The relationship between Britain and Libya may not be as important as we like to think

Libya is not a major trading partner with the UK. So why are we so preoccupied by what happens between the two countries?

Britain's relations with Libya during Colonel Gaddafi's 41-year term as the North African nation's leader have been marked by a series of unfortunate events. But the turbulence of the relationship may have exaggerated the importance of trading links between the countries.

First, some history. In April 1984 WPC Yvonne Fletcher was shot and killed from inside the Libyan embassy in London as she stood on duty outside. 15 years later the Libyan government accepted responsibility for her death.

UK support for the US bombing of Tripoli and Benghazi in 1986 is said to have prompted the Libyan decision to supply arms to the Provisional IRA in the late 1980s.

In December 1988 a bomb on PanAm flight 103 exploded above Lockerbie. 270 people died in the incident. In January 2001 Abdel Basset al-Megrahi was convicted of murder in connection with the explosion and sentenced to life in prison.

In August 2003 Libya admitted responsibility for Lockerbie. Six years later al-Megrahi, suffering from prostate cancer, was released from prison in Scotland on compassionate grounds and returned to Libya. 18 months on, he is still alive.

Normalised relations
In fact, it is easy to argue that the shocking events that have punctuated relations between the UK and Libya over the last 30 years are not actually special to Britain.

Oliver Miles, former UK ambassador to Tripoli and executive director of the MEC consultancy, told Channel 4 News: "Lockerbie only involved Britain because the plane came down over Britain. We weren't involved for any reason other than geography.

"And in the case of Yvonne Fletcher, those responsible probably had Libyan dissidents in their sights - but Fletcher was the one who died."

UK-Libya relations were normalised in 2004 when the then prime minister, Tony Blair, visited Libya and shook hands with Gaddafi. Blair announced a "new relationship" between the two countries.

Three years later, in May 2007, Blair again travelled to Libya to meet Gaddafi in a desert tent. BP subsequently announced it was returning to the north African country, more than 30 years after its assets there had been nationalised. The deal to explore oil was worth is said to have been worth at least £550m.

One of BP's concessions to drill for oil is located in the Mediterranean not far from Benghazi, which has been the focus for the violence in recent days.

But less than four years on, unrest in Libya has forced the UK oil giant to suspend operations there. BP Chief Executive Bob Dudley said this week: "We have some people there (in Libya). Dependants have left the country, but we remain committed to doing business there."

Slice of the Libya cake
Libya is Africa's largest oil producer, and it accounts for three per cent of world reserves. Fawaz Gerges, director of the Middle East Centre at the London School of Economics, says it is the wealthiest country in north Africa.

"There is considerable oil reserves and gas reserves, and potential for growth – construction and arms sales," he told Channel 4 News. "And Britain has tried to get a bite, a slice, out of this particular cake – the Libya cake."

Prince Andrew, fourth in line to the British throne, is among those in apparent thrall to Libya's oil wealth. He has visited Libya on several occasions, and is mentioned in a WikiLeaks cable from the US embassy in Tripoli as having "against all odds" encouraged the "brave decision" to release Abdel Basset al-Megrahi.

The cable also records that President Gaddafi was thankful to former prime minister Gordon Brown – "friend Brown" – for his efforts in securing al-Megrahi's freedom.

Friends of everyone
Though the future of the Gaddafi regime is now uncertain, Colonel Gaddafi's second eldest son, Saif al-Islam, has been regarded as his most likely heir. In the early hours of 21 February he spoke on state TV in Libya, pinning the blame for the unrest on a rogue’s gallery of suspects.

It was al-Islam – educated at the London School of Economics – who accompanied al-Megrahi on his return from Scotland to Libya in the summer of 2009. But Oliver Miles dismisses stories of a friendship between Saif al-Islam and former Labour business secretary Peter Mandelson. "They're both friends of everyone when it pays them to be," he says.

In fact, the LSE has been prompted to issue a statement on the subject of its connections with Libya, which it says it has reconsidered "as a matter of urgency". It acknowledges receipt of a grant from the Gaddafi International Charity and Development foundation (chairman: Saif al-Islam Gaddafi), as well as scholarship funding from the Libyan Investment Authority, a sovereign investment fund.

Tony Blair's contacts with Libya remain strong, however. He advises JP Morgan, the investment bank, and still visits the country. He also travels there in his capacity as Middle East peace envoy.