MANILA - With funding from the Middle East drying up and a decade of US-backed military pressure taking a toll, Islamic militants in the southern Philippines are relying on kidnapping for their survival, experts say.

The kidnapping-for-ransom stings offer the militants a vital source of income, with the best targets the brave or foolhardy foreigners who ignore travel warnings and drift into the most lawless parts of the south, they say.

The dangers were highlighted on Wednesday when two European men on a bird watching trip were kidnapped on remote islands where the Al Qaeda-linked Abu Sayyaf and other militant groups are known to operate.

Their abductions bring to seven the number of foreigners believed to be being held by militants in the south, with one of them -- an elderly Japanese man -- not heard of since the middle of 2010.

"They (the militants) look at these foreigners as potential hostages and walking dollars," said Rommel Banlaoi, executive director of the Institute for Peace, Violence and Terrorism Research, a Manila-based think-tank.

But while the kidnappings of foreigners often grab the headlines, many more Filipinos are abducted then quietly released after ransoms are paid.

The Abu Sayyaf carries out most of the kidnappings of foreigners, although smaller gangs are also known to snatch targets and sell them to the militants, according to Banlaoi and other security experts.

Banlaoi said that, based on his group's study, about 90 percent of the Abu Sayyaf's funding was now sourced from kidnapping and extortion activities.

Ransom payments are then used to buy more arms, pay off members, hire new recruits or bribe community elders to turn a blind eye to their crimes.

"They have simply realized that kidnap-for-ransom activities is an enterprise to finance their movement," said Banlaoi, one of the few security analysts to have visited the militants in their strongholds.

The Abu Sayyaf first carried out mass abductions in the 1990s, and in the early part of the following decade launched kidnapping raids that netted them dozens of local, European and American hostages.

The militants' beheaded several of their hostages when ransoms were not paid, including an American.

However the Abu Sayyaf's brazenness made the group a prime target in the US-led global war on terror.

A rotating force of 600 US Special Forces was deployed to the southern Philippines at the beginning of 2002 to help train local troops in how to deal with the militant threat.

The campaign has had many high-profile successes, including the killing of a range of Abu Sayyaf leaders.

The US global campaign also led to funds from one of Osama bin Laden's brothers and other Middle East sources drying up, said a Philippine police intelligence officer who asked not to be named.

"When the US launched its global war on terror, home grown jiadis found themselves with limited funds. They had to resort to other creative means, like KFR (kidnap-for-ransom)," the officer said.

The Abu Sayyaf's numbers have declined from about 1,500 fighters in the late 1990s to just a few hundred today, according to Banlaoi.

Richard Jacobson, operations director at risk consultancy Pacific Strategies Assessment, said the remaining Abu Sayyaf were now focused on survival rather than their original avowed aim of establishing an Islamic state.

"Most ASG (Abu Sayyaf) elements have abandoned their terror credentials and have reverted to criminal activities such as kidnapping and extortion," Jacobson told AFP.

He said they were aided by lawlessness in the south, where warlords hold political posts and a much larger Muslim rebel group has been waging a separatist insurgency for decades.

"Essentially, some southern parts of the Philippines are assessed to be lawless territories... (where) the central government has very limited influence and capacity."

For this reason, many foreign governments regularly issue advisories warning their citizens from travelling to parts of the southern region of Mindanao.

Like the two kidnapped Europeans, 53-year-old Australian Warren Rodwell ignored those warnings.

The ex-soldier decided to live last year in a southern town where kidnappings of locals had taken place, and reportedly told local authorities that he would be able to take care of himself if anyone tried to kidnap him.

But gunmen pulled Rodwell from his home in December, and the following month a video of him in captivity was made public in which he said his abductors wanted $2 million for his release.

He has not been heard from since.