It’s an old adage, and official policy of many governments. In fact, some upstart terrorist groups count on it in order to pump up their troops and escalate things with the governments they hope to agitate.
But while governments are hesitant to talk to them at first, the more terrorism a terrorist organization does, the more likely the government caves and comes to the table. That also may not actually be a bad thing when you crunch the numbers on it, as it tends to end conflict faster when everyone is able to get together and hash things out.
See the studies below for more details:
Image By BLAKE R. BORSIC, CIV, USAF [Public domain], via Wikimedia Commons
When the weakest rebels make demands from the government, they make large demands, ensuring that sufficiently weak types of government reject, preserving their optimism about their chances of victory. As these weakest rebels grow stronger, they are freed to demand less from the government, because the credibility of their threat to fight is no longer in question; they no longer need to believe that the government is very weak in order to credibly threaten to fight. Thus, we show that some common results from the standard approach to crisis bargaining, which assumes the credibility of threats, do not hold when credibility is an issue for uninformed players.
http://www.jakanathomas.com/uploads/2/7/1/6/27169143/final_rebel_credibility_dilemma_io.pdf (The Rebels’ Credibility Dilemma, Jakana L. Thomas, William Reed, and Scott Wolford, International Organization)
Using the conflicts in Northern Ireland and the southern Philippine region of Mindanao as illustrations, the article argues that the legitimation of `terrorist’ groups through talks can be a means to transform a conflict away from violence, while complexity may in fact open up new possibilities for engagement. The article concludes by examining how the naming of a group as `terrorist’ can and is often designed to forestall nonviolent responses to terrorism.
http://sdi.sagepub.com/content/39/4/407.short (`We Don’t Negotiate with Terrorists!’: Legitimacy and Complexity in Terrorist Conflicts, Harmonie Toros, Security Dialogue)
Using new monthly data on the incidence of negotiations and the number of concessions offered to groups involved in African civil wars, this paper demonstrates that rebel groups are both more likely to be granted the opportunity to participate in negotiations and offered more concessions when they execute a greater number of terror attacks during civil wars.
http://onlinelibrary.wiley.com/doi/10.1111/ajps.12113/abstract and https://www.washingtonpost.com/news/monkey-cage/wp/2014/04/22/actually-sometimes-terrorism-does-work/ (Rewarding Bad Behavior: How Governments Respond to Terrorism in Civil War, Jakana Thomas, American Journal of Political Science, reported on by the Washington Post)
Take a look at some of the most glaring – as well as some of the least well known – examples of U.S. negotiations with terrorists throughout history. [Iran Hostage Crisis, Iran-Contra Affair, Bill Clinton and the IRA, GW Bush and the Abu Sayyaf, Meetings with Hamas, Prisoner Exchanges in Iraq].
http://sotu.blogs.cnn.com/2014/06/07/timeline-of-u-s-negotiations-with-terrorists/ (Timeline of U.S. negotiations with terrorists, CNN)