Terrorist Attack in Malacca Strait Would Impact World Economy

Published Feb 8, 2006 12:01 AM by The Maritime Executive

Admiral Gary Roughead, Commander of the U.S. Pacific Fleet, said an attack on commercial shipping within the Malacca Strait would have a profound economic impact on the world's economies. The narrow Malacca Strait is a 500-mile waterway through which some 50,000 commercial vessels pass through each year, and it links Asia, the Middle East, and Europe.

The strait is shared by Malaysia, Thailand, Indonesia, and Singapore, and it carries 40 percent of the world's trade, which also includes 80 percent of Japan's and South Korea's oil and gas, and 80 percent of China's oil, according to a U.S.-Indonesia Society Study done in 2005, which also addressed piracy and terrorism in the Malacca Strait.

In 2005, the London insurance markets classified the Malacca Strait as a 'war-risk' area and added it to 21 areas it deemed high risk and vulnerable to war, strikes, and terrorism.
Indonesian accounts for approximately 30 percent of reported attacks in 2005, said The International Maritime Bureau (IMB), which monitors piracy worldwide. The IMB said that global piracy fell in the past year, from 329 attacks in 2004 to 276 in 2005, with Indonesian attacks down from 94 to 79 and attacks in the Malacca Strait falling from 38 to 12.

While the U.S. Pacific Fleet covers the Pacific, Indian, and Arctic Oceans with 200 ships, 2,000 aircraft, and approximately 239,000 U.S. sailors, the countries of Malaysia, Thailand, Indonesia, and Singapore began joint air patrols over the Straits' sea lane in September, 2005.

Admiral Roughead said in a statement that the Malacca Straits is a critical region that must be kept open at all cost. If terrorists manage to impede the essential shipping lanes, it could very well have a ripple effect on the global economy.