Lockerbie Bomber Case Exposes the Money Gun in the Global Economy

Once again our leaders in Washington are missing the point.

This week the Senate Foreign Relations Committee held hearings on Scotland's decision last August to free the convicted Lockerbie bomber, Abdel Basset Ali al-Megrahi. The hearing followed a fact-finding mission to Scotland by a Senate staffer that raised more questions than it answered. Powerful senators such as Charles Schumer, Barbara Boxer, Diane Feinstein, and Frank Lautenberg have decried the fact that British Petroleum in particular lobbied the U.K. government to free Megrahi so it could gain access to Libyan oil fields. And the topic has been front-and-center in America's interactions with the U.K. and new British Prime Minister David Cameron.

Obviously there are political benefits to all this tough talk from our elected officials since it's bound to be popular with constituents of varied ideological stripes. But the problem is this grandstanding is largely a waste of time and comes at the expense of much larger issues that are crucial to America's long-term prosperity.

Rather than reexamining this one incident, Congress and the Obama Administration should be looking at the bigger picture and trying to figure out how the world has been transformed in ways that made Megrahi's release all but inevitable. And they also might want to begin exploring what America can do to remain a relevant force in the face of these unstoppable changes. Because like it or not, the U.S. will be grappling with similar questions before too long.

Megrahi, a Libyan national, was convicted in January 2001 of carrying out the 1988 Lockerbie airliner bombing over Scotland. He was sentenced to life in prison. So naturally the expectation was that he would never breathe the air as a free man and would eventually die in prison. Although the decision was hailed as justice throughout much of the West, in parts of Europe, and the Middle East there were serious questions about the veracity evidence presented and the overall fairness of the trial. For its part, Libya consistently believed that Megrahi was an innocent patsy. The country's leader Muammar el-Qaddafi vowed to see him freed. And to accomplish this, Qaddafi planned to utilize Libya's most potent weapon, the nation's growing economic ties with the U.K.

Libya brought up the Megrahi situation at just about every trade conversation with U.K. officials. But in 2007, with Megrahi still behind bars, it started applying serious pressure by threatening to pull out of an oil exploration deal with BP. In response, BP began lobbying U.K. government ministers for Megrahi's release. BP's pushing apparently worked because, lo and behold, last August the Scottish government finally freed Megrahi.

Scotland's ostensible reason for the decision was "compassionate grounds" because Megrahi was stricken with terminal cancer. The ruling was made after doctors examining Megrahi determined that he had just three months to live. To the Scottish government, holding Megrahi violated the nation's sense of compassion because he was literally sitting on death's door.

However, despite that grim prognosis, Megrahi is still alive today at his home in Tripoli, more than a year after gaining his freedom. He is now the longest surviving prisoner ever freed by Scotland on compassionate grounds. Since his release, his doctors have questioned whether they should have stated so emphatically that he only had three months to live. And his case has taken on a broader meaning as a symbol of shifting power dynamics around the world. I mean, does anyone seriously think that if Megrahi was from a poor African nation like Rwanda or Senegal instead of Libya he would've received such compassionate treatment?

But even with all of the obvious questions about Scotland's decision, there's really no need for the U.S. to spend time and money "investigating" any of this. The facts are right there on the surface and have been all along. BP publicly admitted that it lobbied for Libyan prisoner exchange in a statement issued last year and again in July. BP readily acknowledges that it told the British government that this prisoner's continued imprisonment "could have a negative impact on U.K. commercial interests, including the ratification by the Libyan government of BP's exploration agreement."

Meanwhile, British and Scottish government officials have vociferously denied that the drilling deal was a key part of the ultimate decision. And they're right. The Megrahi case always was about much more than oil. It was about money, too.

Over the past few years Libya and other oil-rich Arab states have poured capital into the U.K. economy. In February 2010, just six months after Megrahi was freed, Libya's $70 billion sovereign wealth fund unveiled plans to assist Britain by investing $8 billion in U.K. businesses and real estate. Libya also has relocated LIA's offices to London with plans to invest heavily in the U.K. economy.

But that's not all. Scotland also was pressured to release Megrahi by the government of Qatar, another significant contributor to the U.K. economy. Qatar recently bought Harrods department store for more than $2 billion, is developing the $3 billion Shard London Bridge, which when completed will be the tallest building in Europe, and owns substantial stakes in the British bank Barclays, the supermarket chain J. Sainsbury, and London's Canary Wharf financial district.

With all of this cash at stake, is it any wonder that Scottish officials found a way to satisfy Libya? Essentially the U.K. had a money gun held against its head until it signed the papers. Remember the famous line from the movie The Godfather: "Either your your signature or your brains will be on that contract." Same thing here.

The trouble is Britain is hardly alone in this predicament. Over the past few years, as Western nations have battled repeated brutal financial crises, the strength of the global economy has shifted. Today, newly wealthy countries are using their economic might to assert themselves geopolitically. And what has emerged is a global shadow market where much of the world's liquidity is being provided by wealthy foreign governments that may have political agendas beyond investment returns.

In the U.S. we see this transition most clearly in China's ability to ignore direct pressure from the Obama administration to revise its currency policy, which undervalues the renminbi in order to boost Chinese exports. But it's also visible in China's foot-dragging on a host of other global issues, such as human rights and environmental degradation. America may be considered the world's sole superpower. But it owes so much money to China that it no longer can dictate terms. Instead it has to try to coax its rival to the table before the real conversations can begin.

Looking at the story behind Megrahi's release, it's clear that the challenges we face are much more complicated than our political leaders realize or are willing to acknowledge. The question isn't whether BP pushed to have a convicted murderer freed. It did. And it isn't whether the U.K. caved in to financial pressure to free a convicted murderer. It did.

Instead, the question is when will a foreign government point its money gun at the U.S.? And when it does, will America be powerless to stop it?