Eavesdropping on terror talk in Germany

The surveillance scheme was working perfectly: German intelligence operatives were watching and listening to two terror suspects living in their country for more than two years.

The eavesdropping was yielding a plethora of detail on the cells' desires, plans, and unusual source of funding. The hope was the spying would go on for a long time - long enough to grab others involved in the network.

Instead, according to a European official knowledgeable about the operation, the two terror suspects suddenly made plans to move to the Netherlands. The German agents - unsure if they would lose contact - moved in and had them arrested this past weekend. "The arrests weren't planned," says the European source. "This story from the intelligence and law-enforcement sides now, sadly, is over."

In the end, the surveillance operation offers an inside look at some of the problems and progress of those on the frontlines of the war on terror.

For one thing, it shows that successes are occurring: In addition to the two suspects arrested in Germany - and the information gleaned during the surveillance operation - two other high-level terrorists were apprehended this week in Iraq. Second, it illustrates how difficult it is to tap into terrorist cells and gather enough information to stop a specific attack or round up all those involved. Third, it highlights how contentious the relationship can be between intelligence agencies and local police, which often have different mandates and goals.

"My former service was in the business of letting people run in order to scoop in as many as possible," says Stella Rimington, the former head of MI5, Britain's domestic intelligence service. "But we have to work with the police, and they are of course anxious to bring things to a conclusion without taking too many risks."

Still, the agents learned a lot about how Al Qaeda is evolving and its relationship with sleeper cells in Europe. Significantly, the agents listened to the alleged terrorists discuss ways to obtain uranium to make a dirty bomb in order to kill as many Americans as possible, according to the European official. They heard them recruit suicide bombers from Germany's well-established Muslim community to send to Iraq. They overheard plots to cheat companies out of life-insurance benefits to pay for their illicit activities.

The two arrested on Sunday are known only as Ibrahim Mohamed K, an Iraqi national who lived in Mainz, Germany, and Yasser Abu S, a Palestinian medical student living in Bonn. The Iraqi, according to German officials, attended Osama bin Laden's training camps in Afghanistan and recruited suicide bombers, including Yasser Abu S, to travel to Iraq. They were arraigned in a German federal court earlier this week, and the judge ruled there is enough evidence to hold them for trial.

Through the wiretaps, agents listened to a lot of chatter - much of it just vitriol about the US. But they also heard talk of scary plots, most notably the brainstorming about how to purchase uranium to build a dirty bomb. The European source says the discussion included where, specifically, to find it, but no purchase was made. "They are extremists for sure who hate the US," says the European official.

The agents gleaned new information about how the terror suspects tried to operate within the system without attracting attention. They avoided attending mosques, for instance, where radical imams preach jihad. And they learned more about tactics. For example, the Palestinian married a Syrian woman, who had just recently become a German citizen. That, according to the European official, would allow him legally to stay in Germany.

Moreover, the Palestinian man, Yasser Abu S, with the help of the Iraqi national,

took out as many as five life-insurance policies. According to the European official, Yasser Abu S intended to travel to Egypt and fake his death in a car accident so his wife could collect the life insurance - more than $800,000.

The money would be used to finance additional terror operations. After staging the accident, Yasser Abu S was supposed to go to Iraq, where he would carry out a suicide bomb attack against Americans. "This is a new way of fundraising for terrorist movements," the European official says. "We have not seen this before."

Although German officials don't know how many terrorist cells exist in Europe, they say there's a "pipeline" of Muslim men on the Continent heading for Iraq. One reason for the easy passage: The European Union, in the early 1990s, basically did away with the requirement that citizens show passports at borders. That allows the Muslim extremists to move through Europe largely undetected and then make their way to Iraq through, say, Turkey.

Now that the travel plots have been exposed, intelligence officials expect the terrorists to devise new schemes. But going public with much of what they've learned has its benefits. "The public is made aware that there is still a threat in Germany," says the European source.