January 30, 2015
By Emily Daglish – Research Assistant
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A history of denial creating vulnerability
Hostages and their captors have generated some of the most distressing images of generations. The emotions provoked, the demands made and the subsequent responses raise alarm, condemnation and questions. Despite this, the business of kidnap for ransom has boomed in recent years, notably taken on by terrorist organisations as a low risk method of raising large sums of money.
Ransom payments to terrorist groups and criminal organisations is recognised and condemned internationally as funding and fuelling violence and encouraging more kidnappings. Multinational agreements, such as by the UN in 2009 and 2014, and the Group of Eight in 2013, stressed the importance of international unity in refusing to pay ransoms to terrorist groups. Notably, these international agreements banning ransom payments are exclusive to terrorist organisations. Criminal organisations such as pirates are excluded from such constraints. The UK and the US have publicly chastised countries that continue to pay out to terrorists, claiming they are increasing the risks not only to their own citizens, but to British and American citizens as well.
Despite supposed international resolution, international agreements continue to be ignored in practice. Recent data and case studies makes clear that, with the exception of the UK and the US, which maintain their strict no ransom payment policy, countries continue to bankroll militants. An investigation last year by the New York Times found that since 2008, $125million was paid to Al-Qaeda and its direct affiliates, $66million in 2013 alone. European and Persian Gulf countries are notoriously paying out the most, despite the fact that European countries expressly deny paying out for the return of their citizens. There have been efforts by some countries to stifle such payments. Italy, for example, blocked the assets of hostages’ families in the 1990s to prevent ransoms being paid. However, this was reversed after it failed to deter criminals. A recent UN report has estimated that a Western hostage is now worth an average of $2.7million and that Islamic State (IS) made at least $35-45million from such transactions in 2014 alone.
The argument against paying ransoms to terrorist organisations covers two main aspects: firstly, it further increases the criminal capability of the group; and secondly, ransoms increase the risk of capture for citizens of those countries willing to pay out whilst increasing the risk of death to those who are not. As a result of international pressure, European governments rarely pay out ransoms directly. Instead, intermediaries are used in the form of large state controlled companies or other nations, Qatar and Oman in particular. This provides a form of cover for European governments, however thin the veil may be.
In addition to adverse effects on personal security, the pressure brought by negotiations over hostages has contributed to instability in several countries. Requests by Western diplomats to accede to local demands, such as the release of Al-Qaeda militants from local prisons in return for Western hostages, alongside the security threat a rise in kidnapping brings, has frustrated local security and political forces who see the increasing incentive for kidnapping as obstructing their counter-terrorism efforts. The hypocrisy of governments using others to hide their own actions masks both their own vulnerability and the complexity of the issue.
Bankrolling the balaclavas
Before detailing the role of ransom payments in funding terrorist activity, it must be clarified that other significant methods are available to militant groups, despite extensive and effective international controls of terrorist financing. IS for example uses three main sources of funding, in addition to ransom payments, that have made it one of the best funded terrorist organisations in history in a very short space of time. Its march across large swathes of territory last year has given it substantial funds through: selling oil on the black market, racketeering and extortion in the areas it controls, and trafficking.
Kidnapping for ransom is in fact an extremely low cost, low risk method of raising large sums. Consequentially, emergent militant groups, such as IS, have been able to use the method to raise their profile and grow their organisations. In the early days, many terrorist groups relied on deep pocketed donors. However, with the substantial counter-terror financing that has been implemented globally since 2001, this method has become too risky and difficult. Given that the costs of running a terrorist organisation was estimated at $30million annually even before 9/11, such groups would be considerably more limited in their ability to undertake and promote their activities without the funds generated by ransom payments. 
It is clear that business is booming – just over 5 years ago, hostage takers would expect to receive on average $200,000 per hostage, a figure which can now reach up to $10million. The significance of these figures should not be under-estimated. The leader of Al-Qaeda’s central command has even stated that such ‘spoils’ make up over half of the group’s funding. This rise in cash flow inevitably increases the likelihood of future kidnap for ransom, much more than in previous years, and governments’ willingness to pay out has only encouraged militants to demand more over time.
Although there are a number of cases where demands for payment are made to governments for the return of their citizens, a majority of those taken hostage are actually foreign workers of large international companies. This is largely because such companies are willing to discreetly pay for the return of their employees. The kidnap and ransom insurance and risk advice businesses have boomed in recent years, partly as a result of the increasing awareness and use of hostage taking by terrorist groups in regions rich with natural resources and foreign investment. This loophole contributes significantly to the problem and, whilst largely ignored in most current legislation, is now being increasingly taken note of.
Although paying ransoms to classified terrorist groups is illegal, doing so towards a criminal organisation (the most common currently being pirates) is not covered in international agreements. Although maritime militants and ground terrorist organisations are different both in terms of organisation and aims, links have been made between such payments and terrorist activity. A study has estimated that Somali pirate groups were paid an around $21.6million for the return of hostages in 2013 alone – a figure considerably down from previous years but still highly significant. The fact that pirates have generated such vast sums over the last decade has attracted the attention of terrorist organisations, which began viewing hostage taking as a viable source of funding. Evidence of the operational link has also been firming up in recent years, with Somali pirates for example operating out of Al-Shabaab controlled areas with cooperation on recruitment. Another dimension of ransom payments has thus made way for a loophole to fund terrorist activity.
Ransom demands are not only a source of income, but they have become an invaluable source of propaganda as well. The propaganda element of hostage taking is increasingly relevant with the prevalence of social media. By publicly broadcasting kidnappings of citizens from prominent states, terrorist groups use the panic generated to make demands and appeal to potential recruits across the globe. Hostage taking is used by groups as a means of inciting political concessions and restraint from governments. This is clearly demonstrated in the case of Turkey, which has refused to take part in the US-led international air campaign against IS-militants, partly because IS has been holding 49 Turkish citizen’s hostage since June.
Reinforcing the vicious cycle
One of the main arguments against paying ransoms for hostages is that it increases the threat of future kidnapping as well as the risk of execution for hostages of nations unwilling to succumb to kidnappers demands. For British and American citizens in particular, passports have been described as ‘death certificates.’ It must of course be recognised that the two nations are two of the most high profile and active in their military actions and rhetoric against terrorism, inevitably impacting on how their citizens are viewed upon capture. However, the fact that few American or British hostages have escaped capture alive is largely down to the hypocrisy of states’ attitudes to ransom payments. Refusing to pay ransom money to terrorists has meant that, although a small number have managed to escape or have been rescued by special forces most have been executed or are being held indefinitely. As they cannot be used as a means of making money, they are instead used as a propaganda tool to illicit fear and gain political concessions. A dominant reason why the threat of execution is so high against this particular group is because of the lack of honest international consensus over the issue, which is encouraging the act of kidnapping itself.
The case of the French government shines through when discussing the issue. It is well known that ransoms are frequently paid in return for the release of French citizens, despite their government consistently denying it. The decision for any government over whether to accede to the demands of a terrorist organisation is tortuous with no ‘good’ outcome. However, the decisions made by individual states to pay ransoms have generated a vicious cycle. Over a third of the hostages taken over the past five years have been French, whilst only 5% have been American. Hostages are seen as an investment, and in such terms, there is limited point in taking on a commodity without near guaranteed return. Although the propaganda brought about by execution of British and American civilians is valuable for terrorist organisations, the financial rewards they reap from nations willing to accede to their demands far outweigh such impacts. Governments who continue to pay out to ransom demands have yet to fully recognise how the vicious cycle they have created increases the threat to their civilians abroad.
There are certainly signs of an international realisation that paying out ransoms to kidnappers fuels both terrorism and further kidnappings. There have been numerous international attempts to curb the trend, demonstrated by the 2014 UN Security Council resolution 2133 that condemned paying ransoms to terrorists and the agreement by the G8 in 2013 stating that their governments would not pay ransoms to terrorists. However, this has been underway for longer than last year, notably Arab and African governments demanding in 2010 that more be done to prevent foreign governments paying out ransoms. They note that the two most prominent examples of organisations reliant on ransom payments are Al-Shabaab in Somalia and Al-Qaeda in North Africa. There are also notable domestic loopholes being closed, demonstrated in the recent decision by the UK government to prevent insurance companies paying out ransoms. Yemen is reportedly also refusing to handle kidnap victims who have been released as a result of ransom payments, so as not to encourage kidnappers to ask for ransom payments.
The prevalent reasoning behind paying to secure the release of hostages is that there is little or no alternative. British and American diplomats however claim that negotiations with local elders or the use of special-forces can provide an alternative that does not fund terrorism. However, these are far from concrete measures, as numerous botched special-forces missions and failed negotiations that have come to a bloody end have demonstrated. The anguish this causes for families who are expected to sit back and wait is excruciating, however valid the policy may be.
The use of military force is a difficult and complicated issue. The US in particular, alongside Britain and those with large military forces, are in a stronger position to advocate military intervention in the case of hostage rescue. While it has been successful on occasion, the tragedies of unsuccessful attempts loom large over policy makers. Although often kept out of the public eye, the threat posed to both the captives and military actors are often deemed too high.
The perception that there is no alternative to ransom payment however is untrue and too simplistic. The vicious cycle bred by giving in to terrorist demands has heightened the risk and limited the options available to governments. To reduce the threat to citizens worldwide, international consensus and concrete action is urgently needed.
To counter the persistent threat posed by groups engaged in kidnapping for ransom, countries must at the very least follow through on their international commitments as for example laid out in UNSCR 2133, but more action is needed. Currently, although heavy sanctions are enforced on those who fund terrorist organisations, ransom payments have slipped through the net. Although it should of course be recognised that giving in reluctantly to hostage payments is not the same as actively or willingly funding terrorist organisations, more than a political slap on the wrist is required to prevent this continuous cycle. This could entail a network of sanctions that would categorically link ransom payments to the illegal act of funding terrorism. Sanctions have proven a strong incentive in the past and, as states rely on international trade and political allies, a strong and enforced sanctions regime could prove the only incentive.
More attention needs to be given to the destabilising impact that ransom funding provokes. Western media rarely highlights the impact kidnap for ransom has on local populations and the instability it causes. Western governments must work with, rather dictate to, particularly Arab and African governments to promote alternative avenues whilst ensuring compliance.