Could reach $12 billion annually, according to one report By Peter A. Buxbaum, AJOTNews of ships being abducted by Somali pirates is no longer unusual. On February 25, the Panama-flagged MV IZUMI, which was carrying supplies for humanitarian relief in Somalia, was released from captivity after having been held by pirates for four and half months. Just three days later, a Panamanian flagged, Greek owned bulk cargo carrier MV DOVER was pirated in the North Arabian Sea. The international community has apparently not exacted a sufficient price form Somali terrorists to deter them from their continued activity. U.S. Secretary of State Hillary Clinton told a March 2 Senate Appropriations Committee hearing that the international naval flotilla working to curtail piracy is not achieving results. Clinton said that the naval ships from more than 20 nations “have not been willing to really put themselves out. They’re happy to patrol…but when push comes to shove, they’re not really producing.” But piracy is levying a cost on the international economy, at the macroeconomic level, and all the way down to the effects on carrier costs and shipping rates. Since 2006, reported incidents of piracy have increased, reaching 445 such acts in 2010. Since not all incidents are reported, these figures may be conservative. According to the New York Times, pirates currently hold 50 vessels and more than 800 people hostages. Pirates generally hold captives to receive ransom. During that same time period, the average ransom paid to release hostages and vessels has increased dramatically. In 2010, the average ransom for hijacked ships was $5.4 million, including a record $9.5 million paid in November for a South Korean oil tanker, according to a report released by the One Earth Future (OEF) Foundation, a nonprofit, nongovernmental organization promoting peace and entrepreneurship. This is dramatically higher from 2005 when the average ransom paid was about $150,000, according to OEF. The largest problem area has been off the coast of Somalia. The country’s history of piracy extends 20 years since the fall of its government. But Somali pirates have extended their reach beyond the Gulf of Aden to the north Arabian Sea, near the coastline of India, more than 1,500 nautical miles from Somalia. Somali pirates sometimes use hijacked merchant ships as mother ships to carry out attacks against other vessels, according to the World Shipping Council, an industry group representing liner carriers. The Somali pirates’ area of operations is crucially important to the global economy since it serves as a major artery of international shipping. The oil tankers that ply these waters provide much of the world’s energy supply. In 2010, one-third of all pirate attacks were targeting ships carrying chemicals, crude oil and natural gas, an increase from 20 percent five years ago. And the problem is not limited to the Horn of Africa. Across the African continent, Nigeria’s oil industry has become a major target of pirates. OEF calculated that Nigeria’s oil production has dropped by 20 percent since 2006 as a result of piracy and other attacks. Approximately 100,000 barrels a day, around 10 percent, of Nigeria’s oil production is stolen every day. A report released by the United States Maritime Administration (MARAD) noted that “piracy poses significant burdens on governments and the maritime industry as they take steps to protect themselves from being attacked or hijacked.” These actions include a larger military presence in high-risk areas, rerouting ships to bypass the Gulf of Aden, paying higher insurance premiums, hiring private security guards, and installing deterrent equipment, the costs of which “are passed along to the taxpayer and the consumer.” Carriers have two courses of action against piracy in the Gulf of Aden, according to MARAD: avoiding the area by rerouting vessels around the Cape of Good Hope at the southern end of Africa, or accepting the risk of operating ships through the area by enha