Somali pirates may be dropping their ransom demands by up to 50% following the Kenyan invasion, as Kenyan troops disrupt pirate bases and supply lines and patrol the Somali coast.

According to the Kenyan Business Daily, pirates’ ransom demands could fall further once Kenya’s Operation Defend the Country is completed. Kenya says it will only exit Somalia once the al Shabaab threat has been eliminated.

Andrew Mwangura, the Seafarers’ Assistant Programmes (SAP) coordinator told Business Daily that, “Initially, the pirates holding captive the Algerian flagged MV BLIDA were demanding US$6 million to release the vessel and her multi-national crew. But a package of US$3.5 million was delivered on the vessel and they freed it.”

“Pirates are keener than before to make sure that negotiations for the release of at least nine vessels held in Somali are completed,” a manager at one of a Mombasa-based shipping agents told Business Daily. “It is clear the trend is due to the military operation in Somalia.”

Kenyan navy vessels have sunk two al Shabaab boats this month, killing more than 20 militants as the navy attempts to secure the coastline around the Kenyan border.

Last month Kenya launched a cross-border incursion into Somalia to flush out rebels from its frontier area after a series of kidnappings of foreigners in Kenya. The abductions were carried out by gunmen thought to be linked to al Shabaab.

Last month the United Nation’s counter-piracy unit said that cooperation between militants and pirate gangs is growing as al Shabaab becomes more desperate for funding.

"There is a growing link and growing cooperation between al Shabaab who are desperate for funding and resources with other criminal gangs and with pirates," said Colonel John Steed.

Steed, the principal military adviser to the U.N. special envoy to Somalia and head of the envoy's counter-piracy unit, said pirates were not part of al Shabaab.

"Pirates are one of those potential sources of large amounts of money so there a natural linkage between Shabaab's desire for funding to support their activities and money that pirates are getting from ransoms," he told Reuters.

The President of the semi-autonomous Somali state of Puntland Abdirahman Mohamud Farole believed the two had links.

"We are almost sure about that otherwise in the Shabaab held areas pirates will not operate," he told Insider.

A senior Somali commander has said the Kenyan-Somali operation's aim was to rid Kismayu, a port city that serves as the rebels' nerve centre for operations, of the militants.

"We have seen people taken from the coast of Kenya and then facilitated all the way through al Shabaab held areas and delivered to an area held by pirates and negotiated by pirate gangs," Steed told the conference.

"They have been taken there to be used as human shields to prevent attacks from other states."

Analysts and diplomats in the region have warned that Somali pirates were likely to turn to softer targets, such as tourists in Kenya, in response to more robust defence of merchant vessels.

Steed told Reuters that pirates taking ships and their crews hostages for lucrative ransoms would remain their main focus. He said international military forces were looking to target gangs not just at sea, but in air operations and using Somali forces on the ground.

"Clearly the conclusion will be that the pirates when they are forming up on the beaches are at their most vulnerable and that's the point where they need to react," he said.

Farole said Puntland, which has arrested hundreds of pirates in its territory although is struggling with a lack of resources, would back such operations "if required in cooperation with the local Somali authorities".

"Within our limits we will do everything we can but we are appealing to the international community to support us in establishing our marine police force to be operative now," Farole said.

Earlier in the year Steed said that ransoms paid to Somali pirates are ending up in militants’ hands, laying shipping groups open to accusations of breaching international sanctions.

Ransom demands have risen steadily in recent years. According to one study, the average ransom stood at US$5.4 million in 2010, up from US$150,000 in 2005, helping Somali pirates rake in nearly US$240 million last year.

Some political analysts said the policy of some Western governments to endorse the payment of ransoms, seen as fuelling the insecurity, is at odds with their financial support for the Somali government and the African troops propping it up.

"Detained pirates tell us that some level of cooperation with al Shabaab is necessary to run a criminal enterprise," said Alan Cole, piracy programme coordinator at UNODC.

"If there was no relationship between us, there is no way the pirates would be able to operate, or carry their weapons within zones we control," said an al Shabaab militant based in the pirate haven of Haradhere, north of Mogadishu.

Natznet Tesfay of Executive Analysis said al Shabaab was heavily involved in smuggling through Kismayu, slapping taxes on illegal charcoal exports to the Gulf, arms shipments from Yemen and electronic goods destined for the region.

"Piracy and contraband smuggling are the two biggest games around," said Tesfay at the specialist intelligence company.

Tesfay said she had yet to see evidence of an "operational relationship" between the pirates and al Shabaab but that the militants had a reputation for monopolising key income-earning sectors once they had taken control of an area.

In February al Shabaab seized a number of pirate gang leaders in Haradhere and forced them to accept a multi-million dollar deal under which the pirates would hand over 20 percent of future ransoms.

A Reuters investigation found the following payments had been made to al Shabaab's "marine office":

On February 25: US$200,000 from the release of the Japanese-owned MV Izumi after pirates received a US$4.5 million ransom.

On March 8: US$80,000 from the US$2 million release of the St Vincent & Grenadines-flagged MV Rak Africana.

On March 9: US$100,000 after the Singapore-flagged MV York was freed for US$4.5 million.

On April 13: US$600,000 from the release of the German ship Beluga Nomination after a US$5.5 million ransom was paid.

On April 15: A US$66,000 share of the US$3.6 million ransom handed over for the Panama-flagged MV Asphalt Venture.

On May 14: US$100,000 from the release of two Spanish crew of the Spanish-owned FV VEGA 5.
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