Upon learning that Oskar has discovered Lazar Kiss’s apartment, Strasser is upset that Oskar has continued to investigate on his own. But an official with the Ministry of the Interior, Aehrenthal, overhears and lauds Oskar’s efforts. The government is soon going to make a “statement” opposing the unification of the Balkans, he explains—Kiss must be trying to prevent it. Aehrenthal assigns Oskar to watch Kiss’s apartment. Strasser orders him to do so without reporting to his immediate superior, von Bülow.
Oskar offers the loyal officer Haussmann a drink and asks him to switch off with him in watching Kiss’s apartment—telling no one. They rent an apartment across the street from Kiss’s quarters and settle in. Later, Oskar hears the caretaker of the building sobbing after a yelling match with a man. He tries to help her, but she insists that he leave; the man will eventually come back.
Before his parents’ anniversary party, Max meets again with Lily, the pickpocket girl who is recovering at his parents’ house. She has befriended his sister Leah but still won’t talk to Max.
At the party, Max nervously waits for his guest, Amelia, to arrive, and is forced to chat with his ex-fiancée Clara about her engagement and his own romantic prospects in the meantime. Amelia finally appears and Max awkwardly tries to introduce her to his parents. She comes off much better than him, apologizing for their last interaction.
Leah realizes she left her necklace with Lily and goes into the sleeping girl’s room to retrieve it. Lily wakes and sits on the stairs, watching, until the pianist launches into the same song that the pocket watch she was found with played. She has a fit and runs out into the night. When Max catches up to her, she faints. Amelia watches as he puts her in her bed: you and I have been here before, she says, referring to her own nervous attacks.
The next day, Haussmann finally observes Kiss in his room. He, Oskar, and Max follow Kiss when he leaves, chasing him through a park. Only Oskar gets a good look at him before he disappears. He did leave a trace, however: a note hidden on the bench where he was sitting.
It reads “treaty is imminent,” Oskar reports to Strasser and Aehrenthal. Since Oskar is the only person who can identify Kiss, he asks for more information in order to aid the investigation. Aehrenthal explains that Bosnia and Herzegovina are soon to be annexed by the Austro-Hungarian Empire and that Russian diplomats are coming to Vienna in two days to sign an agreement that they will not interfere, in exchange for “certain military assurances.” Kiss is going to try to prevent the signing of the treaty.
Von Bülow is engaging in his own sort of interference. Noticing that Oskar and Haussmann are working together on something, he sends Haussmann away on a task and then searches his desk, discovering a case file on Kiss. He then shows up with several officers to search Kiss’s apartment, to Oskar’s horror.
Oskar confronts him, trying to get him to leave—but then Kiss arrives, sees officers, and flees. They lose him. Strasser is furious at von Bülow. He doesn’t blame Oskar, however; in fact he asks him to be present at the signing of the treaty so that he can watch out for Kiss and any interference.
Oskar returns to his surveillance hideout, where he has allowed the caretaker to stay for her safety after finding her crying and bruised again. He gives her his card and urges her to call him if she ever needs protection.
At the fortified castle where the treaty signing will take place, Oskar and Max look over the servants and discuss Kiss’s actions. Max is confused by Kiss’s theatricality—it’s like he wants to be noticed. He then has a realization: Lily is the key. She led the police to Resch’s body, which had been decomposing in a hidden location for several days. She must have done so on behalf of Kiss.
Max rushes home to speak with her, shaking her as he accuses her of plotting with Kiss. She simply tells him that Max will never catch Kiss.
Max hurries back to the castle, where he realizes that Kiss has been manipulating and watching the police the whole time, not the other way around. He is the one who was sending notes to Oskar, in order to have someone to watch to learn the location and time of the treaty signing so that he could disrupt it. How is he going to do so? A bomb.
But where is it? The only way into the castle is past guards—or if you happened to be the driver of someone like Oskar who had official papers. Learning that his driver went to the room where the treaty will be signed, Oskar barges in and has Strasser send all the dignitaries fleeing. With no one in the room, he and Max hear ticking, and discover a bomb under the table. Not knowing how to disarm it, Max finally picks it up and rushes it to the river outside the castle, throwing it in. Moments later, it explodes.
Having saved the life of the diplomats, Oskar and Max make more connections. Kiss must have been the actor at the Serbian theater who gave them a tip about his own rooms. But there was more than one actor: he had an accomplice. It was the caretaker of the building where Oskar had his surveillance nest. She was keeping an eye on Oskar for Kiss and distracting him.
Oskar and Max visit the Serbian theater again and find the teddy bear Max gave Lily, but no trace of her, Kiss, or the caretaker. They have fled.