Nov. 9 is a big day for Munich. it's the 65th anniversary of Kristallnacht — the infamous pogrom against Jews launched by Nazi Propaganda Minister Josef Göbbels — and it's the day construction is set to begin on the city's first major synagogue since World War II. Hundreds of politicians and dignitaries, including German President Johannes Rau, Bavarian State Premier Edmund Stoiber and Paul Spiegel, head of Germany's Jewish community, will attend the groundbreaking ceremony. But if a ring of alleged neo-Nazis had its way, police say, Nov. 9 would also have been the day a bomb containing 1.7 kilos of TNT went off near the synagogue site.

Since discovering the suspected plot earlier this month, police have arrested 12 people on charges ranging from weapons violations to supporting a terrorist organization. In raids on homes and businesses in Munich, Berlin and cities in the northeastern state of Mecklenburg-West Pomerania, they discovered explosives, hand grenades, a hit list of potential targets and documents alluding to the Munich bomb plot. "The members of this group are being investigated on suspicion they have formed a terrorist organization," says Frauke-Katrin Scheuten, spokeswoman for the Bavarian federal prosecutor.

Police uncovered evidence of a plot while carrying out surveillance on Martin Wiese, who came to Munich three years ago and has since worked odd jobs and organized right-wing demonstrations with Alexander Metzing, a Munich carpenter. Wiese and Metzing, both of whom are from the former East Germany, are suspected of being leaders of the far-right gang Kameradschaft Süd-Aktionsbüro Süddeutschland (Society of Comrades Action Bureau, Southern Germany). "It's no coincidence that they are east Germans," says Hajo Funke, an expert on right-wing extremism at Berlin's Free University. "Ten years of experiencing the downside of German unification has created a racist youth subculture in the east."

Norbert Klein is the owner of Friendship, a folksy restaurant in a working-class Munich neighborhood, where Wiese and his gang used to provide security for Direct Democracy, a radical right-wing coalition that held meetings in a back room. "Sometimes they'd get a hundred people and the speakers would raise a fuss about foreigners. They didn't like what was going on down at Jakobsplatz," Klein says, referring to the site of the new synagogue. After police began showing up in large numbers to monitor the meetings last year, Klein stopped renting the room to the group.

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nginx/1.14.0 (Ubuntu) In early September, police followed Wiese from Munich to a patch of woods in Brandenburg, near the Polish border. On Sept. 6, investigators say, they stopped Wiese near Nuremberg and found traces of explosives in his backpack. They say they also found a bag with 1.7 kilos of explosives in Metzing's carpentry shop. Searches of the homes of other suspected gang members allegedly turned up 12 more kilos of explosives, grenades and detonators.

The plot in Munich could be a sign that the fractious radical right is organizing itself into a terrorist network. There is increasing concern among politicians and law-enforcement officials that neo-Nazis could form a movement as organized and deadly as the Red Army Faction (raf), which carried out kidnappings, killings and bombings from the 1970s to the '90s. One investigator, who wished to remain anonymous, says German law enforcement takes the threat seriously, but rejects the raf comparison. "The raf was a group of people with a much more sophisticated intellectual background," the official says. But the radical right is increasingly forming loose, cell-like structures, following a strategy popularized by the British neo-Nazi organization Combat 18, which promotes "leaderless resistance" through a decentralized network of activists.

Germany's Office for the Protection of the Constitution, which monitors extremist groups, said in its 2002 report that while the membership of extreme-right organizations is falling, their willingness to use violence is increasing. According to the report, there were almost 45,000 people in extreme-right organizations last year, down 10% from the year before. But the number of right-wing extremist attacks rose nearly 9% last year, to 772. Bernd Wagner, who runs a government-backed program called Exit-Germany that has helped nearly 200 youngsters leave right-wing gangs, warns that the threat posed by Kameradschaft Süd-Aktionsbüro Süddeutschland should not be downplayed. "All the ingredients for right-wing terrorism are there," he says. "Part of the scene is really steaming and looking for a way to take action."

• WILLIAM BOSTON | Munich
• A plot to bomb the site of a new synagogue raises fears that German neo-Nazis are turning to terror