Countries with a reputation for paying ransom to terrorists are more likely to have their citizens targeted by organizations like the Islamic State, a Canadian security expert says.

"When you open yourself for this vulnerability, you basically open the hunt for the citizens of your country around the world to be kidnapped," former CSIS agent Michel Juneau-Katsuya told CTV's Canada AM on Friday.

He says ransom money is one of the primary ways terrorist organizations raise money to fund their operations. "It becomes a national sport, and an extremely lucrative business."

Juneau-Katsuya says the U.S. is more likely to spend money on operations to retrieve its captured citizens than to pay a terrorist ransom, as was the case with beheaded American journalist James Foley.

U.S. officials said Wednesday they launched an operation to rescue Foley from the Islamic State, but their intelligence was wrong and Foley was killed a short time later. U.S. foreign policy strictly prohibits negotiating with terrorists.

The Canadian government has a similar policy, and Juneau-Katsuya says that policy makes Canadian hostages less desirable than those from countries with a reputation for paying ransoms.

"There's definitely some people that are ready and willing to pay, and they officially are known to do so," he says. Juneau-Katsuya points to France as one country with a reputation for paying ransoms from time to time. France has reportedly spent $58 million on ransom payments since 2008.

Juneau-Katsuya says the number of French citizens kidnapped by terrorists is "significantly higher" than the number of kidnapped Canadians, and not just because the French have more journalists working abroad.

He says French tourists are also more likely to be kidnapped, particularly in the northern part of Africa. "Countries that do want to negotiate end up having more citizens being kidnapped," he says.

Experts say al Qaeda has made about US$125 million from ransoms in the last five years. The Islamic State, which started as a branch of al Qaeda, wanted about US$132.5 million for James Foley, according to the slain journalist’s parents.

"We are giving quite a lot of money, so we are contributing to the problem. We are not contributing to the solution," Juneau-Katsuya says.

Most terrorist groups take hostages to make money, but Juneau-Katsuya says the Islamic State is different. "They want also to promote terror," he says. "They want also to make a name for themselves."

The Islamic State made a spectacle of Foley's death by filming it and releasing the video online and through social media.

The G8 countries, including Canada, the U.S. and France, agreed last June to stop all ransom payments to terrorists. Canada has maintained a strict no-negotiation policy under PM Stephen Harper.

However, Juneau-Katsuya says backroom deals still happen. "We use a third party to negotiate on our behalf," he says.

He cites the case of Robert Fowler and Louis Guay, two Canadian diplomats who were kidnapped in 2009 in Niger and released four months later. Harper credited Burkina Faso and Mali with negotiating for their release.

However, Juneau-Katsuya says a ransom may have been paid, though he did not say who paid it.

The ransom rumours spring from a cable document released by WikiLeaks in 2009 and an al Qaeda letter obtained by the Associated Press in 2011, which suggest a $1.1 million ransom may have been paid. The documents do not say Canada paid it.

The Islamic State has threatened to kill a second American hostage, journalist Steven Sotloff, if the U.S. does not halt its airstrikes in Iraq.