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US, 'We did not negotiate with Islamic militants'

Reports have circulated that Foley’s captors had demanded a ransom of $132 million for his release, however, the U.S. declined give the amount.  "We do not make concessions to terrorists. That includes – we do not pay ransoms," Harf said. "One of the main ways ISIL has been funded throughout the conflict had been from ransom payments that others have paid. We believe just in 2014 that that’s in the millions of dollars." She added that paying ransoms or making concessions would put Americans overseas at greater risk for kidnappings, as it would be an incentive for militants.  "It’s in place to protect our citizens overseas and also to not provide terrorists with the funding they need to continue to carry out their heinous acts," she said.  Harf also noted that Islamic State militants' funding has come from a number of sources including criminal activity in Iraq and Syria, bank heists, extortion, robberies, smuggling and kidnapping for ransom as well as raiding villages and towns.

She also added that the militants control some petroleum facilities in eastern Syria.

U.S. Secretary of Defense Chuck Hagel also fingered the Islamic State's funding at a briefing saying it is well-funded beyond other terrorist groups in the region. 

"They are tremendously well-funded. Oh, this is beyond anything that we’ve seen. So we must prepare for everything," Hagel said. 

Chairman of the Joints Chiefs of Staff Gen. Martin Dempsey said to defeat IS requires a number of different approaches which includes addressing the part of the organization which resides in Syria. “"It requires a variety of instruments, only one small part of which is airstrikes," he said "But it requires the application of all of the tools of national power – diplomatic, economic, information, military."

Stating that both sides of Syrian and Iraqi borders have to be adressed, Dempsey added that "a coalition in the region that takes on the task of defeating ISIS over time" is needed to make progress on both sides of the border.

Saying that the group is something more than a terrorist group, Hagel added, "They marry ideology, a sophistication of strategic and tactical military prowess."

Hagel said that the Islamic State is perceived as a threat to Americans across the globe and that the U.S. has continued to explore all options in dealing with them. 

Responding to a question of whether these options include airstrikes in Syria, Hagel said, "Like I said, we’re looking at all options."

Harf also conceded that a wide range of options have been on table regarding American hostages currently in IS captivity.

"Every tool at our disposal to try and get – find them, locate them and then return them home," she said declining to outline specifics. 

The Islamic State, formerly known as the Islamic State of Iraq and the Levant, or ISIL, has been active in Syria for more than two years. A surge in the group’s activity, however, came in early June after a coalition of armed groups took control of large swathes of the Iraq’s predominantly Sunni provinces.

The conflict between the army and militants entered a new stage in July when insurgents captured a number of key cities and towns in Iraq.

The Iraqi army has staged military operations against IS-led militants as more than 1 million civilians have been displaced amid the ongoing clashes in the north and west.

The group has been released videos and messages threatening Americans for the U.S.' recent airstrikes in Iraq.

A video released Tuesday showed one of the group’s militants beheading Foley.

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