Maritime Update – Implications of MV ASPHALT PRINCESS Hijacking

The recent events surrounding an illegal boarding and temporary hijacking of the MV ASPHALT PRINCESS in international sea lanes near Oman and the killing of UK and Romanian personnel on the MV MERCER STREET by a suspected drone attack a week earlier in the same vicinity have been focusing the maritime industry.  These episodes are the latest in a series of tensions watched closely by observers over recent years.  Despite the tragic loss of life and uncertain security conditions that these events highlight, they are nowhere near the scale of the tanker wars of 1984-1988.  In that era nearly 200 merchant vessels were deliberately targeted by military combatants.  Vessels were strafed by aircraft, impacted with missiles, fired on by warships and gunboats and struck by sea mines.  Both Iraqi and Iranian military forces engaged in these attacks and their ongoing war (1980-1988) was widened as a result, drawing in regional and international forces to attempt to protect unrelated and innocent merchant traffic and contain the crisis.  Losses were significant.

Today’s threat conditions have different drivers but the tactics available to combatants remain unchanged and with added measures that did not exist 35 years ago.  Concurrently, naval power is arguably weaker today than in the mid 1980s when the cold war saw western forces at their zenith.  Should conditions continue at an elevated threat tempo with future escalations, Masters and their crews will need to be able to adapt to shifting threats to include:

• Awareness of the air threat. This could mean something as basic as having an air sentry to watch for unknown aircraft or drones.  Drilling the crew to muster into a citadel or some other action station may be required if hostile air attack is suspected to be imminent.  There will be very little to no warning.  Drones in particular are a challenge given their small size and reduced radar signature, and that they are unlikely to be detected by commercial 10cm or 3cm surface radars.  Furthermore, drones are more likely be used as a surveillance tool and not necessarily pose an attack risk – something watchkeepers will be unable to determine with accuracy or confidence, presuming they are even spotted.  As for missile attack, this is a significant issue as air-to-ship, shore-to-ship and ship-to-ship systems can be devastating and appear with no warning.
• Awareness of the surface threat.  Attack by hostile warship or gunboat is a risk factor that is obvious.  If in international waters and approached by combatant surface vessels Master’s will have to take actions in line with protecting their crews and safeguarding their vessels, including with complying to illegal interference if under threat of attack.  What is less obvious is the risk of illegal boarding and hijacking.  Attackers may be masking intentions by posing as fisherman or other benign local seafarer traffic to close distance and attempt to board.  Why would they do this?  If the vessel can be commandeered and brought into the waters of a country it would give complexion to a justified seizure.  We have seen this previously such as the MV STENA IMPERO incident in the summer of 2019.
• Sea mines can lurk just under the surface and present another sinister challenge to merchant traffic.  Submarine attack can be disguised as a sea mine strike but this is unlikely to occur.  For starters allied military forces will be making a concerted effort to track and shadow the submarine activity of potential adversaries.  Awareness of sub-surface threat hazards like these however, are another dimension for Masters to contemplate.
• Awareness of the outlying threat. It is a common perception that the marine industry has inconsistent and outdated technology lacking in universally comprehensive controls, that include penetration testing to prove resilience.  A cyber-attack will not necessarily be targeting the safe working of a vessel at sea, unless there is a deliberate attempt to manipulate platform management systems software.  Instead, it might well be targeting shipowners and ship management venues.  One aim of such action will be gleaning intelligence on fleet details, vessel plans, cargo and crew insights and intended operations.  This will aid aggressors in planning and positioning resources for future attack efforts.  Other actions may be more offensive in nature and simply corrupt information to disrupt commercial operations.  At one end of the spectrum, they may present as nuisance cyber-attacks and at the other may pose a more tangible interdiction to commerce.  Cyber-attacks may present as non-state criminal actors but in fact be a front for hostile state-related offensive action.  Cyber-attacks may also serve to create distraction to an organisation that inadvertently places vessels in a greater exposure to the more traditional threats discussed above.  A Master at sea has control over his vessel and crew but if onshore managers are not thinking with the same clarity of purpose their shortcomings in procedures and information control in the office will be impacting seafarers in a way not conceived previously.  Simply put, all players in the marine industry have a role to live up to and failure in the office can have blowback for those at sea.

Against the backdrop of modern threats, merchant shipping has a lot of positives going for it to build on and enhance preparatory controls and absorb, react and step change competently as the current crisis unfolds.  The Somali piracy crisis of 9-15 years ago compelled the shipping industry to address crew safety and readiness drills in a new fashion.  The industry came together to create Best Management Practices (BMP) and BMP5 is still in use with sound advice on vessel protection and security.  This provides a strong starting point to evolve and adapt drills for the new threats.  This can be woven in parallel with ISPS Code compliance.  The International Ship & Port Security Code was created after 9/11 as an amendment to the 1974 SOLAS Convention and came into effect in 2004.  To some, it is just tick box compliance tool setting a basic level of security universally but if embraced along with BMP5 it provides a useful and operational cultural cue.

UKMTO is a central reporting centre for merchant traffic to raise the alarm, seek and share advice and affords Master’s with naval interface when needed.  UKMTO is operated by the UK Royal Navy and it’s voluntary reporting and information sharing platforms are unreservedly recommended to create better confidence for maintaining situational awareness and vectoring assistance in any emerging crisis event.  Shipowners should be cognizant and interact with UKMTO. Good intelligence is paramount in all of the above scenarios, so that passages can be routed appropriately through threat areas.

Insurers have a host of marine product in the marketplace.  Policyholders should be flexing the products they hold – alongside their brokers – to ensure they know the limits, gaps, and exclusions to their existing coverages.  Stress testing cover with penetration tests on IT systems and short table top wargames to simulate predictable crises will give confidence and reliability to decision makers in advance of a real event.  These efforts will also expose gaps not readily recognised and permit a chance to improve preparations and mitigate future incidents. Even if an incident cannot be fully prevented the recovery process can be expedited and impact costs reduced.  Commercial operations in a high-risk area demand commensurate control measures out of duty of care to seafarers and managing operational efficiencies responsibly.

MS Risk Limited is a British crisis response consultancy serving the Lloyd’s of London speciality risk insurance marketplace and shipowners around the globe.  It has completed assignments for energy and maritime clients in high-risk areas including Libya, Gulf of Guinea, Gulf of Aden, the Sulu Sea and Arabian Gulf for 16 years.      

Hedging Between Great Powers & the VFA

Of all the Southeast Asian states the Philippines has traditionally been one of the closest to the United States. Since decolonisation in 1946 the country has remained on friendly terms with the US, acting as an outpost during the Vietnam War, and maintaining a US military presence ever since. While neighbours like Indonesia and Malaysia are happy to cooperate with the United States in private to combat issues like terrorism, the Philippines has been happy to play the role of close ally in public.

A symbol of this partnership is the Visiting Forces Agreement (VFA). The VFA was brought in in 1999, and it essentially gives all United States military personnel based in the country diplomatic immunity unless the US authorities decide that person should be subject to local laws. The law has resulted in a number of controversies, most notably the Subic rape case, where four US troops were acquitted of raping a Filipino woman in 2006.

The VFA made headlines again in early 2020 when President Duterte said that it would not be renewed. Since 2017 Duterte has been trying to rebalance a perceived over-reliance on the United States by building closer ties to China. These ties have at times included discussion, amongst other things, intelligence sharing. Duterte also prefers China’s policy of refusing to comment on their ally’s internal politics. A closer alliance with China therefore could provide him with political cover internally, as well as resources, trade, and weapons from their northern neighbour.

However, the Philippines ongoing dispute with China over the Spratly islands in the South China Sea has complicated this shift and appears to have forced Duterte to keep the VFA and try to find a balance between China and the United States. Back in March, 220 Chinese coast guard and fishing vessels were placed at the Whitsun Reef. This ignited a number of retaliatory measures, including overflights by the Philippine Air Force, a rebuke from the U.S. National Security Advisor, and both the Philippine and U.S. navies moving parts of their fleet into the region.

This shows the complicated path the Philippines, and other countries in the region, are winding between the China and the United States. On one hand, China will provide investment, resources, and no interference in local politics. But on the other, many ASEAN countries, the Philippines included fear China’s ambitions in the South China Sea and its expansive ambitions. The United States, however, presents a different challenge. Increased interaction with the US could lead to high-profile political criticism, especially on Duterte’s human rights record, and potentially even sanctions. But it is a lot less likely the US will stake a claim to any island chains in the region.

Duterte for now has agreed to extend the VFA. But it remains to be seen if he will change his mind again. It is highly likely China will continue to reinforce their various claims on the Paracel and Spratly islands, unless the ASEAN countries can form a unified response. So, if China do wish to build better relations with the Philippines and in turn reduce the US’s presence in the region, they will need to find another way to forge a stronger relationship with the Southeast Asian nation. In turn, if the US wishes to maintain their relationship with the Philippines while Duterte is in charge it is likely there will be a reduction in official criticism of his government coming from Washington.

Nord Storm 2 Pipeline Creates Divisions Within Europe

Finalising the construction of the Nord Stream 2 pipeline has become a hotly contested issue that has put all sides in a ‘lose-lose’ situation. The German government is acting as though the pipeline were a vital national interest and the US, Baltic States, Poland and Ukraine fear that it will make Europe overly dependent on Russia.

An objective security analysis suggests that the fears have a kernel of truth, nevertheless Ukraine is not necessarily in a detrimental position.

One might see that Ukraine’s fear over the project as a major security threat is justified. Following this perspective, indeed from a purely geostrategic sense, the Nord Stream 2 threatens Ukraine, and not just with the loss of billions of euros in fees for the transit of Russian gas to Europe. Once Russia stops the gas transit, it would not hold back on damaging Ukrainian gas pipelines, and this would mean that the threat of war for Kyiv would increase considerably. The situation could also impact on how quickly Ukraine integrated into NATO and the EU and that the country would need both military aid and financial assistance in the form of low-interest European loans and funds to compensate. Therefore some analyst concluded that if the physical flow of Russia gas through Ukraine stops, the risk of full-scale military aggression by Russia could go up substantially.

In Poland, too, the US-German deal prompted strong condemnation. Poland Government emphasized from the very beginning that Nord Stream 2 is a geopolitical project that destabilizes the political situation in central and eastern European. The Polish Government announced it was ‘surprised’ by the German-American agreement and that Germany was “unfortunately pursuing Russia’s interests,”. Moreover, there has been no adequate response from the EU. At the same time, Poland’s relations with the US and Germany are likely to cool further. The fear remains that the Kremlin will perceive the concessions from the US which could encourage them to pursue an even more aggressive policy with regard to Ukraine and the whole central and eastern European region.

Nevertheless, one needs to keep in mind that a pipeline creates a bilateral dependence: Russia depends on the EU remaining a reliable customer. The bilateral economic link is much more important for Russia since earnings from gas exports make up a significant portion of Russia’s overall export earnings (and the revenues of the Russian government) – but are only a tiny fraction of the European economy. Furthermore, Europe already has an alternative source of supply in the form of free capacity for LNG imports. This means that Russia depends much more on the EU as a customer than the other way round. To achieve its own ‘gas market independence’ from Europe, Russia would need to construct a costly capacity to export LNG from facilities closer to fields near the Arctic Circle. With Nord Stream 2 it has less of an incentive to do so.

This being considered the fact that a large part of its gas exports go through Ukraine did not deter Russia from annexing Crimea and creating a frozen conflict in Donbas. It is thus not clear why a further drop in gas transit should negatively affect Ukrainian national security. Despite their mutual hostility, the two countries still managed to reach an agreement whereby Gazprom will pay transit fees between of $1.5 and $5 billion per annum until 2024. Many US and European observers assume that the transit fees benefit ‘Ukraine’. In reality, these fees found their way into the pockets of oligarchs who siphoned off profits via shell companies and associated local companies. Some recent reforms, which began even before the election of President Zelensky, have improved the situation, as recognised in a report by the OECD. But the transit fees will remain a potential source of corruption, which remains engrained in the country’s energy sector, as noted by the Ukrainian anti-corruption agency. The country as a whole still ranks at the bottom of all indicators of good governance and corruption.

In terms of the goal of bringing Ukraine closer to Europe, and of reducing corruption, the loss of Gazprom transit revenues should be counted as a plus. Ukraine no longer imports gas directly from Russia. The energy security of Ukraine is ensured by reverse flows from Western Europe towards Ukraine. But most of this gas (delivered from Slovakia to Ukraine) is actually Russian gas. Today, this gas arrives first through the Ukrainian transit pipeline into the EU and then returns. With Nord Stream 2 completed the flow would be somewhat more complicated (first to Germany, then through intra-EU Central European interconnectors and then back to Ukraine), but the substance would not change.

Analysing this, the geostrategic point raised initially, loses its linchpin assumption, namely that Ukraine stands to be negatively affected by the new gas pipeline. The discussion in its essence should revolved on how Germany, as the main gas beneficiary, could use its leverage point against Russia and not the other way around.

Deteriorating Security in Afghanistan Increasingly Threatens Neighbouring Pakistan

The Contentious Issue of the Grand Ethiopian Renaissance Dam

The Grand Ethiopian Renaissance Dam (GERD), as its name suggests, would herald in a new era for Ethiopia and the Horn of Africa region. The GERD, which is expected to be formed of 10 metric tonnes of concrete and reaching 175 metres, with a volume of 79 km3, is an outstanding achievement of engineering. When completed later this decade, the $5 billion dam will be Africa’s greatest hydroelectric-power project. Apart from the Congo River project of the Democratic Republic of Congo (once completed), the GERD will be unrivalled in the continent. Located on the Blue Nile, the dam would create 6,000 megawatts of energy, double as much as all of Ethiopia’s present output. Dams in general have several purposes, including to prevent floods, generating energy and storing water for irrigation. However, they create conflict and misery for many, due to environmental damage or the displacement of individuals whose dwellings will be lost underneath dammed waters. This dam has also been the cause of strife between Ethiopia, Sudan and Egypt. For years, the three countries have been locked in ineffective talks over the GERD, and despite severe objections, Ethiopia continues to build the dam, claiming that the hydropower project will considerably enhance livelihoods throughout the region.

Some of the points of contention are the rate at which a planned reservoir behind the dam would be filled, the manner of annual replenishment, and the amount of water Ethiopia will release downstream if a multiyear drought develops. To date, approximately 80% of the dam’s construction has been completed. Ethiopia is aiming for a seven-year filling schedule in order to begin producing power as soon as possible, but Egypt is expecting a lengthier period of 12 to 20 years. Egypt is concerned that the project will suffocate the Nile’s waters. Ethiopia’s timeline implies a reduction in the Nile’s flow in Egypt, which depends on 59% from the Blue Nile. The Nile provides 95 percent of the water used by the country’s 115 million people. According to some experts, the GERD might cut the river’s yearly flow by a quatre and prevent fertile silt from reaching the Nile Delta. Sudan shares a sense of dependency and concern. The Blue Nile River also produces the majority of the silt that contributes to the richness of the soils along the river’s path. Crop production in both countries may be harmed as a result of the dam.

The unbalanced use of the river is a major stumbling block for Ethiopia. The Blue Nile is a major tributary of the Nile River, with Ethiopia accounting for up to 85% of its flows. Despite this, Ethiopia only uses 1% of the river’s capacity. The history of asymmetric river allocation dates back nearly a century, to the 1929 Anglo-Egyptian agreements, which granted Egypt and Sudan nearly all of the Nile’s waters. This agreement, as well as subsequent negotiations in 1959, defined consumption rights that excluded the eight other states that the Nile runs through. Egypt was allocated 55.5 billion cubic metres and 18.5 billion cubic metres was allocated to Sudan – nearly 90% of the Nile’s 84 billion cubic metres total flow. Upstream countries, irrespective of origination point or internal demand, were left without any formalised rights to the river’s waters as a result of these accords.

Rounds after rounds of talks between Sudan, Ethiopia and Egypt have failed  to overcome the impasse over the contentious project. This is preceded by years of failed negotiation between the riparian countries. The negotiations over the Blue Nile’s use have been marked by a complex process of trilateral negotiation and international mediation, with Ethiopia frequently withdrawing before any real deal could be reached.

Ethiopia considers past restrictions on its capacity to consume even a small portion of the waters that originate within its borders to be a violation of its sovereignty. Ethiopia’s upstream position, along with the GERD’s development, gives them the potential to substantially regulate the flow of the river’s waters, bolstering their claims to production-based river use. As a matter of fact, Ethiopia has utilised practically every step of dam construction and negotiation as a means of reclaiming self-reliance in the region, assuming that neither Egypt nor Sudan will explore military alternatives to return the region to a state of stagnation that favours them unevenly. The GERD has become a source of pride and a symbol of the country’s future, and it is seen as a method to reinforce the country’s dominance in the area. Completion of the $5 billion (USD) dam, which is entirely self-financed, is expected to be the lynchpin in Ethiopia’s economic turnaround.

However, for the Egyptians, the GERD is a threat to their hydro-hegemony in the region, as well as its capability to provide for its people, who are nearly totally reliant on the river for freshwater. Only 4 billion cubic metres of the Egypt’s 55.5 billion cubic metres allotment are emptied into the Mediterranean Sea each year, meaning Egypt uses 93% of its yearly allocation. With plans to develop the agricultural sector, even fully utilising the river’s water allocation will not be enough to fulfil Egypt’s rising demand. To complicate matters, Egypt has a record of openly hostile responses to any threats to its hegemony over the river, frequently backed by military intervention threats. While it is imprudent to rule out the possibility of conflict between the nations, full-out war between the states is improbable. Thus, Egypt’s intervention through proxies in Ethiopia’s current and increasing intra-state crisis is a real likelihood.

Sudan’s GERD stance is comparable to that of Egypt. Sudan’s Minister of Irrigation and Water Resources, Yasser Abbas, has indicated that the dam’s next filling, which has reportedly started (5^th July 2021), could represent a direct threat to Sudan’s security. Egypt announced Ethiopia had informed them that the second phase of filling at the GERD had begun, but it denounced the move as a threat to regional stability. Sudan confirmed that it had received the same notification. According to Egypt, the second filling of the dam, which went ahead without having reached an agreement with the downstream riparian countries, will intensify the region’s crisis and tension, resulting in the formation of a situation that jeopardises regional and international security and peace.

To avoid conflict in the Horn of Africa, a stalemate in negotiations between the three countries over the GERD must be resolved quickly and peacefully. However, Ethiopia has repeatedly rejected and opposed calls for outside mediators, stating that the country “believes in resolving African problems by Africans.” In the wake of the second filling, and with it the potential rise in tensions, the United Nations has urged all parties involved to recommit to dialogue and to refrain from taking unilateral measures. The African Union’s involvement in mediating between the countries is supported by UN Secretary-General Antonio Guterres. Similarly, the United States has said all parties must commit to a negotiated settlement that is agreeable to all parties.

However, it seems that despite rising international pressure on Ethiopia – whether over the GERD or the conflict in Tigray – the Ethiopians appear unwilling to make any meaningful compromises. Ethiopia maintains that the GERD is within its sovereign domain. Thus, it will not be restricted by external restraints that reduce the GERD’s benefits because it needs the dam for the country’s development. A compromise between those two opposing viewpoints may appear difficult to achieve, yet it is necessary to handle this lingering issue that has the potential to generate conflict.