- Associated Press - Wednesday, March 16, 2011

LAHORE, Pakistan (AP) — A CIA contractor who shot and killed two Pakistani men was freed from prison on Wednesday after the United States paid $2.34 million in “blood money” to the victims’ families, Pakistani officials said, defusing a dispute that had strained ties between Washington and Islamabad.

In what appeared to be a carefully choreographed end to the diplomatic crisis, the U.S. Embassy said the Justice Department had opened an investigation into the killings on Jan. 27 by Raymond Allen Davis. It thanked the families for “their generosity” in pardoning Mr. Davis but did not mention any money changing hands.

Mr. Davis left the country immediately on a U.S. flight, Pakistani and American officials said.

Rebecca Davis, Mr. Davis‘ wife, said she was elated when she learned of her husband’s release in a phone call at 6:30 a.m. She said she doesn’t know where the money paid to release her husband came from.

“I knew it was self-defense. My husband is not a killer; he’s not a Rambo,” she said, speaking outside her home in Highlands Ranch, Colo.

** FILE ** Pakistani security officials escort Raymond Allen Davis (center), a U.S. Consulate employee, to a local court in Lahore, Pakistan, on Friday, Jan. 28, 2011. (AP Photo/Hamza Ahmed, File)
** FILE ** Pakistani security officials escort Raymond Allen Davis (center), a ... more >

U.S. Secretary of State Hillary Rodham Clinton, speaking from Cairo, thanked Pakistan and the families of the two men for allowing Mr. Davis to go free. She called the two Pakistani men who were shot “victims.”

Mrs. Clinton said the United States did not pay to win Mr. Davis‘ release, but she didn’t dispute that the men’s families were compensated. The amount and source of money paid to the families is not yet completely clear.

The killings and detention of Mr. Davis triggered a fresh wave of anti-American sentiment in Pakistan and were testing an alliance seen as key to defeating al Qaeda and ending the war in Afghanistan.

Antagonism was especially sharp between the CIA and Pakistan‘s powerful Inter Services Intelligence, which said it did not know Mr. Davis was operating in the country. One ISI official said the agency had backed the “blood money” deal as way of soothing tensions.

Small groups of protesters took to the street in major cities after nightfall, briefly clashing with police outside the U.S. Consulate in Lahore, where officers fired tear gas at men burning tires and hurling rocks. Some called for larger protests Friday after noon prayers.

Mr. Davis, a 36-year-old Virginia native, claimed he acted in self-defense when he killed the two men on the street in the eastern city of Lahore. The United States initially described him as either a U.S. consular or embassy official, but officials later acknowledged he was working for the CIA, confirming suspicions that had aired in the Pakistani media.

The United States insisted Mr. Davis was covered by diplomatic immunity, but the weak government here, facing intense pressure from Islamist parties, sections of the media and the general public, did not say whether this was the case.

The payment of “blood money,” sanctioned under Pakistani law, was suggested as the best way to end the dispute.

Given the high stakes for both nations, few imagined either side would allow it to derail the relationship. The main question was how long it would take to reach a deal.

Punjab Law Minister Rana Sanaullah said Mr. Davis was charged with murder Wednesday in a court that was convened in a prison in Lahore but immediately was pardoned by the families of the victims after the payment.

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