In the video showing the brutal murder of James Foley, the masked executioner also paraded a second American journalist, Steven Sotloff. The threat was clear: the Time magazine reporter would meet the same fate if the US does not halt air attacks against IS fighters in northern Iraq.

When news broke on Wednesday evening that the US had recently launched a covert mission to liberate a number of foreign hostages, the Washington Post was quick to report that Foley and Sotloff would have been among the group. But the attempted rescue failed, as did IS efforts to extract a ransom package to the tune of 100 million dollars for James Foley.

Washington fundamentally refuses to pay for kidnapped US citizens on the grounds that it would encourage more abduction and subsequent blackmail. And the US is not the only country with that policy. The UK says it does not strike financial deals with radical groups, and the German government claims to have a similar policy.

Behind closed doors

But what happens out of the public eye is widely believed to deviate from the hardline no-cash approach. Indeed Berlin is rumored to have paid more than 10 million dollars for the release of German engineers René Bräunlich and Thomas Nitzschke who were abducted in Iraq in 2006 and held for 99 days.

And following last year’s liberation of four Frenchmen who had been in al Qaeda captivity for three years, "Le Monde" newspaper said France had paid more than 20 million dollars to secure their freedom.

Ransom money is a significant source of income, which terrorist groups such as al Qaeda, the Islamic State or Boko Haram use to arm themselves.

The New York Times estimates that al Qaeda has received at least $125 million in ransom money since 2008, most of it from European countries, and just over half of it generated last year alone. US Treasury statements have put the figure at $165 million during the same period of time.

From money to propaganda

Besides being a means of generating money, abductions are a tool for terrorist organizations to extract both political concession and restraint. Turkey, for example, has refused to take part in US airstrikes against IS fighters, in part because the Jihadists have been holding 49 Turkish citizens, including Consul General Öztürk Yilmay, since June.

But when abductors fail to secure either ransom money or political concession, it is not uncommon for them to use their hostages for propaganda purposes. James Foley was an example of just that. Prior to his execution, IS militants forced the journalist to read out an anti-American statement, which they then published online.

Islam expert Christoph Günther told DW that the video was designed to create "external shock and internal consolidation." He believes IS wanted to make it clear they were willing to resort to any means to exact revenge. “Their mindset is one of "we will attack any of your citizens we can get hold of: journalists, employees of Western companies in the Kurdish regions, aid workers."

News magazine Spiegel Online estimates that between 30 and 40 Western citizens are currently being held by IS terrorists. Among them is the wife of Syrian photographer Omar Alkhani, who got to know James Foley during his time in captivity. After months as a hostage, he, however, is now a free man.