UPDATE, MARCH 16: At a hearing of the Lahore Sessions Court convened for security reasons at the Kot Lakhpat Jail today, CIA contractor Raymond A. Davis was arraigned on double homicide charges and then quickly acquitted and released. Attorneys for Davis and the victims' families announced that they had entered into an agreement in which Davis offered compensation to the families -- $1.4 million total -- and they forgave him. Davis was then released into the custody of U.S. consular officials, who accompanied him at the hearing. According to the U.S. Consulate General in Lahore, he is leaving for London on a special flight later in the day. 

Punjab's law minister, Rana Sanaullah, denied that his government had played any role in brokering the arrangement. Lawyers associated with the matter suggested that the provincial government had orchestrated the settlement, some arguing to the Pakistani press that the families had been pressured by the government to accept the offer. In any event, the Pakistani government's eagerness to be done with the case was signaled by another factor: Notwithstanding the dismissal of the homicide charges as a result of the reconciliation with the victims' families, Davis could still have been prosecuted on a charge of unlawful possession of a firearm, a charge which was entirely in the control of the government. And that charge was dropped to allow Davis to go free.

According to U.S. ambassador Cameron Munter, Davis's troubles have not ended: The U.S. Justice Department has opened a criminal investigation into the events of Jan. 27, though whether U.S. courts have jurisdiction over CIA contractors such as Davis operating in the field is unclear. 

It's also unknown what accommodations have been reached between the CIA and the Pakistani Directorate for Inter-Services Intelligence (ISI) over on-going intelligence operations in Pakistan, which, as FP reported in this story last week, were the crucial backdrop to the Davis case. However, late last week an important Pakistani general stated that the drone campaign had led to important successes in the Waziristan region. This statement was widely taken as a signal that the talks between the CIA and ISI were moving in a positive direction.

If you wanted to identify the low point of U.S.-Pakistan relations, a good place to start would be Jan. 27 of this year. In heavy midday traffic, an American named Raymond A. Davis stopped his white Honda Civic at a light in Lahore's Qurtaba Chowk neighborhood, drew a Glock pistol, and fired 10 rounds at two young Pakistani men, Faizan Haider and Faheem Shamshad, killing both of them. Davis then attempted to flee the scene but was apprehended by regional police when a car in the road ahead of him stalled.

Those facts are the sum total of what U.S. and Pakistani officials have been able to agree on in the six weeks since the incident occurred and Davis, a muscular young former Special Forces officer who, it has since emerged, was working as a CIA contractor, became the center of a diplomatic crisis. The other details have been spun so aggressively by so many different parties that you could assemble a subcontinental Rashomon out of them.

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On March 8, the Lahore Session Court held a hearing inside the Kot Lakhpat Jail, where Davis is being held, and presented the American with documents charging him with two counts of homicide. (Davis, accompanied by a U.S. consul and a team of American and Pakistani lawyers, declined to sign the charging documents and has yet to enter a plea. The formal arraignment is slated for March 16.)

But in truth, what the court decides in public about Davis's fate is far less important than what the Pakistani government decides behind closed doors about one question: Is Davis's claim of diplomatic immunity valid? And that, in turn, depends on a high-stakes, cat-and-mouse game between the Pakistani and U.S. intelligence communities. Dealings between the CIA and its Pakistani counterpart, the Directorate for Inter-Services Intelligence (ISI), have grown increasingly confrontational since Davis's arrest. Davis's fate now depends on whether the two ostensibly allied but mutually distrustful agencies can establish a new modus vivendi -- and suppress a long-smoldering quarrel that has turned lethal.

When news of Davis's arrest first came to light, the U.S. media gave lead play to the American's own account of the events. In this telling, a clean-cut former soldier, coming from the U.S. Consulate where he worked, had stopped to withdraw cash from an ATM. At a traffic stop a few minutes later he was accosted by two young men on a motorcycle who threatened to rob him, one brandishing a firearm. Davis says he shot them through the windshield of his Civic in an act of self-defense and then, still fearing for his safety, departed the scene.

Pakistani media accounts, conversely, have focused on the myriad details of Davis's story that cannot be reconciled either with the observations of witnesses on the scene or the reports of police investigators. They dwell on the report that each victim bore three bullet wounds, all of which entered from the back -- meaning that neither victim could have been facing Davis or brandishing a firearm when he was shot. They have also fixated in detail on the formidable array of hardware Davis had in his car at the time of his arrest: a Glock 9mm handgun, a Beretta, sophisticated GPS equipment, an infrared light, a telescope, cell phones, a satellite phone, bullets (which, Pakistani police later stated were of a special armor-piercing variety outlawed in many countries), M-16 shells, military knives, and a camera with photographs of madrasas and other sites around Lahore. There were other eyebrow-raising details, too: Davis was reportedly carrying a number of ATM and military ID cards and several IDs identifying him with U.S. consulates, using different names, plus theatrical makeup commonly used for disguises.

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