C-LEVEL Maritime Risks Weekly Update: Feb. 25

Top Stories of the Week:

Russians in hot water over “floating armory” in Nigeria

Last year, the Nigerian Navy arrested Russians on board the MV Myre Seadiver on suspicion of importing a small “floating armory” into Nigeria, with scores of assault rifles and thousands of rounds of ammunition. Moscow claims the ship was serving as a “floating armory” in complete compliance with Nigerian law when it pulled in for repairs – with the Nigerian Navy disregarding the declarations and authorizations after a few days and grabbing the ship and crew.

However, we find it hard to believe that Nigeria would have willingly and knowingly allowed a “floating armory” to pull in for repairs, especially given the country is very strict about weapons in its territorial waters. (Private companies are only permitted to use the Nigerian military for armed guards.)

The Russians could be facing serious sentences – potentially even life sentences, considering the seriousness of the charges.

What we find rather odd, if not telling, is the comparative lack of interest from London for this story. It’s a reminder of how the Enrica Lexie case was first received by London – with a yawn and a shrug. All this despite the potential for the case to impact the conduct of private armed guards. Many of the people we spoke with were unwilling to see the case as anything more than some unlucky Italian military blokes in some sort of blunder – and if they screwed up, they should pay the consequences. Whatever happened to the Italians was viewed as separate and apart from the question of shipowners’ use of former U.K. military.

Now the Enrica Lexie case follows the PMSC (private marine security company) industry like an albatross, and has even led in part to the drop in reporting of piracy incidents as some PMSCs have become paranoid about making their firing of warning shots known.

In this same way, we think that once the folks in London start paying more attention to what’s happening with the Russians, they’ll realize how very important this case could be. Namely, the spike in pirate attacks all over the Gulf of Guinea is not going to be repressed simply by more Nigerian sweeping in front of their doorstep. And if foreign navies are unlikely to show up in large numbers, then private security will have to do the bulk of the anti-piracy job. And they cannot do that job by giving up firearms and attempting to protect ships bare-handed or with knives or noise-makers.

The case could become the next Enrica Lexie albatross shadowing the PMSC industry. It can’t be ignored, and its lessons must be learned and incorporated into the way PMSCs do their business off Nigeria.

Suez Standoff

The Suez Canal is still struggling to under the weight of continued unrest in placed like Port Said. We reported last week on the blow to the Suez Canal Authority’s revenue in the last week of January, when the major protests hit. Our analysis found that in the last week of January, transits were down by close to 20 percent. (See last week’s analysis.)

Since then, Bloomberg News picked up on our analysis and the larger story and offered the first critical analysis of the flow of press releases from Port Said. (See the Bloomberg story here.)

In short, the protests by fans of the Port Said football club have now entrained workers from the city and other towns along the canal. They’ve either been prevented from going to work or they’ve begun a labor outage. So, while the canal is open for transits, the number of ports that serve it is shrinking each day. Our early warnings that the Suez Canal is increasingly a risky proposition for international shipping are being corroborated.

This is still a very volatile situation that could be set off by a spark.

Belt-tightening in the U.S.

Little has changed in Washington, D.C., over budget negotiations and the sequester – a set of indiscriminate, across-the-board cuts to government – is now expected by many observers. We've been warning that an agreement would be unlikely and the sequester would be triggered. As detailed in previous weeks, the cuts would affect the Pentagon and U.S. naval operations in the Persian Gulf.

(See the previous analysis on how we predict the budget standoff might affect anti-piracy operations.)

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Michael G. Frodl, Esq. is founder and head of Washington, DC-based C- LEVEL Maritime Risks consultancy. The group has special expertise in Gulf of Aden / Indian Ocean piracy and the threat it poses to the energy supplies of the Far East, as well as both Gulf of Guinea and SE Asia piracies. The group's specialty is trends analysis & long range forecasting. Michael has provided advice on emerging risks, including environmental, energy, climate, cyber & terrorism to global reinsurers and members of the national security community in Washington, DC for over 15 years. He's also been quoted extensively in specialty publications serving the luxury yacht market out of London. He can be reached directly at mgfrodl@tidalwave.net.

The above text was adapted from the C-LEVEL Maritime Risks weekly newsletter. Find out more at http://c-level.us.com/page.htm.