U.S. navy stalks Somali pirates in hostage standoff

MOGADISHU (Reuters) - Somali elders sought to mediate on Saturday between the U.S. navy and pirates holding an American hostage in a high-seas standoff that presents President Barack Obama with a nasty new dilemma.

Four pirates adrift in a lifeboat far out in the Indian Ocean with Richard Phillips, the 53-year-old American captain of a cargo ship they tried to seize on Wednesday, have demanded $2 million for his release and a guarantee of their own safety.

He is one of about 260 hostages now being held by the swelling numbers of pirates from lawless Somalia who prey on the busy sea lanes of the Gulf of Aden and Indian Ocean.

With three U.S. warships in the area, Somali elders and relatives of the pirates holding the Vermont father-of-two plan a mediation mission in the hope of avoiding bloodshed, said a regional organization that monitors piracy.

"They are just looking to arrange safe passage for the pirates, no ransom," said group coordinator Andrew Mwangura.

Pirates seized another vessel on Saturday, a U.S.-owned, Italian-flagged tugboat with 10 Italians and six others on board, NATO alliance officials on a warship in the region said.

Earlier, attackers fired a rocket-propelled grenade into the cabin of the commanding officer of another ship in the Gulf of Aden between Somalia and Yemen. They also fired bullets.

The grenade did not explode and the ship's crew managed to repel the attackers with water hoses, the NATO officials said.

On Friday French special forces stormed a yacht held by pirates elsewhere in the lawless stretch of the Indian Ocean in an assault that killed one hostage, but freed four.

Two of the pirates were killed and three captured.

WARSHIPS CLOSE IN

A U.S. military official said the destroyer Bainbridge was near the lifeboat and had been joined by the Boxer, the flagship of a U.S.-led multinational counterpiracy task force which has a crew of about 1,000 and dozens of attack planes and helicopters.

The guided U.S. missile frigate Halyburton was also nearby.

At one point, Phillips tried to escape by jumping overboard but was "didn't get very far," a U.S. official said.

The Bainbridge launched monitoring drones and kept radio contact with the pirates.

"What continues to be our number one priority is the safe and healthy return of the captain," said a Pentagon spokesman.

The gang holding Phillips remained defiant. "We will defend ourselves if attacked," one told Reuters by satellite phone.

Pirates on a 20,000-tonne German container vessel with 24 hostages gave up an attempt to use the ship as a "shield" to protect the lifeboat holding Phillips.

"We have come back to Haradheere coast. We could not locate the lifeboat," one pirate on the German ship the Hansa Stavanger, who identified himself as Suleiman, told Reuters.

Relatives said Phillips had volunteered to get in the lifeboat with the pirates in exchange for the safety of his crew, who regained control of the 17,000-tonne, Danish-owned Maersk Alabama, on Wednesday.

The ship was due to dock in Kenya's Mombasa port on Saturday with its cargo of food relief.

Filipinos make up the largest contingent of all the hostages. Pirates are keeping about 17 captured vessels around lairs like Eyl, Hobyo and Haradheere on Somalia's eastern coast -- six taken in the last week alone.

"Once again, it has taken American involvement to get world powers really interested," said a diplomat who tracks Somalia from Nairobi. "I hope they don't forget the Filipinos and all the others once this guy is released."

The standoff has forced Obama to focus on a place most Americans would rather forget. Perched on the Horn of Africa, Somalia has suffered 18 years of conflict since warlords toppled dictator Mohamed Siad Barre in 1991.

Americans remember with a shudder the disastrous U.S.-U.N. intervention there soon after, including the infamous "Black Hawk Down" battle in 1993 when 18 U.S. troops were killed.

FRANCE DEFENDS RAID

In Somalia's semi-autonomous northern Puntland region, which prides itself on its relative stability, a court sentenced 10 pirates to 20 years in prison on Saturday for attacking a Syrian-registered ship in October 2008.

But piracy seems sure to go on while Somalia stays in chaos.

Insurance premiums have risen and some shippers just avoid the area, sending cargoes round South Africa to Europe instead of through the Gulf of Aden into the Suez Canal.

Somalia's Islamist insurgent movement al Shabaab, on Washington's list of terrorist organizations, lambasted the international naval patrols aimed at keeping ships safe.

"You are the ones who are the pirates. Leave our waters. You will be defeated," said a spokesman. The group denies it has links with the pirates, most of whom used to be poor fishermen.

The French government stood by its raid to free the yacht hijacked en route to Zanzibar last weekend with two couples and a 3-year-old child aboard.

"During the operation, a hostage sadly died," said French President Nicolas Sarkozy's office. But it said the president "confirms France's determination not to give in to blackmail and to defeat the pirates."

Piracy has been growing for years but hit headlines in 2008 with the world's largest sea hijack of a Saudi tanker carrying $100 million of oil -- and for taking a Ukrainian ship with a huge military cargo including 33 tanks.

(Additional reporting by Abdi Sheikh and Mohamed Ahmed in Mogadishu, Abdiqani Hassan in Bosasso, Abdiaziz Hassan in Nairobi, Daniel Wallis in Mombasa, Alison Bevege on board the NRB Corte-Real, Andrew Gray and Anthony Boadle in Washington, William Maclean in London and Andrew Cawthorne in Nairobi; writing by Andrew Cawthorne; editing by Richard Meares)