The true Jewish outlook is explained by this Rabbi from Yeshiva Ohr Sameach:
http://ohr.edu/explore_judaism/ask_the_rabbi/ask_the_rabbi/1561From: Adam Blumenthal
Dear Rabbi,
I was wondering if you could discuss the laws pertaining to Pidyon Shevuyim (redeeming captives). I know it is cited as a great mitzvah. However I was wondering if there is a point where it should not be allowed under the grounds of either inequitable exchange or in the event that it could encourage more enemies to take captives, since our enemies consequently know the value that Jews hold for the redemption of their captives. Basically, I was wondering if there is a point at which we should not redeem our captives because it may in the long run do more harm than good. Thanks and Shabbat Shalom, Adam.Dear Adam,
While it is beyond the scope of this column to evaluate any general policy or specific case of redeeming Jewish captives, I will present to you what our sources say about the subject.
Redeeming captives is included in the Torah commandment of charity. In fact, the Rambam writes, "the mitzvah to ransom captives takes precedence over supporting and clothing the poor. Indeed, no commandment, be it ever so important, can compare with [it], since the captive is in the category of those who suffer hunger, thirst, nakedness, and are ever in mortal danger. One who is willfully slack in aiding to ransom a captive transgresses the commandments: You shall not harden your heart, nor shut you hand from your needy brother (Deut. 15:7); That your brother may live with you (Lev. 25:36); Deliver them that are drawn unto death (Prov. 24:11) besides many other similar commandments. Truly, no commandment, be it ever so important, can compare with the ransom of captives."
Given the great importance of this mitzvah, it would seem that there should be no limit to the amount of money to be spent to redeem captives. It is interesting, then, that our Sages asserted, "Captives are not to be redeemed for more than their monetary value, as an enactment for the good of society". Two reasons for this restriction are offered in the Talmud: to prevent the impoverishment of society and to discourage kidnapping. This is precisely the reason that you suggest. If Jews are willing to pay any sum to redeem their captives, there will be no end to kidnapping Jews. However, a Jew who is taken captive, G-d forbid, must not be left to suffer captivity. Therefore his monetary value (generally accepted as his productivity worth, or alternatively the "going rate" for captives) was fixed.
There are some exceptions to the limit imposed upon redeeming captives. An individual may redeem himself for any price, because the Rabbis did not expect one to be able to uphold this enactment regarding oneself. Similarly, one is permitted to redeem his wife at any price because the Torah view is that ones wife is considered "as oneself." Another exception is in ransoming or trading prisoners of war. In such a case, a much more flexible approach may be taken because redeeming POWs at an unfavorable exchange rate will not give the enemy an incentive to start another war countries dont go to war because of an anticipated favorable POW exchange rate.
The issue of exchanging Jewish captives for terrorists is more complicated. Here, there is no formal war such that inequitable exchange wouldnt be considered the cause of a new war. On the contrary, terrorists are interested in a prolonged conflict, and unequal exchange gives them more incentive to kidnap and obtain more concessions. And even an "equitable" exchange is not necessarily acceptable here because releasing terrorists creates an additional potential threat to the public.
However, based on the writings of Rabbi Yosef Karo (author of the Shulchan Aruch, the authoritative code of Jewish law) this may be a tolerable risk. He writes, "The Jerusalem Talmud concludes that one is obligated to place oneself in possible danger in order to save someone who is in definite danger. It appears that the reason for this ruling is that one is in definite danger, while the other is only a doubt, and he who saves the life of a fellow Jew is as though he has saved an entire world". On the other hand, since a released terrorist is not exactly interested in buying Israel Bonds or planting trees for the JNF, the danger may be more definite than doubt, in which case the exchange should perhaps not be made.
Ill conclude with a true, documented story. Rabbi Meir of Rotenburg (1222-1293), one of the greatest Torah scholars of his time, was captured while trying to flee the harsh edicts of Emperor Rudolf I of Hapsburg. The Emperor imprisoned him in the Tower of Ensisheim, and demanded an exorbitant ransom from the Jewish community for his release. Fearing other despots might pursue a similarly lucrative practice by kidnapping other rabbis, Rabbi Meir refused to allow the community to pay the 23,000 talents of silver ransom they were willing to pay. Despite the communitys appeals, Rabbi Meir languished in prison for seven years until his death.
But since he forbid his ransom even after death, his remains were not released for burial until fourteen years later, when a wealthy Jew could no longer bear the disgrace, and paid the much lowered ransom. So ended one of the most remarkable acts of martyrdom and sanctification of G-ds name recorded in the annuls of Jewish history. Rabbi Meirs selfless dedication to his peoples welfare and his utter self-denial in their behalf ensured that Torah luminaries were never again held hostage for the extortion of huge ransoms from the Jewish people.
Sources:
Rambam, Mishna Torah, Zeraim, Hilchot Matanot Aniim, 8:10
Gittin 45a, Mishna
Shulchan Aruch, Yoreh Deah 252:4
Ketuvut 52a, Tur, Shulchan Aruch, Even HaEzer 78
Tosafot, Gittin 58a
Beit Yosef, Choshen Mishpat 426
Masters of the Mesorah, Rabbi Zechariah Fendel, p110
Maharshal, Yam shel Shlomo, Gittin 4:66