NZ suspends dialogue with Iran

[Lilith7]

I think probably it has to do with the kidnappers saying that Louisa Akavi would be killed if there was publicity about her being held hostage. But you're right - if somehow an intermediary could have quietly paid a ransom, that may have been a better outcome, though it may have meant that further hostages wouldn't be released unless ransom was paid.
Its a difficult situation all round when dealing with unreasonable or fanatical people.