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German authorities arrested three Iraqis with alleged Al Qaeda (search) links on suspicion they were planning an attack on Iraqi Prime Minister Ayad Allawi (search) while he visited Germany on Friday, the country's chief prosecutor said.

The arrests were announced while Allawi was in Berlin and hours before he met German Chancellor Gerhard Schroeder (search).

Investigators who had the three suspects under surveillance noticed an increase in activity, phone calls and suspicious movements by one suspect before Allawi's visit that amounted to "evidence of plans of an attack," chief federal prosecutor Kay Nehm said.

All three were members of the terror group Ansar al-Islam (search), Nehm said at his agency's headquarters in Karlsruhe. German authorities have said Ansar al-Islam has about 100 supporters in Germany, and U.S. authorities have linked the group to Al Qaeda.

The suspects' phone calls grew more hectic after initial intelligence led officials to cancel a Thursday night meeting between Allawi and Iraqi exiles in Berlin, Nehm said.

"From the reactions in the various phone calls to the change in the visit's schedule, one must conclude that they indicate that something was planned against the Iraqi prime minister," he said.

"The conversations differed markedly from the usual support activity" for Ansar al-Islam, he said. "Naturally that made us suspicious."

It was unclear what kind of an attack the group might have planned, and Nehm refused to elaborate. He said the suspects appeared to have acted largely on the spur of the moment — seizing the opportunity of Allawi's visit — and he added that initial searches had not found any bomb-making materials or weapons.

"We haven't found anything yet that suggests an attack," he said.

The arrests were made in early-morning raids in Augsburg, Berlin and Stuttgart. A total of nine residences and other sites were searched, Nehm said.

Prosecutors are preparing charges of membership in a terrorist organization against the three suspects, all men, he said.

Ansar al-Islam, which was formed in the Kurdish parts of Iraq, is believed to include Arab Al Qaeda members who fled the U.S.-led invasion of Afghanistan in late 2002. Group bases along the Iranian-Iraqi border were bombed and attacked by Iraqi Kurdish and U.S. Special Forces at the start of the Iraq war.

Jordanian terrorist Abu Musab al-Zarqawi, whose followers in Iraq have claimed responsibility for numerous car bombings and beheadings of foreigners, including three Americans, is believed to have played a key role in the group after fleeing Afghanistan.

The United States has offered a $25 million reward for al-Zarqawi's capture — the same amount as for Usama bin Laden.

In December 2003, police in Munich apprehended a 30-year-old Iraqi, identified only as Lokman M., on suspicion of organizing fund-raising and recruitment for Ansar al-Islam since 2002.

Authorities are pursuing charges he supported a foreign terrorist organization by helping smuggle Iraqis into Germany and organizing trips to Iraq for possible suicide bombing missions against U.S. troops.

Allawi arrived in Berlin from Jordan on Thursday and was scheduled to leave Friday afternoon for Moscow to conclude a three-nation trip.

Schroeder said after their meeting that Germany will seek closer business ties with Iraq as the country's reconstruction advances.

Schroeder, whose government strongly opposed the U.S.-led war in Iraq and has ruled out sending troops, said he offered to expand German aid on civilian reconstruction by training Iraqi ordnance disposal experts in Germany.

Germany also could expand its training of Iraqi police and soldiers in the United Arab Emirates, which neighbor Iraq, Schroeder said.

"Both of us are convinced that there is no point in talking about the past and that we must focus our energy on building a democratic, stable Iraq — regardless of how one viewed the war in Iraq," Schroeder said.

Germany will host a meeting in coming months of German and Iraqi business executives to discuss economic cooperation and security conditions in Iraq, Schroeder said. German companies were involved in Iraq for decades before the war that toppled Saddam Hussein last year.

"We believe we should build on this long history of economic ties," Schroeder said.

Allawi said the meeting, expected to lead to the creation of a German-Iraqi chamber of commerce, will be held in February. Germany already has pledged to forgive much of Iraq's debt.

Allawi thanked Germany for its postwar help and said he looked forward to "a very positive and constructive relationship" with Germany.

"As the political process will mature in Iraq, we will hopefully get more and more cooperation with Germany and Europe," he said.

Allawi also planned to meet with German Foreign Minister Joschka Fischer while in Berlin.