LONDON: So "brave" Muammar Qadhafi has agreed on the importance of combating terrorism. A handshake with Tony Blair has sealed his re-entry into the international community, with contracts worth several hundred million pounds for Shell and BAE to follow. His compliance in opening up Libya to nuclear weapons inspectors has been spun as a major triumph in the "war on terror". The motives, however, are rather more cynical.

Negotiations for a rehabilitated public image for Colonel Qadhafi, linked to improved western access to Libyan oil, began to surface in August 2002 with the visit by the British Foreign Office minister, Mike O'Brien, to Sirte, near Tripoli. As the BBC said at the time, Libya was keen to re-enter the world economy, and the UK did not want to lose out on potentially lucrative oil contracts.

For both the UK and US an energy crisis is looming. The latest BP statistical review of world energy predicted that UK proven oil and gas reserves will last, respectively, only 5.4 and 6.8 years at present rates of use. It has been estimated that by 2020 the UK could be dependent on imported energy for 80 per cent of its needs. The US energy department has calculated that net imports of oil, already at 54 per cent, will rise to 70 per cent by 2025 because of growing demand and declining domestic supply.

Libya produces high-quality, low-sulphur crude oil at very low cost (as low as $1 per barrel in some fields), and holds three per cent of world oil reserves. It also has vast proven natural gas reserves of 46 trillion cubic feet, but actual gas reserves are largely unexplored and estimated to total up to 70 trillion cubic feet.

The problem of access to Libyan hydrocarbons was Qadhafi's record of running a state terrorist machine - responsible for arming the IRA, the shooting of PC Yvonne Fletcher in central London in 1984 and the bombing of Pan Am flight 103 over Lockerbie in 1988. Britain had even, according to the former MI5 agent David Shayler, paid pounds sterling 100,000 to an Al Qaeda cell in Libya to assassinate Qadhafi in 1996, and then granted asylum to a member of the cell named Anas al-Liby, who lived in Manchester until 2000.

Moreover, just two months before Qadhafi's pact with the west was announced on Dec 19 last year, Libya was caught trying to import nuclear technology from Malaysia. If it had been Saddam Hussein, no doubt the deal would have been scotched on the grounds of his unreliability and bad faith. But it is remarkable how sometimes terrorists suddenly turn into "statesmanlike and courageous" friends (to use Jack Straw's phrase).

None of the history of mutual hostility over the past two decades prevented a deal along these simple lines: we accept your acknowledgement of guilt over flight 103, you open up your WMD programmes to inspection, and then both of us can start benefiting from trading your oil again. The weakness of this deal as presented, however, is that it appears that Libya didn't have any WMD, other than chemical weapons no longer likely to be usable.

The International Atomic Energy Agency stated last December that "Libya was not close to building a nuclear weapon". Indeed, Libya had itself nine months earlier proposed inspections, so the west's triumphalism says more about the US-UK desire to placate domestic critics than about forcing any fundamental policy change on a recalcitrant Qadhafi.

Nor is this rapid shift from terrorist to statesman confined to Libya. The US backing of Muslim terrorism in the Balkans provides another example. As the official Dutch inquiry into the 1995 Srebrenica massacre has now revealed, a secret alliance was formed between the Pentagon and radical Muslim groups to assist the Bosnian Muslims in violation of the UN arms embargo.

A vast secret conduit of weapons smuggling through Croatia was organized by US, Turkish and Iranian clandestine agencies, together with Afghan mujahideen and pro-Iranian Hezbollah. Aircraft from Iran Air were used, joined by a US-sponsored fleet of C-130 Hercules.

The 78-day bombing of Yugoslavia in the spring of 1999, directed by the US general Wesley Clark, was said to be stopping an alleged "genocide" by the Serbs in Kosovo (some 2,000 bodies were later exhumed, a horrifying number but far short of the 100,000 the US predicted). The US goal was to assist the Kosovo Liberation Army (KLA). Yet the year before, the US state department had branded the KLA a terrorist organization, financing its operations from the heroin trade and funds from Muslim countries and individuals, including Osama bin Laden.

As James Bissett, the former Canadian ambassador to Yugoslavia, has subsequently reported: "This did not stop the US from arming and training KLA members in Albania and sending them back into Kosovo to assassinate Serbian mayors, ambush Serbian policemen and intimidate hesitant Kosovo Albanians ... Despite a UN arms embargo, and with the support of the US, arms, ammunition and thousands of fighters were smuggled into Bosnia to help the Muslims ... Osama and his network were also active in Kosovo, and KLA members trained in his camps in Afghanistan and Albania." According to reports in April 1999, assistance was also provided by Britain's SAS.

Through much of the 1990s, US support for Muslim militants in former Yugoslavia was backed up by covert US airdrops of arms, especially at Tuzla in northern Bosnia. These took place in the face of Operation Deny Flight, the UN-imposed and Nato-policed no-fly zone over Bosnia. The US House of Representatives also failed to authorize the war under the War Powers Act, making it illegal (shades of Iraq).

But the airdrops were only the tip of the iceberg. Retired US officers heading Military Professional Resources Inc, a private paramilitary firm based in Virginia, planned the bloody Croatian "liberation" of the Serb-held Krajina enclave, which resulted in the ethnic cleansing of 200,000 Serbs.-Dawn/The Guardian News Service.