Raymond Davis
© AFP
CNN notes:
News that the American accused of killing two Pakistani men is a CIA contractor has intensified an already highly charged situation in Pakistan.

"Raymond Davis is a CIA Guy," read the headline in the Daily Times newspaper Tuesday.

Davis was jailed January 27 after fatally shooting two men who pulled up to him on a motorcycle in a bustling Lahore neighborhood.

The 36-year-old Davis is a former member of the U.S. Army special forces and had been employed by security firm XE Services, previously known as Blackwater.

Davis began working for the CIA nearly four years ago. He was assigned to Pakistan in late 2009. He was living with other security personnel at a safehouse in Lahore before the shooting incident.

On Monday, a U.S. government official also said that Davis was a CIA contractor providing security for CIA officers.
The U.S. at first falsely claimed that Davis was a diplomat with the State Department and should therefore be granted diplomatic immunity:
Despite the revelation of Davis' true line of work, U.S. officials on Monday renewed their argument that he has diplomatic immunity and must be released.

Before Monday, U.S. officials had described Davis only as an employee who was attached to the U.S. Embassy in Islamabad and who was working at the U.S. Consulate in Lahore at the time of the shootings.
But the deeper story is that Davis allegedly actively aided and abetted terrorism. As CNN notes:
Some newspapers cited unnamed sources to link Davis with "terrorist activity" and the Pakistani Taliban.

"CIA agent Davis had ties with local militants," read the headline in The Express Tribune.

The Tribune quoted an unnamed "senior police official" as saying Davis was suspected in masterminding terrorist activity.

"His close ties with the TTP (The Pakistani Taliban) were revealed during the investigations," the paper quoted the police official as saying. "Davis was instrumental in recruiting young people from Punjab for the Taliban to fuel the insurgency."
The Star explains:
In a story published Tuesday, the English-language Express Tribune quoted a Punjabi police official who said Davis was actually working with the Pakistani Taliban in a bid to stoke insecurity in Pakistan and support the argument that its cache of nuclear weapons isn't safe.

Call records of Davis's cellphone allegedly establish his link to 27 Taliban militants and a sectarian group known as Lashkar-e-Jhangvi, the police source said.
Reuters points out that two other CIA contractors were involved in a fatal car accident last month while trying to help Davis, and have now quickly departed from Pakistan, and notes:
Two U.S. officials confirmed media reports the two men involved in the fatal accident were working and living in the same building in Lahore as Davis. They said all three men were working on similar security assignments for the CIA.
Most dramatically, South Asian news agency ANI reports that - according to Russia's Foreign Intelligence Service - Davis was giving nuclear and biowarfare materials to Al-Qaeda:
Double murder-accused US official Raymond Davis has been found in possession of top-secret CIA documents, which point to him or the feared American Task Force 373 (TF373) operating in the region, providing Al-Qaeda terrorists with "nuclear fissile material" and "biological agents," according to a report.

Russia's Foreign Intelligence Service (SVR) is warning that the situation on the sub-continent has turned "grave" as it appears that open warfare is about to break out between Pakistan and the United States, The European Union Times reports.

The SVR warned in its report that the apprehension of 36-year-old Davis, who shot dead two Pakistani men in Lahore last month, had fuelled this crisis.

According to the report, the combat skills exhibited by Davis, along with documentation taken from him after his arrest, prove that he is a member of US' TF373 black operations unit currently operating in the Afghan War Theatre and Pakistan's tribal areas, the paper said.

While the US insists that Davis is one of their diplomats, and the two men he killed were robbers, Pakistan says that the duo were ISI agents sent to follow him after it was discovered that he had been making contact with al Qaeda, after his cell phone was tracked to the Waziristan tribal area bordering Afghanistan, the paper said.

The most ominous point in this SVR report is "Pakistan's ISI stating that top-secret CIA documents found in Davis's possession point to his, and/or TF373, providing to al Qaeda terrorists "nuclear fissile material" and "biological agents", which they claim are to be used against the United States itself in order to ignite an all-out war in order to re-establish the West's hegemony over a Global economy that is warned is just months away from collapse," the paper added.
However, ANI's allegations are uncorroborated at this time, and it is unknown whether Russia's Foreign Intelligence Service said anything of the sort.

See this, this, this, this and this for background.