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 yesterday, citing U.S. 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 [Her Majesty’s Government] flat out that there will be ‘enormous repercussions’ for the U.K.-Libya bilateral relationship if Megrahi’s early release is not handled properly,” U.S. diplomat Richard LeBaron wrote in a cable to Washington in October 2008.

Libya “convinced U.K. embassy officers that the consequences if Megrahi were to die in prison ... would be harsh, immediate and not easily remedied,” the U.S. ambassador to Libya was quoted as saying in a cable in January 2009.

Libyan officials implied the welfare of British diplomats and citizens in Libya would be at risk. “The regime remains essentially thuggish in its approach,” said U.S. Ambassador Gene Cretz.

Officials underplayed public response

The U.K.’s Guardian newspaper said the cables showed Scotland’s First Minister Alex Salmond underestimated the public outcry in the United States and Britain.

“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 U.S. ambassador in London, in a cable.