How the Seychelles became a pirates' paradise

With Somali buccaneers heading south in search of a safe haven, the islanders fear for their honeymoon reputation and fishing livelihoods. Daniel Howden reports from Port Victoria

A multi-storey cruise ship dwarfs the harbour of Port Victoria, engulfing two fishing trawlers in its considerable shadow. Together, the trio of vessels offer a snapshot of the economy of this Indian Ocean archipelago. While the floating holiday camp disgorges hundreds of sunburnt Europeans into the Seychelles' eternal summer, the trawlers unload skipjack and yellow fin tuna by the thousands, bound eventually for Europe.

Mention of the Seychelles is typically the cue for flowery sentences in which "palm-fringed", "azure" and "turquoise" are rearranged in brochure variations but another kind of ship has been arriving here almost daily that darkens the postcard picture. Out in the spectacular bay of Mahe Island, visiting Russian frigates and Royal Navy destroyers are evidence of a gathering storm in the Somali basin that threatens to sink the economy of this tropical paradise.

The anti-piracy armada assembled off the Horn of Africa to protect international shipping from Somali pirates has had the unintended consequence of pushing the problem south and east and into the Seychelles.

Britain's High Commissioner, Matthew Forbes, describes what has happened as the "balloon effect" with the Gulf of Aden patrols squeezing out the pirates who instead have "popped up here".

Victoria was often thought of as a cushy posting with an ambassadorial Jaguar to keep up appearances. That changed irrevocably in October when a retired couple from Tunbridge Wells steered their yacht, the Lynn Rival, out of Victoria heading north-west of Mahe. They made it only 60 nautical miles before they were intercepted by Somali pirates. Today, it is thought that Paul and Rachel Chandler, aged 60 and 56, are being held – separately to deter rescue attempts – somewhere inland from the town of Haradheere in south-central Somalia.

The emerging crisis has transformed Mahe, in Forbes's words, "into the frontline of the fight against piracy". Half a dozen EU spotter planes leave on daily sorties; three US drones launch from its granite hills to photograph thousands of square miles of open sea; and warships detour south.

While the consequences for individuals caught up in piracy are dire, the impact on the Indian Ocean island republic is little better.

Joel Morgan, a slight man with a serious manner, is considered the rising star of the local political scene. Having begun the year as Minister of the Environment, Natural Resources and Transport, he added Prisons to his portfolio last week. Despite all this, he is known informally as the "Minister for Piracy".

"We've not really been affected by recession. What did affect us is piracy," he says. Last year's anti-piracy effort cost $9m out of a total annual budget of $200m, he says.

The nightmare scenario is pirates washing up on one of the exclusive beaches waving guns at free-spending tourists. Already, troops have been stationed on two remote islands to sweep for pirate bases.

The island chain's economic survival depends not just on its enduring appeal to honeymooners but also – to an equal, if not greater, extent – on the fishing industry. The Somali buccaneers are a direct threat to both.

Already burdened with one of the highest per capita debts in the world, after years of unsustainable spending and borrowing, the Seychelles was witnessing a tentative recovery before being hit by the fallout from the failed state 600 nautical miles to its west.

"Piracy has the capacity to negate all the reforms we've made under the guidance of the World Bank and IMF," Mr Morgan said last week, addressing a conference on the future of tuna held in Victoria by the International Seafood Sustainability Foundation. "Receipts from tuna dropped by 30 per cent in the third quarter of 2009. We suffered significantly from the insecurity created by piracy."

The signs of trouble are everywhere beneath the five-star veneer of Victoria. The recently completed Eden Park Wharf, intended as a berth and playground for superyachts, stands nearly empty.

A short boat-ride across the bay is the MW Brands tuna canning factory, the biggest single economic engine supporting the country's scattered population of 80,000. The French-owned plant, the biggest of its kind in the Indian Ocean region, supplies roughly one quarter of the tinned tuna eaten in the EU. The hulking French and Spanish trawlers deliver a conveyer belt of catch in one side which emerges on the other side in cans labelled with brands like John West.

Some 3,000 islanders are employed directly or indirectly through the factory, the Seychelles' biggest employer, which produces as much as 450 tons of the canned fish a day. The 30 per cent drop in the catch led to enforced stoppages at the plant and unemployment among dockworkers.

In the bowels of the cannery, the hi-tech production line resembles a laboratory more than a fish processing plant. Staff in white coats hurry around, their heads covered by hygiene nets and facial hair covered with beard snoods. Clouds of mist are created by the 30C heat and 80 per cent humidity outside clashing with the refrigeration unit inside.

François Rossi, the operations manager, is as concerned with pirates as he is with production. "There are some places the boats cannot go, even with security. They cannot go close to the Somali coast and now the pirates are close to the Seychelles." As he speaks a giant digital scoreboard shows line 9 has just passed 60,000 cans for the day.

The ascending columns of numbers may as well be the vital statistics of the islands' finances and the second half of last year was worrying. A spate of attacks in September drove the entire fleet into port and the capture and multimillion pound ransom of the Spanish tuna boat Alakrana prompted Spain to follow France's lead and allow armed personnel on board.

The fleet based in the Seychelles has since been reduced to 45 boats from 52 and those that remain now sail with up to five heavily armed soldiers. At least 10 attacks have happened since then, repelled by French marines and, on the Spanish boats, by private contractors, many of them former British military personnel.

Michel Goujon, a trawler captain and head of the association of French tuna fishermen, has been pushing for further military assistance. He says boats have been afraid to come into port in the Seychellles: "The pirates were waiting for us. The crews didn't feel safe at all. There's no sign that piracy is going to decrease and every time a ransom is paid it's an invitation for new attacks. It's strengthening the pirate economy in Somalia."

European diplomats argue that the response has already been strong. In addition to the naval resources sent south, a new patrol boat is being provided by the EU to the Seychelles coastguard. In return for the military support, the West has pushed the archipelago to join Kenya as the only other nation to sign an agreement allowing suspected pirates to be prosecuted and jailed.

After an embarrassing affair last year where the government got caught in what appeared to be an illegal hostage swap with a Somali gang – which it still denies – diplomats say ministers are now serious about imprisoning captured pirates.

The islands' only prison, a ramshackle penitentiary atop the lushly forested Montagne Posé, 13 kilometres outside the capital, already holds 11 Somalis caught red-handed when they mistook the Topaz, a Seychelles' naval cruiser, for a fishing vessel and launched a night-time attack.

A new high security wing is being built by the UN Office for Drugs and Crime (UNODC) with EU money. Eventually, the facility will be able to hold 45 Somalis. There are already 120 in prison in the Kenyan port of Mombasa and officials insist that the mountain jail will only be a staging post to two new holding facilities being built in Somalia itself.

No one sees an end to the crisis any time soon. And the reason can be found in the dock next to the Topaz. Here sit three of the much-vaunted pirate "mother ships", the craft that tow the faster lighter skiffs the 600 nautical miles from the coast of Somalia to their hunting grounds in the Seychelles. In reality, they are just three battered motor boats, no more than 10m in length. "You have to admit they're brave," says one official.

One of the vessels is crammed with oil barrels, the fuel for the three day journey on the high seas. One barrel has a hole cut in the front and is used to cook the meagre supplies for the hazardous journey.

These vessels, designed to move around harbours, stand no chance if caught in a storm. Alan Cole from UNODC believes that at least as many pirates have been lost at sea as the 150 that have been captured.

While there are fortunes to be made at sea and devastation at home they will keep coming.