Despite intensive efforts by global navies and the Seychelles Coast Guard (SCG), the threat to the Seychelles from Somali-based piracy is increasing. This is not simply because the high season is approaching, but also because a change in pirates' strategies has allowed them to strike at greater distances from the shore through the use of captured motherships. Naval patrols, private guards on ships and more effective anti-piracy strategies means that less than half of attacks are successful, but pirates are still capturing numerous ships and hostages, some in Seychelles waters. The SCG and EU vessels have thwarted several attacks, rescued captives and arrested pirates (who are being tried in Seychelles). However, the risks were highlighted in January when the SCG fired on a seized vessel, the Germany-based Beluga Nomination, killing one of the pirates, who responded by executing a seaman. Alongside reports of hostages being mistreated, this is a clear sign of the pirates' increasing ruthlessness. Two of the ship's 12-strong crew died during the fighting, but the rest and the vessel-which carried numerous goods for Seychelles-were taken to Somalia. Although successful, the SCG was criticised for a lack of restraint and the EU task force for not responding in time. Vessels are increasingly employing private guards, or re-routing via the Cape of Good Hope in South Africa. Coupled with rising insurance, this is imposing a high cost on trade and the local economy (see Economic performance).

Seychelles now has nearly 50 pirates in detention, some convicted and some awaiting trial. In the latest prosecution, in December, a judge sentenced nine pirates to 22-year terms, using new anti-piracy powers in Seychelles law, while another trial of ten pirates is currently underway. Some 10% of Seychelles' prison population now comprises pirates, which is putting a strain on the system, despite external assistance. In a key development, the government and judicial representatives from Somaliland (the breakaway entity in the north of Somalia), Puntland and Somalia's Transitional Federal Government (TFG) signed agreements in February, under the auspices of United Nations Office on Drugs and Crime (UNODC), to repatriate pirates to serve their terms in Somalia. However, Somalia's prisons will need to be upgraded and inspected before actual transfers take place. Several "pirates" have already been repatriated to Puntland because of insufficient evidence to prosecute. On the military side, the United Arab Emirates donated five patrol boats to the SCG in December, as part of a US$15m defence package agreed last year, which also includes constructing a new coast guard station and radar network.

The economic costs of Somalia-based piracy have been estimated by the Ministry of Finance. Trade costs-mainly freight and insurance-are expected to be around US$4.5m; tourism will lose out on US$8m because of cancellations and fewer cruise ships and yachts; and fishing will lose US$4m because of reduced activity. This could bring the total bill to almost US$17m in 2011-about 1.8% of GDP-excluding losses suffered by private businesses such as goods seized on captured vessels. Also excluded are higher outlays on defence and the judiciary (to try captured pirates), although these will mainly be covered by foreign assistance.