Raymond Davis case: Three possible outcomes

An analysis of possible outcomes from the Raymond Davis case, that is testing Pak-US ties.

The arrest of Raymond Davis, an American man for killing two Pakistanis, has created the worst crisis in years between uneasy allies in Washington and Islamabad, threatening the war in Afghanistan and the stability of the Pakistani government.

US officials are putting heavy pressure on Pakistan to secure the release of Davis, a former special forces soldier who they say is a US consular employee with diplomatic immunity.

President Asif Ali Zardari's government is reluctant to add fuel to a fiery anti-American mood in Pakistan and has said local courts must decide.

"The stakes here are huge. Pakistan is key to the war with al Qaeda and the war in Afghanistan," said Bruce Riedel, a former senior CIA analyst who led President Barack Obama's review of US policy in Afghanistan and Pakistan in 2009.

Here are several scenarios for how the Davis case could unfold and effect US-Pakistan ties:

Davis freed but at what price for Pakistan?

Analysts in the United States see little chance that Davis will be convicted and kept in Pakistani custody, saying a solution eventually will be found. Islamabad has good reason to want the problem to go away.

Pakistan is a major recipient of US military aid and the US has also provided it with aid to help recover from natural disasters and to battle widespread poverty.

Analysts therefore say that the Zardari government may lean hard on the Foreign Ministry to certify that Davis does have diplomatic immunity from prosecution in local courts.

The Lahore High Court, which has said it will follow the Foreign Ministry's guidance, could then declare that Davis can be released, ending a threat to multibillion-dollar US aid. But the government could pay a heavy price if it is seen caving in to US pressure over the Davis case.

"If this happens then there will be a storm, everybody will be involved ... but the most effective response will come from the Taliban and al Qaeda," said Pakistani political analyst Khalid Ahmed. "This is a very good opportunity for them to increase their acceptance among the people."

On Friday, protesters in Lahore and other cities demanded Davis be tried in Pakistan. Some of the demonstrators burned US flags. One US official said the Pakistani government's reaction had been coloured by the anti-government protests sweeping the Middle East and the fear that they could spread to Pakistan.

"None of this happens in a vacuum," the official said. "Obviously, with every image from Libya, Bahrain, Tunisia, Egypt, this factors into the Pakistani calculus."

Davis remains in jail, US ties suffer

The issue already has driven a wedge between Islamabad and Washington, adding to long-standing US complaints that Pakistan has not acted strongly enough against militants that are killing US soldiers across the border in Afghanistan. US government sources say the case has clouded the critical relationship between the countries' security agencies, possibly making it even harder for the United States to succeed in Afghanistan, where bloodshed reached record levels in 2010.

One senior US administration official said if a solution is not found quickly, the US Congress could cut foreign aid. The White House on Monday asked Congress to give Islamabad $1.1 billion through the Pakistan Counterinsurgency Fund to help fight militants and another $1.9 billion in economic aid. The money is for the fiscal 2012 year that begins Oct 1.

"The longer this goes on, the higher the potential cost in the relationship," the official said. "Sooner or later, if they can't resolve it, Congress is going to start sending some signals."

Shuja Nawaz, director of the South Asia Center at the Atlantic Council, a Washington think tank, said Pakistan may again start to curtail issuing visas to US diplomatic personnel, which has been a major irritant in the past.

Pakistan government brokers a deal

There is mounting speculation the United States might back payment of compensation, or blood money, as laid out under Pakistani law, even if it is loathe to support such a payment in what it sees as a case of self-defense.

Under this scenario, Pakistan would facilitate US contact with the families of the two slain men - and, presumably, a third who was struck and killed by a US vehicle about the same time - to offer a deal.

"The best, perhaps the only, option for the government is to pacify the relatives of those killed to come to some compromise," said Talat Masood, a retired Pakistani general. "It's the only option everyone seems to be working on."

This would require the families' acceptance of such a payment, sanctioned by Islamic law and common in some parts of rural Pakistan as a way to settle disputes. But emotions are running high in the Davis case, possibly fuelled by heavy media attention.