WASHINGTON — Pakistan abruptly freed the CIA contractor who shot and killed two men in a gunfight in Lahore after a deal was sealed Wednesday to pay $2.34 million in "blood money" to the men's families. The agreement, nearly seven weeks after the shootings, ended a tense showdown with a vital U.S. ally that had threatened to disrupt battling terrorism.
In what appeared to be a carefully choreographed conclusion to the diplomatic crisis, a U.S. official said Pakistan had paid the families whose pardoning of Raymond Davis set the stage for his release. That arrangement allowed Secretary of State Hillary Rodham Clinton to assert in a news conference the U.S. didn't pay compensation.
But the American government "expects to receive a bill at some point," said the official, who spoke only on condition of anonymity because the situation was so sensitive. The payments to families in Pakistan are roughly 400 times as high as the U.S. has paid to families of many civilians wrongfully killed by U.S. soldiers in the wars in Iraq and Afghanistan.
Under negotiations to free Davis, the U.S. Embassy in Lahore said the Justice Department had opened an investigation into the Jan. 27 shootings. In a statement, the embassy thanked the families for their generosity in pardoning Davis but did not mention any money changing hands.
The deal to secure Davis' release had been in the works for some time, with the most intense negotiations over the past three weeks, another U.S. official told The Associated Press.
The arrangement deliberately bypassed the question of whether Davis was immune from prosecution because of diplomatic status, the official said. That had been a central legal issue in the case, but by negotiating Davis' release under Islamic sharia law the issue could be resolved outside the jurisdiction of the police and court system that arrested and held him on suspicion of murder.
Davis, 36, left the country immediately for Kabul in neighboring Afghanistan, where he was expected to be debriefed extensively about his time in custody, Pakistani and American officials said.
In the U.S., an elated Rebecca Davis learned of her husband's release in an early morning phone call. She never blinked, she said, always believing her husband would be set free.
"I knew. I just didn't know how long," she said, speaking outside her home near Denver. "I just knew in my gut that he'd be home."
The killings and then the detention of Davis triggered a fresh wave of anti-American sentiment in Pakistan and tested the sometimes shaky alliance that is seen as key to defeating al-Qaida and ending the war in Afghanistan.
Antagonism has been especially sharp between the CIA and Pakistan's powerful Inter Services Intelligence, its spy service, which says it did not know Davis was operating in the country. One ISI official, also speaking on condition of anonymity, said the deal was reached as way of soothing tensions.
After nightfall Wednesday, small groups of protesters took to the streets in major cities, briefly clashing with police outside the U.S. consulate in Lahore, where officers fired tear gas at men burning tires and hurling rocks. There were calls for larger protests Friday after noon prayers.
Fearing a backlash, U.S. officials planned to close consulates in Pakistan on Thursday.
In the U.S., the deal for the release drew some criticism. Rep. Dana Rohrabacher, R-Calif., complained that Pakistan already receives billions of dollars in U.S. aid. During a congressional hearing, he said the U.S. should look at whether foreign aid recipients "are treating us like suckers."
Davis said he had acted in self-defense when he killed the two men on the street in the eastern city of Lahore. The U.S. government initially described him as either a U.S. consular or embassy official, but officials later acknowledged he was working for the CIA, confirming suspicions that had aired in the Pakistani media. He was working as a security contractor in Lahore, protecting other CIA employees as they gathered intelligence, officials say.
The State Department had insisted Davis was covered by diplomatic immunity. But Pakistan's weak government, facing intense pressure from Islamist parties, sections of the media and the general public, did not say whether it agreed this was the case.
Given the high stakes for both nations, few imagined either side would allow it to derail the relationship. The main question was how long it would take to reach a deal.
Punjab Law Minister Rana Sanaullah said Davis was actually charged with murder Wednesday in a court that was convened in a prison in Lahore, but was immediately pardoned by the families of the victims after the payment.
Reporters were not allowed to witness the proceedings.
"This all happened in court and everything was according to law," he said. "The court has acquitted Raymond Davis. Now he can go anywhere."
Raja Muhammad Irshad, a lawyer for the families, said 19 male and female relatives appeared in court to accept the $2.34 million. He said each told the court "they were ready to accept the blood money deal without pressure and would have no objection if the court acquitted Raymond Davis." The practice, which comes from Islamic law, is common and legal in Pakistan, though criticized by human rights groups.
Separately, one Pakistani official said the sum was just under twice that total, while other news organizations cited anonymous sources to report the amount was between $700,000 and $1.4 million.
Clinton, in Cairo, denied the U.S. had made any payments, but she didn't dispute that the men's families were compensated. Representatives of the families had previously said they would refuse any money.
Asad Mansoor Butt, who had earlier represented the families, accused Pakistan's government of pressuring his former clients; he gave no details.
CIA Director Leon Panetta and ISI chief Gen. Shuja Pasha talked in mid-February in an effort to smooth out the friction between the two spy agencies, according to Pakistan and U.S. officials Pasha demanded the U.S. identify "all the Ray Davises working in Pakistan, behind our backs," the Pakistani official said.
The same official said Panetta agreed "in principle" to declare such employees but would not confirm whether the agency had done so. A second official in Pakistan said as a result of that conversation the ISI — which along with the army is a major power center in the country — then backed an effort to help negotiate payments to the families.
A U.S. official denied there had been any quid pro quo between the two spy agencies in Pakistan over CIA employees, and said the agency had continued to work with the ISI during the crisis. Since Davis was arrested, the CIA has launched drone strikes in the lawless tribal areas of Pakistan.
CIA spokesman George Little said the two agencies have had a strong relationship.
"When issues arise, it is our standing practice to work through them," he said. "That's the sign of a healthy partnership, one that is vital to both countries, especially as we face a common set of terrorist enemies."
Former agency officers had watched the case closely.
"I think that the everybody was pinned into a corner, and this is a way of working their way out," said Robert Grenier, a former CIA station chief in Islamabad and director of the agency's Counterterrorism Center. "Both sides had a compelling interest in finding some way to get beyond this."
Grenier said the amount paid didn't raise any concern in his mind.
"I would be less concerned about this setting a precedent," he said, "because the details of this case are so extraordinary."
Associated Press writers Kimberly Dozier in Kabul, Munir Ahmed, Zarar Khan and Chris Brummitt in Islamabad and Dan Elliott in Colorado contributed to this report.