- Associated Press - Thursday, March 17, 2011

ISLAMABAD (AP) — A “blood money” deal to free a CIA contractor who killed two Pakistani men removes a major thorn in relations between the United States and Pakistan, but bruising from the incident and disagreements over Afghanistan mean the alliance will likely remain stormy.

The already weak Pakistani government has also seen its standing among the country’s 180 million people further diminished, though it remains to be seen whether right wing and Islamist parties are able to organize large-scale protests to destabilize it further.

Raymond Allen Davis was released Wednesday after heirs of his victims were given $2.34 million in exchange for a pardon in a closed-door court session. He shot and killed the men on Jan. 27 in the eastern city of Lahore, allegedly in self-defense.

The deal was a way out of a toxic situation for the U.S. and Pakistani governments, which were able to say it was the families and Pakistan’s legal system — not them — that made the release happen. As such, they were sheltered from the full force of public anger in Pakistan.

Pakistan and the United States are locked in a complex relationship that is increasingly strained due to disagreements over strategic interests in Afghanistan. Many analysts said the crisis generated by the Davis affair was largely a reflection of these tensions.

“This was a bump along the road,” said Samina Ahmed of the International Crisis Group, an international think tank.

“The bigger issue, which still remains, is that of Afghanistan.”

The United States wants Pakistan to crack down on Afghan Taliban factions sheltering on its soil to enable it to quickly withdraw troops from Afghanistan. But Pakistan has resisted doing this fully because it believes the militants could be allies when the Americans leave and help ensure that Afghanistan is not an ally of its long-term enemy, India.

The United States insisted all along that Davis had diplomatic immunity, but Pakistani officials never confirmed this.

Tensions were most acutely felt between the CIA and Pakistan’s main spy agency, the Inter Services Intelligence, whose cooperation is seen as key to defeating al Qaeda.

Davis‘ arrest was highly embarrassing for the ISI, which was criticized for either allowing — or being unaware of — his presence in the country. Critics and conspiracy theorists said Davis was one of many covert CIA operatives in the country, undermining its sovereignty.

One ISI official said the agency had backed the deal after CIA Director Leon Panetta had assured his Pakistani counterpart that it would declare all its operatives and contractors in Pakistan. U.S. officials said the two men had spoken, but did not confirm that.

“I have a feeling that the relationship between the ISI and the CIA has been redefined as a result of this incident,” said former army general and military analyst Gen. Talat Masood. “The ISI must have insisted that the CIA stop operations in Pakistan without their knowledge and extend their tentacles to a point where it is embarrassing and impinges on the country’s sovereignty.”

Few facts were ever released about what Davis was doing in Lahore, as well as the identities of his victims. Some reports said they were robbers; others that they were known to him, or possibly even ISI operatives themselves.

The obfuscation continued when news of the deal to free him broke.

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