ROB CRILLY Its difficult to know which country is in more of a tizz, Pakistan or the US, following the arrest of an American diplomat for shooting dead two Pakistanis in Lahore last week. It is desperately embarrassing for both and could not come at a worse time - just as the US needs all the help in get from Islamabad if it wants to start bringing home its troops from Afghanistan later this year. But now the diplomatic spat caused by Raymond Davis threatens to further undermine an already awkward alliance. As usual in Pakistan, much of the detail is murky, shrouded in layers of intrigue and conspiracy theory. But heres what we know... Davis was arrested last Thursday. He was driving a Honda Civic alone through Lahore when two men pulled alongside him on a motorbike at traffic lights. According to the US embassy in Islamabad, he saw that one of them had a gun. Apparently fearing that he was about to be robbed, he opened fire, killing both. When US officials arrived to rescue him from a growing mob, they ran over a bystander, resulting in a third death. (I think we can assume that the driver of the second vehicle is no longer in Pakistan.) Davis remains in custody, while Pakistan is refusing requests to release him on the ground of diplomatic immunity. This is desperately bad news for the leadership of both countries. This week President Asif Ali Zardari said it was a matter for the courts. However, he knows his regime is propped up by American financial aid and his military risks being overrun by the militant threat with US backing. Snubbing Washington in this way is a disaster. But Zardari is a weak man and an even weaker leader. He dare not alienate the religious right and the rabid talkshow hosts who would seize on the release of Davis as an example of how Pakistan is run by Western puppet masters. And for America, the case risks revealing many awkward truths. Who exactly is Raymond Davis, described by the US as a member of technical and administrative staff? What sort of diplomat carries a weapon? What was he doing driving alone through Lahore? Was he actually working for a private military contractor, Hyperion? Was he meeting an informer? Such is the panic, that last week the State Department spokesman denied his name was even Raymond Davis. Then this week, a spokeswoman for the embassy in Islamabad said Crowley had not denied the name was Raymond Davis. The result is a diplomatic mess that goes beyond mere embarrassment. It could even threaten this years Afghan strategy. If it is to consolidate early gains from the military surge, the Pentagon needs Pakistan to move against suspected militant havens on its side of the border. It needs Pakistan to provide an anvil to American troops hammer in Afghanistan. But being seen to do the bidding of Washington is always awkward for Pakistans political leaders, which have to operate against a backdrop of widespread hostility towards the West and the constant threat of Taliban terrorist attacks. Releasing Davis on the grounds of diplomatic immunity risks unleashing Pakistans darkest forces, further undermining one of the worlds most important alliances. But in Pakistan the truth will remain hidden, leaving the conspiracy theorists to fill in the blanks. Telegraph, UK