Islamic State militants will be able to mount operations in Iraq "for the foreseeable future" despite U.S.-led air strikes and efforts by Iraqi security forces to regain territory, Germany's BND foreign intelligence agency said.
German intelligence also sounded the alarm about a rising number of Islamist militants inside Germany ready to join IS in Iraq and Syria and warned of an increased risk of violent clashes on German streets between rival radical groups.
Islamic State (IS) has seized swathes of territory in Iraq and Syria this year, declared an Islamic 'caliphate' and has executed or driven away Shi'ite Muslims, Christians and other groups that do not share their radical version of Sunni Islam.
In a statement on Tuesday, BND said IS was still able to operate successfully in the western Iraqi province of Anbar and outside Baghdad and was working to convince more Iraqi Sunnis to turn against the U.S.-led coalition fighting against it.
"The continuation of the political and security vacuum in Iraq for the foreseeable future will make fighting terrorist, radical groups considerably harder," it said.
In Syria, the BND said fighting between IS and Kurdish forces in Kobani near the Turkish border showed that the militants were still in a position to attack, even if their mobility has been impaired by U.S.-led air strikes.
Due to limited resources, the forces of President Bashar al-Assad are concentrated in urban centers of Damascus, Homs, Hama and Aleppo along Syria's north to south axis and the coast, where they have seen some military successes, the BND said.
Assad's forces have largely turned their backs on Syria's sparsely populated east, allowing IS to expand there, it added.
In a parallel statement, BND's sister agency BfV, which handles domestic intelligence, said the number of Salafist Islamists was rising in Germany, and with it the number of potential recruits for IS. Some 450 people have travelled from Germany to join the radical Islamist fighters.
Salafists espouse a strict, puritanical form of Islam.
The BfV said some Chechens living in Germany were joining Salafist groups and added that many of those recruits were especially active and violent. It also warned of increased clashes in Germany between Islamist groups and supporters of Kurdish separatists, in an echo of the Kobani conflict.
"Salafists are recruiting fighters for IS. Since the summer of 2014 the Kurdistan Workers Party (PKK) is recruiting its followers to fight against IS," said BfV president Hans-Georg Maassen in the agency's statement.
The PKK, a secular group, has been fighting Turkish security forces for decades in a campaign to carve out a Kurdish homeland in southeast Turkey. The fighting in and around Kobani in recent weeks has put renewed pressure on a fragile peace process pursued by Turkey and the Kurdish separatists.
"We are concerned that violent clashes between extremists on our streets could escalate," Maassen said, referring to a recent wave of fighting in German cities between Salafist groups and local Kurds, and most recently between Salafists and a group of far-right supporters in the western city of Cologne.
The BND and BfV statements were released ahead of a planned news conference on Tuesday by German intelligence chiefs and the interior minister on the fight against terrorism.