Peter Popham: Gaddafi's war against the dispossessed

After being driven from his farm in Somalia by terrorists, Mohamed decided to do what tens of thousands of Africans before him did and seek asylum in Europe.

The well-trodden route led him across the Sahara and through Libya to the coast, where he was put on board an inflatable boat with 83 other Somali refugees – 84 by the time they were halfway across, after one of the passengers gave birth.

But Mohamed's timing was bad: two months earlier Colonel Gaddafi had signed an agreement with Italy which mandated Libya to stop illegal migrants from leaving its coasts, and to take back those who succeeded in doing so. After Mohamed's boat ran out of fuel, they were picked up by an Italian ship, whose crew said it would take them to Sicily.

Three hours later, however, a Libyan ship pulled alongside. "The Italians continued to say that we were going to Sicily but must travel in the Libyan boat," Mohamed remembered. "We didn't believe it. We became very agitated and started to protest and scream... we implored them not to hand us over to the Libyans." Beating them with truncheons, the Italians forced the Somalis on to the Libyan vessel.

"On board the Libyan motorboat they took our photos and shackled us. Then while we were still in chains they beat us unconscious. On arrival in Tripoli they put us on a police lorry and took us to Misrata jail." In jail they were asked why they wanted to go to Italy. "When we said we were refugees they beat us some more, laughing at us... Sometimes the guards forced us to strip to humiliate us further. The only way to get out of that jail was by bribing the police. Those without money stayed there for years."

While Libya celebrates the first anniversary of the return of Abdelbaset al-Megrahi, Mohamed's account of his Libyan nightmare exposes another facet of the unique diplomatic style of the man they call simply "the Leader of the Revolution". Muammar Gaddafi has graduated from being the Mad Dog of the Middle East (in President Reagan's phrase) to a man who, while always unpredictable and indeed possibly mad, has learnt to play us Europeans like a Stradivarius. He sees right through our rhetoric to the real needs throbbing below – and as the driving force behind the Opec "oil shock" 37 years ago, he has a shrewd idea of how much we are prepared to pay to satisfy them.

Like all Middle Eastern leaders who grew up in the shadow of Nasser, Gaddafi knows how important it is to shake one's fist at the Crusaders, to damn them to hell and threaten them with fearful revenge for the humiliations of colonialism. But the fate of Saddam appears to have sobered him up: he understood the limits of what he could get away with.

Despite the bragging that went on for decades, he never got very far in building a nuclear deterrent. When the UN inspectors came to see what he had amassed they found that most of the centrifuges he had obtained via the scientist A Q Khan in Islamabad were still in their boxes. What he gave up was merely a boast. In return he was welcomed back into the West's fold, and the hard currency of which his country's palsied economy was in desperate need began to flow in again.

But Libya's doors did not fly open and stay open: even after the nuclear deal, every concession to the West was painfully obtained, the result of another brutally hard bargain.

For decades the Gaddafi regime has demonised Italy as the colonial master responsible, it claimed, for the deaths of one-third of the Libyan population. In the meantime, and it wasn't an accident, Libya became the principal entrepôt for sub-Saharan Africans trying to make it into Europe. For years the EU pleaded with Libya to do something about the flood of migrants, some 30,000 in 2008, crossing the Strait of Sicily. Finally, last year, Gaddafi did a comprehensive deal with the Berlusconi government involving billions in reparations, gas and oil contracts for Italy, and an end to the leaky boats.

The result was a political triumph for Italy: illegal immigration, while far from "solved", has vanished from the headlines. The fact that thousands of people like Mohamed suffer a living death in Tripoli's jails under a regime that never signed the Human Rights Convention is a non-issue. Gaddafi has become a virtuoso at the use of blackmail in diplomacy: Tony Blair was putty in his hands. BP, which has emerged from its negotiations with Libya clutching a $900m oil exploration contract after 30 years banned from the country, may indeed have done no more than lobby the Scottish parliament for a prisoner swap, but there are suspicions in Washington that its involvement went far deeper. Whatever the small print, and whatever the truth of Megrahi's involvement in Lockerbie, his return home, not to mention his new lease of life, are political triumphs for Gaddafi to savour.

Gaddafi has learnt that to maintain your credentials as the Leader of the Revolution, there is no need to play nuclear brinkmanship with the United States. It's quite enough to humiliate the small fry – like Bulgaria.

For years a group of Bulgarian nurses (and one Palestinian doctor) were held in a Libyan jail, preposterously accused of deliberately infecting Libyan children with Aids, charges Gaddafi himself repeated, even though there was no evidence of guilt. Again, Gaddafi had found a brilliant card to play, and as political pressures built up within the EU to bring the unlucky nurses home, he hung on to it until able to convert their release into a fat compensation deal.

Truth and principle are of no importance: the only thing that matters is Libya coming out on top. So to hell with trying to export democracy: as Foreign Policy in Focus put it, "Engagement with even unpredictable tyrants can yield important and durable agreements." Just don't ask awkward questions about the price to be paid, and who is paying it.