The success, however, has had an unintended consequence: The Somali crime lords behind the pirate networks have shifted to other illicit trade, sometimes in partnership with al Qaeda-linked militant groups like al-Shabaab, aiding terrorism in the Horn of Africa, diplomats and intelligence officials said.

'None of these operations exists in a vacuum,' said a regional intelligence official who traces terrorism financing across Gulf states. Al Qaeda and smugglers 'trade off the same connections, the same sea routes and the same protection rackets.'

In 2011, there were 237 piracy-related events in the waters off Somalia, according to the International Maritime Bureau, which monitors piracy and the effect on commercial shipping. In 2012, the figure dropped to 75. This year, as of Oct. 14 there were 10 incidents--only two of them hijackings.

The United Nations reports similar figures. U.N. Secretary-General Ban Ki-moon said last week there had been 17 attacks in the first nine months of 2013 in the Arabian Sea, compared with 99 in the same period last year.

Most of the piracy in the Gulf of Aden and the adjacent Arabian Sea and Indian Ocean has been controlled by Somali organized crime lords whose business networks stretch between their homeland and Gulf Arab nations including Saudi Arabia, Yemen, the United Arab Emirates and Iran, according to U.N. and regional diplomats who follow crime and terrorism issues.

The Somalis have helped finance pirate ships and have laundered an estimated $400 million in ransom paid by shipping companies between April 2005 and December 2012, regional diplomats and U.N. investigators said.

Their profits began to slip in 2012 when navies and shipping companies began beefing up military defenses.

The international naval force known as Task Force 151 stepped up its use of drones and other intelligence gathering resources, allowing them to better position warships to intercept pirates, said Commodore Jeremy Blunden, the British naval officer currently in charge of the fleet.

Meanwhile, the commercial shipping industry has standardized the use of armed guards on vessels carrying oil and valuable products through the waterways. The practice had been controversial because it contravened common seafaring ways. But it proved cost-effective, say shipping company executives who are reaping the advantages of lower insurance rates as a result.

Countries have also stepped up legal prosecution of pirates in recent years, adding risk for Somali pirate financiers, who face loss of crews and ships. On Wednesday, a Spanish court handed multiple-year sentences to six Somalis convicted of piracy and arms possession, according to the Associated Press.

The only surviving pirate who attacked the Maersk Alabama merchant vessel in 2009--the story on which the Hollywood movie 'Captain Phillips' is based--is serving a 33-year sentence in a U.S. prison.

The aggressive military response changed the risk-reward ratio for Somali piracy financiers, who must pay upward of 80% of their earnings to corrupt Somali officials, local warlords and other middlemen, military officials and diplomats said.

In 2012, Somali pirates only managed to rake in $37 million in payments, or about three quarters of the annual average received since 2005, according to a World Bank report.

'We've put a fire blanket over the problem,' said Capt. William Nault, the chief of staff for the international naval force taking the lead on counterpiracy patrols in the area. 'We've raised the cost [analysis] for them.'

Somali piracy bosses, however, have proven nimble businessmen. As piracy profits decreased, they refocused resources on other long-standing illicit operations, including arms smuggling and region's lucrative trade in charcoal made from Acacia trees, according to diplomats and law-enforcement officials in the region who monitor illicit activity.

In a report issued to the U.N. Security Council this summer, diplomats watching violations of U.N. sanctions in Somalia provide evidence of alleged links between the Somali businessmen suspected of running the pirate networks and smuggling rings and al-Shabaab. The militant group is battling Somali government forces and African peacekeepers to try to establish a fundamentalist Islamic government.

The U.N. report presents telephone records and other surveillance that links alleged Somali financiers of piracy with business partners in Iran, Saudi Arabia and the United Arab Emirates in the charcoal-smuggling network.

The report also alleges similar business links between these same actors and weapons smuggling into Somalia. Most weapons sales to Somalia are prohibited under U.N. sanctions, as is the charcoal trade there.

Counterterrorism officials say that the charcoal trade is one of the main avenues that al-Shabaab finances its terrorism operations and pays for the weapons they use to fight the Somali government and African peacekeepers. The business has grown from roughly $30 million a year in the late 2000s to a business now worth an estimated $340 million-$380 million a year, according to the U.N.

The White House slapped a trade ban on Somali-sourced charcoal in 2012 because of the alleged trade links to al-Shabaab.

The U.N. investigators complain that while regional governments understand the threat of terrorism financing, there has been no political will to arrest the men at the top of the Somali crime networks.

The majority of recent pirate trials involve men at the midrange of these organizations or foot soldiers suborned into piracy for their sailing knowledge, a regional counterterrorism official said.

U.N. investigators have recommended adding these Somalis to an international sanctions list, and some diplomats argue that they should be prosecuted for sanctions violations or terrorism ties.