One of the biggest crises between Pakistan and the United States has been defused after a Lahore court released Raymond Davis, a CIA contractor facing charges of double murder, after a blood money settlement was paid to families of the victims.
While the release of Davis cools tensions between Washington and Islamabad, after plunging relations to a low point, it is likely to inflame an already enraged Pakistani public. Islamist parties took to the streets in protest last night.
Each of the two men's families were paid US$700,000 ($969,000) by the CIA, senior Pakistani officials said. Under Pakistan's laws, a sharia-based provision allows the families of murder victims to forgive the accused in exchange for monetary compensation. The "blood money" laws have been invoked in a majority of murder cases in Pakistan.
The arrangement was the result of lengthy direct negotiations between the Pakistani Inter-Services Intelligence (ISI) and the CIA last month.
Davis was a CIA contractor working in Pakistan without the ISI's authorisation, spying on the banned Pakistani militant outfit Lashkar-e-Taiba, an anti-Indian group that is held responsible for the November 2008 Mumbai attacks.
The blood money formula was first devised by Husain Haqqani, Pakistan's ambassador to the US.
He discussed the proposal with US Senator John Kerry, who took it with him for discussions with Pakistani leaders. By circumventing the issue of diplomatic immunity, the blood money formula helped the Pakistani government save face, said Pakistani officials.
Washington had always said Davis enjoyed immunity from prosecution under the Vienna Convention. The Lahore court disputed this, ruling last week that he had no immunity.
The victims of the families were persuaded to accept the compensation by the ISI, said a senior Pakistani official. By getting them to do so, the Pakistan Government was able to see through its insistence that Pakistani courts be used to settle the matter.
Amid the negotiations, the ISI was also able to secure an unprecedented two-year extension for its chief, Lieutenant-General Ahmed Shuja Pasha. The message to the civilian government, which had already given army chief General Ashfaq Kiyani a three-year extension, was that it would not be prudent to switch spy chiefs during such a crisis. Pasha had been due to retire in two days.
It is unclear whether the ISI was able to secure its demand that the CIA withdraw all contractors from Pakistan. The contractors are a part of the CIA's vast covert war inside Pakistan. Pakistan has quietly allowed the CIA to routinely fire drone missiles targeting militants in the tribal areas along the Afghan border.
But the two agencies clashed over the use of contractors who were spying on militant outfits known to have ties with the ISI.