnesty program. Piracy in the Greater Gulf of Guinea began to decrease soon thereafter. According to the IMB Piracy Reporting Center, pirate attacks dropped by approximately 75% between 2008 and 2011. However, the ceasefire between Niger Delta militant groups and the Nigerian government started to disintegrate in 2010 and soon after, piracy attacks off the Nigerian coast began to increase again along with political violence.

The Bonga incident illustrates that illegal resource extraction such as the bunkering of oil and kidnapping for ransom can function as a funding strategy for rebel groups in the Gulf of Guinea. Research on civil war (here) and (here) has long established the importance of control over natural resources as a determinant of civil war, showing that countries with larger resource endowments are more likely to experience civil war. These so-called resource wars also last longer, perhaps because profits from the sale of contraband incentivize continued fighting. Further, resource wealth can increase the value of regional control of territory, pushing rebel leaders into separatist conflicts. Policymakers have recognized the connection between resources and rebel activity. The Kimberley Process, for example, acknowledges that alluvial diamond extraction contributes to armed conflict and establishes a certification process that aims to prevent rebel groups from profiting from conflict diamonds.

If resource control supports rebellion, maritime piracy as a form of illicit resource appropriation may provide rebel groups with critical funds for the financing of armed conflict. Since 2010, nearly $100 million has been stolen from ships transiting the Gulf of Guinea and these attacks against oil transports off the Nigerian coast may signal an effort by insurgents to use piracy as an additional revenue stream to fund a revolutionary campaign against the Nigerian government. Experts agree that many pirates are current or former Niger Delta militants that have extensive experience targeting oil pipelines and platforms. Oil bunkering appears to be increasingly used by pirate groups operating in Southeast Asia as well and anecdotal evidence connects insurgent groups like Abu Sayyaf and the Moro Islamic Liberation Front in the Philippines and the Free Aceh Movement in Indonesia to attacks against ships.

The number of intra-state conflicts funded through gemstones, minerals and or drugs appears have increased following the collapse of the Soviet Union. Rebels sought alternative funding streams that could be developed locally and thus not dependent on outside actors, such as the Cold War adversaries. Interestingly, maritime piracy reemerged around the same time. The International Maritime Bureau (IMB) recorded 107 pirate attacks in 1991, which increased by 300% over the next ten years. Maritime piracy and the exploitation of valuable resources may have thus emerged together as a means of revenue generation for rebel groups. A cursory look suggests that piracy thrives in countries where insurgency also flourishes. The five most piracy prone countries since 1993 – Indonesia, Bangladesh, Nigeria, India, and Somalia – have all experienced armed rebellion or significant political violence. Now it may be that conditions that facilitate the emergence of violent non-state groups also facilitate piracy. Thus both may develop from similar environments, such as economic and ethnic inequality, poverty, and state weakness. But piracy, similar to the use of contraband or oil, may also result from strategic decisions made by insurgent leaders looking for resources to fund rebel activities. The heat map below shows that some of the most conflictual countries in Africa and East Asia also support significant maritime piracy. And globally, nine countries in 2013 experienced both armed conflict and piracy, which is nearly twice what one would expect by chance alone.

In a working paper on piracy and conflict in Africa and East Asia, we show that maritime piracy increases both the intensity of conflict and the number of civilian casualties, and that these effects appear more consistent and substantively larger than that of either oil or diamonds. We also find that piracy increases conflict events when oil or diamond resources are absent, but oil deposits or diamonds do not seem to increase conflict events in the absence of piracy. Importantly, our findings suggest that counter-piracy efforts could have additional benefits, such as reducing conflict violence by eliminating a funding source for insurgents. While substitution effects for forms of resource appropriation not included in our model (e.g. petty crime) remain possible, our results for oil and diamonds show that insurgents cannot easily replace loot from piracy with gains from other natural resources.

Ursula Daxecker is an Assistant Professor of Political Science at the University of Amsterdam, Brandon Prins is Professor of Political Science at the University of Tennessee.