[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                        GLOBAL MARITIME PIRACY: 
                    FUELING TERRORISM, HARMING TRADE

=======================================================================

                                HEARING

                               BEFORE THE

         SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 15, 2011

                               __________

                           Serial No. 112-41

                               __________

        Printed for the use of the Committee on Foreign Affairs


 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                                 ______


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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California          BRAD SHERMAN, California
STEVE CHABOT, Ohio                   ELIOT L. ENGEL, New York
RON PAUL, Texas                      GREGORY W. MEEKS, New York
MIKE PENCE, Indiana                  RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina           ALBIO SIRES, New Jersey
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska           THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas             DENNIS CARDOZA, California
TED POE, Texas                       BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida            BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
BILL JOHNSON, Ohio                   CHRISTOPHER S. MURPHY, Connecticut
DAVID RIVERA, Florida                FREDERICA WILSON, Florida
MIKE KELLY, Pennsylvania             KAREN BASS, California
TIM GRIFFIN, Arkansas                WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
VACANT
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director
                                 ------                                

         Subcommittee on Terrorism, Nonproliferation, and Trade

                 EDWARD R. ROYCE, California, Chairman
TED POE, Texas                       BRAD SHERMAN, California
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
BILL JOHNSON, Ohio                   GERALD E. CONNOLLY, Virginia
TIM GRIFFIN, Arkansas                BRIAN HIGGINS, New York
ANN MARIE BUERKLE, New York          ALLYSON SCHWARTZ, Pennsylvania
RENEE ELLMERS, North Carolina



                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Andrew J. Shapiro, Assistant Secretary, Bureau of 
  Political-Military Affairs, U.S. Department of State...........     6
Mr. William F. Wechsler, Deputy Assistant Secretary, 
  Counternarcotics and Global Threats, U.S. Department of Defense    16

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Edward R. Royce, a Representative in Congress from 
  the State of California, and chairman, Subcommittee on 
  Terrorism, Nonproliferation, and Trade: Prepared statement.....     3
The Honorable Andrew J. Shapiro: Prepared statement..............    10
Mr. William F. Wechsler: Prepared statement......................    19

                                APPENDIX

Hearing notice...................................................    38
Hearing minutes..................................................    39
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    41
The Honorable Edward R. Royce: Material submitted for the record.    42


        GLOBAL MARITIME PIRACY: FUELING TERRORISM, HARMING TRADE

                              ----------                              


                        WEDNESDAY, JUNE 15, 2011

              House of Representatives,    
                     Subcommittee on Terrorism,    
                           Nonproliferation, and Trade,    
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:05 p.m., in 
room 2172, Rayburn House Office Building, Hon. Edward R. Royce 
(chairman of the subcommittee) presiding.
    Mr. Royce. This subcommittee hearing will come to order. 
Today's subcommittee hearing is entitled ``Global Maritime 
Piracy: Fueling Terrorism, Harming Trade.''
    And this hearing of the Subcommittee on Terrorism, 
Nonproliferation, and Trade is going to look at a problem that 
is not a new problem on this planet. The Romans branded pirates 
outlaws of humanity, and they punished them severely, as did 
the British and certainly us. In our country's early history, 
we forcefully, we very decisively confronted pirate attacks off 
the Barbary Coast.
    But today, we face a very different situation. Today, 
maritime piracy is booming without any credible deterrence, 
without the type of deterrence you saw at one point in time 
from the British Navy or from the U.S. fleet. As we speak, 
there are 27 vessels and 449 hostages being held by Somali 
pirates. We have some slides up on the monitor there, if you 
would like to take a look, that tell a tale.
    From 2007 to 2010, hijackings and pirate attacks increased 
sevenfold. Employing mother ships, pirates now operate in a 
space of 2.5 million square nautical miles, over double the 
territory from just 2 years ago.
    In January, a U.N. official declared, ``Pirates are 
becoming the masters of the Indian Ocean.'' And the number and 
abuse of hostages has increased dramatically.
    More attacks and more hostages, of course, equal greater 
ransom payments. The average ransom payment was $300,000 a few 
years ago. Today the average is $4 million to $5 million. For 
Somali pirates, crime does pay.
    We should be concerned that these payments may fund al-
Shabaab, al-Qaeda's East Africa arm. We cannot be passive. As 
Leon Panetta testified last week, al-Shabaab's threat ``to the 
U.S. homeland is significant and on the rise.''
    The United States has begun targeting pirate ring leaders. 
In April, FBI agents entered Somalia. We apprehended an 
individual who oversaw ransom negotiations for four American 
hostages who were killed. This was a first. One pirate leader 
is out the game. That is good.
    Unfortunately, there are many, many more to go.
    Pirate ``investors,'' as they call themselves, investors, 
who back attacks, span the globe. There are pirate investors in 
Europe, in the Middle East, and in Australia. Piracy has become 
a vast criminal enterprise. We must track down these criminals. 
The GAO has given the administration poor marks on tracking 
pirate financing. That has to change.
    Many navies are working to deter piracy in the Gulf of 
Aden, but as Secretary Clinton recently remarked, we are not 
getting enough out of it.
    Too many of our partners are there to log sea time instead 
of stopping pirates. That is my quote, not hers, that second 
part of that, just for the record.
    The pendulum between the Romans and our 21st century 
treatment of pirates, frankly, has swung too far in the 
direction of favoring the pirates. Extreme notions of human 
rights and the rights of the accused mean today that of the 10 
pirates we catch, 9 are then released.
    I prefer the justice our SEALs dispensed against three 
pirates 2 years ago. That is a credible deterrence. When navies 
are used to forcefully take out piracy, that is a credible 
deterrence.
    The U.N. is pushing for specialized piracy courts. The 
Obama administration, once opposed, is now actively considering 
this proposal. I have a hard time justifying an international 
justice system for pirates. But we will hear the 
administration's case.
    Lastly, it should be stressed that industry itself can do 
much to prevent piracy. Shippers are often blase about ransom 
payments, and it is the vessels that do not employ best 
management practices that are the ones that are hijacked.
    And I want everybody to think about this: Not a single ship 
employing armed guards has been successfully pirated. Not one. 
As we will hear, we are throwing a lot at this problem, even 
putting American lives at risk. Industry has to play its part 
in this.
    I will now turn to the ranking member for a 5-minute 
opening statement, and then we will go to other members and 
then our witnesses.
    [The prepared statement of Mr. Royce follows:]

    
    
    
    
    Mr. Sherman. Thank you, Mr. Chairman, for convening these 
hearings.
    I know we are going the hear excellent testimony from the 
representative of the Department of Defense. I know that not 
only from his reputation but from his Aunt Winnie.
    I want to thank you for calling these hearings, thank our 
witness for being here. I have been an advocate of burden 
sharing for quite some time. I think that we undercut our 
burden sharing efforts by deliberately understating the cost of 
our international operations, whether they be aid or especially 
military operations.
    In an effort to understate the cost to the American people, 
we understate the cost to the world. We use the marginal cost 
system of accounting for determining the cost of these 
operations, and any perusing of a cost accounting book would 
say that that is the worst possible system to use for 
calculating cost. Full cost accounting ought to be used, and on 
that basis, we are doing far more to aid those actions urged on 
us by the U.N. than we currently claim credit for.
    It is not cheap to maintain a military capable of 
responding to piracies, tsunamis and other disasters around the 
world.
    I think Secretary Gates' comments that our European allies 
have not only hollowed out their militaries but are now 
contemplating even greater cuts comes to mind.
    When we look at global piracy, we do see some 60 nations 
involved, including some that are not our traditional allies. 
But there are discouraging signs, as the chairman points out. 
Some 90 percent of the pirates are part of the catch-and-
release program. This is absurd. We ought to be willing to 
extradite these pirates to whichever nation in the world will 
treat them with the most justice. And there is universal 
jurisdiction. If our European friends are unwilling to impose 
penalties, that does not mean they have to release the pirates.
    Piracy, of course, as I mentioned, has universal 
jurisdiction.
    We also ought to look at how the shipowners are behaving. 
Should we be requiring armed guards? Should we be prohibiting 
ransom? Or should we let them view ransom and detention as just 
a cost of business?
    This understates the cost of piracy. The cost of piracy is 
not just the ransom. It is not just the delay. This money is 
going to some of the worst people in the world who are either 
killing more people on the high seas or killing more people in 
Somalia.
    Paying ransom and refusing to invest in safety is not a 
business decision. And it is not a decision we should allow 
businesses to make on a strictly profit-and-loss basis.
    I have so much more to say, but in so many other occasions, 
my opening statements have stretched the limit of the 
definition of 5 minutes, and I am going to yield back for this 
one time this year. Thank you.
    Mr. Royce. Well, I thank the ranking member for yielding.
    I will make two other brief points just for the edification 
of the committee members. The Kenyan Government estimates that 
30 percent of ransom payments are funneled to al-Shabaab. And 
Shabaab commanders have spoken of a sea Jihad and have opened a 
marine office, a marine office to coordinate with pirates.
    We will go now to Judge Poe of Texas for 2 minutes.
    Mr. Poe. Thank you, Mr. Chairman.
    The pirates are back. These aren't swashbuckling, eye-patch 
wearing pirates. These are modern-day pirates that have 
automatic weapons, elaborate intelligence systems, 
sophisticated money laundering network in connections to their 
brothers in crime, Islamic terrorists.
    One of my constituents from Texas, Bill Rouse, is an avid 
sailor of the high seas, but he is just one example of the way 
these pirate thugs have taken away his freedom. He, like many 
other small boat owners that cross the ocean, have to get a 
barge to put their ship on or their boat on to go through 
pirate-filled areas.
    The pirates are in it for the money. About 40 percent of 
the world's oil is shipped through the Indian Ocean, where the 
Somali pirates have had a field day. Collectively governments 
spend $1 billion a year policing the pirates while the cost of 
piracy to the global economy is anywhere from $7 billion to $12 
billion.
    The industry is growing. New reports from confirmed Somali 
pirates reach all the way to the west coast of India, spanning 
the breadth of the Indian Ocean. I have here a poster of some 
of the recent--excuse me, Mr. Duncan--the pirate attacks in the 
Indian Ocean. From Somalia to India is 2,240 miles. That is a 
long way. And all of these show pirate attacks. The red are 19 
months prior to October, but the blue, the most of them, are 
just from October to February of this year. They are 
increasing, and they are, with reckless abandon, moving closer 
and closer to India.
    Right now, I understand there are approximately 200 small 
boat owners in Malaysia waiting to go west but can't get there 
because they are afraid of the pirates. There are a couple 
hundred more in the Pacific Ocean waiting to go west, but they 
cannot, because they are afraid of the pirates.
    Last year Somalian pirates hijacked 53 ships and a total of 
1,100 hostages were held for ransom. This is increasing every 
day, and they act with disregard to anyone, especially to 
nations that should be patrolling the high seas.
    We can take control of this situation if we have the moral 
will to do so. We can lower the benefits by pirates by stopping 
them from receiving money. We can raise the cost just like 
Jefferson did to the pirates off the shores of Tripoli in 1801. 
The Constitution actually gives authority to the United States 
Government to do something about piracy, Article I, Section 8, 
to define and punish pirates, piracy, and felonies committed on 
the high seas. It is time the United States takes some action 
and put these outlaws on the high seas out of business and send 
them to Davy Jones' locker. I yield back.
    Mr. Royce. Thank you, Mr. Poe.
    We will go to Mr. Higgins of New York for 3 minutes.
    Mr. Higgins. Thank you, Mr. Chairman.
    Obviously, this is a big problem in that piracy has grown 
to a multi-million dollar criminal enterprise and pirates 
attack or seize ships. Ransoms now average between $4 million 
and $5 million. And some 2,000 pirates operate from Somalia's 
shores.
    Larger pirate syndicates are becoming increasingly more 
sophisticated and professional. They seize cargo ships and oil 
tankers because of their huge ransom values.
    Piracy thrives in Somalia for two reasons: Somalia is one 
of the world's most failed states; and Somalia is a desperately 
poor state, and there is huge money in pirating.
    My concern also is where this money ends up. And so I look 
forward to the testimony of our expert witnesses and drilling 
deeper into this problem and hopefully coming up with some 
answers.
    With that, I yield back.
    Mr. Royce. Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman. I will be brief.
    This is a real issue. I just came back where I talked with 
the Pacific Command. A conversation we had was about piracy, 
growing threat of piracy around the world. We had the 
opportunity to talk with some folks in the Philippines about 
the issue and about the Malacca Strait and how the pirates are 
starting to come further and further east, as Judge Poe said, 
off the coast of India and even closer to Indonesia. So I 
certainly appreciate the hearing today.
    I came to learn. I am a freshman Member of Congress. That 
is part of the reason I went and talked with those folks about 
these issues. And I look forward to hearing your testimony 
today. And I yield back.
    Mr. Royce. Very good. We are joined by representatives of 
the State and Defense Departments today.
    Andrew Shapiro is the Assistant Secretary of State for 
Political-Military Affairs. He served on the Obama transition 
team and, prior to that, was Senator Clinton's senior defense 
and foreign policy adviser. Mr. Shapiro received a joint law 
and master's in international affairs degree from Columbia 
University.
    William Wechsler is the Deputy Assistant Secretary of 
Defense for Counternarcotics and Global Threats, where he leads 
the department's counternarcotics and threat finance policies 
and operations around the world. He reports to the Assistant 
Secretary of Defense for Special Operations, Low-Intensity 
Conflict. Previously, Mr. Wechsler served as special adviser to 
the Secretary of the Treasury on the staff of the National 
Security Council as director for transnational threats.
    All of the witnesses' complete written testimony we have 
and have read, and will be entered in the record. I will remind 
our witnesses to summarize your statements, keep it to 5 
minutes, if you can, and then we will go to questions.
    And we will begin with Assistant Secretary Shapiro.

    STATEMENT OF THE HONORABLE ANDREW J. SHAPIRO, ASSISTANT 
     SECRETARY, BUREAU OF POLITICAL-MILITARY AFFAIRS, U.S. 
                      DEPARTMENT OF STATE

    Mr. Shapiro. Chairman Royce, Ranking Member Sherman members 
of the committee, I appreciate this opportunity to testify 
about the problem of piracy on the high seas and outline our 
new approach to combat this scourge.
    As all the members of the committee noted during their 
opening statements, piracy off the coast of Somalia is a crime 
of growing concern. The number of pirate attacks has risen 
steadily since 2007. In 2010, Somali pirates captured over 
1,000 sailors aboard 49 vessels. As of June 14th of this year, 
400 seafarers were being held as hostages and 18 hijacked ships 
were being held for ransom.
    The increase in the total number of attacks has tragically 
come with an increase in the level of violence against 
hostages. This was displayed in brutal fashion by the killing 
of the four American citizens aboard the sailing vessel Quest 
in February.
    Pirates are also evolving their tactics. Through the use of 
mother ships and GPS technology, pirates have been able to 
expand their geographic range from the southern Red Sea to the 
eastern Indian ocean. Mother ships are hijacked ships used as 
floating bases, which allow pirates to stage attacks hundreds 
of miles from Somali coast.
    A vicious cycle has formed where ever rising ransom 
payments have not just spurred additional pirate activity but 
have also enabled pirates to increase their operational 
capabilities and sophistication.
    Piracy has gone from a fairly ad hoc, disorganized criminal 
endeavor to a highly developed, transnational criminal 
enterprise.
    In response, the United States has taken the lead in 
pursuing a multilateral and multidimensional approach to 
combating piracy emanating from the Coast of Somalia. Piracy 
can only be effectively addressed through broad, coordinated 
and comprehensive international efforts.
    In January 2009, the United States helped establish the 
Contact Group on Piracy off the Coast of Somalia which now 
includes nearly 70 nations, international organizations and 
maritime trade associations.
    The Contact Group helps coordinate national and 
international counterpiracy policies and actions. It has 
galvanized action and harmonized counterpiracy policy among 
participating countries and international organizations. There 
is immense international concern over piracy and an increasing 
willingness amongst affected nations to expand counterpiracy 
efforts and increase cooperation and collaboration with the 
United States.
    With this multilateral framework in place, we have pursued 
a multidimensional approach that focuses on security, 
prevention, and deterrence.
    Improving security on the seas has been a principal focus 
of our efforts. As pirate tactics have grown more sophisticated 
and aggressive, the international naval forces performing 
counterpiracy operations have responded in kind. U.S. Naval 
Forces have thwarted pirate attacks in process, engaged pirate 
skiffs and mother ships and successfully taken back hijacked 
ships by opposed boardings.
    U.S. Naval Forces Central Command (NAVCENT) has worked with 
partners to set up a 463-mile long corridor through the Gulf of 
Aden called the Internationally Recommended Transit Corridor or 
IRTC for short.
    This transit zone has been successful in reducing the 
number of attacks within the corridor, but it has had the 
unfortunate side effect of pushing pirate activities elsewhere 
outside of the corridor. Given the immense area in which 
pirates operate, it is often impossible for naval forces to 
respond in time to stop an attack. There is just too much water 
to patrol.
    That is why the United States has also focused on 
prevention by encouraging commercial and private vessels to 
implement industry developed best management practices. These 
are practical steps shipowners and seafarers can take to 
prevent pirate attacks from happening in the first place.
    More flagged states are also allowing armed guards on 
merchant vessels. It is notable, as the chairman mentioned, 
that no vessel with an armed security team embarked has been 
successfully hijacked.
    It is also U.S. policy to discourage the payment of ransoms 
and to seek to deny pirates the benefits of any ransoms which 
may be paid.
    Lastly, to deter piracy, we have sought to expand 
prosecution and incarceration. When suspected pirates have been 
captured, the United States has consistently advocated that the 
states directly victimized take on the responsibility to not 
only try these suspects but to also incarcerate them if 
convicted. There are more than 1,000 pirates in custody in more 
than 18 countries where national prosecutions are taking place.
    Taken in concert, this multilateral or multi dimensional 
approach seems to have led to a drop in successful pirate 
attacks. But total number of successful attacks in March, April 
and May of this year was eight. This is still unacceptably 
high, but it is down significantly from the 27 successful 
attacks for the same 3-month period in 2010.
    This is a small sample size, so we do not know for sure if 
it signifies a turning of the tide or a brief aberration. But 
even if these figures do point to significant progress, given 
the lucrative financial incentives, pirates will likely attempt 
to further adapt their approaches.
    Since pirates are already adapting and expanding their 
efforts, we must as well.
    Earlier this year, Secretary Clinton expressed impatience 
with the lack of progress against piracy and urged that more be 
done to address this scourge.
    After an intensive review of our strategy following the 
Quest tragedy, Secretary Clinton approved a series of 
recommendations which, taken together, constitute a new 
strategic approach. This approach calls for continuing naval 
action at sea as well as exploring nonmilitary options to 
target pirate leaders and organizers ashore.
    Our intention is to pursue innovative measures to maximize 
all the tools at our disposal in order to disrupt the 
activities of the financiers, organizer and logistics suppliers 
of piracy. We are in the process of discussing our ideas for 
these new lines of action with our interagency partners with an 
eye toward rapid implementation of agreed measures.
    The focus on network is essential. As piracy has evolved 
into an organized transnational criminal enterprise, it is 
increasingly clear that the arrest and prosecution of pirates 
captured at sea, who are often the low-level operatives 
involved in piracy, is insufficient on its own to meet our 
longer-term counterpiracy goals. Pirate leaders and 
facilitators receive income both from investors and ransom 
payments and disburse a portion of the proceeds of ransom back 
to their investors and to the pirates who actually hijack the 
ships and hold the crews hostage.
    We will focus in the coming months in identifying, 
apprehending the criminal conspirators who provide the 
leadership and financial management of the pirate enterprise 
with the objective of bringing them to trial and interrupting 
pirate business processes.
    Already the United States has recently indicted and 
extradited two alleged Somali pirate negotiators for the 
respective leadership roles in attacks on U.S. vessels.
    To achieve this, we are working to connect law enforcement 
communities, intelligence agencies, financial experts and our 
international partners to promote information sharing and 
develop actionable information against pirate conspirators. 
This effort includes tracking pirate sources of financing and 
supplies, such as fuel, outboard motors and weapons.
    Additionally an important element of our recalibrated 
counterpiracy approach involves renewed emphasis on enhancing 
the capacity of the international community and particularly 
states in the region to prosecute and incarcerate suspected 
pirates.
    The United States supports a comprehensive approach that 
addresses concerns about incarceration and repatriation by 
increasing prison capacity in Somalia, developing a framework 
for prisoner transfers so convicted pirates serve their 
sentence back in their home country of Somalia, and by working 
to establish a specialized piracy chamber in the national 
courts of one or more regional states.
    Finally, we believe supporting the reestablishment of 
stability and adequate governance in Somalia represents the 
only sustainable long-term solution to piracy. This will 
require concentrated and coordinated assistance to states in 
the region, including those parts of Somali society with which 
we can work, to build their capacity to deal with the social, 
legal, economic and operational challenges to effective law 
enforcement.
    However, acknowledging the difficult situation ashore does 
not preclude progress at sea. Through the State Department's 
new strategic approach, significant progress can be made to 
degrade the ability of pirates to conduct attacks and threaten 
vital shipping lanes.
    We should have no illusions. There is no simple solution to 
modern day piracy off the Horn of Africa. But through the 
shared commitment of the United States and the international 
community, there is much we can do in the months and years 
ahead to achieve progress against this growing challenge. Thank 
you.
    [The prepared statement of Mr. Shapiro follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    

    Mr. Royce. Thank you, Mr. Shapiro.
    Mr. Wechsler.

    STATEMENT OF MR. WILLIAM F. WECHSLER, DEPUTY ASSISTANT 
SECRETARY, COUNTERNARCOTICS AND GLOBAL THREATS, U.S. DEPARTMENT 
                           OF DEFENSE

    Mr. Wechsler. Thank you very much, Mr. Chairman, 
Representative Sherman and other distinguished members of the 
subcommittee. I will be brief. And one thing that I will skip 
in my oral statement is a description of the problem because, 
quite frankly, you all have described it extremely well and 
very accurately.
    The cost of piracy is no more visible, though, than through 
the tragedy aboard the sailing vessel Quest in February. Four 
Americans--Jean and Scott Adam, Phyllis McKay, and Robert 
Riggle--were murdered by pirates.
    Chairman Royce and Representative Sherman, I understand the 
Adams were from Marina del Rey in your State. This incident is 
a stark reminder of what is at stake in our efforts to fight 
the piracy.
    One thing that has been mentioned is the question of the 
connections between the pirates and the revenues that they 
receive and terrorists that operate in the same area. This is 
an exceedingly important question.
    I think it would be untrue if we were to represent to you 
that we know the answer to this question or that the 
intelligence on this issue is much less than any of us would 
like.
    However, as we see it now, we believe that the terrorists 
and the pirates are not operationally or organizationally 
aligned, though there is an element of coercion that results in 
pirate revenues going to al-Shabaab.
    Disrupting piracy will remain challenging for several 
reasons. First and foremost, as was just discussed by my 
colleague from the Department of State, the root causes of 
Somalia piracy lie in Somalia, in the poverty, instability and 
absence of governance in that country.
    Second, Somali pirates operate in an area covering 
approximately 2.9 million square nautical miles. This is an 
area approximately the size of the continental United States. 
It is a vast amount of area that simply cannot be covered by 
naval forces. Indeed, if you took all of the navies of all of 
the countries in all of the world and put them against this 
area, we still wouldn't be able to cover this amount of 
nautical space.
    Third, captured suspected pirates often go unprosecuted, as 
has been noted, even when significant criminal evidence exists. 
Many states lack the appropriate domestic laws to prosecute 
pirates. Other states may have the necessary legal frameworks 
but do not have the prosecutorial and judicial capacity to hold 
pirates accountable. And most troubling, other states just 
simply lack the political will at all to do this job.
    Finally, as the members of this subcommittee know, the 
Department of Defense has many other urgent priorities around 
the world, particularly in Afghanistan and Iraq. In the Horn of 
Africa, many of the resources most in demand for counterpiracy 
activities, such as intelligence, surveillance and 
reconnaissance assets, are urgently required for 
counterterrorism purposes.
    These multidimensional challenges illustrate that there is 
no simple solution to piracy. Most importantly, they underscore 
that this problem cannot be solved by military action alone.
    Let me briefly describe the Department of Defense's role. 
Our primary role is to interrupt and terminate acts of piracy. 
We also play a supporting role in reducing the vulnerability of 
the maritime domain and facilitating the prosecution of 
suspected pirates.
    On average, United States has two to four vessels 
participating in counterpiracy operations as part of Combined 
Task Force 151 and NATO's Operation Ocean Shield. Combined Task 
Force 151 is a component of combined maritime forces which 
regularly host international coordination meetings to share 
information and deconflict regional counterpiracy efforts.
    The Department of Defense also is in support of the 
Departments of State and Treasury in efforts to track the 
finances and make this criminal activity less lucrative.
    Mr. Chairman, I know that you have long and deep history in 
the efforts of the executive branch to combat threat finance 
and many other areas, and this is an area in which we all are 
committed to doing much more.
    Through our interagency partners, DOD will continue to work 
with regional states to develop their capacity to patrol the 
seas and enhance their prosecutorial and judicial capabilities. 
While much remains to be done, as Assistant Secretary Shapiro 
has noted, we are seeing concrete results already from our 
efforts.
    Since August 2008, international efforts have led to the 
destruction or confiscation of more than 100 pirate vessels and 
numerous weapons, including small arms and rocket-propelled 
grenades. The international community has also turned over 
approximately 1,000 pirates to various countries for 
prosecution.
    From the Department of Defense's perspective, when we have 
the opportunity to act, we do act. But given the trends that 
you all described, it is, again, clear that military action is 
not enough.
    As you noted, one of the--I will just close by noting that 
one of the very key elements in our strategy has to have a more 
effective shared responsibility with industry. Effectively 
countering piracy, the single most effective way to deter 
piracy in the short term is to make the vessels harder to 
attack successfully. There was a time a couple of years ago 
where there was some debate on this question. Best management 
practices, which range from hardening the vessel to maintaining 
professional civilian armed security teams on board, can thwart 
the majority of pirate attacks without the need for military 
intervention.
    I would underscore, as you did, Mr. Chairman, that no 
vessel that has implemented best management practices and has 
armed private security teams aboard has been successfully 
pirated. Indeed, just last month, at least six attacks were 
halted after embarked security teams engaged pirates.
    Thank you very much for inviting me to this hearing. I look 
forward to your questions, sir.
    [The prepared statement of Mr. Wechsler follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mr. Royce. Thank you, Mr. Wechsler.
    One of the things that hasn't changed is the vastness of 
the ocean. The reason we established the U.S. Navy, arguably, 
the reason put forward by Jefferson had to do with pirate 
attacks off the Barbary Coast. And so what has changed over 
time is our rules of engagement.
    And I know this is a debatable point here in the U.S. and 
in the U.K., but Mr. Shapiro, in a speech last year, you said, 
``We have to apply 21st century standards of evidence, human 
rights, and other legal protections'' to the piracy problem. We 
are aware of the debates on the engagement between the way the 
British and the U.S. handle this and the way that the Russians, 
for example, and the Indians handle the piracy problem.
    There has not been one pirate who has taken a Russian 
seaman who has lived the tell the tale. And the Indians engage 
the same way.
    The Indian Navy, they take these ships to the bottom of the 
ocean.
    A few weeks ago, I think it was, I read about a German 
warship that engaged two attack skiffs and sunk them but 
allowed the mother ship to return.
    So the rules of engagement are different between different 
navies. And I think one of the questions we wrestle with, and I 
know reading--I have seen legal commentary put forward, that 
the U.N. Security Council resolutions, which were issued under 
Charter 7 of the U.N. Charter, should serve as sufficient legal 
justice to kill pirates on the high seas. And you have legal 
scholars calling for targeting, selective targeting of pirate 
leaders, just as we do with al-Qaeda, with terrorist leaders in 
Yemen or in Pakistan.
    So, why not take this approach, Mr. Shapiro? I mean, we can 
revisit your commentary on this and sort of reopen this debate.
    Mr. Shapiro. Well, thanks for that question. I think the 
quote you were referring to is, I was quoting Secretary Clinton 
saying that we needed 21st century solutions to a 19th century 
problem. And that meant more broadly, we need to use all the 
tools at our disposal.
    Mr. Royce. Let me quote you exactly, ``We have to apply 
21st century standards of evidence, human rights, and other 
legal protections'' to the piracy problem. That is sort of the 
debate.
    Mr. Shapiro. I think a couple of issues, first, from our 
perspective, our ability to gain international support for 
addressing piracy will require us to treat in a manner 
consistent with the rule of law.
    Secondly, when you talk about targeting pirates on the high 
seas, it is important to prosecute those we catch. But what is 
more important is to target the pirate facilitators because 
there is an almost innumerable number of young pirates who are 
willing to be recruited to go out on the high seas and take 
their chances, given their life in Somalia.
    It is the facilitators and the people who profit from this 
that we need to target, and that is what our approach is going 
to start to do.
    We have already brought back two facilitators back to the 
United States for prosecution. And I think that in order to 
continue to get the level of international support that we need 
to make further progress, that is the right approach.
    We continue to build cases against them, as we have done 
against other organized crime groups, such as drug cartels, 
build the cases, bring them back for prosecution, and in that 
way, we can disrupt the pirates from being able to get the 
funding that they need to go out to sea.
    Mr. Royce. You know, it is an interesting question. I 
remember the debate in the State Senate over the use of lethal 
force, which is what we are talking about here, as well, in 
California. The question was--and it actually prevailed at the 
time--the question was, could you use lethal force if someone 
was attacking you, coming into your home, robbing your home, 
invading your home, could you use lethal force? And the 
decision in the State Senate and the Assembly was, yes, you 
could.
    And clearly, the conclusion that has been reached in 
Germany, India, Russia, is that they are going to use lethal 
force in engagements with pirates.
    Mr. Shapiro. Well, in India, they did use lethal force to 
free their ship, but they also brought back many of their 
pirates for prosecution in India.
    And I would say, Secretary Clinton has expressed a desire 
to make progress. She has expressed an openness to entertaining 
ideas regarding addressing the pirate problem on shore.
    But at the end of the day, if we are to target these 
networks, it will be important to build cases and develop 
information, and that means you bring in one pirate 
facilitator, and then he rolls up the next one. And then you 
bring in the next one and work your way up the chain to the 
highest levels. So these require long, complicated cases. But 
at the end of the day, if we are going to disrupt these 
networks, we are going to have to target the appropriate 
people, bring them back, get them to turn on their higher ups 
and continue to make progress in disrupting these 
organizations.
    Mr. Royce. Mr. Sherman. Thank you.
    Mr. Sherman. Mr. Shapiro, the State Department has to often 
decide, do they want to be popular with the diplomats from 
Europe, or do they want to serve the interests of the American 
people?
    These ships, 99.9 percent of them, are foreign ships. They 
are not U.S. ships. They are not U.S. crews. We don't get the 
jobs, and most of that cargo isn't headed to the United States.
    And yet these are foreign shipowners, making foreign 
profits.
    Do we charge any fees for protection for any of these 
ships? Or do we bear the cost at the cost of the U.S. taxpayer?
    Mr. Shapiro. We do not charge fees.
    Mr. Sherman. And so we will use the marginal cost system to 
say that this is only costing us hundreds of millions, but it 
is actually costing us billions, a gift to foreign shipowners.
    You say that punishing the rank and file pirates doesn't 
matter; I think, yes, there are a large number of Somalis who 
are willing to become rank and file pirates, but that is 
because they don't get punished. If you create a high level of 
mortality among these rank and file pirates, that will be 
successful.
    But now let's turn to the real rip off of the U.S. 
taxpayer, and that is these shipowners. They don't want to told 
to put armed guards. That costs them money. They would rather 
have U.S. taxpayers pay money. They don't want to be told, only 
go through in convoys. That costs them money. They want our 
money.
    What are you doing to say, we are going to shift the costs 
to the shipowners, we are going to require armed guards, and we 
are going to require armed convoys?
    Mr. Shapiro. Well I would say for U.S. ships, you know, the 
Coast Guard----
    Mr. Sherman. None of these are U.S. ships, sir, so why 
don't you talk about the real ships?
    Mr. Shapiro. Well, obviously, we are working through the 
Contact Group and through our international partners to 
encourage this.
    We, as a matter of policy, have made the decision that for 
U.S. ships, we will permit it. A number of other states 
actually ban it. Some ships have moved their flag states 
because their governments will not allow them. And we are 
working through diplomatic channels to change that attitude.
    Mr. Sherman. So as long as it is in the interests of the 
shipowners and the Europeans, so that the shipowners don't have 
to bear the cost of having armed guards and the shipowners 
don't have to bear the cost of going in convoys, we will be 
there with U.S. taxpayer money to support these shipowners?
    Mr. Shapiro. Well, I think we are there with U.S. taxpayer 
money because it is in our own interests. As we saw----
    Mr. Sherman. It is in our interests to bear the costs that 
should be borne by those foreign shipowners?
    Mr. Shapiro. Well, it is in our interests as we saw, you 
know, we had four Americans who were brutally murdered by 
pirates. We have U.S. ships that have had been attacked by 
pirates. So it is--there is----
    Mr. Sherman. And if these ships were all required to go in 
convoys, those Americans would be alive, and the costs for 
corporate shipowners would be higher. Is that correct?
    Mr. Shapiro. In terms of--probably, that, I believe that is 
an accurate statement. But I am not an expert on what the 
shipowners think their costs are.
    But I would say, certainly we have been disappointed. And 
Secretary Clinton has testified that she has been disappointed 
that the shipowners have not taken more responsibility, and 
that is going to be a focus of our efforts going forward is to 
put----
    Mr. Sherman. I serve on Financial Services, where we get a 
chance to bail out rich corporations with U.S. taxpayer 
dollars. We rarely get the opportunity to discuss that in this 
room. But these are multi-billion dollar private corporations 
who don't want to bear the costs. They don't want to bear the 
inconvenience. They don't want to pay for armed guards. They 
don't want the inefficiency of having to go in convoys, and 
they are willing to operate that way because they are 
subsidized by free security offered by the U.S. taxpayer.
    I would say it is time for us to condition our protection 
of these ships on them either paying the fee or bearing the 
cost. And if U.S. ships are in the area, we could organize 
convoys. But bailouts happen, apparently, in the jurisdiction 
of both of my committees.
    Mr. Shapiro. I would make two points.
    First, we have seen more and more shipowners adopt the 
practice of armed security teams. Indeed, that is why we think 
there has been less success over the last 3 months, is that 
greater adherence to best management practices.
    The problem is that the small number of ships that don't 
follow best management practices are responsible for the vast 
majority of those that are actually pirated. So the question 
is, what do you do about those? And we need to work with the 
shipping industry to put financial pressure and incentives on 
those who are not following best management practices and 
leading to this problem to take further action.
    Mr. Sherman. I would point out that the U.S. Navy is 
capable of detaining those ships that are acting in a way that 
is hazardous to their crews, promoting piracy, putting 
themselves in a position where they are going to need a naval 
bailout. And for these ships not to be willing to have armed 
guards and/or convoys and for us to sit back and say, okay, we 
will defend you, is bailout foreign policy.
    I yield back.
    Mr. Royce. Mr. Duncan, I have an amendment on the floor. If 
you will continue to chair and handle the panel here, I will 
try to return after it is taken up.
    I think you are next, Mr. Duncan.
    Mr. Duncan [presiding]. Thank you.
    I recognize myself for 5 minutes.
    I believe that the presence of U.S. Naval vessels in the 
region are a definite deterrent and meeting with Admiral Papp 
with the Coast Guard recently and learning that the U.S. does 
have a strong presence there with the Coast Guard is 
encouraging.
    But I think it was French philosopher Pascal that said a 
police force without force is impotent.
    And I believe that if we don't have a presence there--I 
think you mentioned earlier that the Germans and the Russians 
and the Indians even use more force in dealing with the Somali 
pirates, and I would be willing to say their vessels are 
probably the least pirated. So I would love to see that.
    I want you to, if you will repeat, did you say that you 
would encourage security forces on U.S. flag vessels?
    Mr. Shapiro. Well, the Coast Guard requires either an armed 
or unarmed security team for U.S. flag vessels. We have not 
taken a position on whether to encourage them to be armed or 
unarmed other than to note that armed vessels have not been 
successfully pirated.
    Mr. Duncan. Okay. And that is good.
    Mr. Wechsler, you noted that you didn't see a meaningful 
connection between the pirates and other violent extremist 
groups, and we are all concerned about money going to the 
extremists and the jihadists that are wanting to continue to 
wage this war against freedom.
    But there been meaningful reports that multi-million dollar 
ransoms have become a source of funding for Somali based 
terrorist groups al-Shabaab, and they have reportedly taxed 
Somali pirate ransoms. The Kenyan Government estimates that 30 
percent of ransom payments are funneled to al-Shabaab.
    Could you comment on that? And does the Kenyan Government 
have it wrong?
    Mr. Wechsler. Sure. Let me make sure that I am clear.
    I want to make two points about what I can say in this 
session, and if you want to get together in a closed session, 
one on one, I am happy to give a full intelligence brief on 
this as well.
    What we don't believe, what we don't see yet is operational 
or organizational alignment between the piracy, the pirates 
themselves and al-Shabaab. They are not the same organization.
    Mr. Duncan. No direct connection then?
    Mr. Wechsler. It is not no direct connection, but they are 
not the same organization; they are not operationally or 
organizationally aligned.
    What we do believe that we see some evidence of is 
coercion. So these are competing organizations, and al-Shabaab 
sometimes coerces the pirates into giving some revenues to 
them. That is, again, with all the caveats that I said 
previously about the limits of our intelligence right now, that 
is what I can say in this open session.
    Mr. Duncan. Thank you.
    The chair will recognize the gentleman from New York 5 
minutes.
    Mr. Higgins. Thank you, Mr. Chairman.
    United States Special Forces killed three Somali pirates in 
2009 and freed captain Richard Phillips. In that there are 
dozens of ships being held off the coast of Somalia and some 
300 to 500 merchant sailors, why aren't other countries taking 
unilateral action against these pirates in the Gulf of Aden?
    Mr. Shapiro. Well, each country makes its own decisions 
about how they will address their pirated vessels.
    We have, as was noted earlier, certain countries have 
become more aggressive in addressing their pirated vessels 
where their citizens have been captured and their ships have 
been captured. India was mentioned; South Korea, and others.
    Ultimately, because often these vessels have hostages, each 
case is unique. Each case has its own particular factors which 
require the Navy ship on scene to make a determination as to 
whether it is, the risk is worth taking kinetic action against 
those ships. So there is no hard and fast rule. Each is unique, 
based on each particular circumstance.
    Mr. Wechsler. I think I can best describe what we do, and I 
also want to make sure that this point is clear for this 
committee, because it is quite an important point about our 
rules of engagement. We are constantly assessing and 
reassessing our rules of engagement. Again, the specific nature 
of our rules of engagement is something that I would be more 
than happy to discuss in a closed or one-on-one session with 
anyone here.
    But I am very comfortable with the rules of engagement as 
they are now. They are very well balanced. We are constantly 
assessing them. They have been changed as a result of the 
changing dynamic. That I can say in this session.
    And one thing I would just point out is, as recently as 
last month, May 16th, the USS Bulkeley responded to a mayday 
message from the Artemis Glory, which reported that it was 
being attacked by pirates, launched an SH-60B helicopter. Upon 
its arrival, under the principle of extended unit self defense, 
which is allowed in order to provide protection to the crew, 
the helicopter engaged the pirates. All the pirates are 
believed to have been killed.
    So I do want to make clear that some of the distinctions 
that folks may be referring to between what we do and what some 
other countries do, we have very robust rules of engagement, 
and when appropriate, we can act, and we do act.
    But I do want to go back, again, to what I said in my 
opening statement; the full solution to this problem will not 
be addressed by military means alone. It will be addressed by 
some of the other nonmilitary elements that we have also been 
discussing here.
    Mr. Higgins. Just a final question. Are there concerns 
along the Gulf of Aden and the Horn of Africa that this problem 
is expanding to areas beyond Somalia?
    Mr. Shapiro. Thus far, we have not seen it. Obviously, the 
ships coming from Somalia are moving further and further out 
into the Indian Ocean. But in terms of pirate havens, typically 
that takes place, as we have seen in Somalia, in a failed state 
environment. So we have not seen this tactic spreading 
elsewhere in the region. However, we are concerned that the 
number of--that the ships are extending their range to cover a 
broader area of the Indian Ocean.
    Mr. Higgins. Okay.
    Mr. Wechsler. Somalia is a special case. In some parts of 
the world, it is--and going through history, some of which has 
been mentioned before, piracy, including back in the early 
1800s, was, in effect, a state-sponsored activity. There was 
somebody making a decision to do this. And in fact, at that 
point, a huge proportion of the U.S. Treasury was going to pay 
tribute to the pirates in Tripoli because it was a state-
sponsored activity.
    In other places, where there was a--where it is nonstate 
activities, it is much more geographically focused, as it has 
been in the Straits of Malacca. Here you have the combination 
of a vast geographic area and no state, in large case, to 
organize this, and so a sanctuary for the pirates. So this is 
the combination of both of these situations for the worst-case 
scenario.
    Mr. Duncan. The chair now recognizes the gentlewoman from 
North Carolina, Ms. Ellmers, for 5 minutes.
    Mrs. Ellmers. Thank you. Thank you gentlemen for being here 
today.
    Mr. Shapiro, I have a question. We have talked a lot about 
the Somalian pirates, and U.S. officials, yourselves, 
acknowledge the fact that we need to be doing more to alleviate 
this problem.
    One of the areas, of course, is targeting and following the 
monetary flow of ransom and the moneys that are being paid. In 
a recent meeting of the International Contact Group, they did 
discuss mapping and following the money. But the group was put 
together in 2009. This seems like a pretty commonsense 
approach.
    Why is it taking this long to prioritize that and to take 
this approach?
    Mr. Shapiro. I will say, as you mentioned, the Contact 
Group was set up in 2009. And initially, it was starting from 
scratch, and it was focusing on building prosecutorial 
capacity, working on what and how to work, how the 
international community should coordinate on this issue.
    As we learned more, as we learned how the pirates operate, 
it has become apparent that in order to be successful, we will 
need to target the financial flows.
    There has been a learning curve for the international 
community, no question about it.
    But now we have ascended that learning curve. And we in the 
United States Government, at the State Department, we have 
begun to devote resources into how to crack this. We are going 
to work with our interagency partners, and the Contact Group is 
talking about setting up a fifth working group on financial 
flows, so that we can work together with the international 
community which will be essential.
    Mrs. Ellmers. Mr. Wechsler, kind of along the same line of 
questioning here. Basically, you have pointed out that the 
Department of Defense is working with the International Contact 
Group with the aim of pursuing criminals who are funding 
pirates, demanding ransoms, and laundering the illegal proceeds 
from ransom payments. In your opinion, how can this best be 
executed?
    Mr. Wechsler. The Department of Defense has learned a lot, 
has been forced to learn a lot about this question in Iraq and 
Afghanistan where, we have confronted and are confronting an 
irregular adversary with independent sources of revenue through 
criminal means. The best way to go about this and the way that 
I know my colleague from the Department of State would agree is 
to use all the tools available to government in a coordinated 
campaign effort to go against the financiers on a counter 
network capacity.
    You have to be able to map the networks. You have to be 
able to identify the right nodes, and then you have to be able 
to identify which tool of the U.S. Government is best suited to 
go after the nodes to have--what kind of effect that you want 
to have, whether it is military activity, whether it is 
intelligence activity, it is law enforcement activity, whether 
it is sanctioning activity. That is the way that we have found 
in other contexts the ability to have some strategic impact.
    Mrs. Ellmers. Thank you.
    And I yield back my time.
    Mr. Duncan. Thank you.
    I am going to reserve some time for myself to ask another 
question for Chairman Royce. The Somali piracy is essentially 
an international criminal enterprise, and the GAO found that 
the information on private finances collected by various U.S. 
Government agencies is not being systematically analyzed and is 
unclear if any agency is using it to identify and apprehend 
pirate leaders or financiers. How are you correcting this?
    Because we have had practice with organized crime and 
terrorism, this is where we can truly have a strategic impact 
it would seem. So the question is, how are you correcting this? 
And that is for either one.
    Mr. Shapiro. As I mentioned, the State Department is 
coordinating interagency efforts to identify the most effective 
means of disrupting the financial flows of piracy and targeting 
the pirate----
    Mr. Duncan. Would that be the Contact Group?
    Mr. Shapiro. Yes. We will work both in our Government, as 
well as with international partners. And through our 
international partners is with the Contact Group. So we will be 
working--you know, there are a number of agencies throughout 
the U.S. Government, the Department of Treasury, Defense, DEA, 
FBI, as well as the intelligence community. We will also be 
working with INTERPOL and through our law enforcement contacts.
    So we do acknowledge that we need to do a better job on 
this--no question about it--that we need to focus on financial 
flows and that we need to devote the resources that are 
necessary in the U.S. Government to better track financial 
flows.
    Mr. Duncan. When you say we will be working, I understand 
that the Contact Group was established over 2 years ago and 
with the things going on in the world, it would seem like this 
element would be prioritized.
    Mr. Shapiro. And indeed, there was a recent meeting, as the 
Congresswoman mentioned, to talk about this issue at the 
Contact Group. And the goal was to set up another working group 
to focus on financial flows. So there is great interest in the 
international community. And I have talked with a number of our 
international partners who are greatly interested in working 
with us on tracking financial flows.
    Mr. Duncan. As you can see, I am the last one here. So let 
me take this opportunity to thank the panelists for being here. 
If any of our subcommittee members or committee members have 
written questions, they will be submitted, and we ask you to 
timely return those. And since there is no other committee 
members here, we will stand adjourned. Thank you.
    [Whereupon, at 3:04 p.m., the subcommittee was adjourned.]
                                     

                                     

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