The two governments have made a genuine effort to create the impression of diplomatic normalcy. When Chancellor Gerhard Schröder and Saudi Crown Prince Abdullah met last October, they took pains to appear like two friendly partners who had just managed to clear up a few minor irritations.

It was almost as if the fact that Germany's Federal Office for the Protection of the Constitution has been discretely monitoring Saudi organizations in Germany since last summer - because of the apparent financial support militant Islamists were receiving from Saudi Arabian sources - was hardly worth mentioning, or that the fact that suspected terrorist sympathizers had received support from a member of the Saudi embassy in Berlin was nothing but a harmless faux pas.

There will be no mention of normalcy this week, when Minister of the Interior Otto Schily presents the report on the protection of the constitution. Because of foreign policy considerations, the report makes virtually no mention of the illicit activities of Saudi radicals. For months, the administration has been involved in internal debates over whether the kingdom should be publicly reprimanded.

The internal discussion over the use of intelligence on the Saudis shows just how far the two countries are from a cooperative relationship. The officials responsible for the report had initially presented an internal draft version which mentioned "many indications that semi-official Saudi institutions, functionaries and private Saudi citizens were and continue to be involved in support and funding activities for international networks of Islamists prepared to commit acts of violence."

If the German government had accused the Saudis, directly and officially, of supporting terrorists, this would have been tantamount to a public affront. After all, the royal family in Riyadh had been considered a reliable partner in terms of foreign policy for decades. In recent years, Germany companies have exported more goods to the region than ever before. And, because of Saudi Arabia's virtually inexhaustible oil reserves, few western countries can afford a permanent rift with the Saudi royal family.

But the other side of the story is no less consequential.

From Berlin to Bosnia, from Münster to Macedonia, wealthy Saudis are contributing oil money to support the construction of mosques and, at the same time, the work of dubious groups from the shadowy word of hate-mongering imams. For years, the German government, loathe to interfere with "religious freedom," turned a blind eye to these practices, at least until it was discovered last year that a Saudi diplomat was supporting a presumed terrorist organization (SPIEGEL 14/2003). Since then, there has been a shift in Berlin's approach to the issue. "We were much too tolerant for far too long," says a high-ranking government official. "This cannot continue."

German investigators, for example, have noted with interest that Spanish mosques frequented by the Madrid terrorists were build with funds from Saudi Arabia. In another case, an imam from Budapest, who was arrested by Hungarian authorities in mid-April for allegedly planning terrorist attacks, had received the equivalent of 474,000 Euros in funding from a Riyadh-based foundation.

For years, generous construction funding has also been flowing into Germany. In January, the Bundeskriminalamt (BKA, German Federal Office of Criminal Investigation) presented a twenty-page, confidential dossier on one of the largest charities in the kingdom, the Haramain Foundation. According to the document, the Saudis had, contrary to expectations, by no means initiated a clear change in direction after September 11, 2001. The BKA claims that, after the attacks, "representatives" affiliated with the foundation provided support to militant Muslims.

Among other things, the German authorities state that in addition to a mosque in Berlin, which received more than a million Euros in funding, the Münster Islamic Center, which has been under observation by the Federal Office for the Protection of the Constitution, received a sum in the five-digit range - officially for events and seminars. A German-Arab investigation team has now been set up to look into such flows of funding.

In attempting to balance undisputed facts against diplomatic interests, German authorities have turned to dialectics. "If the Saudis are classified as spies, the entire country will be branded as evil," says one intelligence official. "If they are classified as extremists, it becomes a problem of individuals." For this reason, the report was "edited in the context of collateral damage to foreign policy" and certain passages were removed.