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In the murky and conflicted world of paying huge ransom to free hostages, there are no right answers and often precious little time to make life-and-death decisions.

The grisly beheading of James Foley, the American journalist killed this week by an Islamic State jihadi in retaliation for President Barack Obama sending U.S. warplanes back into action in Iraq has raised the stakes in the grim calculus of whether paying ransoms frees innocent hostages or only makes others more likely to be seized.

Holding hostages for ransom ranges from common criminal enterprise in some Latin American countries, to the economic mainstay of failed states like Somalia where piracy flourishes, to a major source of income for extremist groups such as Islamic State.

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A host of middlemen operate in the shadows, delivering and laundering payments, so governments and corporations can claim they don't deal (at least not directly) with hostage-takers.

As for the families, they are often left attempting to raise astronomical sums while coping with nightmarish stress and attempting to stay inside the law which – for instance in the United States – makes it a crime to send funds to designated terrorist groups.

Those holding Mr. Foley initially demanded €100-million Euro (roughly $132-million U.S.) or the release of Muslim prisoners held by the United States.

"It's very easy to have these theoretical policies about not paying a ransom until you're faced with the real life-and-death situation," said Phil Balboni, the president of GlobalPost, the digital news service Mr. Foley was working for. "Personally – and I know I speak for the Foleys as well – we would've paid a ransom," Mr. Balboni told National Public Radio. They were engaged in an effort to raise $5-million, hoping it would be sufficient to win Mr. Foley's release.

The killing of Mr. Foley was gruesomely captured in video posted online that warned another American journalist, Steven Sotloff, would also be killed unless Mr. Obama halted air strikes.

After Mr. Foley's death, the Pentagon revealed that U.S. Special Forces had landed in Syria earlier this summer in a daring, but unsuccessful, rescue mission.

Occasionally, such missions liberate hostages.

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U.S. Special Forces parachuted into Somalia in 2012, attacked and killed nine militants holding a pair of hostages and freed both American Jessica Buchanan, 32, and Poul Thisted, 60, a Dane.

Far more often, deals are done, details of which often remain murky, at least in part to allow governments and companies to maintain deniability.

"Aside from state sponsorship of terrorism, ransom payments are the greatest source of terrorist funding today," David Cohen, a senior U.S. Treasury official said in June. The scale of the payments is enormous. "Groups such as AQAP, AQIM, Boko Haram and al-Shabaab have collected tens of millions of dollars in ransoms in the past several years," he said, referring to al-Qaeda groups in the Arabian Peninsula, the Maghreb, and the Islamic extremists groups in Nigeria and Somalia.

In recent years, French, Swiss and Italian hostages have all been freed in circumstances that indicate significant ransoms were paid. Al-Qaeda in the Maghreb has reportedly secured tens of millions of dollars in exchanges for numerous hostages.

Meanwhile, other journalists held by Islamic State in Syria, including several who were held with Mr. Foley and Mr. Sotloff, have been freed, apparently after significant ransoms were paid.

In North Africa, ransom payments are a major source of income to al-Qaeda offshoots.

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That includes cash in excess of several million dollars paid in 2009 to Islamic extremists who held Canadians Robert Fowler and Louis Guay hostage for more than four months.

"The government of Canada does not pay ransom or money," Prime Minister Stephen Harper insisted. But he allowed that "what efforts or initiatives may have been undertaken by other governments are questions you'll have to put to those governments." Some officials with knowledge of Canadian manoeuvring believe Mali paid the ransom but only on the understanding that Ottawa will reimburse it, albeit indirectly.

Sometimes payment isn't cash but homage, and the recipient is a dictator, not a shadowy terrorist group. Former U.S. presidents Bill Clinton and Jimmy Carter made separate trips in 2009 and 2010 to Pyongyang to win the release of Americans seized by the brutal, neo-Stalinist regime, providing then-president Kim Jong-il with valuable photo-ops.

Some governments, notably the United States but also Canada and Britain, say they never pay ransom to win hostage releases. But the contortions taken to maintain the "clean hands" claim can be considerable. Mr. Obama authorized the release of five senior Taliban commanders – all previously regarded as far too dangerous to be freed – from Guantanamo in exchange for Bowe Bergdahl, a U.S. soldier held in Afghanistan. That deal was billed as a prisoner exchange, not payment to win the release of a hostage.

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