The Right Way to Pay Ransoms to Terrorists

It all began in 2003, when a German official flew into the wilds of northern Mali with three suitcases full of cash to secure the release of 14 European hostages. That first big ransom breathed life into the militant group known as Al Qaeda in the Islamic Maghreb, and laid the groundwork for a kidnap economy that now finances Islamist extremist groups around the globe.

Foreigners who stumble into this world are highly prized assets: They are tracked, abducted, sold from one militant group to another and held for months, or even years, in the hope of a multimillion-dollar payday. Such hopes are kept alive by France, Germany and other European governments that routinely facilitate ransom payments for the release of their own citizens.

The United States steadfastly refuses to pay ransom, which undoubtedly reduces the price that American hostages fetch in the kidnap economy. However, money isn’t the only motivator for those holding hostages; they are also used to demonstrate the groups’ ferocity, as shown recently by the Islamic State’s gruesome killings of two Japanese men.

We can therefore expect the Islamic State, or any other violent group looking to put a thumb in the eye of the United States, to continue abducting Americans at every opportunity. Worse yet, these hostages, no longer being held for ransom, may be essentially impossible to find and rescue since their kidnappers, freed from the need to contact ransom-payers, will be able to lie low in more remote locations.

The good news is there is a way to change this game, to turn the tables on terrorist kidnappers and undermine the kidnap economy. Law enforcement already offers a model for finding criminals whose illegal activities are so secretive that they cannot possibly be found by any amount of detective work — namely, business cartels.

Throughout the 1980s, federal investigators did not catch a single major business cartel, despite having a whole division at the Department of Justice devoted to the task. That’s because business cartels, groups of companies that work together in secret to fix prices, can be nearly impossible to detect. Take so-called Vitamins Inc., a major international cartel that fixed vitamin prices for years but kept its activities under wraps, with its representatives meeting secretly just once a year, keeping no written notes and even lying under oath to protect the conspiracy.

That all changed, suddenly and dramatically, in 1993 when the Department of Justice instituted a new program offering complete immunity to the first firm in a cartel to confess. As Scott Hammond, the head of the department’s Antitrust Division, explained in a 2010 speech, “The notion of letting hard-core cartel participants escape punishment was initially unsettling to many prosecutors.” But, he added, they “recognized that the grant of full immunity was necessary to induce cartel participants to turn on each other.”

And turn on each other they did; soon convictions and settlements in the United States alone were generating hundreds of millions of dollars in fines each year.

As different as corporate collusion and international terrorism are, the same model that has been so successful at catching business cartels can be used to disrupt kidnapping networks.

Imagine what would happen if the federal government were to offer a million-dollar reward and promise safety to anyone — Islamic State militant or not — who provided information that led to the rescue of American hostages, and the capture or killing of their kidnappers. Holding an American hostage would then become fraught with peril, no matter where the kidnappers might hide, as anyone, even one of their own, might turn on them at any time.

The infrastructure for such a program already exists. Rewards for Justice, a State Department initiative originally authorized by the 1984 Act to Combat International Terrorism, offers money “for information that leads to the arrest or conviction of anyone who plans, commits, or attempts international terrorist acts against U.S. persons or property, that prevents such acts from occurring in the first place ... or that disrupts terrorist financing.” Targeting terrorist kidnapping rings fits within this framework, by disrupting terrorist financing (by avoiding future kidnappings and ransoms) and by preventing terrorist acts against Americans (by stopping executions). It just needs to be authorized for this purpose.

Moreover, there’s clearly a market for this sort of reward. In December The Times reported that an Islamic State commander had contacted the American Embassy in Ankara, Turkey, with an offer to smuggle James Foley to safety, in exchange for $750,000 and asylum in the United States. Embassy officials refused to even discuss it, saying, “We don’t negotiate with terrorists.”

To save future American hostages, the government needs to recognize that there is, in fact, a time when it should negotiate with terrorists: when one of them is willing to turn on his comrades and help us rescue one of our own. And when that happens, the American government should be willing to offer asylum, just as it gives criminal informants a fresh start in the witness protection program if they are willing to turn on organized crime.

Such an asylum program would not only protect informants and their families from violent reprisals, but would also show the world that even those fighting with Al Qaeda and the Islamic State now wish to be free of them.

David McAdams is a professor of economics at Duke and the author of the book Game-Changer: Game Theory and the Art of Transforming Strategic Situations.

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