
Keeping the Sea Lanes Open: A Cost-Benefit Analysis - Thevet
http://insidestory.org.au/keeping-the-sea-lanes-open-a-cost-benefit-analysis
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ant6n
The author claims the cost for the UK of the navy is 0.6% of GDP, and the cost
of not being able to access the Suez canal is 0.06% - ten times lower. My
problem with that argument is that the Suez canal is not on the only shipping
lane that the UK is using, and thus interested in 'protecting'. Maybe the
proportional cost for 'protecting' the Suez canal as part of the whole navy
budget is much lower than 10%, in which case the economic calculation may come
out ahead.

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cbsmith
None of this figures really have any notion of precision, and yet we're
dealing with impacts that are a fraction of a percent. There's more than
enough room for fudge factor that it could go either way.

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SixSigma
While the cost of open/closed routes concludes with "little impact", what
about the sea piracy aspect?

The Somalis already showed us what can happen : in 2013 The World Bank said
$18bn a year of increased costs by route changing and insurance. [1]

IBM / Rand performed a similar analysis in 2014 [2], they concluded

> the total cost of piracy off the coast of Somalia at US$7–US$12 billion in
> 2010; US$6.6–US$6.9 billion in 2011 42 and US$5.7–US$6.1 billion in 2012.

> “While over 80 per cent of these costs were estimated to be borne by the
> shipping industry, 20 per cent were estimated to be borne by governments,”
> the report reads.

[1] [http://edition.cnn.com/2013/04/12/business/piracy-economy-
wo...](http://edition.cnn.com/2013/04/12/business/piracy-economy-world-bank/)

[2] [http://worldmaritimenews.com/archives/134829/annual-
global-c...](http://worldmaritimenews.com/archives/134829/annual-global-cost-
of-piracy-measured-in-billions/)

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ufmace
Interesting, if maybe questionable. The author assumes that all of the non-
Chinese trade through the South China Sea could take routes around it - is
this the case? Even if it is, if we were to allow even partial blockage,
wouldn't that also encourage China and any other regional actors to block
anything else they felt like blocking? And if it isn't, what's the economic
effect of halting that trade entirely? Particularly on smaller nations in the
area whose economies may be more heavily based on sea trade.

