[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






                  UPDATES ON EFFORTS TO COMBAT PIRACY

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

                                (113-7)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 10, 2013

                               __________

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
VACANCY
                                ------                               

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska                    JOHN GARAMENDI, California
HOWARD COBLE, North Carolina         ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        CORRINE BROWN, Florida
PATRICK MEEHAN, Pennsylvania         RICK LARSEN, Washington
STEVE SOUTHERLAND, II, Florida,      TIMOTHY H. BISHOP, New York
  Vice Chair                         JANICE HAHN, California
TOM RICE, South Carolina             LOIS FRANKEL, Florida
TREY RADEL, Florida                  NICK J. RAHALL, II, West Virginia
VACANCY                                (Ex Officio)
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
    
    
    
    
    
    
    
    
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Rear Admiral Joseph A. Servidio, Assistant Commandant for 
  Prevention Policy, U.S. Coast Guard............................     3
Rear Admiral Joseph W. Kuzmick, Director, Operations and Plans, 
  U.S. Navy......................................................     3
Hon. David T. Matsuda, Administrator, Maritime Administration....     3
Andrew Shapiro, Assistant Secretary, Bureau of Political-Military 
  Affairs, U.S. Department of State..............................     3
Neil Smith, Head of Underwriting, Lloyd's Market Association.....     3

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Howard Coble, of North Carolina.............................    26
Hon. John Garamendi, of California...............................    28

 PREPARED STATEMENTS AND ANSWERS TO QUESTIONS FOR THE RECORD SUBMITTED 
                              BY WITNESSES

Rear Admiral Joseph A. Servidio:

    Prepared statement...........................................    30
    Answers to questions from Hon. John Garamendi, a 
      Representative in Congress from the State of California....    34
Rear Admiral Joseph W. Kuzmick:

    Prepared statement...........................................    39
    Answers to questions from Hon. John Garamendi, a 
      Representative in Congress from the State of California....    50
Hon. David T. Matsuda:

    Prepared statement...........................................    53
    Answers to questions from Hon. John Garamendi, a 
      Representative in Congress from the State of California....    58
Andrew Shapiro:

    Prepared statement...........................................    60
    Answers to questions from Hon. John Garamendi, a 
      Representative in Congress from the State of California....    65
Neil Smith:

    Prepared statement...........................................    73
    Answers to questions from Hon. John Garamendi, a 
      Representative in Congress from the State of California....    77

                       SUBMISSION FOR THE RECORD

Rear Admiral Joseph A. Servidio, Assistant Commandant for 
  Prevention Policy, U.S. Coast Guard, response to request for 
  information from Hon. Duncan Hunter, a Representative in 
  Congress from the State of California..........................    14

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                  UPDATES ON EFFORTS TO COMBAT PIRACY

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                       WEDNESDAY, APRIL 10, 2013

                  House of Representatives,
                        Subcommittee on Coast Guard
                       and Maritime Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:04 p.m. in 
Room 2167, Rayburn House Office Building, Hon. Duncan Hunter 
(Chairman of the subcommittee) presiding.
    Mr. Hunter. The subcommittee will come to order. The 
subcommittee is meeting this morning to review efforts by the 
United States and the international community to respond to 
piracy on the high seas and prevent future attacks. Since the 
subcommittee's last hearing on this topic, there has been a 
dramatic reduction in the number of attacks off the Horn of 
Africa. I commend the industry, labor, the Federal Government, 
and the international community for working together and taking 
strong actions to improve the safety and security of the crews, 
vessels, and cargoes transiting those strategically important 
waters.
    Unfortunately, although the situation has improved on the 
East Coast of Africa, it has deteriorated on the West Coast. 
Attacks on vessels and mariners in the Gulf of Guinea have 
risen nearly 20 percent from 2011 to 2012. Pirates are 
venturing further from shore and using more violent tactics. In 
just the last few weeks, pirates operating out of Nigeria 
hijacked more than 5 vessels, taking more than 20 mariners 
hostage, and killing 1 crewmember.
    The United States is not immune from the violence. Since 
2008, pirates have attacked or attempted to attack 20 U.S.-flag 
vessels. Pirates took three Americans hostage, including two 
working on a U.S.-flagged offshore supply vessel in the Gulf of 
Guinea. In 2011 pirates ruthlessly murdered a retired couple 
from southern California and their two friends from Washington 
State as they sailed through the Indian Ocean.
    In addition to the human cost, piracy impacts our economy 
by driving up the cost of moving critical commodities. By some 
estimates, the cost of piracy on the world economy is more than 
$7 billion. The cost to the U.S. taxpayer to provide Navy 
patrols and reimburse industry for their cost to move defense 
and humanitarian cargo through high-risk waters is immense, 
totaling more than $65 million in a recent year.
    Finally, I am concerned with the impact piracy is having on 
our national security. Piracy has become a multimillion-dollar 
criminal enterprise funded by ransoms and the black market 
sales of stolen oil and other cargoes. Tracking ransom payments 
and capturing pirate financiers has proven tremendously 
difficult. This is concerning, as we know terrorist groups are 
operating in Africa. I look forward to hearing from our 
witnesses on what actions they are taking to improve our 
ability to disrupt pirate financing.
    Piracy is recognized internationally as a crime against all 
nations, and it is a crime to which all nations must respond. 
This hearing provides us with a chance to examine ways to 
respond to the ongoing threat. It is important for us to find 
solutions to minimize if not end this threat and its impact on 
our citizens, economy, and national security.
    I thank the witnesses for appearing today, and look forward 
to their testimony. With that I yield to Ranking Member 
Garamendi.
    Mr. Garamendi. Mr. Chairman, thank you for scheduling this 
afternoon's hearing to update the subcommittee on the progress 
made by the administration, the international governments, and 
nongovernment partners in dealing with the issue of piracy.
    You are certainly correct. Off the coast of Somalia great 
progress has been made. However, we have got issues off the 
coast of Africa. I am going to keep my remarks brief. With your 
permission and the committee's, my opening statement could be 
read into the record.
    I do want to express appreciation to Mr. Neil Smith, the 
head of underwriting for Lloyd's Market Association, the 
international marine insurers, to come here on very, very short 
notice to share his insights on how the marine insurance 
industry addresses this rather risky issue of piracy.
    Thank you very much, Mr. Smith. And for all the witnesses, 
thank you for your testimony today. Mr. Chairman, you have 
covered much of what I would say. And so, with that, I will 
pass back my time and let's get on with the hearing.
    Mr. Hunter. Thank the ranking member. I would like to yield 
to the only Coast Guardsman in Congress. We don't do opening 
statements in this committee any more because it takes too 
long, but we are going to make an exception. I would like to 
recognize Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman. Can you all hear me OK? 
Am I coming through? Thank you, Mr. Chairman. I owe you one. 
There is an old--and I, too, will be brief. I want to thank you 
and the ranking member for having called this meeting. There is 
an old adage among mariners that a rescue--that a collision at 
sea just ruins your day. Well, folks, I think to encounter a 
gang of murderers, thugs, pirates, all titles are appropriate, 
whatever way of ruining your day. The good news is I am told 
the climate is better now, and I am sure we will hear more 
about high-risk waters as the hearing proceeds.
    But on April 8, 2009, you remember the Maersk Alabama was 
attacked by Somalian pirates who seized the ship and took 
members of its crew in hostage. This was the first successful 
hijacking of an American-flag ship since the 19th century. For 
4 days the United States Navy maneuvered three vessels into 
position: the USS Bainbridge, Halyburton, and Boxer, and, aided 
by the Navy SEALS, eliminated the pirates, rescuing Captain 
Richard Phillips and his crew.
    Today, Chairman Hunter, I would like to bestow recognition 
to those brave sailors in the United States Navy and members of 
other branches that made this rescue possible. I would also 
like to pay tribute to a proud company, the Maersk Line, with 
offices in North Carolina, whose crew risks their lives every 
day to ship millions of tons of cargo across the world.
    Since the Maersk Alabama rescue, the United States Coast 
Guard--and thank you for recognizing me as a Coastie, Chairman, 
I appreciate that--the United States Coast Guard, the United 
States Navy have diligently worked to prevent further piracy of 
shipping lanes in the Indian Ocean and the Arabian Sea. 
Although there are still an unacceptable number of hijackings, 
the size of these bodies of water will almost guarantee attacks 
in the foreseeable future. It is incumbent upon this 
subcommittee, it seems to me, to furnish the help necessary so 
that Maersk and other cargo shippers will continue to keep the 
world economy growing well into the future.
    And I thank you again, Mr. Chairman.
    Mr. Hunter. Thank you, Mr. Coble. Our witnesses today are 
Coast Guard Rear Admiral Joseph Servidio, Assistant Commandant 
for Prevention Policy; Navy Rear Admiral Joseph Kuzmick, 
Director, Operations and Plans; the Honorable David Matsuda, 
Administrator of the Maritime Administration; Andrew Shapiro, 
Assistant Secretary, Bureau of Political-Military Affairs, U.S. 
Department of State; and Mr. Neil Smith, Head of Underwriting, 
Lloyd's Market Association.
    Welcome to each of you. And with that, Admiral Servidio, 
you are recognized for your statement.

    TESTIMONY OF REAR ADMIRAL JOSEPH A. SERVIDIO, ASSISTANT 
   COMMANDANT FOR PREVENTION POLICY, U.S. COAST GUARD; REAR 
ADMIRAL JOSEPH W. KUZMICK, DIRECTOR, OPERATIONS AND PLANS, U.S. 
     NAVY; HON. DAVID T. MATSUDA, ADMINISTRATOR, MARITIME 
ADMINISTRATION; ANDREW SHAPIRO, ASSISTANT SECRETARY, BUREAU OF 
POLITICAL-MILITARY AFFAIRS, U.S. DEPARTMENT OF STATE; AND NEIL 
    SMITH, HEAD OF UNDERWRITING, LLOYD'S MARKET ASSOCIATION

    Admiral Servidio. Good afternoon, Chairman Hunter, Ranking 
Member Garamendi, and distinguished members of the committee. 
Thank you for giving me this opportunity to speak with you 
today on piracy and the actions we have taken to prevent and 
respond to pirate attacks off the Horn of Africa and elsewhere. 
Piracy is a universal crime under international law. And 
despite the recent decline and successful attacks off Somalia, 
it remains a threat to U.S. vessels and mariners and those of 
all nations.
    The Coast Guard continues to thwart this threat through 
domestic regulation and policy, international standards and 
guidelines, and on-water counterpiracy operations. And we do 
this in close coordination with the U.S. interagency maritime 
industry and key international organizations and partners.
    The Maritime Transportation Security Act of 2002 provides 
the legal authority for the Coast Guard to regulate U.S. vessel 
security, requiring vessel owners and operators to develop 
security plans that reduce and manage oil security threats, 
including the threat of piracy. Coast Guard required and 
approved security plans must include an annex to address 
countering piracy for vessels operating in high-risk waters.
    Maritime Security Directive 104-6 establishes specific 
requirements for U.S. vessel security measures during high-risk 
water transits. The Coast Guard, working with the interagency 
and industry, has revised this directive six times, including 
revisions regarding areas designated as high-risk waters, and 
expanded security protocols reflecting lessons learned from 
attacks.
    Working with an interagency team that includes Departments 
of State, Defense, Homeland Security, Justice, Transportation, 
and Commerce, and many subordinate agencies and commands, the 
Coast Guard has published nine piracy-related port security 
advisors on topics that include self defense and defense of 
others, international arms regulations, contracted security 
services, background screening of security personnel, and post-
attack coordination.
    The Coast Guard also works with industry conducting 
roundtables and meetings with U.S. vessel owners and operators. 
Most recently we engaged U.S. company security officers for 
vessels operating in the Gulf of Guinea, and we will hold a 
best practices and lessons learned forum with them later this 
month.
    As the head of the U.S. delegation to the International 
Maritime Organization, the Coast Guard and our interagency 
partners have worked to pass resolutions to combat piracy, 
including a framework for international cooperation, 
counterpiracy guidance, and the promotion of judicial 
consequences. Just last month I spoke with the IMO Secretary 
General about piracy and the support IMO is providing for the 
development and implementation of a new code of conduct for the 
prevention and repression of piracy, and the listed maritime 
activity in west and central Africa.
    Under U.N. auspices, the contact group on piracy 
coordinates international counterpiracy efforts, and was 
pivotal in developing the best management practices for 
security. In its fourth revision, the BMP provides guidance to 
international shipping for hardening vessels against attacks, 
building and using citadels, and training voyage planning and 
communications with combined maritime forces.
    On the water, the Coast Guard leverages our maritime law 
enforcement core competency, and our 35-plus bilateral 
agreements, our experience with domestic and international 
legal frameworks, and our training capacity to facilitate 
counterpiracy operations. Our boarding teams are conducting 
anti-piracy operations in support of the U.S. Central Command, 
and with Combined Task Force 151. Coast Guard international 
training teams and deployable law enforcement detachments offer 
tailored maritime law enforcement training integral to regional 
capacity-building and counterpiracy operations.
    Piracy continues to present a threat to the U.S., our 
mariners, and our maritime industry. Our response requires a 
broad array of legal authorities, operational capabilities, and 
partner expertise. The Coast Guard has a unique role to play, 
and remains committed to working with others to address the 
safety and security risks of today and the solutions for 
tomorrow.
    Thank you again for the opportunity to be here, and I look 
forward to your questions.
    Mr. Hunter. Thank you, Admiral.
    Admiral Kuzmick.
    Admiral Kuzmick. Thank you, Mr. Chairman, Ranking Member 
Garamendi, distinguished members of the subcommittee. I am Rear 
Admiral Joe Kuzmick, appearing today on behalf of the Chief of 
Naval Operations. I am happy to have the opportunity to appear 
before your committee and discuss the U.S. Navy's ongoing 
counterpiracy efforts.
    In 2007 pirate hijackings and piracy incidents off the 
Somalia coast escalated dramatically, ultimately peaking in 
2009. At this point, pirates could operate for weeks at a time, 
up to 1,200 nautical miles from the Somali coast. By 2011 the 
trend had reversed, and by 2012 the number of successful 
attacks dropped to only seven vessels, the lowest level of 
pirate activity since 2006. This decrease is directly 
attributable to industry use of best management practices, a 
robust multinational naval presence, and the increased use of 
privately contracted armed security personnel on merchant 
vessels.
    U.S. Navy is currently engaged in a Horn of Africa 
counterpiracy operations under Commander, Task Force 151. 
Additionally, NATO Operation Ocean Shield, European Union 
Operation Atalanta, and other navies operating independently 
conduct naval patrols off the Horn of Africa. These efforts are 
coordinated through participation in Shared Awareness and 
Deconfliction, or SHADE, meetings in Bahrain.
    The use of privately contracted armed security personnel, 
or PCASP, has proven extremely effective. To date no vessel 
with a PCASP has been successfully hijacked by Somali pirates. 
Based upon self-reporting from vessels transiting this area, we 
assess approximately 50 percent or more likely have PCASPs. As 
a result, there has been no reported pirate activity in the 
Mozambique Channel since December 2010. There have been no 
confirmed attacks or hijackings in the Red Sea since September 
2011. There has been no hijacking in the Gulf of Aden since 
October 2011, and there have been no successful hijackings off 
the entire Horn of Africa this year.
    In the Gulf of Guinea, however, maritime criminals have not 
been as effectively shut down. There are many differences 
between piracy off the Horn of Africa and maritime crime in the 
Gulf of Guinea. Attacks conducted by Somali pirates generally 
take place in international waters, while the Gulf of Guinea 
attacks generally occur within territorial seas. Somali pirate 
attacks are generally hijacking for ransom, where the vessel, 
cargo, and crew are held for ransom. In the Gulf of Guinea, 
fuel theft, robberies, and kidnapping of crewmembers for ransom 
are the most common incidents. Hijacking for ransom is 
virtually absent in the Gulf of Guinea, because the coastal 
nations there have functional navies or coast guards capable of 
conducting law enforcement operations within their territorial 
waters.
    Just as the characteristics of piracy and armed robbery at 
sea differ between Somalia and the Gulf of Guinea, so too do 
the efforts to combat them. Theater security cooperation 
exercises and events aimed at promoting professionalism and 
sustained capability, effectiveness, and interoperability of 
coastal states, navies, and coast guards provides a more 
effective means of countering this threat.
    U.S. Naval Forces Africa, or NAVAF, created Africa 
Partnership Station, or APS, to promote maritime security and 
maritime domain awareness in Africa. APS is a year-round 
capacity-building continuum which progresses from basic 
training to exercises, and finally into combined law 
enforcement operations.
    As part of APS, NAVAF developed regional maritime security 
exercises around the African continent. Exercise Obangame 
Express focuses on the Gulf Guinea region. Cutlass Express 
focuses on the Indian Ocean and the Gulf of Aden. And Saharan 
Express focuses on west Africa.
    African Maritime Law Enforcement Partnership, otherwise 
known as AMLEP, is the operational arm of APS. It uses U.S. 
Coast Guard boarding teams and U.S. or international maritime 
assets, together with host nation boarding teams. While the 
combined teams conduct boardings at sea, the host nation 
retains responsibility for any arrests and resulting criminal 
prosecutions.
    Finally, turning to Southeast Asia, the majority of the 
reported maritime crime events are quickly executed, 
nonconfrontational, smash-and-grab operations. Most of the 
incidents occur while vessels are anchored or berthed, and are 
conducted by robbers seeking to steal the ship's stores or 
crew's personal belongings. Hijackings and hostage-taking 
incidents are rare. In this area, too, the U.S. Navy has 
focused efforts on theater security and cooperation events in 
an effort to strengthen partner nation maritime security 
capabilities. The United States Seventh Fleet has led these 
efforts conducting annual bilateral Cooperation Afloat 
Readiness and Training, or CARAT exercises, with numerous ASEAN 
nations and Southeast Asia Cooperation and Training, or SEACAT, 
which is an annual exercise that highlights maritime 
interdiction scenarios, including counterpiracy.
    The United States Navy remains committed to working with 
our fellow Government agencies, our international partners, and 
with industry to forge long-term solutions for regional 
maritime safety and security. Thank you for the opportunity to 
testify. I look forward to your questions.
    Mr. Hunter. Thank you, Admiral.
    Administrator Matsuda, you are recognized for a statement.
    Mr. Matsuda. Good afternoon. Chairman Hunter, Ranking 
Member Garamendi, members of the subcommittee, I am pleased to 
have the opportunity to appear before you today on behalf of 
the men and women of the U.S. Maritime Administration to 
provide an update on efforts to counter piracy and other 
maritime crimes.
    While piracy incidents off the Horn of Africa have been 
decreasing since 2010, as you have heard from my colleagues, it 
continues to be a significant threat in this area. At the same 
time, incidents of armed robbery in the Gulf of Guinea off west 
Africa have increased. And threats to mariners continue in the 
Straits of Malacca, Indonesia, Malaysia, and the South China 
Sea.
    Clearly, there are economic consequences from piracy for 
shipping companies which operate in these areas, like increased 
operations cost, from additional crew wages to employment of 
armed security guards and higher fuel costs to speed through 
high-risk waters. But it also includes capital costs, like 
vessel modifications to harden potential targets, and higher 
insurance premiums, as well.
    Perhaps the most important cost of piracy is the human one. 
Crews are robbed and physically abused by pirates or held 
hostage for long periods of time, frequently experience serious 
post-traumatic stress disorder. The U.S. Maritime 
Administration recognizes the serious threat piracy continues 
to pose to shipping, mariners, and commerce around the world, 
and I would like to discuss briefly six areas in which our 
agency has taken an active role in addressing this threat.
    First, we immediately went to work collaborating with the 
international shipping community and foreign governments to 
support the creation--rapid creation and dissemination of best 
management practices for maritime operators around the world. 
This guidance has helped shipping companies and crews to better 
prepare themselves against pirate attacks. The Maritime 
Administration even co-chaired, along with our Coast Guard 
partners, Working Group 3 of the United Nations sponsored 
Contact Group on Piracy. The U.S. leadership clearly helped the 
industry get these guidelines developed and distributed. A 
first version was distributed throughout the world within 
months.
    Second, the Maritime Administration regularly issues 
advisories to U.S.-flag vessel operators and mariners, 
providing current information on piracy threats and operational 
guidance. These advisories are coordinated with Federal 
agencies and are disseminated widely and timely to U.S. 
shipping interests, containing the latest intelligence about 
piracy threats.
    Third, our agency has developed training courses for 
maritime industry security officers based on International 
Maritime Organization guidance, and is developing training for 
the use of force against piracy. We expect the recent updates 
to be completed on schedule, as required by the subcommittee's 
recent legislation.
    Fourth, the Maritime Administration partners with the Naval 
Criminal Investigative Service to conduct vulnerability 
assessments for individual vessel operators on a voluntary 
basis. These Anti-Piracy Assistance Teams, or APATs, have been 
aboard 60 U.S.-flag vessels and provided extensive 
recommendations to vessel operators to reduce their 
vulnerability to pirate attacks.
    Fifth, the Maritime Administration has continued to foster 
collaboration with industry, labor, and Government agencies 
since the dramatic increase in piracy off the Horn of Africa 
began in 2008. Each year we have hosted meetings with key 
civilian and military officials, and at times including 
international industry representatives and foreign governments. 
In addition, our agency regularly arranges unclassified 
briefings for interested U.S.-flag operators.
    Lastly, the Maritime Administration is taking the lead on 
an international anti-piracy training initiative to improve the 
safety and welfare of seafarers. By building on a successful 
2009 DOT initiative with the Government of the Philippines, we 
are working with an expanded group of nations throughout 
Southeast Asia, a region which is home to 20 percent of the 
world's seafarers. This program, called the Expanded 
Association of Southeast Asian Nations Seafarer Training 
program, will focus on the often-overlooked humanitarian side 
of piracy, like surviving in captivity, for instance.
    The Maritime Administration is proud of its many 
contributions which have helped stem the tide of piracy. 
However, more work remains to be done. And we will make every 
possible effort to continue the effective collaboration--
collaborative approach with industry and our Federal partners 
to fight piracy.
    Mr. Chairman, I appreciate the opportunity to discuss the 
U.S. Maritime Administration's role in addressing piracy and 
the subcommittee's continuing support for maritime programs. I 
am happy to answer any questions you and the members of the 
committee might have.
    Mr. Hunter. Thank you, Administrator.
    And next I would like to recognize Assistant Secretary 
Shapiro for his statement.
    Mr. Shapiro. Mr. Chairman and members of the committee, 
thank you for inviting me to discuss the national security 
problems poised by piracy and maritime crime. I have submitted 
a longer statement for the record and will offer brief opening 
remarks.
    When I first started this job in the summer of 2009, Somali 
piracy was spiraling out of control. Attacks were escalating, 
and pirates were expanding operations far into the Indian 
Ocean. In addition to the threat posed by--to innocent 
mariners, pirate activity was costing the global economy an 
estimated $7 billion a year.
    Somali piracy represented a perfect storm for the 
international community: a weak state in a strategically 
essential location harboring a rapidly growing, transnational 
criminal enterprise that threatened a vital artery of the 
global economy. Action had to be taken. This promoted former 
Secretary Clinton in 2010 to call for a new strategy into 
tackling pirate networks and to put pirates out of business. 
This commitment to tackling piracy has also been affirmed by 
Secretary Kerry.
    And now, after years of hard work, successful pirate 
attacks have plummeted. According to figures from the U.S. 
Navy, we experienced a 75-percent decline in overall pirate 
attacks in 2012, compared with 2011. We are seeing fewer 
attempted attacks in no small measure because pirates are 
increasingly less successful at hijacking ships. For example, 
in 2012 pirates captured just 10 vessels, compared to 34 in 
2011 and 68 in 2010. Remarkably, the last successful Somali 
pirate attack on a large commercial vessel was on May 10, 2012, 
nearly 1 year ago.
    The lack of success at sea means that Somali pirates are 
holding fewer and fewer hostages. In January 2011, pirates held 
31 ships and 710 hostages. Today, Somali pirates hold hostage 
just 2 ships and 60 mariners. That is more than a 90-percent 
reduction in the hostages held by pirates since January 2011. 
While having just one hostage is still unacceptable, the 
downward trend is clear.
    Now, let me be clear. Piracy remains a threat. Pirates at 
sea are still searching for ships to target as we speak. In 
fact, just last week a merchant ship successfully fended off an 
attack by pirates off the coast of Somalia. So the threat 
remains, but the progress that has been made is also real and 
remarkable.
    I would like to briefly outline our approach to tackling 
piracy off the coast of Somalia.
    First, the United States has helped galvanize international 
action. All countries connected to the global economy have an 
interest in addressing piracy. We therefore sought to make this 
a collective effort and build new kinds of partnerships and 
coalitions. In January 2009 the United States helped establish 
the Contact Group on Piracy off the Coast of Somalia, which now 
includes over 80 nations and organizations bound together on a 
purely voluntary basis. The Contact Group meets frequently to 
coordinate national and international counterpiracy actions. 
Through the Contract Group, the international community has 
been able to coordinate multinational naval patrols, work 
through the legal difficulties involved in addressing piracy, 
and cooperate to impede the financial flows of pirate networks.
    Second, the United States has sought to empower the private 
sector to take steps to protect themselves from attack. We have 
pushed the maritime industry to adopt best management practices 
which include practical measures such as proceeding at full 
speed through high-risk areas and erecting physical barriers 
such as razor wire.
    But perhaps the ultimate security measure a commercial ship 
can adopt is the use of privately contracted armed security 
teams. And as Admiral Kuzmick mentioned, to date not a single 
ship with armed security personnel on board has been 
successfully pirated off the coast of Somalia. And this has 
been a real game changer in the effort to combat piracy.
    For our part, the U.S. Government has led by example. Early 
on in the crisis we permitted armed personnel aboard U.S.-flag 
merchant vessels. We also encourage port States to permit the 
transit of armed security teams, and work to address the 
varying national legal regimes. American ambassadors, embassy 
officials, members of our counterpiracy office at the State 
Department, and I, myself, in meetings with senior officials, 
have pressed key maritime countries on this issue.
    Third, we have sought to apprehend, prosecute, and 
incarcerate pirates. Today, over 1,000 pirates are in custody 
in 20 countries around the world. The United States has 
encouraged countries to prosecute pirates, and we have 
supported efforts to increase prison capacity in Somalia. But 
it became increasingly clear that prosecuting low-level pirates 
at sea was not on its own going to significantly change the 
dynamic. And so we have targeted pirate kingpins and pirate 
networks. We are collaborating with law enforcement in the 
intelligence community as well as our international partners, 
like Interpol, to detect, track, disrupt, and interdict elicit 
financial transactions connected to piracy and criminal 
networks that finance piracy.
    Lastly, the long-term solution to piracy is the re-
establishment of stability in Somalia. The successful political 
transition in Somalia is clearly a step in the right direction, 
but much remains to be done. Once Somalia is capable of 
policing its own territory and its own waters, piracy will fade 
away. To that end, the United States continues to support the 
newly established government in Mogadishu.
    Before I would close I would just note that in recent 
months we have noted a disturbing increase in the incidence of 
maritime crime, including piracy and armed robbery at sea off 
the West Coast of Africa, specifically in the Gulf of Guinea. 
While in Somalia, we faced an absence of government. In the 
Gulf of Guinea, the exact opposite holds true. There are many 
sovereign governments with varying degrees of capability, but 
all with their own laws and their own interests. The tools and 
relationships we built to roll back Somali piracy are not 
easily transferrable to the Gulf of Guinea.
    Success in west Africa will depend more on the political 
will of regional governments to take the steps needed to 
curtail criminal activity. We could support with capacity-
building efforts and have an impressive list of those efforts 
underway. But ultimately, tackling this challenge will depend 
on the countries in the region.
    With that, thank you for having me today, and I look 
forward to your questions.
    Mr. Hunter. Thank you.
    And lastly, Mr. Smith, who I understand didn't come from 
New York or San Francisco or L.A., you actually came from 
London. So thank you. You are recognized for your statement.
    Mr. Smith. Good afternoon, Chairman Hunter, Ranking Member 
Garamendi, and members of the subcommittee. I am pleased to be 
here today to discuss the role of the insurance sector in the 
ongoing efforts to combat piracy, and I appreciate the 
opportunity to do so.
    While there are a number of maritime hubs, I am speaking 
here on behalf of the Lloyd's insurance market, based in 
London. I should also make it clear that Lloyd's is not an 
insurance company, but is an international insurance market, 
where syndicates of underwriters transact business on behalf of 
managing agents for their own account and risk. Individual 
insurance policies are arranged by firms of insurance brokers 
authorized to transact business in the Lloyd's market with 
syndicates. Apart from the market itself, the Lloyd's Market 
Association is an independent organization providing services 
to and representing the interests of all Lloyd's managing 
agents.
    It would probably be helpful if I provide to you a simple 
outline of how the hull insurance is placed in the Lloyd's 
market. A shipowner will have a number of insurance policies 
covering their activities. But the two I focus on are the hull 
and machinery policy and the separate hull all-risks policy. 
Both are usually negotiated on an annual basis.
    The hull and machinery policy covers what we would regard 
as perils of the sea, those risks of a maritime nature which a 
vessel will face during its daily trading activities. Over many 
years, piracy, which has been an insured peril within the 
marine market for as long as the market has existed, was 
written into the hull and machinery policy as standard cover. 
The trading limitations on a hull and machinery policy are 
generally very broad, with little opportunity for hull insurers 
to monitor their exposures. The hull and machinery policy has 
an associated deductible, and the general model of piracy 
attacks in the late 20th and early 21st century, because of 
their nature, would generally fall below that deductible.
    The war policy is slightly different. Alongside the annual 
premium covering the majority of locations, a separate list 
identifies areas where the war risk is regarded as being 
enhanced. If the owner wishes to send a vessel to one of these 
areas, they must notify the underwriters to negotiate the terms 
of the voyage.
    In recent years piracy coverage has moved from the hull and 
machinery policy onto the war policy. There are some technical 
reasons for this movement unrelated to piracy, but in this 
context it gives the insurer the opportunity to monitor the 
movement of vessels into high-risk areas, including areas 
impacted by piracy, and assess the steps being taken by the 
shipowner to mitigate the risk.
    During the initial placement process, and then 
subsequently, if a vessel is being sent into the high-risk 
area, an underwriter will pay close attention to what the 
shipowner is doing to protect the vessel. Lloyd's insurers have 
supported the development of the industry-led best management 
practices. Insurers will look closely at how the shipowner is 
using BMP, whether it is ingrained into the culture of their 
operations, and would make an assessment and price dependent on 
these issues.
    Reference is made to the use of armed guards within BMP. 
But certainly in the early days, insurers had some reservations 
about their use without proper standards. Use of poorly trained 
or undisciplined guards operating without proper legal 
authority or rules of engagement could enhance the risk to the 
crew they are meant to protect, along with enhanced risk of 
loss or damage to the vessel and the cargo. The development of 
ISO standards in this regard is a great step forward.
    Why has Somalia been such a challenge for the shipping and 
insurance community, bearing in mind the market's long history 
of piracy coverage? My view is that Somalian pirates introduce 
a different method of operation. The traditional model took the 
vessel and the cargo. But the Somali game changer has been the 
recognition that the crew is a valuable asset for ransom. This 
is a marine version of kidnap and ransom activity, rather than 
what we would traditionally regard as piracy activity. This 
leaves us with a number of long-term questions about how the 
maritime community should approach some of these traditional 
areas of cover.
    I should make it clear here that property insurers are not 
directly involved in the negotiation or payment of ransom 
monies. These negotiations take place between shipowner 
representatives and pirate groups. Proper insurers will be 
involved through the ancient marine concept of general average. 
This ensures that costs incurred for the safe completion of a 
maritime adventure are shared across all parties involved. Once 
an owner has declared general average, the various parties will 
contribute according to a complex charging structure, based 
upon the values of the ship and cargo, and the hull and cargo 
insurers will therefore be major contributors.
    Insurers have been engaged with the ongoing role of 
regulators in looking at the money trail which arises following 
the payment of ransoms. From a Lloyd's perspective, this is a 
particularly important aspect of our work. Lloyd's has a 
valuable brand and reputation to protect in the U.S. And so our 
involvement in discussions with OFAC in the practical issues 
arising from payment of ransoms has been particularly helpful.
    Bearing in mind the position of the crew in relation to the 
current problems, I should note that crew liability is not 
covered by hull and cargo underwriters, but rather by the 
Protection and Indemnity Clubs, mutual groups funded by the 
shipowners. Traditionally, P&I Clubs are not involved in 
funding GA payments, but property insurers feel that this is an 
issue that we should look to address on the longer term.
    Setting Somalia aside, there has been a recent trend of 
attacks on vessels moving oil offshore in the Gulf of Guinea. 
These incidents look at this stage to be returned to the more 
traditional model of piracy with organized theft of portable 
goods from the ships and transshipment theft of the oil 
cargoes. The insurance sector is monitoring developments 
closely, and it is a further example of why, even though the 
situation in Somalia looks to be improving, the international 
maritime community cannot afford to relax its efforts to reduce 
the threat of piracy.
    I will be happy to respond to any questions you may have, 
or to expand on any of my comments further, if it would be 
helpful. Thank you.
    Mr. Hunter. I would like to thank everybody for their 
testimony. I told my kids that I was having a hearing today on 
piracy this morning, and they laughed. Unfortunately, Jack 
Sparrow and Disney took a lot of the reality off of piracy for 
that generation of kids. So we will scare them back into shape.
    I am going to recognize myself really quick for just a 
quick question. And it goes back to the statement that I think 
a few of you made--said if there is armed guards or contractors 
on these ships, you have zero hijackings. So my question is all 
encompassing, going from the Department of State to the Navy, 
Coast Guard. When do we make the transition from us using you 
and using the Coast Guard resources, Naval resources, 
Department of State resources, and shift that to the merchant 
and say, ``If you want to be safe, we recommend you have armed 
guards, because you have a zero-percent chance of being 
hijacked if you have armed guards, based on past statistics''?
    And then, a question to go with that is, how do we make 
sure that the guys that are on these ships that are the armed 
guards can have weapons with them? What ports can they go into? 
Do you have to have floating arsenals--of which there are some 
out there, some are good and some are bad, from what I 
understand, where guys can actually gear up on the water once 
the ship leaves the port that does not allow Americans to have 
weapons. And when it comes to the Department of State, there 
have been some cases where even countries that allow that have 
detained American personnel, ship operators, and--until we pay 
them off, basically.
    So, that is my question. When do we shift the burden from 
the U.S. Government and the American taxpayer to the ship 
driver or the owner-operator? When does that happen and how 
does it happen? And what are we doing to make it happen? And 
what is standing in the way of it happening?
    And I guess, Admiral, maybe we will start with you. Admiral 
Kuzmick. I am sorry.
    Admiral Kuzmick. Yes, thank you, Mr. Chairman.
    Our feeling in the Navy is that it has been a combination 
of those efforts that has virtually eliminated Somali piracy. 
While it is true that no one has been successfully hijacked 
when they have been able to shoot back, it is important.
    It has also been important that we have some Naval presence 
there that can interdict the pirates, and I think that there is 
room there for this to be reversible and that we would have to 
come back.
    It is important for us because we can do the Horn of Africa 
Piracy without much additional resources. We have most of the 
resources there assigned to contest Iran's hegemony in the 
area, and they are there anyway. So we can often split them off 
to do some of that kind of work, and all the help we get from 
the other nations is very helpful.
    Over toward Gulf of Guinea, a little bit of a different 
story. I think some of the other witnesses may know more 
details about this than I do, but my understanding is that 
there are a number of different intricacies over there of 
convincing sometimes smaller vessels to hire personal armed 
security guards.
    And also the legalities, a lot of the stuff happens in 
shore waters. Those kinds of armed security teams, as you 
mentioned, are not capable or they are not allowed to work in 
there. So that is an extra difficulty.
    Mr. Hunter. Admiral Servidio.
    Admiral Servidio. Mr. Chairman, what the U.S. Coast Guard 
requires is the vessel has to do their own assessment, and 
based upon their assessment, they could determine whether they 
need to have armed security guards or additional security, but 
it does not necessarily have to be armed.
    On some vessels, due to the risk of what they are carrying, 
be it a gas, cargo or other types of things, they feel that 
that assessment might be that they need additional security on 
board, but they might not necessarily want them armed.
    As Admiral Kuzmick brought up, there are some challenges 
especially in the West Coast of Africa. Nigeria does not allow 
privately armed security to go in there. So they offer their 
personnel to provide some security. I know there has been some 
questions with some of that, and we have had offshore supply 
vessels that have been operating in that area for decades 
dealing with a security situation, and they have been able to 
manage that through their assessment of risks and their own 
practices that they put in place, and those have been codified 
now under the MTSA requirements for vessel security plans.
    Mr. Hunter. Anybody else who would like to take a shot at 
that? Mr. Secretary?
    Mr. Shapiro. Well, I would make two points. First, for the 
most part, unless it is a U.S. Government cargo, it is the 
shipowners who are paying the costs of the private armed 
security teams. So in terms of burden sharing, it is mostly be 
borne by the maritime industry.
    In terms of the problems in various ports, the State 
Department has demarched port States to let them know that 
U.S.-flag vessels which have armed security teams will be 
coming through and has also worked through the contact group to 
encourage States to develop appropriate regulatory framework to 
allow the use of armed security teams.
    That being said, occasionally there is a bump in the road. 
We are usually able to work it out through our embassy when 
there are those bumps and reach a satisfactory conclusion.
    Mr. Hunter. Where is the usual dropoff/pickup point so that 
if you do not want to carry security where you do not need it 
and have to pay for it? Where would you usually pick up 
security? Where would your private contractors meet you to get 
on the ship? And then where would they transit with you to?
    Admiral Servidio. Mr. Chairman, for the U.S. vessels, in 
our maritime security directive we identify where those high-
risk waters are, and if a U.S. vessel transits, that is where 
they have to put in place their piracy annex and those 
additional security measures to address that risk.
    Again, they have done their assessment, and they make a 
proposal as to what it will be. But we have identified those 
waters, and they include waters in the Middle East, in Asia, in 
South America, and other areas. And, again, we have identified 
where those waters----
    Mr. Hunter. Are there not some actual ports though that are 
the main ports where they have to kind of jump off when they 
enter the high-risk waters?
    Admiral Servidio. If you have privately armed security, 
there are some countries and there are some locations that it 
is logistically much easier to end up doing that.
    Mr. Hunter. What countries are those? If you do not know, 
then just for the record.
    Admiral Servidio. I do not know. I can get it for the 
record, Mr. Chairman.
    [The information follows:]

        The information requested is Sensitive Security Information 
        (SSI) and cannot be provided for the record. However, a copy of 
        this material has been provided to Chairman Hunter.

    Mr. Hunter. OK. All right. Thank you all.
    With that, I would like to yield to Mr. Garamendi.
    Mr. Garamendi. Thank you, Mr. Chairman.
    Many questions come up here. I do thank all of you for your 
testimony and particularly for the success that you have had in 
dampening down the piracy, particularly in Somalia, and I 
suspect you will soon find similar success in the Gulf of 
Guinea.
    But, Admiral Servidio, you mentioned that the U.S. proposed 
an amendment to the IMO to require IMO nations to mandate 
adherence to the security guidance that the U.S.-flag vessels 
have to obtain. Apparently that was not accepted. Why?
    Admiral Servidio. I really do not know the answer of what 
all of the other countries on the U.N. felt. Not all of them 
feel that this should be required. Not all of them feel the 
risk is as great as what the U.S. feels. So I really cannot 
speak on behalf of them, Ranking Member, but our desire would 
have been that everybody puts in place what we have required on 
U.S.-flag vessels.
    Mr. Garamendi. Mr. Smith, is this an insurance issue that 
could be helpful in setting a higher standard for all ships? 
That is, if you want to get insurance, then you had better 
abide by the standards?
    Has Lloyd's considered that?
    Mr. Smith. I mean, this comes back to the way in which the 
BMP really are used within the London market. It is not 
possible for the market to mandate the use of BMP because BMP 
itself is not really in a format that that would work, and for 
as well, without the EU, we are not in a position where from an 
insurance angle we can mandate particular standards or levels. 
That goes for piracy and just general shipping safety as well. 
There are issues where we cannot mandate.
    However, it is an issue from a market perspective, where 
insurers, as I said earlier, will look very closely at what the 
shipowner is doing, how they are operating, when they are 
assessing the insurance risk.
    So if from the negotiations it can be seen that the 
shipowner is taking all reasonable steps to protect and 
mitigate against the threat of piracy, then that will be taken 
into account by the insurer during the negotiation process.
    Mr. Garamendi. I thought that might be the case. As a 
former insurance commissioner, I learned that the availability 
or the unavailability of insurance is a high motivator, and it 
would seem to me that while you may not be successful on the 
regulatory side, you could be successful on the insurance side. 
Simply do it or else I am not going to ensure you, pretty 
simple. So they start to do it because they need the insurance.
    I would like to follow along on that process with you, Mr. 
Smith, and the others if you could keep track of the success of 
the insurance market in promoting best practices.
    I understand the litigation issues of mandating.
    Mr. Smith. Sure.
    Mr. Garamendi. But then you do not have to provide the 
insurance, do you, if you do not like what they are doing?
    There are numerous questions here that I really would like 
to get to, and let me see if I can move through some of those. 
There are some detailed insurance issues that I will take up 
with you, Mr. Smith, separately, but they are going to get into 
esoteric stuff.
    The question, Mr. Matsuda, you are appropriately looking 
out for the mariners and their well-being, which is first to 
avoid a piracy action. But when there is a piracy action, what 
steps can be taken to assist the mariners in dealing with 
everything from loss of health and life to other let's call it 
post-traumatic stress issues?
    Mr. Matsuda. Well, thank you, sir.
    We certainly prioritize the safety and well-being of our 
mariners. The best thing they can do is have an employer, a 
ship operator who is fully complying with Coast Guard rules and 
standards, best management practices, and is staying up on all 
of the types of things that need to be done to run an operation 
efficiently and safely for their crews. That is our priority.
    We are certainly trying to chase down any additional things 
we can learn about being held captive, what we can learn from 
our foreign counterparts who have mariners who have been in 
that situation. Our successful interaction with the Government 
of the Philippines led to a former hostage coming to the U.S. 
and speaking with the maritime community. They went to the many 
maritime educational facilities, U.S. Merchant Marine Academy 
and others. So we will continue to explore those avenues to 
learn everything we can.
    Mr. Garamendi. Again, best practices, I notice that we have 
a vote coming up, and so I am going to cut my questions short 
here. I may ask you separately, all of you, for some specific 
questions and answers.
    Mr. Chairman, I yield back.
    Mr. Hunter. I thank the gentleman.
    We have about 5 or 10 minutes before we have to go. If you 
do not mind, we would like to continue this. We just have two 
votes, two 5-minute votes, a motion to recommit and then 
another one, and we will come right back here.
    So with that I think we have time. Do we have time to 
recognize Mr. Coble?
    I recognize Mr. Coble for 5 minutes.
    Mr. Coble. Thank you, Mr. Chairman.
    Gentlemen, thank you all for your testimony today.
    Admiral Servidio, I have a two-part question to you. What 
is the Coast Guard doing to combat piracy off of Africa's West 
Coast--(a)?
    And (b)--I had a second question here--explain to me if you 
would, Admiral, the Coast Guard standard for use of force for 
self-defense of a vessel.
    Admiral Servidio. Sir, the Coast Guard is doing a number of 
things for piracy. We just had a law enforcement detachment 
that was deployed on a British ship that was off the West Coast 
of Africa doing boardings and doing training for local as part 
of our capacity building. So we are involved in the capacity 
building side of it.
    Additionally, for U.S.-flag vessels that are operating 
there, we review their security plans. We approve their 
security plans, and we have had a number of different meetings 
with those company security officers to ensure we are taking 
care of our merchant mariners and our vessels.
    Internationally, we are working with the IMO who are 
supporting a code of conduct that will be established on the 
West Coast of Africa that is similar to the East Coast of 
Africa's code of conduct so that they can use their inherent 
capabilities to address the piracy scourge much more 
effectively.
    As far as the use of force, sir, the U.S. has reserved sort 
of position when it comes to convoy or private escort vessels 
with regards to that use of force because it is a legal issue 
as to when you can use force and when you cannot use force. For 
self-defense you can, but I know some nations are looking at 
having private security vessels that are pretty much taking the 
place of military vessels, and there are some legal issues with 
that.
    Mr. Coble. Thank you, Admiral.
    Admiral Kuzmick, the number of vessels attacked last year 
by Somalia pirates off the horn of Africa fell to the lowest 
level, I am told, since 2009. Of all the mitigating actions, 
which do you believe has had the most influence on the 
decreased number of attacks off the coast of Somalia?
    Admiral Kuzmick. Congressman, did you say the least number 
of attacks?
    Mr. Coble. Pardon?
    Admiral Kuzmick. The influence on the? The last part of 
your question.
    Mr. Coble. I just said of all the mitigating actions, which 
do you believe had the most influence on the decreased number 
of attacks.
    Admiral Kuzmick. Yes, sir. Well, I would say certainly the 
armed security teams has reduced that a great deal. We have 
made it very uncomfortable for pirates to approach many of the 
vessels that transit the area because they are going to get 
shot at, and they decide, you know--that is very difficult for 
a military unit to do, much less a rag-tag group of pirates--to 
try and take a vessel that is shooting back.
    So that is certainly the biggest thing. That is not 
something that we are doing directly, but certainly something 
that we are trying to influence people to do.
    And then I think it is important, as well, still at the 
moment that we have the task forces that we have down there, 
CTF-151 primarily with a dozen or more ships from various 
nations.
    There is the NATO group of, at the moment, a couple or 
three ships and another EU group of a couple or three ships. 
All participate and cover a huge area, but what it allows us to 
do is, when there is an act of piracy or an attack of some 
kind, it allows us to try and intervene in that skiff after 
they are away and they have decided not to attack a vessel 
maybe that has an armed security team, and we can try and 
interdict the pirates in that way.
    Mr. Coble. I thank you, sir.
    One more question, if I may, Mr. Chairman.
    Mr. Matsuda, how many U.S.-flag vessels transit pirate 
infested, high-risk waters on a daily basis?
    And why must U.S.-flag vessels transit these waters? What 
cargo are they carrying, for example?
    Mr. Matsuda. According to our information on any given day 
there are about a dozen U.S.-flag vessels in the area near the 
Gulf of Aden high-risk waters. They are carrying all kinds of 
goods, whether it is federally financed cargoes, food aid, 
humanitarian supplies, cargo for the military to support their 
efforts, or just commercial cargoes to and from the United 
States or between foreign countries.
    Mr. Coble. I see.
    Thank you, gentlemen.
    I will yield back, Mr. Chairman.
    Mr. Hunter. I thank the gentleman from North Carolina.
    We are going to go ahead and go vote, and if you would not 
mind, we will stand in recess. It will probably be 20 or 25 
minutes.
    So the hearing will stand in recess, subject to the call of 
the Chair. Thank you.
    [Recess.]
    Mr. Hunter. The subcommittee will come to order.
    Thank you, everybody, for waiting. We apologize. As you 
know, that is just kind of how it is.
    So at this time I would like to recognize the absence of 
Ms. Hahn. Mr. Southerland from Florida.
    We will not start the time yet. You can take your time. 
Sorry.
    Mr. Southerland. Thank you. I have got too many papers 
here.
    Thank you, Mr. Chairman. I would like to thank you for 
this. To me, new to the committee, it is an interesting 
subject, and I enjoyed reading and learning more about this.
    I am glad to see the recent reports show that there is a 
dramatic reduction in pirate attacks off the Horn of Africa, 
and I commend Coast Guard and Navy, the State Department for 
working together to develop effective strategies for dealing 
with this important issue.
    Additionally, we know that several high-profile raids by 
American and European forces have acted as a further deterrent, 
and I think the American people appreciate that.
    While I understand that a permanent solution will not be 
reached until Somalia has an effective and capable government, 
the trend of decreased incidences of piracy off the Horn of 
Africa is encouraging. Unfortunately, we have seen, as we have 
talked about in other questions increasing attacks off of 
Guinea.
    I wanted to ask a question. How exactly should both the 
U.S. and the international partners' response differ from our 
response to piracy off the eastern coast?
    Because you have got an increase there. Just kind of in a 
general way, and I would kind of like to ask the three of you 
on this end that question as it pertains to your operations. 
Because you have got two different, obviously, regions and two 
different challenges. One we seem to be doing very well, and so 
if we could just start.
    Admiral Servidio. Thank you very, much, sir for the 
question.
    What we see is that it is not only the nature of the 
governance on the East Coast that is different from the West 
Coast. There was a lack of governance on the East Coast of 
Africa, and in Nigeria and the Gulf of Guinea, you have a 
number of different nation states that have capabilities, but 
it is also the type of vessel. It is the type of operations.
    On the West Coast of Africa, there are a lot of offshore 
supply vessels and lift boats, vessels involved in petroleum. 
Their operations are very different than in transit or food 
deliveries from deep draft vessels on the East Coast of Africa.
    The tools that we can engage from PCAS to others, privately 
contracted armed security, are different. I think overall the 
solution sets, which is international cooperation with industry 
and working with the regional nations on building that capacity 
are going to be the same in general, but the specifics are 
going to be a little bit different on how we implement that on 
the West Coast as opposed to the East Coast.
    Mr. Southerland. OK.
    Admiral Kuzmick. Well, Congressman, from the Navy's point 
of view, I think in the Gulf of Guinea it is radically 
different from our perspective. As I said, we can sort of mooch 
off of the assets that are in the central command area already, 
in the Horn of Africa. In the Gulf of Guinea for us to provide 
any sort of gray hulled Navy ship asset to help a whole lot 
would be a tremendous expense, especially as compared to the 
eastern side, a tremendous incremental additional expense.
    And the other thing is that we would not be all that 
terribly effective. As Admiral Servidio said, you have got 
nation states over there that are functional. They may not be 
as functional as we are, but they are functional.
    Mr. Southerland. Sure.
    Admiral Kuzmick. And our best bang for the buck is to 
provide for the occasional Navy vessel as Africa Partnership 
Station does to provide the training to improve the economic 
viability of those nations and the law abiding infrastructure 
to help them deal with their own problems. In my testimony I 
mention a lot of the activity over there is less on the high 
seas and more in the territorial waters that those folks 
patrol.
    Mr. Southerland. Very good. Thank you.
    Mr. Matsuda.
    Mr. Matsuda. Sir, I think to best replicate the success 
that we have had in addressing the situation in the Horn of 
Africa region, we have got to take what works and continue to 
do that. And that is taking a whole of government approach, 
work with the industries and the affected countries to bring 
about the appropriate solution.
    As my colleagues mentioned, the nature of the threat is 
just different. It is a different type of operation in 
different territory. These are territorial seas of nations. So 
we have got to be mindful of that, but I think that you have 
got the right agencies engaged, and that we should be able to 
tackle this effectively.
    Mr. Southerland. Let me ask. For Americans who are watching 
this, I think sometimes, and again, being new to the 
subcommittee, I kind of struggle with this as well, to try to 
explain to--and I would ask the Navy to explain--I think 
Americans struggle in trying to figure out how a small boat 
with a band of people on it can overtake. Can you just briefly, 
and I know I have run out of time here, just briefly just 
describe for the American people how that happens?
    I mean, I think we struggle understanding the problem when 
a small boat with a band of thugs can come up and overtake a 
large tanker, and it is as much for my benefit as it is for 
those who may be watching this.
    Admiral Kuzmick. Well, Congressman, my understanding is, 
you know, you have got a large vessel at sea. You have spent a 
lot of monotonous time out there. You have got very, very 
minimally manned vessels. They are keeping the costs down. They 
are keeping the cost of people down, a very expensive part of 
that. Keeping the vigilance can be difficult when approached by 
folks that are armed.
    You know, if you are using these best practices that have 
been developed over the years, you are probably not going to 
get attacked. If you are lackadaisical about it or you take 
risks and you ignore these best practices, then it is not that 
difficult for somebody to come up to a low freeboard ship that 
is not moving very fast in decent weather and get folks with 
rifles on board, and once this happens, it is a hostage 
situation.
    Mr. Southerland. Thank you.
    I know my time has expired. I yield back.
    Mr. Hunter. I thank the gentleman.
    If he has any further questions, I would grant him 
unanimous consent to continue.
    Mr. Southerland. Thank you.
    I wanted to--hold on. Let me turn through, and I apologize. 
I have got so many questions here. I know that the Coast Guard 
issues, you know, the maritime security directives requiring 
vessels and owners to update their VSP plans to respond to the 
latest security threats.
    To what extent are U.S.-flag vessels complying with these 
directives? I mean, is this a large percentage?
    If we could, maybe, Mr. Shapiro, is that something that you 
could address?
    Mr. Shapiro. The percentage of ships that are being 
attacked?
    Mr. Southerland. Yes.
    Mr. Shapiro. Well, I think that what we have seen is the 
percentage has dropped precipitously off the coast of Somalia. 
As we discussed earlier, the number of successful attacks has 
dropped to zero since last May. We are still seeing some 
attacks continuing, but the number of attacks that are actually 
taking place is much, much lower. We are seeing actually 
pirates holding press conferences announcing that they are 
getting out of the business because it is just not as lucrative 
as it once was.
    So, again, this is an example of, you know, the policy has 
been working. What I would say, just to echo what my colleagues 
said, is that the ships that do not have best management 
practices are by far the majority of those that are pirated. So 
at one point we look a look at this, and it was about 20 
percent of the ships were not using best management practices, 
but if you looked at the ships that were successfully pirated, 
those were the vast majority.
    And so the importance of these best management practices in 
deterring and preventing successful pirate attacks has been 
important and something that we continue to urge.
    Mr. Southerland. Is it fair? I know that oftentimes we have 
I am think of factories that we have here where if those 
transporting raw materials into a factory are not allowed to 
offload their goods, those factories are not accepting of these 
trucks and any of these deliveries by rail unless there has 
been proven a necessary level of insurance.
    I know, Mr. Smith, you talked about the insurance, how you 
insure these vessels regarding piracy. Is there a requirement 
that a port would not receive these vessels if they did not 
have the necessary insurance?
    And I am assuming what you are doing by requiring; if I 
have got to buy insurance, and I have taken necessary steps to 
mitigate these risks; in other words, I am a believer of the 
best practices as you all on this end of the table have 
outlined, and it is out there. If I am mandated to have this 
insurance, I want to have obviously the most reasonable 
premiums, and if the ports are requiring this, then it seems to 
me to be kind of a global effort to make sure these vessels are 
mandated to have the measure to prevent these acts.
    So is that something that is done in the industry? Does 
that make sense? Because I know this. That practice is required 
in American industry for our plants. So is that something that 
is done or is it looked into?
    Mr. Smith. Sir, I can respond to that really. I mean, even 
in a broader context than piracy. Vessels have to have proper 
certification and insurance to be able to trade full stop.
    Mr. Southerland. I mean, in your comments you were talking 
about you had a hauling machine to really protect you in your 
daily use of the vessel. I am referring to whole risk regarding 
piracy.
    So are you mandated by the industry to have whole risk 
regarding piracy?
    Mr. Smith. What, from the port perspective, sir?
    Mr. Southerland. Yes.
    Mr. Smith. Not to my knowledge.
    Mr. Southerland. OK.
    Mr. Smith. That is not a requirement, but from our 
perspective as the insurance as a support service to the 
shipping industry, as I said during my testimony, piracy is an 
insured peril under our contract and has been for centuries, 
and as far as we are concerned, it is a coverage that we would 
intend to continue to provide.
    The interesting aspect here with Somalia has been, of 
course, it is a different form of piracy that we are dealing 
with, and that is the challenge that we have been facing as an 
industry, both as an insurance industry and across the maritime 
sector as a whole.
    Mr. Southerland. I would suggest that, and I am referring 
to the whole risk due to piracy. It just makes sense. It 
certainly works to create safer rails, safer highways.
    I know in America because we require those who transport in 
America to have necessary insurance limits or they cannot have 
their raw goods off-loaded at our factories. So it seems to be 
something that works.
    I will say this. I could not help, Mr. Chairman. You know, 
our country right now is going through a heated debate on guns 
and gun safety. I could not help but draw a parallel with what 
you have. I mean, I heard things today such as, you know, those 
ships who have the ability, no one has been successfully 
hijacked when they can shoot back. What a novel idea.
    I mean, I am hearing things today that if we would adopt 
into this debate that we are having in America right now, that 
just seems to be on the TV every time I turn on the TV. You 
have taken the first law of nature or self-preservation, and 
you are using it, as I think God intended us to, to protect our 
persons, our crew, and our cargo.
    And I want to say I applaud you all for your effort. It is 
working. You are talking about it today. You started the 
testimony today about how the numbers are decreasing. Why? 
Because we are using the common sense that God gave us, and I 
will tell you it is rare that I hear acknowledgment of that at 
the committee level. I just wish that we would practice the 
same common sense and embrace those God-given abilities that He 
expects from us to practice in other areas, and especially in 
the current environment today to rid ourselves of armed 
robbery. That was a term used today. Smash and grab, you know, 
collaboration between Government and industry, I think, working 
together and the American citizens to make sure we use the same 
tactics that you are.
    It is effective. It is work, and I applaud you.
    With that I yield back.
    Mr. Hunter. I thank the gentleman, and Ms. Hahn did have a 
question. I am going to go ahead and we will submit her 
questions for the record later, whatever she would like to ask.
    I would like to finish by just asking this. I am on the 
Armed Services Committee, too, and we get briefed on Africa all 
the time, and so the question is we know what is going on 
there. We are tracking it in a big way. So is there ever a 
parallel to what is happening on the ground there with the 
counterterrorist fight that transfer to the piracy fight?
    And if there is, how does DOD get the message out? Is it 
through MarAd? Is it through the Coast Guard? We say, ``Hey, 
there are some bad guys operating in this area. They are a 
little bit more sophisticated,'' or we do not think that they 
are the run-of-the-mill pirates. They could have Al Qaeda be 
financing or be trying to finance Al Qaeda from what they are 
doing.
    How do we let guys know that they are going to be in a 
place where there is going to be bad people?
    Mr. Matsuda. Sorry. I can start. I think this is really 
more of a question for my colleagues at the State Department 
and other places. But I can tell you that as recently as 
several weeks ago, Secretary LaHood met with the Prime Minister 
of Cape Verde, which is in a neighboring country, and the Prime 
Minister expressed his concern about the potential spread of 
piracy, smuggling and other criminal activities to the 
neighboring countries in the Gulf of Guinea.
    And so there is definitely some concern. These are 
countries that have established governments, unlike what is 
happening on the high seas and on the Horn of Africa, but there 
is definitely concern. We committed to work with governments 
that are interested in building those capacities as they have 
in other areas.
    Mr. Hunter. Let me interrupt just really quick in the 
interest of time. What I am asking explicitly is how do you get 
the message from whoever finds out that there is bad people in 
a certain area to those ships that are traveling in that 
certain area?
    Who is in charge of that? Who puts the message out and how 
is it done?
    Mr. Matsuda. I think that it is fair to say we work with 
all of our agencies here to disseminate advisories to the 
maritime community to make sure they are aware of the latest 
threats wherever they might be and however they might be 
evolving.
    Mr. Hunter. How does that work? Like their radio beeps and 
it is you guys, an all-con message out?
    Mr. Matsuda. We do direct messaging to the maritime 
operators that have U.S.-flag vessels. We also work with the 
National Geospatial Agency to broadcast messages, and I know 
that Coast Guard and the Navy also take separate communication 
means.
    Mr. Hunter. Has that happen?
    Admiral Servidio. Mr. Chairman, most vessels that at 
transiting the area check in with the Maritime Security Center, 
Horn of Africa, and they are the ones that are tracking it.
    There is also----
    Mr. Hunter. Wait. Whose department is that in?
    Admiral Servidio. It is not U.S., sir. It is interagency. 
It is international is really who is running that. I believe 
the U.K. is the ones that originally stood that up.
    Additionally, the Coast Guard is in contact with each of 
the company security officers for U.S.-flag vessels, and we are 
part of the intelligence community. I cannot really get into 
details in this forum, but we can talk about what we do as far 
as tracking vessels, U.S.-flag, and we have the capability to 
ensure people are aware that is a threat out there.
    Likewise, the combined maritime forces provide that similar 
service in the Horn of Africa region.
    Mr. Hunter. So let me ask this then. Have we noticed any 
sophistication of the ``bad guys,'' the pirates? Are they 
getting more sophisticated, number one?
    And, number two, do you ever see them doing anything 
besides just trying to hijack and sell the goods? I mean, do 
you see them just acting with malicious intent to sink a ship 
or scuttle it, whatever, kill the crew, but something beyond 
selling the goods that are on it, trying to make money or 
trying to get a ransom?
    Mr. Shapiro. Well, I will say that we did see over the past 
few years the greater use of mother ships by the pirates which 
enabled them to move further and further from the coast of 
Somalia, getting close to the coast of India where they engaged 
with Indian naval forces. So that was a development which made 
the threat much broader than just off the coast of Somalia.
    However, as we have talked about, as industry has adopted 
these best management security practices, as navies have, you 
know, put assets in the region, we are seeing less of these 
mother ships out on the water trying to attack vessels.
    And so, you know, from that perspective we did see that 
innovation, but the international community responded to that 
innovation in a way that now we are seeing a reduction.
    Mr. Hunter. Yes, go ahead, sir.
    Mr. Smith. Chairman Hunter, could I just comment here 
because I think from our perspective it is one of those 
refreshing things that we have seen with regard to the 
situation in Somalia. It has been the degree of cooperation 
between the various government agencies, both U.S. and 
internationally, and the military forces and the commercial 
sector as well.
    I think from our perspective, that is one of the really 
refreshing things here, where there have been developments, 
trends that we have seen. They have been shared with us where 
appropriate by the military and the Government forces so that 
the industry is aware of them and we can act as well. And I 
think that has been the thing that has really helped in this 
instance with Somalia, is that sort of ``joined up'' thinking 
between both the private and the public sector, which has 
really helped here.
    And for me, the bit lesson to be learned here is that when 
there are developments in other areas we need to act in the 
same way.
    Thank you.
    Mr. Hunter. Last question here. So let us go forward a 
little bit. When I went to Iraq in 2003, we had soft-skin 
Humvees, did not have any up-armored vehicles at all, and the 
IED was kind of invented and used a lot. So what happens when 
they start simply wanting to sink ships?
    So let us say it less of a law enforcement thing where we 
do not care about the ransom. They just want to take a ship 
down, or 20 or 30, or hit as many as they can just to cause a 
little havoc. What happens then? And is anybody thinking about 
that? I would hope.
    Mr. Shapiro. I will say that when we originally made the 
decision to allow the use of armed security teams, there was 
concern that this would lead to an arm's race at sea; that the 
pirates would see, you know, the weapons and try and one up 
with heavy weapons and that it could lead to these types of 
attacks.
    And what we have found is it has not happened, and the 
reason is that most of these pirates skiffs are relatively 
small and do not have the ability to carry heavy weapons. So 
they can attack an unarmed ship with rifles and small arms and 
take it over, but when it comes to doing the type of damage 
that you are talking about, the level of, you know, weaponry 
necessary for that has not really been taken on these smaller 
skiffs.
    Now, is there risk that they might, you know, try and use 
larger ships? Yes, and it is something that we have thought 
about, but we have not seen it yet, and thus far we see that 
when there is a ship that has an armed security team, rather 
than confront it they tend to look for a softer target.
    Mr. Hunter. Did anybody understand the other part? I mean, 
the question was: is that on anybody's lane at all? Do we not 
think that will ever happen where the ``bad guys'' try to IED 
our ships and just kind of ram them with a few hundred pounds 
of explosives just to sink them?
    We do not care about them being shot at. They do not have a 
50-caliber on their little RIB or a fast boat, but they just 
have a few hundred pounds of explosives and they pop a hole in 
a ship.
    Admiral Servidio. The Maritime Transportation Security Act 
under which we have the authority for U.S. vessels requires a 
security plan, a vessel security plan, and that was designed to 
address terrorism types of things, which are things like the 
fast RIB or other types of things coming alongside.
    Internationally, the International Port and Vessel Ship 
Security Code also addresses that. So there are some things in 
place.
    What we do annually is we look at our maritime security 
directives, and our maritime security directives, unlike the 
best management practices which are recommendations, are 
mandated for U.S.-flag vessels that go through the high-risk 
areas, and we analyze them each year to see whether they are 
effective for what we are seeing, and we make modifications as 
necessary.
    We are on the sixth version of the MARSEC Directive that 
sort of deals with piracy. So if we did see trends, we would be 
able to adapt to those. Likewise, industry is the ones that 
have adopted these best management practices. This is the large 
intergovernmental organizations for tankers, for cargo vessels, 
bulkers and others, and they are the ones that put these 
recommendations in place.
    They have recently put an amendment to best management 
practice or best management Plan IV to address some of the 
issues on the West Coast of Africa because it is different, and 
I would likewise see them adopting some of those best 
management practices as the threat changes.
    It is an intelligent adversary, and they do make 
modifications, and we have to recognize that we cannot just say 
that this is going to take care of itself and that we have 
succeeded, but we have to continually look at where we stand 
and what we need to be next, Mr. Chairman.
    Mr. Hunter. Let me thank the panel, and I have one last 
question for Mr. Smith because I just read ``The Wave.'' I do 
not know if you have read ``The Wave.'' It is a good book. I 
recommend reading it, but here is the question if you have the 
answer.
    How many ships are lost at sea, big ships, cargo ships that 
you insure for no known reason? I am just curious. You are here 
from London. I figured I would just ask you.
    Mr. Smith. Well, in fact, I mean, it is a phenomenon that 
we see occasionally. I do not have the exact figures about when 
the last time we had one, but this is one of the refreshing 
statistics for us, is that the number of large merchant vessels 
that just disappear are very few and far between.
    If you want me to find the exact figures for you, I can do 
so.
    Mr. Hunter. Well, not if they are not an impressively high 
number. Then it is not a big deal, but OK.
    Well, with that, let me thank the panel. Thank you, 
Admirals. Thank you all for your service and your time.
    The hearing is adjourned.
    [Whereupon, at 4:14 p.m., the subcommittee was adjourned.]
    
    
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