The shimmering blue water washes gently on to golden sands that stretch past the crumbling, whitewashed villas lining the shore. Dolphins leap from the gentle swell of the Indian Ocean.

In another age this was known as “beautiful Mogadishu”, a destination for package tourists from Europe. Today it stands beside the most dangerous shipping lane in the world. Pirates armed with rocket-propelled grenades and AK47s control the waters far out to sea; close to shore, the threat of Islamist suicide boats keeps captains watchful.

“It used to be a good place,” says Mohamed Shoaib Siddiqui, the Paki-stani master of the MV Golina, a rust-bucket of a cargo ship loaded down with food desperately needed by Somalia’s starving population. “It was like Kenya, with disco bars, nice hotels, a good life. Then the security situation changed. None of that is possible now.”

His 510-mile voyage from the Kenyan port of Mombasa was made possible only by staying close to the guns of a naval escort. As the master turns the vast hull of the Golinatowards Mogadishu’s harbour, a Canadian frigate, HMCS Ville de Quebec, stands guard. Her commander, Chris Dickinson, scans the shoreline with high-powered binoculars, watching for high-speed skiffs leaving the harbour. Anything that gets within 500 yards of cargo ship or escort will be turned to driftwood by the frigate’s 57mm cannon. “The threat here for us is small boats – a suicide boat or a boat armed with RPGs or small arms,” Commander Dickinson says.

His crew is deployed along the decks, armed with heavy machine-guns and assault rifles. The ship’s helicopter has been dispatched to make passes close to Mogadishu’s pockmarked villas and bombed-out hotels looking for potential threats. This is the only way humanitarian aid can be delivered to the gates of Hell.

Tens of thousands of people have fled the city during some of the worst fighting in 20 years. An estimated 8,000 people have died in the past 18 months. Guns are power in the city’s lawless streets. This week Islamist insurgents ordered the city’s airport to close amid intelligence reports that they had received a shipment of surface-to-air missiles recently.

While most of Somalia’s population hovers on the brink of famine, its armed entrepreneurs are busy exploiting the anarchy to earn hard currency. On land they run protection rackets and roadblocks; at sea they call themselves pirates, although they have little in common with the cutlass-wielding brigands of old.

The result is a country that analysts no longer describe as a failed state. Today it is known as a postfailed state.

With no regulation, patchy taxation and a civil war raging between Islamists and a weak, interim government, an AK47 is the only licence needed to do business.

The power vacuum has allowed pirates to launch 55 attacks this year on vessels as they skirt the Horn of Africa. As a result, insurance premiums have soared; it costs $9,000 (£5,000) to send cargo through the Gulf of Aden, up from $900 a year ago.

Shipowners have said that soon they may be forced to reroute their vessels around the Cape of Good Hope, increasing costs to consumers.

Pottengal Mukundan, director of the International Maritime Bureau, based in London, said that the frequency of attacks was unprecedented and could be stemmed only with international action. “Somalia has no government able to deal with piracy. Neighbouring countries lack the resources to tackle this problem,” he said. “The only forces that can do anything are coalition naval forces.”

About 30,000 ships use the route as they pass in and out of the Suez Canal, making it a vital artery for global trade. A US-led naval taskforce, set up as part of Operation Enduring Freedom to tackle terrorism, has been given responsibility for trying to keep the sea lanes open. They have established a series of waypoints marking a safe corridor through the Gulf of Aden patrolled by warships and coalition aircraft overhead.

This week European Union foreign ministers announced plans to set up a coordination centre to help to tackle the threat but so far the warships – a British frigate among them – seem powerless, despite their radar, missiles and helicopers, to halt the ragtag bands of pirates in their simple, fast-moving skiffs.

Captain Mukundan said: “The issue is that they are there for military duties. Piracy is not their biggest priority. We would like to see naval vessels homing in on the mother ships that are operating in the Gulf of Aden, getting on board and confiscating weapons and disrupting their operations.”

His views are echoed by Andrew Mwangura, who monitors piracy for the Seafarers’ Assistance Programme from Mombasa. “The coalition is interested in smuggling and illegal fishing,” he said. “They chase off pirates if they see them but they don’t know what to do once a ship has been taken.”

French commandos are the exception. They have twice been called in to rescue hijacked French vessels. Earlier this week a special forces team freed the 50ft Carre d’Asyacht and her crew, a retired couple who were sailing from Australia to France when they were snatched by pirates on September 2.

But often the picture is complicated by ships registered, owned and crewed by companies from different countries. A ransom, up to £750,000, is often paid before the ships are set free.

The result is boom time for the pirates, who have looted and pillaged since the breakdown of Mohamed Siad Barre’s Government in 1991. Most started out as fishermen who became increasingly angered by foreign vessels trawling Somali waters. They would board foreign boats and demand their share of the catch. It did not take long for them to realise that there was more money to be made by hijacking the boats and holding the crew for ransom.

Today there are thought to be ten gangs operating around Somalia with as many as 1,000 members. Two years ago there were only about a hundred pirates. Most are based in Puntland, a semi-autonomous region that angles around the Horn. Recent visitors say that the tiny fishing village of Eyl has enjoyed a huge economic boom as the pirates buy luxury 4x4s and build smart new homes. Men with laptops describing themselves as “pirate accountants” come and go and restaurants have opened to cater for more than 200 hostages. In all, 13 ships are under the control of pirates. Two more vessels – a Greek cargo ship and a Hong Kong-flagged vessel – were snatched this week and attacks are reported almost daily.

As Commander Dickinson brought his frigate through the Gulf of Aden to begin escort duties last month, his radar came alive with blips showing the locations and names of hijacked ships. “What we don’t want is dead hostages,” he says. “There are negotiations under way with the owners of the vessels. Any intervention would be counter-productive.”

Instead, his job was to ensure that 4,000 tonnes of sorghum sent by the UN’s World Food Programme made it through to one of the world’s hungriest countries. After two days cruising along the Somali coast he watched as African Union soldiers in two speed-boats came alongside the Golinato see her into the harbour.

In the distance, a skiff with a powerful outboard motor emerged from the shoreline apparently on course for the ageing cargo ship. It stopped only when one of the two AU boats broke off to block its path.

Everyone on the bridge of the HMCS Ville de Quebec breathed a sigh of relief. Commander Dickinson turned away to order his ship back to Kenyan waters. He has to escort two more aid vessels before his mission comes to an end. Then the cargo ships will be on their own once more and Somalia’s tortured people will be left to fend for themselves again.

Times Recommends

• Rio Tinto four held as China prepares case
• Diplomats must keep heads down and trousers up
• When in Rome should one make like Berlusconi?