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The drone strike was carried out in the town of Mir Ali in October 2010 against militants present in the area and killed Buenyamin E. as a result.
The federal prosecutors initiated an investigation last year to ascertain whether the death constituted a war crime under international law.
The prosecutors said on Monday that they are dropping the investigation since they don't consider the German as a civilian covered by international humanitarian law.
The Pakistani government has openly maintained an anti-drone stance, claiming that they are illegal and counterproductive.
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