Despite announcing its intentions to block web services from BlackBerry devices starting last week, Saudi Arabia has allowed them to continue functioning unimpeded while BlackBerry-maker Research in Motion tries to resolve the country’s security complaints with the smartphones.

The country originally set a deadline for Friday August 6 to block the services, and it also let a second deadline go by at midnight last night, reports BusinessWeek. The news comes after the Obama administration announced its intentions to mediate discussions between RIM and countries with similar concerns to Saudi Arabia.

Regarding the leeway, Saudi Arabia’s Communications and Information Technology Commission said: “Given the positive development in the completion of part of the regulatory requirements by service providers, the Commission decided to allow the continuation of BlackBerry Messenger service.”

The UAE and Saudi Arabia were the first to announce that they would ban certain BlackBerry services — Saudi Arabia initially wanted to block BlackBerry’s Messenger IM service, and the UAE plans to block IM, email, and web access starting October 11. They’re being driven to block the devices because RIM would not give them access to encrypted customer data. Indonesia, and later India, both announced that they would block BlackBerrys for similar reasons.

Needless to say, other countries are watching the situation in Saudi Arabia closely, since it would set a precedent for their access to RIM’s encrypted user data. RIM previously stated that there is no way for it to decrypt user data, let alone grant other countries access to it. Last week, U.S. authorities admitted they had the capability of tapping into RIM’s encrypted data, but the company has yet to admit helping the U.S., or any government.

It’s unclear how, exactly, RIM would be able to make BlackBerry devices compliant with Saudi Arabia’s local laws without giving up access to user data. That the country has decided to delay the device ban is a sign that RIM is doing something to appease it — what RIM is actually up to is still unknown.