By Kiyoshi Takenaka and Mubasher Bokhari
LAHORE/TOKYO (Reuters) - Pakistan insisted on Tuesday that the courts would decide the fate of an American detained on murder charges, even after it was revealed he was a CIA contractor whom Washington says enjoys diplomatic immunity.
The case of 36-year-old Raymond Davis, a former U.S. special forces officer, has strained the already-uneasy alliance between the United States and Pakistan, who are supposed to be united in the face of Islamist militants waging a war in Afghanistan.
Davis' killing of two Pakistani men in the eastern city of Lahore last month has inflamed anti-U.S. sentiment in Pakistan, effectively giving the government little choice but to prosecute him in court. His trial for murder beings on Friday, February 25.
The United States, however, says Davis has diplomatic immunity and should be released immediately. Davis says he acted in self defense against what he said were armed robbers, and is currently being held in a Lahore jail where, despite tight security, some U.S. officials fear for his life.
"The President has already stated that the matter is in the court and we will wait for the court decision in this case," Farhatullah Babar, a spokesman for President Asif Ali Zardari told Reuters during an official visit to Japan.
"Regardless of whether he now turns out to be a CIA employee, the matter will be decided by the court."
U.S. sources in Washington closely following the case said on Monday Davis was a "protective officer" employed as a CIA contractor.
Davis' duties were essentially as a bodyguard, to provide physical security to U.S. Embassy and consular officers and visiting American dignitaries, U.S. officials who declined to be identified told Reuters.
Officials strongly denied news reports alleging Davis was part of a covert CIA-led team of operatives conducting surveillance on militant groups.
U.S. officials have complained for days that security conditions under which Davis has been held have put his life in grave danger. Pakistan said on Monday it was taking steps to keep Davis safe.
Two U.S. sources familiar with the matter confirmed to Reuters that Davis, worked previously on contract as a security officer for Xe Services, a controversial private contractor formerly known as Blackwater.
Asked during a conference call with reporters about a link between Davis and the CIA, State Department spokesman P.J. Crowley said: "We will not comment on his particular activity in Pakistan other than to say he is a member of the administrative and technical staff of the embassy and has diplomatic immunity."
"From that point ... he enjoyed privileges and immunities against local criminal law, including inviolability of person, inviolability from arrest and detention, and immunity from criminal jurisdiction," another senior U.S. official said.
The official said the United States was trying to work out a diplomatic solution to the disagreement but noted it could take the matter to the International Court of Justice.
Crowley said the United States was not considering curtailing economic or military assistance to Pakistan to show its displeasure over Davis' treatment.
CONCERNS OVER SECURITY
While some Pakistani officials have signaled they would like to back Davis's immunity, the government so far has said local courts must decide. Last week, the Lahore court delayed a hearing on whether Davis had immunity until March 14, prolonging the diplomatic standoff and stoking concerns for his safety.
Prison sources in Lahore said surveillance cameras were monitoring the area where Davis has been locked in a cell isolated from other prisoners.
Thirty-six unarmed guards, who Pakistani officials say have been specially screened, are standing watch in shifts of eight.
Outside the Kot Lakhpat jail in Lahore, where protesters have demanded Davis be publicly hanged, some 75 police officers, a team of provincial rangers and vehicles packed with elite forces were deployed.
Abdul Samad, a deputy prosecutor-general in Lahore, told Reuters the first hearing in Davis' murder trial would be held inside the jail for "security reasons."
The United States holds Pakistan's government fully responsible for Davis' safety, spokesman Crowley said.
There is some reason for worry in Pakistan, where rogue security forces have at times turned on government officials.
Last month, Punjab Governor Salman Taseer was shot to death by one of his own guards. His killer became a hero for Islamist groups that opposed the governor's moderate political views.
A U.S. source familiar with other official reporting from Pakistan said that according to Davis' account of the shooting incident, two men on a motorbike cornered him and pulled a gun on him as he was driving on a street in Lahore.
The source said Davis, believing his life was in danger, drew his weapon and shot the men through the window of his car. At some point, the source said, Davis got out of his car and used his mobile phone to take pictures of the assailants.
He took the pictures to corroborate his story about what had happened, the source said.
U.S. sources denied reports and rumors in Pakistan suggesting Davis' assailants had some connection with Pakistan's principal intelligence agency, the Inter Service Intelligence directorate, known as ISI.
With cooperation from ISI elements, the U.S. government, including the CIA, has for the past several years been attacking militants in Pakistani tribal areas using missiles fired from remotely piloted drone aircraft.
Relations between ISI and its U.S. counterparts have deteriorated since an incident last year in which the name of the CIA's undercover station chief in Pakistan was leaked to local media, resulting in the official having to make a hasty exit from the country.
(Additional reporting by Augustine Anthony and Zeeshan Haider in Islamabad and Arshad Mohammed in Washington; Writing by Missy Ryan and Frances Kerry; Editing by Chris Allbritton and Miral Fahmy)