High Seas Piracy Is Legal for Uncle Sam

High Seas Piracy Is Legal for Uncle Sam

By Mark Nestmann • July 14, 2020

Piracy is one of the few activities that nearly everyone worldwide condemns. It’s one of three crimes defined in the US Constitution, and the first federal criminal statute, enacted in 1790, set forth the death penalty for any person convicted of it.

Piracy is also a uniquely profitable enterprise. When a pirate crew seizes a ship, not only can it generate considerable revenues from selling the vessel and its contents, but can also hold the crew for ransom, or even sell them into slavery.

Historically, entire societies have based their economies on piracy. By the late 1700s, the North African Ottoman provinces of Algiers, Tunis, and Tripoli, along with the independent nation of Morocco, routinely captured merchant ships and either enslaved or ransomed their crews. One historian estimates that between 1530 and 1780, more than one million Europeans were enslaved by what came to be known as the “Barbary pirates.”

As a newly independent state in the last half of the 18th century, the US faced unique challenges from piracy. Isolated from its markets in Europe by the Atlantic Ocean, American merchant ships were frequently seized, and their crews ransomed by Barbary pirates.

By 1801, the newly inaugurated Thomas Jefferson was spurred into action. Shortly after Jefferson refused a demand from the Pasha of Tripoli to pay $225,000 to permit American merchant ships to freely navigate Mediterranean waters, the Pasha declared war on the US.  Jefferson then dispatched warships to the region to restore the free flow of American goods.

More than two centuries later, the old-fashioned variety of piracy continues to flourish, especially off the coast of Somalia and the Strait of Malacca. And more recently, in the Caribbean off the coast of Venezuela. But as with so many other aspects of modern life, piracy has also become more genteel. These days, piracy is as likely to occur with the stroke of a pen as with the tip of a sword.

A case in point is the latest effort by the Trump administration to enforce economic sanctions against two of its longstanding enemies: Iran and Venezuela. On July 3, federal prosecutors filed an arrest warrant and civil forfeiture complaint in Washington, D.C. to seize more than one million gallons of gasoline held on four tankers enroute from Iran to Venezuela. The existence of these sanctions supposedly gives the federal government legal authority to confiscate the gasoline. Presumably, Uncle Sam doesn’t plan to enslave the crews of the four tankers, although I’m certainly not ruling it out.

Unlike the Jefferson administration two centuries ago, it seems unlikely that President Trump will dispatch American warships to seize the gasoline. It’s even less likely that their captains would voluntarily enter a US port to willingly turn over cargo to the federal government. (Although if they did, they would presumably be eligible for a generous commission, as is routine in narcotics-related civil forfeitures.)

Instead, the Trump administration is counting on other countries to help it seize the fuel. It’s using a carrot and stick approach: cooperate with us and you won’t face American economic sanctions. And it means business: on July 1, the feds auctioned more than 100,000 barrels of previously seized gasoline voluntarily turned over by a Greek shipowner who suspected its captain was headed to Venezuela.

Naturally, US authorities aren’t using the word “piracy” to describe their efforts to seize the cargoes of these four ships. Their actions are couched in the legalese of civil forfeiture, and the arrest warrant for the gasoline is said to be in full compliance with the “Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure.”

Naturally, Iran disagrees. Its mission to the United Nations characterized the attempted seizure as “piracy,” adding that the effort is “contrary to international law, including the United Nations Charter.”

At the moment, it’s anyone’s guess how this will all turn out. None of the four ships the US is seeking have yet come under American control, and at least one of them has turned off its transponder, making it virtually impossible to trace.

One thing is for certain, though. If the tables were turned, and Iran or Venezuela were seeking to forcibly seize American goods bound for global markets, Washington wouldn’t hesitate to use military force to repel the effort. That’s as true today as it was more than 200 years ago, when President Jefferson was battling the Barbary pirates.

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About The Author

Since 1990, Mark Nestmann has helped thousands of clients seeking wealth preservation and international tax planning solutions. He is the author of highly acclaimed Lifeboat Strategy and other books & reports dealing with these subjects.

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