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The U.S. government believes that Maher Arar, a Canadian telecommunications engineer, has ties to terrorists, and it has placed his name on a U.S. watch list that bars him from entering the country.

That alone would be unremarkable because U.S. watch lists contain thousands of names -- except that the Canadian government, after a highly publicized inquiry last year, concluded that there is no basis for believing that Arar is connected to Islamic radicals. The inquiry also determined that, based on all of the evidence collected by Canadian officials, there is nothing to indicate that Arar committed a crime or that he poses a threat.

This U.S.-Canada dispute, in and of itself, might also be unremarkable, except that in September 2002, U.S. officials detained Arar at John F. Kennedy International Airport in New York and then sent him to Syria, the country of his birth, after receiving intelligence from the Canadians that indicated Arar was connected to terrorism.

Arar says, and the Ottawa inquiry confirmed, that he was interrogated in Syria for almost a year and tortured. In October 2003, Arar was returned to Canada, where he has become a cause celebre and a potent symbol for critics of the Bush administration's practice of sending suspected terrorists to third countries that employ torture.

Now, U.S. and Canadian officials find themselves in a standoff over whether Arar remains a threat and should be on the watch list. The dispute has shone a light on the deeply rooted suspicions each country has of the other when it comes to the gray and secretive world of intelligence.

Despite having a wealth of potential terrorist targets, Canada has no foreign-intelligence service; information about outside threats comes from other governments. Indeed, the tips that first led Canadian officials to suspect that Arar had terrorist connections came from Syria.

The Canadian inquiry found that Ottawa's handling of his case was deeply flawed and was based on false information. The Canadian government has agreed to pay Arar nearly $10 million in compensation and has asked that the Americans clear his name. The Bush administration has refused.

Current and former U.S. national security officials said that the United States and Canada have maintained good political relations but that American intelligence officials don't consider Canada an especially strong partner in the war on terrorism because the country doesn't gather its own foreign intelligence.

The Arar inquiry, which focused on internal Canadian law enforcement processes, hasn't changed U.S. opinions.

"They didn't have the ability to look at [Arar's] past activities," said Christopher Sands, a senior associate with the Canada Project at the Center for Strategic and International Studies in Washington. One source from which the Canadians could have received that information, the United States, wouldn't cooperate with the inquiry.

The Arar dispute is now straining political relations. Last month, Canadian Minister of Public Safety Stockwell Day visited Washington and met with his counterpart, Homeland Security Secretary Michael Chertoff, and Attorney General Alberto Gonzales.

In that and subsequent meetings among lower-level officials, the United States showed Canada the information it has that keeps Arar on the watch list. In a letter to Day, Chertoff and Gonzales wrote that the information was developed independently of what the Canadians used to conclude that Arar was innocent.

The Canadians remain unmoved by the U.S. claims; the Americans won't take Canada's conclusions as definitive. Hence, the stalemate.

"We're both playing to our type," Sands said. "Canadian nationalism ... from the very beginning has had this sense of superiority to the Americans. The Americans were richer and had more toys, but in the end the Canadians were smarter."

Meanwhile, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., is investigating what information prompted the United States to send Arar to Syria and says that Gonzales and Justice officials have repeatedly stonewalled him in that effort. Maria LaHood, Arar's attorney at the Center for Constitutional Rights in New York City, said that keeping her client on a list of suspected terrorists adds "insult to injury."

But a U.S. government counter-terrorism official, who requested anonymity because the Arar matter has become a political issue, said the feud over Arar's guilt or innocence stems from that uneven intelligence relationship.

The Canadians "continue to view this case, and the information they have about this case, in a rather open-and-shut manner, meaning they have assessed what they have and made a decision, and they seem rooted in that decision, which is certainly their prerogative." But the official added, "We have our own information, as well."