Johann Hari: Oil, blood money, and Blair's last scandal

Is your life worth more to your government than a few pence added to BP's share price? At first, this will sound like a strange question. But sometimes there is a news story that lays out the priorities that drive our governments once the doors are closed and the cameras are switched off. The story of the attempt to trade the Lockerbie bomber for oil is one of those moments.

Let's start in the deserts of Iraq – because the Lockerbie deal might just reveal what really happened there. Many people were perplexed by Tony Blair's decision to back George W Bush's invasion, which has led to the deaths of 1.2 million people. Blair said he was motivated by opposition to two things – terrorism and tyranny. First off, he said Saddam Hussein might give weapons of mass destruction to jihadis. When it was proven in the rubble after the invasion that Saddam had no WMD and no links to jihadis – as many critics of the war had said all along – Blair declared he would do it all again anyway, because Saddam Hussein was a tyrant, and all tyrants should be opposed.

Most critics of the war said the real reason was a desire for Western access to Iraq's vast supplies of oil. This debate has gone on for years. Now it has emerged that Tony Blair plotted to hand a convicted terrorist – the worst in modern British history – to a vicious tyrant in exchange for access to oil for British corporations. It seems to settle the argument about his priorities in the darkest possible way.

Here's how it happened. Just before Christmas in 1988, a flight from London to New York City was blasted out of the sky above Scotland by a bomb in the cargo. All 259 people on board were killed, along with 11 on the ground. One man was convicted for the mass murder at a Scottish trial in 2000: Abdelbasset al-Megrahi, a former Libyan intelligence officer. Following the bombing, most Western governments imposed sanctions on Libya that forbade companies from investing there. If you are opposed to terrorism and tyranny, it was a happy ending: an alleged terrorist was tried in open court and convicted, and a tyrant was shunned.

But, within a few short years, Tony Blair was not happy. Why? The oil company BP wanted to be able to drill down into Libya's oil, and tap the profits that would gush forth. Their then-CEO, John Browne, flew to Tripoli in the company of MI6 agents to find out what the dictatorship wanted in return for opening the country's wells. It was, of course, clear that they wanted Megrahi back.

BP has admitted it lobbied Tony Blair to exchange prisoners with Libya. They say they didn't specifically mention Megrahi – but there was no need to: there were no other Libyan prisoners of particular note in Britain.

Blair's administration was so intertwined with the oil company by this point that it was often dubbed "Blair's Petroleum". There was a revolving door between BP and Downing Street: BP execs sat on more government taskforces than all other oil companies combined, while many of Blair's closest confidantes went to work for the corporation. He gave two of its CEOs peerages, and slashed taxes on North Sea oil production. By 2005, he was talking to Lord Browne at Downing Street dinners about what he would do after he left office, with rumours circulating of a move to BP.

Blair responded to BP's lobbying with apparent pleasure. His Foreign Office Minister, Bill Rammell, assured Libyan officials that Blair did not "want Megrahi to pass away in prison". His Foreign Secretary, Jack Straw, said a desire for Libya's oil was "an essential part" of this decision. So Straw began negotiating a prisoner swap agreement, and urged the Scottish authorities to release the convict. He told the Scottish Government in a leaked letter that it was "in the overwhelming interests of the United Kingdom" to let Megrahi go.

The chief negotiator for the Libyans was Mousa Kousa, a thug who had been expelled from Britain after bragging about plots to murder democratic dissidents here on British soil. These supposed opponents of tyranny didn't blush.

There are, of course, some serious commentators who argue that Megrahi was framed. It's a legitimate debate. But if he was, it should have been settled in court, at an appeal – not in a dodgy deal with a dictator to benefit BP.

Both sides now admit what was happening: they were trying to trade a convicted mass murderer for oil. Saif Gaddafi, the Libyan dictator's son and second in command, said it was "obvious" that attempts to free Megrahi were linked to oil contracts, adding: "We all knew what we were talking about."

There is no question there was a plot. The question is whether the plot worked, or whether it got what it wanted anyway by a remarkable coincidence. It was, ultimately, up to the Scottish politicians whether to release Megrahi, and they publicly refused a prisoner swap. We know that Straw lobbied them to do it, but they insist they made the decision independently on "compassionate grounds". A year ago, Megrahi was sent home to Tripoli after serving 11 days for each person he was convicted of killing. Officially, the Scots had assessed him to have only three months left to live.

There are several facts that batter these claims with question marks. The most obvious is that, 11 months later, Megrahi isn't dead. It's the most amazing medical recovery since Lazarus. Or is it? It turns out the doctors who declared him sick were paid for by the Libyan government, and one of them says he was put under pressure by Libya to offer the most pessimistic estimate of life expectancy. Susan Cohen, whose only daughter died in Lockerbie, asks: "Why didn't the Scottish Government pay for the doctors?"

Indeed, a detailed investigation by the Sunday Telegraph reported that "the Scottish and British Governments actively assisted Megrahi and his legal team to seek a release on compassionate grounds". The Libyan dictatorship certainly took it as a gift from the British government. The tyranny's chief spokesman, Abdul Majeed al-Dursi, said: "This is a brave and courageous decision by the British... Britain will find it is rewarded." BP has indeed been rewarded: it is now drilling in Libya.

This affair seems to reopen the Iraq debate, in a way that vindicates Blair's most severe critics. Tony Blair's remaining defenders say he was motivated in Iraq by a hatred of terrorism and tyranny and had no regard whatsoever for getting access to oil. Yet at the very same time the Labour government was plotting in Libya to hand the worst terrorist in British history to a tyrant in exchange for oil. It's proof that oil and corporate power were a much bigger factor in driving foreign policy than the public rhetoric of opposing tyranny or terror.

David Cameron refuses to open an investigation. He says he will release all the relevant documents – but the Cabinet Office has quietly declared that Blair's permission will be needed before any records are shown to the public. For the families of all the innocent people slaughtered in Lockerbie, this has been a cold-water education in what their governments really value. Cohen, remembering her murdered 20 year-old daughter Theodora, says: "Western governments seem to be run by one thing now – the great God money."

There's a revealing little postscript to this tale. Last month, Blair went to Libya on behalf of the many mega-corporations who now employ him. He was greeted by Gaddaffi himself – who tortures dissidents and terrorises his population – "like a brother", according to the Libyan press. There has even been speculation that, now they need a CEO, Tony Blair will go to work for BP. In so many ways, it seems, he always has.

j.hari@independent.co.uk