CIA contractor freed after families 'blood money' deal

The deal, reached just hours after the contractor had been indicted, ends a long-simmering diplomatic stand-off between Pakistan and the United States. The money appears to have been paid by the Pakistani government itself.

"The court first indicted him, but the families later told the court that they have accepted the blood money and they have pardoned him," said Punjab law minister Rana Sanaullah. He added that the court then acquitted the American.

Raymond Davis, 36, shot dead two Pakistanis in Lahore on 27 January, claiming he acted in self-defence during an armed robbery. The US said that, as he had diplomatic immunity, he should have been immediately repatriated.

"The families of the victims of the 27 January incident in Lahore have pardoned Raymond Davis. I am grateful for their generosity. I wish to express, once again, my regret for the incident," said the US ambassador, Cameron Munter. A US official said Mr Davis was flown out of Pakistan last night and there had been "no quid pro quo".

The case became a major test of ties between the US and Pakistan, a vital ally in the American-led campaign against the Taleban in Afghanistan.

After Mr Davis's acquittal, the case could become even more contentious in Pakistan. The country's powerful religious parties had tried to block such a deal, calling for the American to be hanged, and the families' lawyer suggested they had been forced to sign the papers.

"We were put in detention for four hours and not allowed to meet our clients, who were called by authorities to the court," said lawyer Asad Manzoor Butt.

Religious parties condemned the release. Amir-ul-Azeem, a senior leader of the hardline Islamic party Jamaat-e-Islami, denounced the acquittal and repeated the claim that the victims' lawyers were detained, and the families were forced to sign a deal pardoning Mr Davis. "We will protest against this. This is shameful," he said.

Analysts said there was a risk of a backlash against the government. Talat Masood, a defence analyst and retired general, said some groups could use the case to their advantage. "Some elements will take advantage of it (such as] opposition parties, even if it's only for rhetoric to gain points. With the religious parties and militant groups, they might use it to expand their reach."

There had been speculation that a deal was in the works between America and the families of the dead men, including a third killed when a US consulate vehicle struck him while en route to extract Mr Davis from the scene.Such payments are sanctioned by Islamic law and are common in parts of rural Pakistan as a way to settle disputes.

The identity of the victims has been questioned from the outset, with some media reports saying the men worked for Pakistan's Inter-Services Intelligence (ISI) agency, and that they might have been known to Mr Davis.

Other reports have suggested they attempted to rob Mr Davis, tailing him on motorbikes along a congested city road.

The case also strained ties between the CIA and the ISI, which said it was unaware that Mr Davis was working in Pakistan.

Mr Masood said that Pakistan's military, its intelligence agencies and the government would have had to act in rare unison to reach a settlement in the case, because of concerns about a possible public backlash from a population that overwhelmingly disapproves of Pakistan's relationship with the United States.

"This obviously places the government in a very tight corner, although in a way it has taken a bold step," he said.