Raids on Somalia's notorious pirate bases risk exacerbating the problem they are trying to solve as the coastal communities who host the bandits benefit little from ransom money, a report warned Thursday.

"Pirates appear to be investing money principally in the main cities rather than in the coastal communities where pirate activity takes place," Britain's Royal Institute of International Affairs, better known as Chatham House, said.

"Coastal villages have gained little from hosting pirates and may be open to a negotiated solution which would be to their benefit," report author Anja Shortland wrote.

Using evidence based on satellite imagery -- including mapping new buildings and nightime light emission denoting developments -- it suggests little of the ransom profits go to the coastal communities who carry out the attacks.

Instead, cash is funneled to the regional cities of Garowe and Bosasso in the northern semi-autonomous Puntland region, with an influential and "large interest group behind its continuation."

Efforts should be made therefore to approach coastal communities to "offer them an alternative that brings them far greater benefits than hosting pirates does," it argued.

"A military crackdown on the other hand would deprive one of the world’s poorest nations of an important source of income and aggravate poverty," it read.

Western military officials have off the record hinted at possible pre-emptive strikes again pirate bases.

Stopping the fearsome pirates -- who prowl far across the Indian Ocean seizing ships for multi-million dollar ransoms -- requires a "land-based solution" as warships chasing pirates only thwart individual attacks, Shortland added.

The report said the sum required to fund security forces and development projects on land would be considerably less than the amount currently spent on ransom payments.

It also repeated unconfirmed suggestions of links between pirate gangs and the Al-Qaeda linked Shebab insurgents, whose power base lies in south and central Somalia.

"There are as yet unproven assertions that Al-Shebab is offering attractive cooperative agreements to pirates, meaning that piracy could at some stage fund regional instability and terror," the report added.

Ransoms for single pirate hijacks ranged from $690,000 (530,000 euros) to $3 million (2.3 million euros) in 2008 but climbed to a record $9 million in 2010, it said.

At least 44 foreign vessels and more than 400 sailors are being held by pirates, according to Ecoterra International, which monitors maritime activity in the region.