Other than the CIA drone strikes, the U.S. denies any of the accusations are true, and public affairs officials in Islamabad have recently launched a new campaign trying to combat false rumors that appear in the Pakistani press.
But the Blackwater allegation is repeated not only in working class sections of Peshawar, but in elite drawing rooms as well. And it helps deflate enthusiasm for a military operation against the Taliban in South Waziristan, from where Pakistani officials say more than 80 percent of the country's attacks are hatched.
In a recent Gallup poll, 39 percent of Pakistanis said the war in South Waziristan was only America's war. And 35 percent of the country blamed the United States as being more responsible for the current crisis, while a smaller percentage blamed the Pakistani government and in third place was the Taliban.
Pakistani military officials say they can only successfully defeat the Taliban if they have public support. And they acknowledge that the U.S. unpopularity in Pakistan risks the shaky backing the military currently enjoys for its second major anti-Taliban operation of the year.
"What we desire and what we have planned [is for this] to be seen as a pure Pakistani military operation without any outside interference or without any outside support. Because that is at the cost of public support," said Maj. Gen. Athar Abbas, the Pakistani military's chief spokesman. "The moment it gets connected with something outside, then the public starts getting other ideas."
The attack at Mina Bazaar was perhaps the single largest attempt to pierce support for the war. Pakistani officials argue the Taliban are incapable of taking on the military directly, and so they resort to guerilla tactics aimed at soft targets with little security.
Peshawar has particularly suffered since the operation began. Some 300 people have been killed in more than a half dozen attacks on markets, mosques, intersections and restaurants.
"The Taliban are trying to break our backs, and force the government to stop the operation," says Malik Naveed Khan, the police chief for Pakistans Northwest Frontier Province. "It is a bitter pill, but the will of the people will not be reduced."
The pill becomes more difficult to swallow when residents are convinced it's not only the Taliban who are behind the attacks, despite the fact that, according to local residents, the Taliban threatened the market in the days before the attack if shop owners did not stop women from shopping there.
Gul Jan walked through the market after the attack and says he saw bodies cut in half.
"We haven't seen anything like this in 100 years," he says. "This cannot happen without a foreign conspiracy."
The anti-American theories also threaten to derail the cornerstone of the Obama administrations "soft power" approach to Pakistan. U.S. officials say as they push the Pakistani military to take action against the Taliban and al Qaeda allies along the Afghan border, they want to also infuse the area with development money.
"The partnership between our countries is not limited to the halls of government," Clinton said in Islamabad on the day of the bombing. "In democracies, there has to be a partnership between the people and that is what I'm aiming to foster."