Freeing Megrahi 'wrong', Cameron will tell Obama

David Cameron will tell US President Barack Obama tomorrow that he "deeply regrets the pain" caused by the release of Lockerbie bomber Abdelbaset al-Megrahi last year and that it was the "wrong" decision, in an attempt to prevent the affair overshadowing his first visit to Washington, DC, as Prime Minister.

Britain's actions are in the spotlight in the United States as the Senate Foreign Relations Committee launches an inquiry into Megrahi's release by the Scottish government. He was said to have had only three months to live because he had prostate cancer, but 11 months later, he is still alive.

The Government has become embroiled because there have been claims that Megrahi was freed to help BP land a £550m oil exploration contract in Libya. The Senate investigation could embarrass former Labour cabinet ministers. Jack Straw, who negotiated a prisoner transfer deal as Justice Secretary, told the Scottish administration in 2007 that Megrahi's release was in the UK's "overwhelming interests", as "wider negotiations" with Libya reached a critical stage.

One former minister said yesterday that Megrahi's case was "always raised" by Libya in any meetings with Britain but denied there was a trade-off involving the oil deal. Megrahi is the only person to be convicted over the attack on Pan Am Flight 103, which was blown up over Scotland in 1988 with the loss of 270 lives – 189 of them American.

At the White House, Mr Cameron will insist that there is "no evidence" to support claims of a link with the BP contract. Last night his official spokesman said: "We don't see this as a major issue for the trip but of course it may come up, particularly in the Prime Minister's meetings with members of Congress." He added: "The Prime Minister's view is that the decision to release Megrahi was wrong and he deeply regrets the pain that his release has caused. However, it was a decision for the Scottish executive alone."

Some good news for Mr Cameron is that his visit is unlikely to be accompanied by images of black crude oil gushing into the Gulf of Mexico. Yesterday, the chief operating officer of BP, Doug Suttles, said in a conference call from Houston: "No one associated with this whole activity ... wants to see any more oil flow into the Gulf of Mexico.

"We're hopeful that if the encouraging signs continue, we'll able to continue the integrity test [on the new containment cap] all the way to the point that we get the well killed." And the first of two relief wells being drilled might be completed before the end of July.

On his visit, the Prime Minister hopes to strengthen his personal relationship with President Obama, with whom he held "getting to know you" talks on the sidelines of the G20 summit in Canada last month. The two leaders will have a one-to-one meeting in the Oval Office tomorrow, before being joined by officials for a working lunch.

There are fears in the Obama administration that Europe's rush to cut public spending could spark a double-dip global recession, but, as they did in Canada, the two men are expected to politely agree to disagree.

Mr Cameron is holding separate talks with the Vice-President, Joe Biden, the House Speaker, Nancy Pelosi, and senior congressmen, including the House majority and minority leaders, as well as Senator John McCain. The Prime Minister will also be briefed on operations in Afghanistan at the Pentagon.

He will hold talks with UN secretary general Ban Ki-moon on foreign policy issues including Afghanistan, Iran, Burma and a UN summit on the Millennium Development Goals scheduled for September. Mr Cameron will attend a dinner hosted by the Mayor of New York, Michael Bloomberg, where he will speak about the economy.

Although hopes of a global trade deal have faded, Mr Cameron believes trade has a vital role to play in driving a sustainable global economic recovery.

Four key issues on the table in Washington

Afghanistan

The two men will be under intense pressure to show joint resolve on winning the war as both countries try to strike a balance between keeping up the fight and signalling to their electorates that troops will not stay there indefinitely. Among others the Prime Minister will see in Washington tomorrow is John McCain, the Republican senator who opposes offering any deadlines for starting to withdraw. Showing unity of purpose on the issue is critical for Mr Obama and Mr Cameron, as scepticism about fighting for the Afghan government grows as quickly as the death toll for both their armies.

BP

For a while, the spill in the Gulf of Mexico was threatening to stunt the new relationship between the two men almost before it had begun. The Prime Minister has been berated at home for failing to stand up sufficiently to defend BP, which in the past two months has come under sustained attack from the White House and Capitol Hill. While BP continues to signal that its new cap mechanism on the seabed appears to have at last tamed its runaway well, the investigations into what went wrong – including a criminal probe by the Justice Department – are ongoing. The bashing of BP is not over yet, and the company's future as a major operator in the United States remains in doubt.

Lockerbie bomber

The Cameron government has lost no time saying it was the "last lot" that oversaw a process that ended with the release from a Scotland prison of the only person convicted of the 1988 Pan-Am bombing. Among those killed in the tragedy were 190 Americans, and anger at the release of Abdelbaset al-Megrahi has re-erupted, with the Senate Foreign Relations Committee set to hold hearings later this month into what role in the release BP may have played, to capture Libyan oil leases. Mr Cameron will again say in Washington that he regards the prisoner's release almost a year ago as a "mistake", but Mr Obama will nonetheless urge him to make current and former UK officials available to testify when hearings start.

Economy

At the G20 summit in Toronto, Mr Cameron and Mr Obama found themselves on opposite sides of a debate over what balance countries should strike between maintaining economic stimulus programmes and cutting spending to reduce dangerously swollen budget deficits. The final declarations papered them over but differences remain, with the Americans still anxious that Britain and other European countries risk triggering a second dip into recession by cutting too quickly. Mr Obama will claim that America has taken the lead on stiffening regulation of banks and investment houses and will suggest Europe catches up. He signs the new US financial reform bill into law this week.