Sisko uncovers a Federation terrorist group whose actions could start another war with the Cardassians.
The worst is feared when a Cardassian freighter, the Bok'Nor, explodes while departing the station. Dax determines it was no accident, since it appears an implosive device was placed aboard the ship. Worried how this will affect Federation colonies in the newly-established Demilitarized Zone, Lieutenant Commander Cal Hudson, an old friend of Sisko's who serves as Starfleet's attache to the colonies, is called in to help. He hints that the colonists, who, thanks to the treaty, are suddenly living in Cardassian territory, feel abandoned by the Federation.
Sisko returns to his quarters to find Gul Dukat waiting for him, insisting he is there to talk with Sisko privately, without the Cardassian government's knowledge. He says certain Federation members are responsible for the destruction of the Bok'Nor, and insists Sisko accompany him to the Volan Colonies in the Demilitarized Zone. Sisko, intrigued, agrees, and the two set off in a Runabout. When they reach the area, they encounter a Federation ship under attack by Cardassians a clear violation of the treaty. Surprised, Dukat orders his own people to stand down and threatens to fire, but another Federation ship arrives and destroys both Cardassian vessels. A war appears to be breaking out.
The two leaders join a meeting at one of the colonies, where Cal Hudson, his Cardassian counterpart Gul Evek, and a few colonists are present. Evek insists the colonists are engaging in organized terrorist activities, and tells Sisko he can prove this because they have the confession of the man who destroyed the Bok'Nor. He then shows the recorded confession of William Samuels, a colonist who Evek says was apprehended on Deep Space Nine. When Sisko asks to talk to Samuels, Evek reveals his body an apparent suicide which infuriates the colonists.
Later, Sisko wonders if Cardassian fears about organized terrorism are true, and while Hudson says he is aware of no such campaign, he also admits he wouldn't blame the colonists. Sisko and Dukat then return to the station, and Dukat admits he knew Samuels had been apprehended, but denies knowledge of his suspicious death. Soon afterward, O'Brien approaches Sisko with bad news the device that destroyed the Bok'Nor was a Federation device, apparently proving the colonists are responsible. Then, Gul Dukat is kidnapped from the station.
While the crew works to determine where the kidnappers have gone, they receive a transmission from the Demilitarized Zone, where a group called the Maquis is claiming to have abducted Dukat. Sisko, Kira, and Bashir follow the kidnappers to a stretch along the Cardassian border known as the Badlands, where they detect life on a large asteroid. They transport to the surface and are taken prisoner by a band of armed Federation colonists led by Cal Hudson.
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