Barack Obama’s decision to relax Washington’s blanket ban on paying ransoms to free hostages will be seen as belated American acceptance of an unpleasant but unavoidable necessity by west European countries criticised in the past for buying off terrorist kidnappers with cash.

But if David Cohen, deputy director of the CIA, and other counter-terrorism experts are to be believed, Wednesday’s announcement may increase the risk of American citizens being taken hostage abroad, because the payment of large amounts of money for their release now appears more likely.

Obama’s policy shift does not in any way overcome the basic ransoms-for-hostages dilemma, which is the fear that handing over money is, in effect, “giving in” to the bad guys and will encourage and finance more terrorism. Linked to this is the belief, common among American and British politicians, that European governments that pay ransoms (while officially denying it) – notably France, Germany, Spain, Austria, Switzerland and Italy – are letting the side down.

This view contains an element of self-righteous moralising that, whether justified or not, is of scant comfort to the grieving relatives of executed American and British hostage victims. Acutely aware of this cruel human toll and of a string of failed or thwarted armed rescue operations, particularly in Syria, Obama ordered the policy review in an attempt to ensure US policy was consistent and that hostages’ relatives were treated fairly and kept informed and involved.

Families complained that they had been threatened with prosecution for trying to arrange ransoms, while different government branches were giving them contradictory advice. Obama will allow officials to communicate and negotiate with kidnappers, but has made clear he remains opposed to making concessions to terrorists.

David Cameron is outspoken on the ransom issue. He cajoled the G8 countries into issuing a joint declaration in 2013 pledging that they would not meet ransom demands. This vow has since been ignored by key signatories. In September last year, Cameron told parliament he had no doubt that the “many tens of millions” raised by Islamic State extremists through hostage-taking in Syria and Iraq was being used to “promote terrorism”. Thus Britain would not change its stance. “Britain continues with this policy, America continues with this policy, but we need to redouble the efforts to make sure that other countries are good to their word,” he said.

Obama’s shift – giving American hostages’ families or their representatives the right to pay ransoms without fear of legal repercussions, and authorising US government officials to communicate and negotiate with captors in arranging such deals – cuts the ground from under Cameron’s feet. Although it has occasionally broken its own rule, Britain now stands alone among the big western powers in adhering to the principle of no hostage ransoms, with the possible exception of Shinzo Abe’s Japan (which lost two hostages this year after rejecting Isis demands). Cameron’s stance may prove increasingly hard to maintain as public pressure grows to rescue British citizens in trouble abroad in the same way that other countries do.

The US move has several other ramifications. It potentially raises the profile of the hostage-taking business, giving the terrorists what Margaret Thatcher called the oxygen of publicity. Critics will say it encourages copycat scams by criminal gangs. The change may also fuel hostage price inflation. According to figures researched by the New York Times, al-Qaida took in $125m (£80m) in revenue from kidnappings between 2008 and 2014, with more than half – $66m – extorted in 2013. In total, ransoms paid amounted to $165m in the same period. In 2003 the average hostage head-price was $200,000. Now $10m is not unusual.

France, for example, is said to have paid about $40m in 2013 to free four citizens held in Mali. (It denied having done so.) In total, France has reportedly paid out $58m since 2008. In January this year, two Italian aid volunteers held in Syria were freed after $14m was reportedly handed over to their captors, the Nusra Front. Italy and Spain previously paid about $8.9m for the release of three tourists abducted in southern Algeria. Similarly, Germany paid out untold millions last year for two hostages held by Abu Sayyaf in the Philippines.

When Isis paraded the US hostage James Foley before video cameras and threatened to behead him, the asking price for his release was an extraordinary $132m. This figure reflected Foley’s political and propaganda value to Isis, rather than any realistic hope of obtaining so large a sum. Foley’s subsequent murder was a cruel reminder that in the world of Isis’s new caliphate, no amount of money may suffice to save a life if fanatical extremists decree otherwise.

Some evidence suggests Americans will become more attractive to kidnappers due to Obama’s move, because al-Qaida and other terror groups target individuals according to their government’s willingness to pay. Of 53 hostages taken by al-Qaida from 2009-14, a third were French and a disproportionately high number were Spanish, Austrian or Swiss. “It’s obvious al-Qaida is targeting them by nationality,” Jean-Paul Rouiller, a Swiss counter-terrorism expert, told the New York Times.

David Cohen, deputy CIA director and formerly the top US Treasury official responsible for terrorism and financial intelligence, made a similar point in a trenchant speech in London in 2012. Unless he has radically changed his opinion since then, Cohen’s view is sharply at odds with the new White House approach.

Cohen said: “We know that hostage-takers looking for ransoms distinguish between those governments that pay ransoms and those that do not, and make a point of not taking hostages from those countries that do not pay. Recent kidnapping trends appear to indicate that hostage-takers prefer not to take US or UK hostages because they understand they will not receive ransoms.”

He said paying ransoms, by whatever means, was a bad idea. “Ransom payments lead to future kidnappings, and future kidnappings lead to additional ransom payments. And it all builds the capacity of terrorist organisations to conduct attacks.”