Pakistan Tried to Trade CIA Contractor for 'Lady al Qaeda'

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Since the impasse began in the days after the January 27th shooting in Lahore, that ultimately led to the deaths of three Pakistani citizens, both sides have alternated between hard and soft approaches to end the diplomatic stand off.

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U.S. and Pakistani officials told ABC News that early on, the White House threatened to close the three U.S. consulates and expel the Pakistani ambassador to the U.S. if Davis wasn't released. Pakistan's ambassador, Husain Haqqani, has denied that the White House made those threats.

The Associated Press reported last week that the Pakistani intelligence agency, the Inter-Services Intelligence, or ISI, has stopped speaking with the CIA over the Davis case and its perception that the Americans have been heavy-handed in their efforts to get Davis released. Citing a senior ISI official, the report described the relationship between the ISI and CIA as at the lowest point since 9/11. The U.S.-Pakistani relationship is considered crucial to ending the war in Afghanistan.

Pakistani Officials: It's a 'Matter of Time' Before Davis Is Released

On Friday, Davis refused to sign a charge sheet during a pre-trial hearing, telling the court he has been advised that he has diplomatic immunity.

But there is still hope for a resolution despite the apparent impasse. Pakistani officials in both Lahore and Islamabad have told ABC News that Davis' release is a "matter of time," and that the Pakistani government is waiting for the public furor over the case to wane before releasing the American.

One Pakistani official said that one likely outcome would be that the U.S. government would pay reparations to the victims' families, who under Pakistan law can pardon Davis if asked.

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