(CNSNews.com) - Flush with cash and emboldened by the success of its hostage-taking spree, the militant Abu Sayyaf terrorist group in the southern Philippines is now threatening to murder an American captive if three Arab terrorists are not freed from prisons in the U.S.
"Let's see how great a superpower America is," a Manila newspaper Wednesday quoted Abu Sayyaf spokesman Abu Sabaya as saying in a radio interview.
Sabaya named the new American hostage as Jeffrey Craig Edwards Schilling, 24, from California, and claimed he was a CIA spy.
That claim was denied by the American embassy, Philippines Defense Secretary Orlando Mercado confirmed. Mercado said Schilling was a convert to Islam who had come to the southern Philippines "looking for a wife."
Exactly how Schilling came to be caught remains unclear. His Filipino fianc\'e9e, MBA student Ivi Osani, is a cousin of Sabaya, Mercado said. Some reports suggest the American had been interested in meeting Abu Sayyaf members in Jolo.
In Washington, State Department spokesman Philip Reeker declined to comment on the CIA allegation, citing longstanding U.S. policy not to do so.
Reeker reiterated that the U.S. would not pay ransom for Schilling's safe release.
"We do not make deals with terrorists; we will not pay ransom; we will not change
policies; we will not release prisoners or make any other concessions that reward hostage-taking."
The Philippine Daily Inquirer reports that the Islamist gang would formulate its demands within three days, but had already made one - the release from prison in the U.S. of three men jailed in connection with the 1993 bombing of the World Trade Center in New York.
The three are the international terrorist Ramzi Yousef, Egyptian cleric Sheikh Oman Abdel Rahman, and Abu Haider, an Islamist who reportedly taught the late founder of Abu Sayyaf, Abdurajak Janjalani.
Sabaya told the radio interview his group would "not hesitate to execute this American guy if the Philippine government and the U.S. will not listen to our demands.
"Then next week we'll get another American and do the same thing to him. The Americans may think we are afraid of them."
He was also quoted as saying: "One American equals ten Europeans."
Sabaya said the group was prepared to begin talks with American diplomats on Thursday, and demanded that representatives of North Korea, Iraq, China, Libya and Saudi Arabia also participate.
Abu Sayyaf is the smaller of two Muslim groups fighting for an independent Islamic homeland in the south of the predominantly Roman Catholic Philippines. Western and Philippines intelligence agencies believe the group has links to the Saudi-born anti-U.S. militant, Osama bin Laden, who is hiding out in Afghanistan.
The new crisis comes at a time another hostage situation remains at a sensitive stage: Another cell of Abu Sayyaf has made a deal to release a group of mainly Western hostages, most of whom were seized from a Malaysian diving resort in April.
Most have been freed in recent days, after intervention from Libya and the reported payment of millions of dollars in ransom. But six Europeans and a Filipino remain captive.
Philippine government spokesman Ronaldo Zamora said in a statement Wednesday Manila was coordinating efforts closely with the U.S. regarding Schilling's abduction and would enter negotiations with the militants.
"It is clear that we will treat this as a kidnap-for-ransom case. Since an American is involved, it is necessary for us to know the view of the American government on this matter," he said.
Zamora expressed satisfaction that the U.S. was refusing to pay ransom or make concessions to Abu Sayyaf
"He noted that Washington, which strictly implements its no-negotiation policy against terrorists, understands that giving in to the demands of the Abu Sayyaf extremists now would only embolden them to conduct more abductions later," the statement said.
This is precisely the concern raised by commentators in the Philippines and elsewhere over the past fortnight, as reports circulated that Libya was paying $1 million each for the release of the Western hostages.
Libya denied any cash was offered, saying it was providing development aid to needy Muslim community in the region. But local newspapers have reported that Abu Sayyaf gunmen have been showing off new weaponry bought with recently-acquired funds.
The government of France, which holds the rotating presidency of the European Union, has denied reports in French newspapers that Paris offered President Muammar Gadaffi diplomatic concessions in exchange for his help in having the hostages freed. Libya has longstanding ties with Filipino Muslim militants.
Earlier this year Abu Sayyaf seized 57 Catholic teachers and pupils on the neighboring island of Basilan and demanded that the three World Trade Center conspirators be freed. When this did not materialize, they beheaded two of the teachers. The children were eventually freed.
Of the three jailed terrorists, Yousef is suspected to have direct links to Abu Sayyaf. He played a key role in helping organize Islamists in the Philippines in the early 1990s, according to American terrorism specialist Yosef Bodansky, the author of a biography on bin Laden.
He and Abu Sayyaf plotted to assassinate President Clinton and Pope John Paul II during official visits by the two leaders to Manila in 1994 and 1995. But his cover was blown and he fled to Pakistan, whose government bowed to U.S. pressure and handed him over for trial.
The Catholic bishop of Basilan, Romulo de la Cruz, this week called on the government to wipe out Abu Sayyaf, to ensure the terrorists would never again "wreak havoc" on the people of the province.
The appeal was contained in a pastoral letter read out during many church services on Sunday.
John Cooley, the author of a book of Islamic terrorism spawned in Afghanistan, called Wednesday for concerted action against Abu Sayyaf by the Philippines government, the U.S. and its Western and Far Eastern friends.
Once the remaining hostages are freed, he wrote in the International Herald Tribune, "all concerned should be prepared to act decisively, militarily if necessary, to neutralize the pirates and whomever may be teleguiding them from Afghanistan or elsewhere."