There is a popular saying here in South Asia: "Most countries have an army, but Pakistan's army has a country."

The statement exemplifies how much power Pakistan's military and intelligence establishment is perceived to have.

Many in this part of the world believe that no matter who holds elected power in Islamabad, the military and the Inter-Services Intelligence (ISI) are the ones who really run Pakistan.

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Canadian journalist Faiz Jamil, a former reporter and news reader with the CBC, currently reports on South Asia from New Delhi. 

Their watchful eye is everywhere and yet even that watchful eye missed Osama Bin Laden and his family literally on their doorstep. Or so they claim.

Deeply rooted in Pakistan, the ISI goes back to 1948, the year after Pakistan and India gained their independence from Britain and fought their first war against each other.

Consisting of military and civilian personnel, and run by a general, the ISI has over the years gradually expanded its role, from coordinating intelligence among the different branches of Pakistan's armed forces, to espionage abroad and surveillance at home.

For some, like Siddharth Ramana, a researcher at the Institute of Peace and Conflict Studies in New Delhi, the ISI "evolved into being a quasi-state within a state for Pakistan."

Indeed, many within Pakistan have tried to rein it in as well, including, most recently, President Asif Ali Zardari. So did his wife, the late Benazir Bhutto, the former prime minister who was assassinated in 2007.

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Pakistan's Prime Minister Yusuf Raza Gilani is to address the nation on Monday, May 9, 2011, about what the country knew about Osama bin Laden in advance of the U.S. raid. (Reuters)

Both attempted to bring the ISI under civilian control. But after more than 60 years, the roots of its power went too deep.

Proxy wars

One of the main reasons for that power has been the ISI's tacit success, at least within Pakistan, of waging proxy wars against India (in Kashmir and elsewhere) as well as against Afghanistan.

After the Soviet Union invaded Afghanistan in 1979, the ISI, along with America's Central Intelligence Agency helped to train and arm Islamic militants in an effort to drive back the Soviet army.

That guerrilla war lasted almost 10 years and was joined enthusiastically by a 20-something Osama bin Laden, one of its many young commanders.

When the Soviets were forced to retreat, the U.S. declared victory, packed up and went home. But Pakistan was left with a neighbour in shambles.

After several of its convoys were attacked and looted by local warlords, the ISI persuaded a small group of militants, known as the Taliban, to secure the roads in exchange for arms and money.

Pushed by ideology and disgust over the actions of the warlords, the Taliban slowly took over more and more of the country.

By 1999, the Taliban were in full control and Pakistan's military dictatorship was one of only three governments in the world that recognized the group as the legitimate rulers of Afghanistan.

Co-operation with the West

The events of Sept. 11, 2001 changed many things around the world, including Pakistan's support of the Taliban, at least in public.

Facing the rage of the U.S. and its allies, Pakistan publicly shifted gears and allowed NATO to use its territory to attack the Taliban.

Then, as now, Pakistan said it did not know where bin Laden was. But given the history and close ties that the ISI had formed with the Taliban and other militants, many close observers never bought that line.

Political scientist Nisarul Haq is a South Asia expert at Jamia Millia Islamia University in New Delhi. He says it's very possible that most people in the ISI and military were left in the dark when it came to bin Laden.

"But definitely a few people. Not all the people in the ISI. But it's difficult to believe that nobody was to know where was bin Laden."

Haq says that two distinct factions have developed within the ISI and Pakistan itself: Those that are pro-American versus those who are more mistrustful of the West. Each has a different view on how to act and whom to trust, though they share the same goal of advancing Pakistan interests.

Just last year, former president Pervez Musharraf acknowledged that Pakistan encouraged militants to cross over and attack India in the disputed Kashmir region. So the notion that Pakistan does not have the contacts and influence among militant groups to track down bin Laden was laughable to many.

As Ramana says, "The entire world knew where bin Laden would be hiding, the only people who actually denied it were the Pakistanis."

Why the denial?

Who knew what about bin Laden's hiding place is more than just a parlour game in this part of the world. Strategic alliances may depend on what the real story is.

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An aerial view, released by the U.S. Department of Defence, showing the compound where Osama bin Laden was killed in a raid on Monday, May 2, 2011, in Abbottabad, Pakistan. (Reuters)

Both Ramana and Haq feel that Pakistan knew in advance of the operation to kill bin Laden, despite what Islamabad and Washington say.

To back this up, they cite media reports from local residents that the lights and phones went out just before the raid on the bin Laden compound. Plus, many analysts are finding it hard to imagine how an American helicopter attack like this could take place apparently undetected in such a well-garrisoned military town as Abbottabad.

Also, the number of high-level meetings between senior ISI and Pakistani officials and their U.S. counterparts in the weeks leading up the raid, suggest Pakistan had full-knowledge of what was about to happen.

Allowing bin Laden and his family to while away their years in suburban Abbottabad may have helped keep the militants off Pakistan's back, but at some point that policy was clearly going to come into conflict with the billions of dollars in promised aid from the U.S.

However, if the death of bin Laden went down as Washington says — without any real or covert help from Pakistan — both these strategies may now be in jeopardy.

In the short-term, Pakistan is probably too strategically placed to suffer any serious repercussions from the U.S. or NATO over what it did or did not know. Right now, it's too valuable as an ally.

But when bin Laden died in that raid that may also have been the moment that the West's trust in Pakistan took a fatal blow of its own.