The latest battle in the intermittent war between the New York Police Department and the Federal Bureau of Investigation has ended in a truce with the appointment of a well-respected G-man to head the Bureau’s powerful New York office. Both privately and publicly, the NYPD welcomed the Bureau’s appointment Monday of Joseph M. Demarest, Jr. as Assistant Director in Charge of the FBI’s New York Division. “The champagne corks are popping all over the city,” said a senior NYPD official.

Demarest’s background is impressive. He not only investigated the 1998 embassy bombings in Africa, but was also one of two shift commanders for the Bureau’s investigation of the 9/11 Pentagon attack, overseeing some 400 federal, state, and local investigators from over 40 agencies. In his first New York stint, Demarest headed the Bureau’s counterterrorism operations, running an FBI SWAT team and the Joint Terrorism Task Force (JTTF) before taking a job as the head of international security at Goldman Sachs. He has worked well with police commissioner Raymond Kelly. Police officials say that Demarest’s appointment is likely to enhance prospects that the NYPD and FBI will work closely together on threats to the city.

FBI director Robert S. Mueller’s decision to lure Demarest back to the Bureau in such a key job reflects the importance he places on resolving long-running tensions between the two law-enforcement agencies, which have repeatedly clashed, sometimes over seemingly small issues. For example, the FBI spent six years stonewalling an NYPD request to let the police designate a secure site for storing classified information—known as a Sensitive Compartmented Information Facility—at its downtown Manhattan headquarters at One Police Plaza. (The bureau finally approved Kelly’s request last spring.)

A far more serious dispute arose last month when Kelly accused the Justice Department’s “risk-averse” lawyers of endangering New York by delaying requests for wiretaps in time-sensitive counterterrorism cases. Justice replied that the NYPD’s requests—channeled through the FBI to a special court under the Foreign Intelligence Surveillance Act of 1978, the domestic wiretapping law that was amended last year—were too broad and violated the law. Tensions flared further when the New York Times published an exchange of unusually angry letters between Kelly and Attorney General Michael Mukasey. But New York police now say that the wiretap issue has been largely resolved and that Justice has been processing the city’s applications with the speed and urgency that they deserve.

Another source of contention concerned the recent terrorist attacks in Mumbai. National Public Radio reported Monday that Bureau officials were annoyed that the NYPD had sent three of its detectives to Mumbai last week, one day after the FBI sent its own team. More broadly, some FBI agents have long disliked the NYPD’s stationing detectives in police departments overseas to collect information related to terrorist techniques and operations that may threaten New York.

But Paul J. Browne, the NYPD’s chief spokesman, said that FBI director Mueller welcomed the practice. The decision to send a team to Mumbai, he added, had produced important insights about the terrorists and their training that had already resulted in tighter security at hotels and other changes in counterterrorism practices in New York. For instance, last Friday, according to an Associated Press report, NYPD captain Brandon Del Pozo—speaking by phone from India to an FBI conference—announced that his team had concluded that the militants had fired their automatic rifles in precise, three-round bursts. This, along with the fact that most of the shots had not missed their targets but directly struck victims’ bodies or heads, suggested that the assailants were well-trained in “shoot and scoot” tactics.

By most accounts, Demarest and Kelly consider terrorism a leading threat to New York and give counterterrorism efforts priority. Kelly, like Demarest a fitness fanatic, called “Joe” a “first-class professional” with whom he looks forward to working closely. But some law-enforcement observers are skeptical that the Kumbaya spirit will last long. Tensions over turf and operations tend to be structural, not personality-driven—and thus likely to reappear.

Judith Miller, a contributing editor of City Journal, is a Pulitzer Prize–winning journalist who writes about national security issues.