American held in Lahore is CIA contractor - sources

WASHINGTON/LAHORE (Reuters) - An American held on murder charges in Pakistan after a shooting worked as a CIA contractor but was not involved in covert operations, U.S. sources closely following the case said on Monday.

The confirmation of a link with the CIA -- which had been reported in recent days in Pakistani media -- was likely to further strain Washington's ties with Islamabad over the case.

The shooting of two Pakistanis last month in the eastern city of Lahore has inflamed anti-American feeling in Pakistan and highlighted the countries' uneasy alliance against Islamist militants who attack U.S. troops in neighbouring Afghanistan.

Raymond Davis, a former American special forces soldier, is a "protective officer" employed as a CIA contractor, the U.S. sources said.

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.

Confirmation of a connection between Davis and the CIA came as President Barack Obama's administration reiterated its call for Pakistan to recognise what Washington says is Davis' diplomatic immunity and to free him immediately. Davis has said the shooting occurred during a robbery attempt.

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."

A second U.S. official said on the call the U.S. Embassy in Islamabad notified the Pakistani government on January 20, 2010, that Davis was "a member of the administrative and technical staff under the Vienna convention on diplomatic relations."

"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," the 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.

While some Pakistani officials have signalled they would like to back Davis's immunity, the government so far has said local courts must decide.

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

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.

"We have taken maximum security measures to ensure his protection," said Rana Sanaullah, law minister for Punjab province, where Lahore is located, said.

"They have told us that he is in the safest possible location in Lahore and clearly we hold the government of Pakistan fully responsible of his safety," Crowley said.

Last week, the Lahore high court delayed a hearing on whether Davis had immunity until March 14, prolonging the diplomatic standoff and stoking concerns for his safety.

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.

Some analysts believe elements of Pakistan's security establishment remain linked to Islamist militants in the tribal areas bordering Afghanistan and Pakistan, the very groups the United States is seeking to defeat across the Khyber Pass.

SHOOTING INCIDENT

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 protect himself and corroborate his story about what had happened, the source said.

U.S. sources denied reports and rumours 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 Frances Kerry; Editing by Peter Cooney)