U.S. Murder Case Threatens Pakistan Ties

This story was filed by CBS News' Farhan Bokhari in Islamabad.

A provincial high court in Pakistan passed an order Tuesday blocking Raymond Davis, a U.S. national arrested in Lahore in the murder of two Pakistani men, from leaving the country.

He was arrested after killing the two men, who he says were trying to attack him. The U.S. government insists Davis has diplomatic immunity and therefore must be allowed to leave the country, while Pakistani officials say he's probably a security expert who works for a private contractor, making him ineligible for diplomatic protection.

Western diplomats based in Pakistan warn the Davis case could further complicate relations between the U.S. and its key ally in the fight against Islamic militancy, Pakistan.

After the ruling from the Lahore high court, a senior western diplomat based in Islamabad told CBS News on condition of anonymity the, "episode will only cause divisions between the U.S. and Pakistan at a critical time when these two countries need to work together."

Davis' case has been widely publicized on streets of Pakistan, where anti-U.S. sentiment runs high. While many in the country -- particularly the impoverished masses -- consider the U.S. to be working against their interests by supporting successive rulers tainted by corruption, the country's ruling elite have repeatedly sought to work with Washington.

Initial reports on the shooting saw American officials class the suspect, who has yet to be officially identified by the U.S. government, as a member of staff at the U.S. consulate in Lahore. A couple days later, they identified him as a "diplomat" and insisted he should have the associated legal protections.

The Pakistanis' seeming inability to identify the man or his assignment, and the American government's relative silence on the matter, has only fueled speculation that he could be a security contractor, or even a CIA agent. It is highly unusual for American diplomats to travel alone in Pakistan, and would be even more unusual for them to do so armed.

Officials who witnessed the incident have told CBS News the American suspect was travelling alone in a Toyota Corolla, and opened fire with a handgun after realizing he was being pursued by the two men. Police told CBS on the day of the shooting that the men who were killed also had handguns in their possession.

On Friday (January 28), a day after Davis was arrested in Lahore, a group of demonstrators took to the streets of Pakistan's capital city, demanding his prosecution.

"What was a diplomat doing with a gun on our streets?" asked Sabir Khan, a college student, standing with other protesters in Islamabad's central Aabpara neighborhood.

"Raymond Davis must be brought to justice in Pakistan. Let him prove his innocence in a Pakistani court," said Khan.