Sarah Shourd (C), the American hiker released from detention in Iran after 410 days, Cindy Hickey (L), Shane Bauer's mother and Laura Fattal, Josh Fattal's mother, arrive for a press conference in New York on September 19, 2010. (EMMANUEL DUNAND/AFP/GETTY IMAGES)

Pay up.

Or let your fellow citizen pay the price.

That’s the crude equation hanging over every hostage’s head.

It was the deal that preoccupied Sarah Shourd, who was arrested along with two other Americans in 2009 while hiking on the unmarked Iraq-Iran border. Shourd spent 410 days in solitary confinement in Iran’s notorious Evin prison, beating her knuckles raw against her cell walls.

It’s the calculation that oil, mining and securities companies confront as they take out kidnapping and ransom — or K&R — insurance for employees who work overseas, fueling an international business that thrives on human predation.

An image grab taken from a video released by the Islamic State on Sept. 18 shows British freelance photojournalist, John Cantlie, who has become the militants captive mouthpiece in recent propaganda videos. (Ho/AFP/Getty Images)

It’s the chilling calculus that loomed over the killings of U.S. journalists James Foley and Steven Sotloff and British aid worker David Haines. And it may yet define the fate of other hostages, including British photojournalist John Cantlie, who has become the Islamic State’s captive mouthpiece in three recent propaganda videos.

Mindful of recent reports that al-Qaeda and its offshoots are raking in tens of millions of dollars a year in ransom, the United States and Britain are standing together — and apart from many European countries — in a shared resolve not to make deals with the devil.

“We believe that paying ransoms or making concessions would put all Americans overseas at greater risk,” said State Department spokeswoman Marie Harf, by funding the very terrorists “we are trying to degrade.”

“What matters is . . . not letting money be paid to terrorist kidnappers,” echoed British Prime Minister David Cameron, “because that money goes into arms, it goes into weapons, it goes into terror plots, it goes into more kidnaps.”

That is a logical stance, former FBI hostage negotiators Gary Noesner and Christopher Voss said. The problem, they argue, is that it is unrealistically rigid in a world where families, companies and other countries routinely pay ransoms. Negotiating with kidnappers not only offers the hope of buying a hostage’s freedom but also buys time, intelligence and, potentially, the chance to change the terms to something more like this:

Yes, let’s talk about paying up.

And then make the kidnappers pay the price.

Sgt. Bowe Bergdahl, right, stands with a Taliban fighter in eastern Afghanistan. Bergdahl was freed in a swap in which the U.S. freed five Taliban detainees, a diplomatic victory for the insurgent group. (Voice Of Jihad Website via AP video/AP)
A ransom history

The demands of kidnappers, corsairs and hijackers have shaped the course of history ever since Julius Caesar was attacked by Cilician pirates, dispatched men to raise his ransom, and then sailed back to catch and crucify his captors. The very real risks of making payments to free hostages, prevent plunder or guarantee free passage have been articulated by politicians and poets alike.

In 1911, Rudyard Kipling famously condemned “Paying the Dane-geld” — an allusion to Ethelred the Unready’s (968-1016) buying off of the Viking marauders who ravaged the English coast:

It is wrong to put temptation in the path of any nation,

For fear they should succumb and go astray;

So when you are requested to pay up or be molested,

You will find it better policy to say: —

“We never pay any-one Dane-geld,

No matter how trifling the cost;

For the end of that game is oppression and shame,

And the nation that pays it is lost!”

But in the early days of the United States, “ransom and tribute paying was the cost of doing business,” said Frank Lambert, a professor of history at Purdue University.

One of the goals of U.S. independence was free trade. But without the protection of the British navy, American ships in the Mediterranean frequently fell victim to Barbary pirates operating out of North African ports, who looted cargoes and enslaved those on board.

“If you were going to trade in the Mediterranean — and one-sixth of U.S. foreign trade was in the Mediterranean — what are you going to do?” Lambert said. “Give up, or work out an accommodation?”

In one instance, instead of demanding cash in exchange for safe passage, Algiers asked the United States to build it a warship complete with a copper bottom, Lambert said, and to fit it out with 40 guns. George Washington saw exactly what he was being asked to do — to build a ship that would turn around and capture U.S. vessels.

“He had no better alternative,” Lambert said. “He did it. Absolutely, he did it.”

In the late 1790s, the United States was paying as much as 10 percent of its budget to Algiers in ransom and tribute, until the new nation became powerful enough for Thomas Jefferson to go to war against the Barbary States.

“My guess is the world we face now is something of a new world for us,” Lambert said. “In a sense, we are trying to figure out our way.” And that, he said, “is exactly what Jefferson was trying to do, and Washington before him.”

It was a “despicable business” for those idealistic early U.S. leaders, Lambert said. But paying can be “a strategy, a ploy, a recognition that we don’t hold all the cards,” and that there are “other players who have their own interests.”

Necessary concessions

Shaping that strategy today is often the task of the professional hostage negotiator — a role romanticized in the 2000 movie “Proof of Life,” in which Terry Thorne (played by Russell Crowe) succeeds in engineering the escape of a U.S. businessman being held by guerillas in a fictional South American state. The story is based loosely on the 1994 kidnapping in Colombia of agronomist Tom Hargrove, who was released 11 months into his ordeal after his family paid two ransoms.

Washington has a principled stand against paying ransom, the former FBI negotiators said, but such inflexibility does little to prevent or resolve kidnappings, and in practice things are far more nuanced. Noesner does not suggest that the U.S. government simply roll over and pay up, but it did make a prisoner exchange, for example, in the case of Army Sgt. Bowe Bergdahl.

And think what you would do to get family, friends or colleagues out, as the relatives of Hargrove and more recent hostages apparently did. Which is why neither Voss nor Noesner believes that kidnapping will be stopped by trying to prevent a family, a company or another country from paying up.

Noesner recalls counseling a U.S. ambassador on a South American kidnapping case.

“If the money’s not paid,” he remembers telling the diplomat, the hostages “are going to die.”

“I don’t like those options,” the ambassador responded.

“So I told him the options again,” Noesner says. “I didn’t like them, either.”

The key goals, said Noesner, who retired as the FBI’s chief negotiator in 2003 and now works as a crisis management consultant, should be to “save the hostage and then go after the bad guys.” The very process of negotiating makes kidnappers “vulnerable”; they reveal things about how they work and who they work with. The FBI got so good at capturing domestic kidnappers, with a success rate of more than 95 percent, and the U.S. penalties are so stiff, he said, that “smart criminals have said ‘I’ll get into another line of work: The odds are not good.’ ”

Today’s problem, said Noesner, author of “Stalling for Time,” is that in the high-stakes post-9/11 world, negotiation — which “demands creativity, ingenuity and flexibility” — is too often seen as concession.

It’s a necessary concession in the view of many companies whose overseas employees make easy targets.

The result is the burgeoning K&R consulting and insurance industry. The earliest ransom insurance policies, taken out in the 1930s after aviator Charles Lindbergh’s baby son was snatched, have been succeeded by sophisticated packages tailored to multinational companies and include such pricey services as crisis response teams that provide linguists or help with intelligence-gathering and negotiation.

Peter James, K&R expert for the Washington-based global insurance company Clements Worldwide, has seen substantial growth in the insurance market in the past eight years and said he would be surprised if there were any Fortune 500 companies these days that didn’t consider coverage for personnel working in high-risk areas.

Unlike an auto policy or medical insurance, K&R is what James called “high severity/low frequency”: Claims are few, but when they come along, they “tend to be headline grabbers,” he said.

The cost? Companies might shell out a couple thousand dollars on a premium for a businessman spending a few months in a danger zone, he said, or many times that amount to cover all the employees on an oil rig off the coast of Nigeria.

But there are bigger societal costs, some experts said: That insurance exists to cover the costs of ransom payments undermines Washington’s no-concession policy and makes kidnapping a reliably profitable business.

Opening for terrorists

At a little less than $500,000 a head, the price for freeing Shourd and, later, her fellow hikers, Shane Bauer and Joshua Fattal, was chump change compared with the more than $100 million demanded before James Foley’s beheading. Washington also knew where the hikers were being held and could deal, at least indirectly, with the Iranian government rather than the shadowy nonstate actors holding the current hostages. The hikers’ ransoms — or bails — were eventually paid, they said, by the Omani government, a U.S. ally that maintains ties with Iran, as their fates became ever more entangled in larger geopolitical maneuvering.

Shourd recalled being led blindfolded out of her cell to a conference room to meet the Omani envoy who negotiated their release, a berobed and kindly figure smelling of sandalwood and bearing gifts of dates and watches — and a sense of hope.

Not that Shourd, who now lectures and writes about imprisonment and wrote a book with her fellow hikers about their experiences, believes in striking deals under all circumstances. “I could never have lived with the guilt that anything was done for me that would have hurt others,” she said. She understands the risk, she said, of funding terrorists and creating an incentive for them to capture Americans.

But each step in the negotiation left her with some optimism at a time when, she said, she felt abandoned by her own country — echoing a sentiment expressed by John Cantlie in the scripted videos released by the Islamic State.

In a parody of a lecture series that holds reason itself hostage, Cantlie adopts the civilized tone of open debate. He mocks President Obama’s strategy, reminds listeners about the quagmires of previous wars, repeats contemporary criticisms of British and U.S. decisions and portrays his captors as having formed a united ideological front against a fragile international alliance. There are “two sides to every picture,” he said, talking about “how the British and American governments thought they could do it differently to every other European country. They negotiated with the Islamic State and got their people home, while the British and Americans were left behind.”

Who knows what kind of negotiation the Islamic State is open to? Or what clandestine U.S. operation to rescue hostages might be underway. But the administration’s public refusal to make concessions has opened the airwaves to terrorist propaganda that, Shourd said, does “far greater damage than any ransom.”

“The story should be focused on the murderers,” said Voss, now chief executive of Black Swan Group, where he applies his negotiating tactics to the boardroom. Instead, government failure has become the story — and that, Voss said, “plays into the hands of the murderers.”