Unfurl the Banner! Privateers and Commerce Raiding of China’s Merchant Fleet in Developing Markets

February 18, 2021
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The first rays of sunlight splayed across the calm coastal waters as Steele steered the fast-boat toward the target. Since graduating as a U.S. Navy Special Warfare Combatant-Craft Crewman over a decade ago, he had rehearsed and conducted intercepts like this hundreds of times. He subconsciously compared wave states to those he had encountered off Coronado, Virginia Beach, and foreign war zones and adjusted the throttle and steering of his powerful craft accordingly. A week ago, his unit had been providing counter-piracy training for Somaliland’s coast guard, but then tensions in the South China Sea erupted into conflict. Now Steele and his team had become commerce raiders preying on the large vessels operated by Chinese state-owned enterprises and carrying natural resources from Africa to China.

While often paying bribes to African rulers and their coterie, China had not made itself popular with many Africans. This resulted from China’s frequently corrupt business practices, with its cheap imports undercutting local producers, and the use of Chinese labor on the multi-billion-dollar Belt and Road Initiative projects (many of which are environmentally harmful). Critics saw many of these as premeditated debt traps that obligate governments to offer concessions for breathing room to finance these “white elephants.” A local working in the harbor master’s office passed word that the COSCO Shipping vessel transporting Sudanese crude oil, now 20 nautical miles east of the port, did not appear to have a vessel protection detachment or any other means for self defense when it steamed out to sea. Later reconnaissance conducted by an intelligence, surveillance, and reconnaissance platform spotted no evidence of shipborne defense.

A swarm of drones deployed from a warehouse, a tug, and a charter dive boat converged on the tanker. The captain was told to prepare for boarding or risk having his vessel turned into a giant Roman candle lit by thermobaric weapons dropped by the drones. The captain issued an order and the ship began to slow. Jan, the leader of the assault team, spoke to Steele in his Afrikaans-accented English, saying, “I bet when you were a Navy squid, you never imagined a payday like today.” Jan was right. Steele and the other men in the boat worked as private maritime security contractors, but their company now operated with a letter of marque issued by the United States government providing them with legal status as privateers — and they stood to profit handsomely from the seizure of this prize.

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Privateers in Great-Power Competition

China has a vast and vulnerable overseas presence in the developing world, as it has sought to obtain raw materials that it cannot produce at home. As an example, it is now the world’s largest importer of oil and gas. Increasingly, China relies on raw materials shipped home from projects run by its state-owned enterprises, many of which operate in Africa and Latin America. The presence of large numbers of well-trained and well-staffed private military contractor companies and private maritime security companies in Africa and Latin America provides a ready resource to leverage against China’s long sea lines of communication. China has been undergoing a dramatic naval expansion, exacerbating a growing imbalance between the size of the U.S. and Chinese fleets. The U.S. Navy’s global commitments have already led some to conclude that the force is stretched too thin. Privateers offer a force multiplier for the United States and its allies.

 

 

While they were a key instrument of naval warfare for hundreds of years, the use of privateers declined over time as private companies lost the ability to outfit their own vessels to make them comparable in speed and lethality to modern warships. However, in the past two decades, cheap and lethal military technology has become commonplace. With off-the-shelf military-grade equipment available in the open market, proficient and disciplined forces can inflict significant damage against even the best-equipped military units. This development may allow privateers to return to a position where they overmatch merchant ships and most protective elements.

The United States should consider hiring privateers to raid Chinese merchant ships and destroy port facilities owned by Chinese state-owned enterprises in any future great-power conflict. The power to employ privateers would be delegated to combatant commands to utilize in their regional area of responsibility. By themselves, privateers are not a war-winning weapon, but they can inflict economic harm, degrade China’s war machine that relies upon foreign supply lines, and impact the Chinese military’s decision-making calculus. Efforts by China to protect merchant shipping or state-owned enterprise facilities would take resources away from operations in the Pacific, the central theater of any future Sino-American conflict. The failure to protect these lines of communication would cause China’s war-making capacity to sputter over time, as Imperial Japan learned to its detriment in World War II. Hiring privateers to raid China’s commercial interests may appear far-fetched to some, but doing so in wartime would nevertheless be legal, ethical, and in the American national interest.

Use of Privateers

The United States has a history of employing privateers to augment its naval forces. Their greatest impact came in the War of 1812 against the British Empire, then the world’s greatest naval power. In that war, the U.S. Navy captured around 250 enemy vessels, but American privateers likely captured five times that number. U.S. privateers had a similar effect during the Revolutionary War, straining the Royal Navy’s resources by driving it to carry out convoy operations for merchants, impinging upon their sea lines of communication, and substantially increasing insurance rates on British merchant shipping, among other impacts. While not issuing letters of marque (i.e, documents granted by the government to private entities to act as a privateer on the government’s behalf) during the Spanish-American War in 1898, the United States recognized it maintained the right to do so. Scholars have argued recently that commissioning privateers remains legal under international law.

Privateers were typically a weapon of choice for weaker maritime powers, though Britain employed them extensively in the 18th century despite dominating the seas. Unfortunately, the U.S. Navy may already be too small to challenge the People’s Liberation Army Navy directly while operating in the Western Pacific and at the same time engage in commercial raiding of the Chinese merchant fleet. Using privateers to engage Chinese vessels around the globe would free the U.S. Navy from the task, allowing it greater freedom to operate in the Western Pacific. Privateering is an economy of force option for a Navy that is finding itself outbuilt by Chinese shipyards and, eventually, outnumbered by the People’s Liberation Army Navy. It would also be a fair response to the People’s Armed Forces Maritime Militia, a paramilitary of civilian mariners that Beijing has repeatedly used in regional disputes. In both world wars, the major powers sought to exploit commerce raiding in peripheral theaters to impact their adversaries’ strategic options. For example, the threat posed in 1914 by a single German cruiser — the Königsberg — to British supply lines off of East Africa and the Indian Ocean obsessed the First Lord of the Admiralty, Winston Churchill, and led the British Admiralty to redeploy 27 ships from across the globe for more than a year to counter it. Today, those regions are even more important in terms of the resources they produce and the investment that they host.

China Is Increasingly Reliant on Developing Markets

China is increasingly reliant on the importation of natural resources from overseas to run its economy, with notable efforts in Africa and Latin America. It relies upon unarmed merchant shipping to transport these critical raw materials across great distances back to China. Securing these seaborne lines of communication across thousands of miles of oceans and from ports spread across the width and length of two large continents presents a vulnerability that the United States should exploit in a conflict.

China now obtains more than one-third of its oil and 20 percent of its cotton from Africa, and it has developed ports and funded mines to gain access to critical minerals such as manganese, coltan, and rare-earth metals. To guarantee future oil supplies, China has heavily invested in African oil producers including Sudan, Angola, and Nigeria. Chinese state-owned enterprises are the leading investors in the development of the African petroleum industries, and those same Chinese companies ship the fuel produced by these African projects to China. As part of China’s foreign policy, and to address excess economic capacity, the Chinese Belt and Road Initiative has undertaken development projects in more than 60 countries. As of December 2019, it had invested $140 billion in Africa alone, with China holding more than 20 percent of all  African governmental debt. Forty countries in sub-Saharan Africa have signed onto Belt and Road projects.

Chinese investment in Latin America and the Caribbean has increased dramatically in the last decade. Trade between China and the region has increased more than 20 fold in the past ten years, and almost all of it is seaborne. Chinese banks have surpassed the investments made by the Inter-American Development Bank and the World Bank, pouring over $100 billion into the region. China has focused its financing on commodities and infrastructure, including Venezuelan crude production, petroleum refining in Ecuador and Costa Rica, and soybeans in Brazil and Argentina. China’s overseas fishing fleet, consisting of ships smaller than large cargo transports, could be an additional target for privateers. Fleets made up of hundreds of Chinese-owned fishing vessels consistently operate in Latin American or adjacent waters to satisfy the skyrocketing demand for seafood by Chinese consumers, who now consume more than a third of all seafood globally. These fleets have repeatedly clashed with regional governments, and while the total number of vessels is unclear, it is estimated to be as high as 17,000 vessels. Taking on fishing fleets with privateers might not force starvation but would cut off the supply of an important daily commodity.

Legal Basis For Privateers

Many may assume that privateers died off with the Age of Sail, and the practice was barred by a series of international treaties. However, renewed attention to the subject over the past two decades has established that first, the United States never agreed to any prohibitions on privateering and specifically rejected the efforts to outlaw the practice at the Second Hague Convention in 1907, and second, that it remains a lawful practice under international law. Furthermore, the U.S. Constitution specifically provides for the issuance of letters of marque. Most recent scholarship has focused on utilizing privateers to counter piracy (and it has also been raised as an idea in counter-terrorism). The legal bases for utilizing privateers in support of counter-piracy missions are no different than those that would authorize the use of privateers in a great-power competition. Some have begun to advocate, as do we, their use as a means of warfare for countering China if the United States and its allies find themselves in a third world war.

There has been robust discussion as to whether private maritime security companies acting against pirates meet the definition of privateers, as they operate in a defensive fashion to protect ships in transit. We argue that privateers could operate more broadly, not to safeguard commercial transportation but to actively engage in commerce raiding as an asymmetric means to impact China’s ability to engage in a lengthy conflict against the United States and its allies.

Historically, privateering represented a “peculiarly American way of war,” given its decentralized, entrepreneurial nature, that relied upon consortia to disperse risk and consolidate investment in a capitalist enterprise — private companies raiding ships for profit. Recently, scholars have tried to reassert the importance of “maritime raiding and irregular warfare” to the early U.S. Navy. Using privateers today would be in line with that linage. Privateering is lawful, and the privateers are legally distinct from mercenaries and entitled to protection under the Geneva Convention. Captured merchant vessels were evaluated by prize courts that awarded shares of prize money to the successful raiders. Letters of marque do not begin at the water’s edge, but also allow for land-based seizures. The United States pays bounties to private citizens, allowing bounty hunters to pursue federal fugitives, and offers payment for information on terrorists and drug kingpins through the Rewards for Justice and Narcotic Rewards programs.

Were the United States or other allied powers to decide to utilize privateers against China’s economic periphery, the question would be whom to employ. The least problematic from a legal basis would be private military contractors and private maritime security contractors, given the requirements under the Geneva Convention that they operate in accordance with the laws of war and have a command structure.

During the height of the war in Iraq, Gen. Stanley McChrystal developed Joint Special Operations Command into one of the most nimble and lethal organizations in history that succeeded in shattering al-Qaeda in Iraq. To achieve this, McChrystal focused on pushing decision-making and authority down to the lowest tactical level. Similarly, we suggest giving combatant commands the authority to hire privateers in their areas of operation. They would likely further delegate decision-making to their naval elements, for example U.S. Naval Forces Central Command in the Middle East and the Horn of Africa, or U.S. Naval Forces Southern Command in Latin American waters.

The U.S. military’s contracting system is often cumbersome and slow, though it does allow for waivers — exceptions were often granted in Iraq and Afghanistan — and “other transaction authority agreements” have become increasingly popular as a means to cut through bureaucratic red tape. Combatant commands could utilize streamlined contracting procedures supervised by their lawyers to hire appropriate companies. As a global conflict with China would require quick reactions and not allow the traditional lag times for build-up that the United States has grown accustomed to, commands could identify first movers ahead of time with standby letters of marque for trusted U.S. companies. The past two decades have already seen the United States rely heavily on the privatization of warfare. During the height of fighting in Iraq, 50 percent of U.S. force structure was provided by contractors and, similarly, 70 percent in Afghanistan. Some predict that the United States may outsource 80 percent or more to outside contractors in future wars. U.S. Central Command employed 50,000 contractors in 2018, and 30,000 of them were foreign nationals. Provided that foreign private military contracting companies are appropriately trained, equipped, and led, it seems reasonable that they could be used as privateers by the United States. U.S. Southern Command relies on chartered support at sea for counter-narcotics and recently extended the contract.

Many private security companies meet international standards for transparency and accountability in accordance with international business standards. The International Organization for Standardization has issued guidance for private maritime security companies performing shipboard defense. While not directly analogous to privateers (which are fundamentally offensive), companies that have undertaken to comply with international standards in this industry could be a good first start of those to be enlisted in commerce raiding. Private security contractors that are contracted through the Defense Department are also subject to the Uniform Code of Military Justice, and privateers could be similarly held accountable with courts martial and other non-judicial punishments.

Historically, privateers received “prize money” for the vessels and goods that they captured after having been evaluated by a prize court. British Admiralty courts were the prime developers of admiralty law and the rules of these tribunals. Privateers would sail seized vessels into the ports of belligerents or their allies for evaluation of their prizes. These courts provided a measure of due process to ensure that privateers employed only reasonable violence and that they received payment for only legitimate targets. The 1995 San Remo Manual on International Law Applicable to Armed Conflicts at Sea recognizes that combatants may capture enemy merchant vessels as a prize and that prize courts can examine the legality of the seizure. Civilians may man a “warship” under international law, and thus their conduct would also be covered by the San Remo Manual. Using privateers, the U.S. could lawfully utilize a prize court (or appropriately competent panel) and pay them for seized Chinese goods and vessels. Those goods could be auctioned off, or — if they are critical war materials, such as oil — be used by the U.S. government.

Available Actors

In Africa, the extensive number of private contracting companies operating in security roles and conflicts provide a ready-made infrastructure for hiring privateers, and many already operate in the maritime space protecting shipping from pirates. Similarly, in many Latin American countries, private contractors outnumber police. The United States government heavily employs contracting companies in African counter-terrorism and stability missions and in Latin American counter-narcotics operations. French, British, Russian, and Ukrainian companies (among others) work for African states or at the behest of Western governments in the Sahel and elsewhere on the continent.

Employing well-regulated private military contractors to serve as privateers would be an ethical solution for the United States or its allies. Nevertheless, history provides examples of the United States cooperating with even less savory groups including with the Mafia in Sicily during World War II and — with less success — in operations conducted against Castro’s Cuba. In a high-intensity global conflict, state actors may not be as scrupulous in whom they hire as privateers. The same Somali clans that operate effective consortia for piracy, which have been the focus of much of the privateer debate, would be well-positioned to conduct commerce raiding against Chinese shipping around the Horn of Africa, the Red Sea, and likely as far as the entrance of the Persian Gulf — impacting Chinese oil imports. Similarly, non-state actors, such as the Houthis in Yemen, have a demonstrated capacity to utilize their naval forces to impact merchant shipping, and may represent a potential ally for raiding Chinese shipping (and are not a stranger bedfellow than was the U.S. alliance with Stalin and the Soviet Union). Nigerian separatist groups, concentrated in the oil-rich Niger Delta, have long conducted attacks against foreign oil companies and state hydrocarbon infrastructure. They would have the means and potential motive to enlist in privateer activities in Africa. Even states desiring to improve relations with the West could allow their citizens to participate as privateers — or importantly as a neutral country allow privateers to refuel and rearm: Eritrea is one such country whose mercurial leader may see the benefits of such an understanding.

Asymmetric Advantage

The proliferation of affordable weapons technology has revolutionized the battlefield over the past two decades and “democratized” access to cutting-edge systems. The Islamic State utilized drones for reconnaissance as well as to deliver improvised weapons against forces in Iraq and Syria. Armenia had no counter to the devastating drones utilized by their Azeri adversaries in the fighting that took place in late 2020 in Nagorno-Karabakh, leading Armenia to accept a humiliating ceasefire in their long-running dispute over the territory. Houthis have pioneered the use of drone suicide-boats against belligerents and commercial shipping in Yemen’s waters. Mexican security forces have repeatedly found themselves out-gunned by better armed cartels. Criminal groups in the Caribbean and Western Pacific are no stranger to maritime operations and use large fleets of boats and semi-submersibles to move drugs, particularly cocaine, north toward the United States with what has been called a “narco-navy.” In a crisis, the United States should fund and organize privateers to utilize their existing capabilities to attack Chinese merchant vessels.

The success of Chinese state-owned enterprises provides a significant vulnerability. Their size and scope in developing nations ensures that they present lucrative targets that are nearly impossible to protect everywhere. As an example, China Merchants Port Holdings, and China COSCO Shipping Corporation Ltd are mega-companies cover the waterfront for maritime industries involved in dry-bulk, container, and liquid tanker shipping; shipyards; and port management. COSCO Shipping Ports is the world’s second-largest terminal operator in the world and China Merchants Port Holdings, which operates Djibouti’s container port is an even larger state-owned enterprise than COSCO, moving a greater volume of cargo and operating terminals worldwide.

Various countries’ militaries have deployed vessel protection detachments to protect merchant ships flagged by that country. It is possible that China could seek to counter privateers through extensive use of this technique or by launching its own privateers. Beijing could also conduct protected convoy operations as the allies did in the Battle of the Atlantic to counter the U-boat threat. But in either circumstance to protect the vast number of Chinese merchant vessels (or shore-based infrastructure, which as was noted is also a legitimate target for privateers under international law), the People’s Liberation Army and/or People’s Liberation Army Navy would have to commit resources to protecting these assets and sea lines of communication, reducing the resources that they could use against U.S. or allied naval forces. At the outset of the war, it is unlikely that the Chinese would have implemented use of vessel protection detachments to protect their state-owned enterprise vessels and facilities in Africa and Latin America. While it is possible that they might choose to do so, the most likely way to quickly reinforce and harden their fleet would be to utilize transport aircraft to deliver security forces to these regions. Not only are there potential issues on refueling aircraft flying from China to these developing areas, but cargo aircraft are typically slow and vulnerable, and would reduce Chinese lift capabilities to reinforce units engaged in combat, deliver logistical resupply, or support operations in the Pacific.

Because Chinese fleets — merchant, fishing, naval, and coast guard — all outnumber their U.S. equivalents and China has a larger domestic shipbuilding capacity, the United States is unlikely to win a conventional naval arms race. Leveraging privateers is a way to unleash the forces of market capitalism at scale. Focusing on Africa and Latin America leverages the United States’ superior geography and access to the Pacific, Atlantic, and Caribbean. U.S. military and U.S.-based private security contractors already operated in those areas and would have a critical advantage in time and space of Chinese or People’s Liberation Army Navy protection operations in those regions.

Captured merchant vessels would also be able to supplement the anemic U.S. flagged fleet. Both the US flagged merchant fleet and the government-owned vessels of Maritime Sealift Command are in such dire straits that one analyst forecast a future conflict where the United States is “unable” carry its armies to war. During World War II, 60 percent of the worlds merchant shipping by tonnage was U.S. flagged, in 2015 only two percent of the ships visiting American ports were U.S. flagged. Between 1960 and 2010 the U.S. flagged fleet fell from over 1,000 vessels to 221 – privateering would be one way to help boost those numbers if the captured ships were pressed into U.S. service and to make up for limited domestic shipbuilding capacity and the replacement of cargo vessels lost in a conflict.

Conclusion

Both China’s navy and coast guard are larger than their American counterparts and increasingly well equipped. In the event of a conflict, the U.S. Navy will have to think outside the box: Hiring privateers to raid Chinese maritime interests is one such strategy. Its substantial overseas presence in the developing world and reliance on natural resources being transported across vast oceans to mainland China have created a unique vulnerability that could be exploited. Threats to Chinese assets are in many areas already in place given the proliferation of trained and disciplined private contractor forces who are operating in the same regions and areas as the vulnerable Chinese state-owned enterprises. China would likely be no more successful than many other governments who have sought to counter the propagation of advanced military technologies. Finally, while the use of privateers has largely died there are no legal prohibitions against their use, and privateers themselves have legal protections as combatants. Capitalism has been one of the greatest levers for innovation and development the world has ever seen, and incentivizing decentralized but professional organizations to develop techniques and conduct attacks against Chinese merchant shipping for profit provides a unique and asymmetric advantage that could be employed in any future great-power conflict.

 

 

Christopher D. Booth is a career national security professional and served on active duty as a commissioned U.S. Army armor and cavalry officer. He has extensive experience abroad, including assignments in the Middle East, Asia, and Europe. He is a distinguished graduate of Command and Staff College-Marine Corps University. He graduated from Vanderbilt University Law School and received a B.A. from the College of William and Mary.

Capt. Walker D. Mills is a Marine infantry officer. He is currently serving as an exchange officer at the Colombian Naval Academy. He is a non-resident Master of Arts student at the Naval Postgraduate School’s Center for Homeland Security and Defense. He holds an M.A. in International Relations and Modern War from King’s College London and received a B.A. from Brown University.

All statements of fact, opinion, or analysis expressed are those of the authors and do not reflect the official positions or views of the U.S. government. Nothing in the contents should be construed as asserting or implying U.S. government authentication of information or endorsement of the authors’ views.

Image: Flickr (Photo by Mussi Katz)

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