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“Even if we so far have no claim of responsibility, we must go on the basis that the motive was xenophobic,” Horst Kretzschmar, president of Dresden police, said in a statement.
He said police believed there was a link to celebrations planned for the coming weekend in the city to mark the anniversary of German reunification of October 3, 1990.
At the time of the first explosion, the imam of the mosque was inside with his wife and sons but they were not hurt. Damage was, however, done to the building through pressure waves.
Soon after, the International Congress Center was damaged by a home-made device and the bar of a nearby hotel was evacuated.
During the night, police officers were sent to protect other mosques in the city.
Dresden was the cradle of the anti-Islam Pegida grassroots movement whose weekly rallies attracted around 20,000 supporters at the height of its popularity at the start of 2015.
In a rambling Facebook post Tuesday, Pegida founder Lutz Bachmann suggested that the cause of the blast was either “Islamist infighting” or possibly a deliberate setup to justify a ban on demonstrations planned for October 3.
The influx of about one million migrants to Germany last year has increased social tensions, especially in eastern Germany where there have been some high-profile attacks on refugee shelters.