Nearly a decade of quiet British diplomacy and adroit Libyan manoeuvring left Scottish Justice Minister Kenny MacAskill with no realistic option but to return convicted Lockerbie bomber Abdelbasset Ali Mohammed Al-Megrahi to Libya. Any alternative would have thrown into question the whole logic of rapprochement with Libya – one of the UK’s few notable international triumphs of recent years.
It would have jeopardised a strategic relationship initiated by then prime minister Tony Blair, involving Prince Andrew, Duke of York, veteran British financier Lord (Jacob) Rothschild and a host of less well-known but still influential characters. As explained below, the interests at stake range from high-level intelligence co-operation, through well-known major oil and gas deals, to large defence procurement contracts and financial services co-operation connected to Libya’s $100bn sovereign wealth fund.
Gordon Brown’s government insists that Al-Megrahi’s return was not connected to any of this – although Libyan negotiators are renowned for placing linkages of this sort into deals, as with Italy’s agreement to pay $5bn compensation for colonial era abuses in return for extensive infrastructure projects. The linkage of the former intelligence agent’s fate to BP plc’s exploration deal is old news to readers of African Energy, which in November 2007 reported that BP’s deal had been delayed by the Libyan authorities as they pressurised the UK over Al-Megrahi’s release (AE 126/1). The deal ratified by the Libyan authorities in early 2008 after Justice Minister Jack Straw gave an assurance that Al-Megrahi would be included in the prisoner transfer agreement (PTA) signed by Blair and Brother Leader Colonel Muammar Qadhafi in May 2007 (AE 132/1). Correspondence between Straw and MacAskill published by the Scottish Executive in late August and subsequently splashed on the front page of every major UK newspaper has confirmed these facts more than 20 months later.
There is no doubt that an extensive roster of vital British interests was at risk if MacAskill had decided Al-Megrahi should remain to die in Glasgow’s Greenock Prison. In the run-up to the decision, oil companies and others maintained a worried silence, understanding that attempts at advocacy would be counterproductive, but concerned that what one executive called the “wrong decision” would place them at “the wrong end of a long queue”. The upside is that sending Al-Megrahi home could “unblock all the agreements of British companies enabling them to be signed forthwith”, according to Saad Djebbar, a lawyer with intimate knowledge of the Lockerbie case, who was involved in Megrahi’s defence and appeal. This “could close the last chapter in the dark book of British-Libyan relations.”
The deals on the table extend far beyond the important and potentially lucrative collaboration on oil and gas exploration. Investments by BP and Royal Dutch Shell are strongly and actively supported by London, but they are far from being the most closely entwined with official government business. Other key elements of the partnership include:
•intelligence co-operation – one closely involved source recently told African Energy the status of UK-Libyan co-operation was “excellent” and “very open”. London and Tripoli have a common interest in combating Islamic terrorism;
•defence procurement – the UK government is lobbying hard for British companies to win further defence contracts with the Jamahiriya (State of the Masses). In May 2008, General Dynamics UK (GDUK) agreed a $165m deal to supply its C41 tactical communications and data system to the 32nd Reinforced Brigade of the Armed People – the army’s elite unit commanded by 29-year old Captain Khames Abu-Manyar Al-Qadhafi, one of the fast-rising younger sons of the Libyan Leader. In a statement, GDUK said its Libya programme had been “developed with the full support of Her Majesty’s Government and is in accordance with both the UK’s defence industrial strategy and foreign policy objectives”.
•Sovereign wealth fund joint ventures – the UK government and City of London have been lobbying intensively for the Libyan Investment Authority (LIA) to establish an office in London. Originally planned for mid-2008, according to a number of Libyan sources, this has been steadily postponed, even though the fund has bought property in the City and West End of London. The UK government has also facilitated direct investment co-operation. In mid-July Special Representative for International Trade and Investment Prince Andrew hosted a meeting at St James’s Palace between Libyan African Investment Portfolio (LAIP) chairman Bashir Saleh (Qadhafi’s former chief of staff) and about 100 potential investment partners. Saleh invited investors to enter joint ventures in Africa with LAIP, which is worth $5bn-$7bn (AE 168/33). Following the celebratory reception of Al-Megrahi in Tripoli on 20 August, Prince Andrew cancelled a planned trade mission; it would have been his third visit in two years.
Lord Rothschild has been a pivotal figure in the development of the UK-Libya financial relationship. He served on the LIA Advisory Board for two years until mid-2009 when, according to his office, he “retired from a number of boards to reduce his commitments”. Rothschild entertained the Libyan Leader’s prominent son Saif Al-Islam Al-Qadhafi at his Corfu villa this summer in the same party as UK Business Secretary Lord (Peter) Mandelson, which created considerable political noise in Britain. Saif al-Islam was instrumental in the LIA’s establishment and is still believed to be influential there. According to two authoritative UK-based financial sector sources, Rothschild’s Libya connections have opened the door for funds looking for investments from the LIA. However, his private office told African Energy that Rothschild “has never sought and has never received any fees earned by any funds in which the LIA has invested”. Among other significant links with Saif Al-Islam, London School of Economics (LSE) director and former UK Financial Services Authority chief Sir Howard Davies also served on the LIA’s advisory board. Blair made Davies his economic envoy to Libya in 2007, partly because Saif Al-Islam is an alumnus of the LSE. Qadhafi’s son is now reported to be spending more time in London after purchasing a large house in Hampstead.
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