The killing of Osama bin Laden by US Special Forces has tipped US-Pakistan relations into their deepest pit since 9/11. They have not yet reached rupture: both countries are aware of the consequences that would have for their respective wars. And there are opportunities in the Al Qaeda leader’s abrupt demise. But both Islamabad and Washington will have to break from failed policies. Currently the countries seem bent only on repeating them. Barack Obama’s gentle call for a government investigation into how the world’s number-one fugitive could be hiding in plain sight in a military cantonment deep in Pakistan has been amplified by furious demands from Congress that all aid be cut.

Pakistan is unapologetic. Admitting some “shortcomings,” the army chief of staff, Gen. Ashfaq Kayani, warned that any similar unauthorized strike inside Pakistan would mean a “review” of all military and intelligence cooperation with the United States. He means it. The Pakistani military has reportedly revealed the identity of the CIA station chief in Islamabad. In the toxic anti-Americanism now flowing through Pakistan, that could be a death sentence. Public outrage arises not only from the violation of sovereignty but from a suspicion that the army’s denunciations are a smoke screen for a secret deal that permits US Special Forces to kill Al Qaeda targets inside Pakistan unmolested.

American anger is also understandable. How could bin Laden live for five years undetected in a leafy suburb under the noses of an army that has received some $20 billion in US aid primarily to achieve his death or capture? The answer is that he couldn’t without the connivance of Pakistan’s Inter-Services Intelligence, or at least elements of it. That view is near universally held not only in Washington but also in Pakistan, including by former ISI chiefs.

The ISI was always a reluctant convert to the “war on terror.” If for Washington the enemy was bin Laden and the pro-Pakistan Taliban regime in Kabul that had harbored him, for Islamabad it remained India, in its eyes massively strengthened after 9/11 by the US tilt toward Delhi as the dominant power in the region and by a pro-India (and anti-Pakistan) government in Kabul. The upshot was a “double” policy, whereby Islamabad went after certain insurgent groups but not others. The Afghan Taliban leadership in Quetta and the Haqqani network in the tribal areas were routinely described as “assets” and “our people” by ISI officers. They were backed as a way to project Pakistani power in Afghanistan and as a hedge against India’s widening influence there.

Most commentators believed the ISI saw Al Qaeda and its Pakistani affiliates as enemies, especially after the very real carnage inflicted on the army in their violent insurgencies against the state. Bin Laden’s presence in Abbottabad suggests otherwise. One view is that he was being held by the ISI as leverage to bring the more ferocious Pakistani insurgents under control. Others say he was being protected by the ISI as simply a way to ensure endless American cash. There is a third theory. Many military and ISI leaders are convinced that the ultimate aim of the United States and India is to strip Pakistan of its nuclear arsenal, and some officers saw the Abbottabad raid as a dry run. Was the possible sheltering of bin Laden a bizarre deterrence against this? So opaque is the ISI as an institution that all these theories are plausible.

What to do about it? For two years Obama tried charm, arguing with General Kayani that Pakistan’s main enemy was not India but violent Islamist insurgents in its midst. That policy clearly failed. In documents released by WikiLeaks in April, US authorities describe the ISI as a “terrorist” organization on a par with Al Qaeda. In its most important covert operation since 9/11, the United States didn’t trust the ISI enough to inform it. The temptation in Washington may be to do more of the same—in Kayani’s acid phrase, more “Hollywood movies” in which US forces go in alone to kill other wanted men, like Afghan Taliban leader Mullah Omar or Jalaluddin Haqqani.

Given Pakistan’s current state of paranoia, nothing could be more dangerous. The ISI is an integral part of US policies on nuclear proliferation, counterterrorism and America’s impending withdrawal from Afghanistan. The ISI could wreck all three, and it will if it believes it is under threat from a US-Indian alliance.

There has been a lot of hot air blowing from Islamabad. But one recrimination rings true, especially for Pakistanis: that the US-led war in Afghanistan has been the biggest motor in the meteoric rise in political violence and Islamist insurgency in Pakistan. In perhaps the most dangerous consequence of the “war on terror,” the United States has helped create in a nuclear-armed state the conditions it invaded a medieval one to destroy.

Bin Laden’s death offers Obama a chance to end that war. Flush with success, he could start a process with the Karzai government on clear terms: an early NATO withdrawal in return for a Taliban pledge to share power with other Afghan forces and sever all ties with Al Qaeda. With Al Qaeda’s leader gone and perhaps fewer than 100 of its men in Afghanistan, that’s not a hard condition for the Afghan Taliban to fulfill. For more than a decade it has been an ethnic insurgency focused more on expelling foreign forces from Afghanistan than global jihad.

One force could scupper the reconciliation: the Taliban’s ISI handlers. Yet the Pakistani Army too has been talking to Karzai recently about inclusion in a political process. Its terms are also known: clarity about the depth of India’s role in Afghanistan and renunciation by Kabul of irredentist claims on Pashtun areas in northwest Pakistan. On the basis of this, a Pakistan-India peace process could revive, with substantive negotiations about the contested territory of Kashmir. More than any other issue, peace in Kashmir would help bring stability to South Asia.

These would be epochal changes for all parties. The onus is on a triumphant America—rather than a cowed Pakistan—to make the break with a history that has failed them both.