* "Big Mouth" is last of three pirate kingpins -analyst
* U.N. report said he was given Somali diplomatic passport
* Somali pirate attacks have declined markedly since 2010
By Abdi Sheikh
MOGADISHU, Jan 11 (Reuters) - A Somali pirate kingpin nicknamed "Big Mouth" has renounced a life of hijacking ships that earned him fame and fortune before an international naval crackdown that has curbed attacks on maritime commercial and pleasure craft.
A U.N. Monitoring Group report on Somalia in 2010 said that Mohamed Abdi Hassan "Afweyne" commanded bandits in the Arabian Sea and off the Indian Ocean coast of East Africa for almost a decade, raking in millions of dollars in ransom payments.
"I have given up piracy and succeeded in encouraging more youth to give up piracy," Afweyne told Reuters on Friday.
"This came as a result of my efforts for a long period. The boys also took the decision like me. It was not due to fear from warships, it was just a decision," he said by mobile phone from his base in Adado in central Somalia.
Security analysts saw Afweyne's gesture as symbolic, saying he had already grown rich off the proceeds of piracy and seemed to have decided it was no longer worth the increasing risk.
"(Afweyne's move) may be a tacit recognition that the Somali piracy phenomenon no longer yields the lucrative criminal gains it did in previous years, thanks to successful naval operations and improved security and awareness on merchant vessels," said Rory Lamrock, intelligence analyst with security firm AKE.
"(Pirates) are getting shot up or arrested by private security companies and navies so he (Afweyne) is finding it increasingly difficult to find recruits," said Alan Cole, head of the anti-piracy programme at the United Nations Office of Drugs and Crime (UNODC).
"As many as 1,500 young men have left home hoping to come back rich and not come home at all," Cole said from Nairobi, capital of Somalia's southern neighbour, Kenya.
NAVAL PATROLS DETER PIRACY
In 2011, Somali piracy in the busy shipping lanes of the Gulf of Aden and the northwestern Indian Ocean netted $160 million, and cost the world economy some $7 billion, according to the American One Earth Future foundation.
But successful hijackings have been declining steadily since 2010 thanks to concerted patrolling by an international coalition of warships and the increasing use of armed private security guards on merchant ships.
Just seven ships were seized in the vast area of the Indian Ocean off Somalia in the first 11 months of last year, compared to 24 in the whole of 2011, after NATO, the European Union and other nations dispatched warships there.
Adado regional President Mohamed Aden Tiicey said Afweyne had actually withdrawn from active piracy some years ago, and was behind the surrender of 120 pirates over the past week.
"In 2010 our administration pardoned him and the then-interim government of Somalia also pardoned him and gave him a diplomatic passport," Tiicey said.
The U.N. Monitoring Group said last year pirate chieftains such as Afweyne were being protected by Somali authorities from arrest. It said it had evidence a diplomatic passport had been issued to Afweyne by then-Somali President Sheikh Sharif Sheikh Ahmed as a reward for what Somali officials said was Afweyne's involvement in anti-piracy activities.
The UNODC said it remained sceptical about Afweyne's announcement. "He's a criminal so is by implication dishonest, so we take this with a pinch of salt," said Cole.
The U.N. report said pirate leaders are now increasingly involved in land-based kidnap for ransom of foreign tourists and aid workers in northern Kenya and Somalia, as well as selling services as counter-piracy experts and consultants in ransom negotiations, and exploring "new types of criminal activity".
Somalia has been in chaos since warlords toppled dictator Mohamed Siad Barre in 1991. His fall spawned clan warfare and Qaeda-linked al-Shabaab militants who are fighting to topple the Mogadishu government and impose a harsh brand of Islamic law.