updated 9/6/2009 12:08:59 PM ET 2009-09-06T16:08:59

Britain made no demands that Libya offer compensation for Britons killed by Libyan explosives supplied to Irish Republican terrorists for fear it could jeopardize ties with Tripoli, according to new documents released Sunday.

The revelation prompted accusations that the British government had acted to protect energy deals, and added to questions about whether trade ties influenced last month's decision to release Lockerbie bomber Abdel Baset al-Megrahi.

Relatives of British victims of the IRA bombings were outraged to learn that Prime Minister Gordon Brown refused to broach the compensation subject with Libya — particularly since U.S. victims of IRA attacks have secured a separate compensation deal with Tripoli.

Brown says in two letters released by his office, however, that his government was motivated not by oil interests, but by the need to cooperate in fighting terror.

"The U.K. government does not consider it appropriate to enter into a bilateral discussion with Libya on this matter," Brown says in the letters, dated Sept. 11 and Oct. 7 of last year and sent to British victims' lawyer Jason McCue. They were released after being alluded to in a report in The Sunday Times of London.

"You assert that the core reason for not entering into direct negotiations with Libya is that of trade," Brown told McCue in the Oct. 7 letter. "I assure you that this is not the case. While the U.K.-Libya relationship does indeed include trade, bilateral cooperation is now wide-ranging on many levels, particularly in the fight against terrorism."

Compensation issue ‘risky’
The letters concern Libya's role in supplying weapons and explosives to terrorists around the world, including several tons of Semtex plastic explosive to IRA rebels fighting to split Northern Ireland from the United Kingdom. The IRA used those explosives in the 1980s and 90s.

Brown argues in the letters that bringing up the compensation issue would be risky since Libya had turned over a new leaf — renouncing terrorism and dismantling its nuclear program.

"Libya has made it very clear to us that they consider this matter closed," Brown says in the October letter. "It would be very strongly opposed to reopening the issue, and ... doing so would entail substantial risks."

Libya appeared recently to contradict that assessment, however. Libyan Secretary for International Co-operation Mohammed Siala was quoted Tuesday by The Independent newspaper as saying he was open to talking about the issue.

Despite Brown's explanation, IRA victims saw his refusal to bring up the compensation issue as a decision motivated by commercial interests.

"It's because of an oil deal with BP. I really believe that," IRA bomb survivor Jonathan Ganesh told Sky News television. He was referring to the $900 million exploration agreement the British energy company signed with Libya Investment Corp. in May 2007

That same month, Britain and Libya signed a memorandum of understanding that paved the way for al-Megrahi's release from a Scottish prison.

‘It does make Britain look very, very weak’
Colin Parry, whose 12-year-old son was killed by an IRA bomb, said it defied belief that American government had secured a settlement for its victims — while British government had not.

"I can't see why the British government won't take a similarly robust position with Libya," Parry told BBC television. "It does make Britain look very, very weak and insignificant if, for reasons of worrying about oil deals or other economic considerations, this government of ours is prepared to disregard all the pain of the thousands of victims of IRA terrorist campaigns."

The decision last month to free al-Megrahi on compassionate grounds — he is suffering from terminal pancreatic cancer — also fueled questions about whether Britain was protecting trade.

Brown insists the decision was made by independent Scottish authorities, but media have suggested otherwise.

On Friday, BP PLC said it had warned British officials to quickly seal a prisoner transfer agreement with Libya. Such a deal would have allowed al-Megrahi to serve out his sentence in Libya, though BP said it did not refer specifically to al-Megrahi's case.

Justice Minister Jack Straw said Saturday that trade — particularly the BP oil deal — had been "a very big part" of the 2007 negotiations that led to the prisoner deal.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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