Storyline
The story revolves around the lives of two NYPD police detectives, Det. Sgts. Deke DaSilva (Sylvester Stallone, sporting a beard) and Matthew Fox (Billy Dee Williams) who work undercover, and a terrorist Heymar Reinhardt, alias Wulfgar (Rutger Hauer). In the South Bronx during the late night to early morning hours on New Year's Eve 1980, three armed assailants attempt a mugging on a supposedly unsuspecting woman, who turns out to be DaSilva in drag for a carefully planned sting operation. Fox immobilizes two of the suspects as Deke chases the third upstairs to the 174th Street (IRT White Plains Road Line) Subway Station platform and dares the man to cut him. Deke then incapacitates him and places him under arrest.
The next scene takes place in London on the same day, where Wulfgar bombs a department store, instilling the will of fear in the surrounding society. Meanwhile, back in New York City on January 4, 1981, DaSilva and Fox serve a high risk warrant in the Bronx. They raid a known drug distribution spot. The obvious corruption in the police department is exposed in the suspect's dialogue as a minor subplot. Two days later in London, Wulfgar converses with his contact at a party, Kenna, who tells Wulfgar that Mercer, who we never see but come to know as the financier of Wulfgar's operations, is withholding money owed to Wulfgar because several children were killed in Wulfgar's latest bombing. Wulfgar quickly discovers that Kenna had been held at Heathrow Airport in police custody, and has inadvertently led police to Wulfgar's location. Wulfgar then proceeds to murder Kenna and the policemen who had converged on the location. The next day, he then flees to Paris where he meets his associate, Shakka Holland (Persis Khambatta) at La Sainte-Chapelle. Shakka remarks that La Sainte-Chapelle is a bad meeting place because it's next to (in real life too), the Palais de Justice, a courthouse in Paris. She informs Wulfgar that Kenneth's death was a rash decision, for the police found a passport that he'd brought to Wulfgar on his person. Wulfgar also realizes he has killed one of his own, and is now facing alienation from his allies. With his identity revealed to all European authorities, Wulfgar and Shakka visit a plastic surgeon, who changes Wulfgar's appearance. After the process, the surgeon becomes a liability, and is murdered by Wulfgar, who then flees to New York City.
After having their undercover detail compromised by two uniformed officers, DaSilva and Fox are informed that they have been transferred from the Street Crime Unit and into a special Federal-State Unit. After a touchy moment with their superior, Lieutenant Munafo (Joe Spinell), they discover that their transfer orders came from the commissioner, who had received the orders from Washington D.C.. The fact that the two detectives served in Vietnam also play into this, making them two of the highest recommended candidates for the special unit. The Anti-Terrorist Action Command (A.T.A.C.) squad is assembled by INTERPOL British Counter-terrorist specialist Peter Hartman (Nigel Davenport). Hartman believes Wulfgar will come to the U.S. next primarily for the press coverage. Hartman schools DaSilva, Fox and a specially selected team of New York police on Wulfgar, Shakka, and terrorism in general on his proactive approach to finding and taking out terrorists. But the 'shoot-to-kill' policy that Hartman encourages doesn't go down well with DeSilva, who says it sounds like an order to be an assassin insead of a policeman. Hartman also makes a personal comment regarding DaSilva's ex-wife, which causes him to leave, but opening him up to the connections of the underground New York City.
According to Hartman, Wulfgar wastes no time in becoming familiar with new surroundings. After completing the latter, Hartman states that Wulfgar, an aficionado for the vivid nightclub scene, will try to find safe housing for his arsenal. Sure enough, Wulfgar meets Pam, a flight attendant, in a nightclub and moves in with her. Surprisingly enough, when she asks him what he does for a living, he tells her the complete and total truth: "I'm an international terrorist wanted on three continents." She takes it as humor. Wulfgar then announces his presence in New York by bombing several locations in the Wall Street area. Alone in her apartment while Wulfgar (known as Eric to Pam), is away, Pam discovers his arsenal. Wulfgar kills Pam, and her death is the first break Hartman, DaSilva and Fox get. Wulfgar has left behind a map of the Wall Street area. According to investigators, the location that had been bombed was marked. DaSilva and Fox investigate Pam's favorite nightspots and hope to find Wulfgar at one of them. They do find him. But, unsure of what he looks like since the plastic surgery, they hesitate and after a long chase and nearly fatal hostage situation on the New York City Subway's IND 6th Avenue Line, Wulfgar gets away, slashing Fox's face in the process. An angry DaSilva vows to kill Wulfgar who makes his getaway. Wulfgar takes refuge in the basement of a little grocery store, where it is revealed that Shakka is now in the United States to inform him that the NYPD and the United Nations delegation members have a description of him. She also informs him that revolutionary communities back in Europe are paying attention to the Wall Street bombings, but have not yet decided to rehire him. In the meantime, the two research on the UN personnel and the A.T.A.C team and plan their next move.
On January 17, the members of A.T.A.C. are protecting a United Nations function at the Metropolitan Museum of Art that has the earmarks of a potential terrorist target. Shakka infiltrates the party in disguise. She corners Hartman on an escalator and murders him.
Wulfgar and Shakka then hijack a Roosevelt Island Tram car carrying U.N. representatives. He executes the wife of the French ambassador while DaSilva is watching from a hovering police helicopter as a penalty for the nightclub and subway chase. Wulfgar decides to release an infant on board the car, and demands that DaSilva personally board the tramway to rescue it. DaSilva is winched up to the aerial tram and confronts Wulfgar face-to-face. DaSilva demands to know why Wulfgar killed the woman. “I wanted to,” the sadist replies. However, he decides to spare his nemesis for the moment. DaSilva and the baby are lowered back down to a waiting barge.
The police agree to Wulfgar's demands for a MTA New York City Transit bus to escort him and the hostages to the airport, where a jet will be waiting for takeoff. Wulfgar and Shakka hide among the crowd of hostages from the tram. DaSilva waits until they try to board before making his move. He plays back a recording of Hartman's lecture in which the terrorist expert denounces Shakka. In a rage, Shakka breaks from the hostages and is gunned down by Fox. Wulfgar returns fire on the police. He escapes, driving the bus off a ramp into the East River.
A search of the wreckage shows no sign of Wulfgar. The team finds the store where Wulfgar has been staying and DaSilva finds that Wulfgar has gathered information on all participating members of A.T.A.C., including Fox, Hartman, and DaSilva: an address of his ex-wife, Irene (Lindsay Wagner) is found on one of the printouts. Wulfgar makes his way to Irene's house, hides outside, and sees Irene walk up to the house and goes in. He breaks in, finds her washing dishes and sneaks up behind her brandishing a knife. But DaSilva has made it to Irene's first; he turns around, wearing his ex-wife's housecoat and a blonde wig, brandishing a gun. With nowhere to go, Wulfgar lunges at DaSilva who fires his revolver twice into the terrorist, sending his dead body crashing back into the street.
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