Libyan leader Muammar Gaddafi threatened to cut trade with Britain and warned of "enormous repercussions" if the Lockerbie bomber died in jail, Britain's Guardian newspaper said on Wednesday, citing US diplomatic cables obtained by WikiLeaks. 

Abdel Basset Al-Megrahi, jailed for life for his part in blowing up Pan Am Flight 103 over Scotland in 1988, was freed by Scottish authorities in August 2009 on compassionate grounds, as he had prostate cancer and was thought to have just months to live.

The release fuelled anger in the United States, because 189 of the 270 victims were American, and the fact he remains alive today has stirred suspicion over the reason for his release.

"The Libyans have told HMG (Her Majesty's Government) flat out that there will be 'enormous repercussions' for the UK-Libya bilateral relationship if Megrahi's early release is not handled properly," US diplomat Richard LeBaron wrote in a cable to Washington in October 2008.

Libya "convinced UK embassy officers that the consequences if Megrahi were to die in prison ... would be harsh, immediate and not easily remedied," the US ambassador to Libya was quoted as saying in another cable in Jan 2009.

"Specific threats have included the immediate cessation of all UK commercial activity with Libya, a diminishment or severing of political ties, and demonstrations against official UK facilities," said US Ambassador Gene Cretz.

Libyan officials had implied the welfare of British diplomats and citizens in Libya would be at risk. "The regime remains essentially thuggish in its approach," he added.

The Guardian said the cables also showed Scotland's First Minister Alex Salmond had underestimated the public outcry in the United States and Britain. It said a British civil servant had told the US embassy that officials from Salmond's Scottish National Party had sought to blame the British government for putting the Scots in a position to have to make a decision.   

"It is clear that the Scottish government underestimated the blowback it would receive in response to Megrahi's release and is now trying to paint itself as the victim," wrote Louis Susman, the US ambassador in London, in a cable.

US anger over Megrahi's release resurfaced earlier this year after suggestions British energy giant BP had lobbied Scotland for Megrahi's release. BP and Scottish ministers have denied the accusations.    

Britain has always conceded that its interests would be damaged if Megrahi died in a Scottish prison. However, speaking to BBC radio on Wednesday, both Salmond and former British Justice Secretary Jack Straw repeated denials that Libyan pressure had played a part in the decision to allow Megrahi to return home. - Reuters