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* Piracy incidents off Somalia have dropped since 2012
* Pirates need support on land to conduct operations
* Work on high seas still more lucrative than other ventures
By Edmund Blair
MOGADISHU, April 11 (Reuters) - Ending Somali piracy requires a shift from reliance on security at sea to targeting those on land who enable the lucrative business to thrive, according to the World Bank.
Although the number of attacks has markedly fallen since 2011 thanks to tougher security aboard ships and increased Western naval patrols, piracy emanating from the lawless Horn of Africa nation may still cost the world economy about $18 billion a year, the bank said in a report released on Thursday.
Pirates operate far beyond Somalia's waters, disrupting shipping on global routes in the Indian Ocean and into the Red Sea. Since the first reported hijacking in 2005, 149 ships have been seized, raising total ransoms of $315 million-$385 million.
That is a fraction of the amount World Bank in its 218-page report estimates it costs the world economy from distortions to trade prompted by piracy. Other bodies give lower estimates.
But the costs of naval operations, guards on ships, higher insurance and other factors run into billions of dollars.
Piracy incidents have dropped since 2012, but much of that experts attribute to tougher security at sea. Talk among donors of offering alternative livelihoods to pirates have had little impact given that Somalia's government has limited control over the country and a pirate's booty is far higher than other work.
One expert said a pirate who can earn $5,000 in a night's work capturing a ship will not be tempted by fishing classes giving him skills that may earn just a few dollars a day.
"Somalia cannot buy its way out of piracy; nor can the international community rely solely on its law enforcement agencies to defeat pirates, whether at sea or on land," the World Bank said in its study.
Pirates rely on support onshore to conduct negotiations and to secure locations from where they can operate. "In turn, politically powerful figures capture large portions of the profits associated with piracy," the report said.
"Any solution therefore will involve forging a political contract with local stakeholders - a shift in attention, in other words, from the perpetrators to the enablers of piracy."
It said the international community and Somali government needed to tailor development assistance and security initiatives in locations where pirates operate to win support from the local power brokers and their communities.
The report did not list project proposals. One example it cited was an initiative by a Britain-based non-governmental organisation offering social and economic developments to local communities if they help eject pirates and their backers.
"The long-term solution to piracy off the Horn of Africa cannot be dissociated from construction of a Somali state that is viable at both central and local levels," the World Bank said.
Some experts argue that tough security at sea may already be cutting the costs of piracy to the world economy and making it a far less attractive business to both those at sea or on shore.
The Oceans Beyond Piracy advocacy group says the cost to the global economy was $5.7 billion to $6.1 billion in 2012, far lower than the World Bank's estimate.
The World Bank estimates that it would cost between $40,000 and $80,000 to outfit a pirate group. If the chance of a multi-million-dollar ransom is now slimmer and the danger higher due to naval action, those with the cash may look at other ventures.
Alan Cole, regional coordinator for the counter-piracy programme of the U.N. Office on Drugs and Crime (UNODC) in Nairobi, said targeting those funding piracy was one part of the response but not to the exclusion of other aspects.
"It's a combination of things. It's certainly got more dangerous (for pirates) to be at sea," he said. "Coupled with that, there is less coastline available to pirates."
Authorities in Somalia's northern Puntland region have tried to crack down on piracy, while an African Union force has helped deny pirates parts of the south as troops pushed out al Shabaab Islamist militants, a group seen as a beneficiary from piracy.
Cole also pointed to the challenge of going after the organisers on land. He said he was not aware of a single case where a businessman backing piracy ventures was prosecuted, while some 1,200 pirates were now in jail around the world.
"With a crime of this complexity you have got to go after it everywhere," he said. "The international community has had less success in arresting the organisers than it has arresting the young men in the boats. That needs to change." (Editing by Richard Lough and Mark Heinrich)