Britain opposed a bid by US president Bill Clinton to expand UN sanctions on Libya under dictator Moamer Kadhafi, while seeking to extradite the Lockerbie bombers, previously secret government papers showed on Wednesday.
Cabinet Office correspondence, released by the National Archives covering the years 1995 and 1996, showed the UK was concerned at the possible impact of expanded Security Council sanctions on Britain's $230 million annual exports to Libya, especially of oil-producing equipment.
The prime minister at the time, John Major, wrote to Clinton in late 1995 dissuading him from a new resolution, after the US leader had appealed for Britain's support.
On December 21, 1988, a bomb exploded on Pan Am Flight 103 from London to New York over the Scottish town of Lockerbie, killing 259 passengers and crew, and 11 people on the ground.
After a US and UK investigation, arrest warrants were issued for two Libyans in 1991.
At the time of the papers, the UK was urging for Libya to surrender the suspects for trial in the US or the UK, while Libya was calling for a "neutral" court to try the men.
The papers show that Britain thought Kadhafi would never hand over the bombing suspects.
A Foreign Office official, Richard Stagg, wrote to Major's private secretary Roderic Lyne in November 1995: "We should like to try the two accused and secure convictions. But the likelihood of Qadhafi handing them over is negligible."
Another wrote to Major's private secretary, Edward Oakden, in February 1996 that the Americans had "returned to the charge" over calls for a new Security Council resolution.
"The Foreign Secretary (Malcom Rifkind) has decided that we should not support the US in going for a new resolution," said Sam Sharpe, Rifkind's private secretary.
He cited "strong opposition" to expanding the UN sanctions regime in "both the Treasury and the Department for Trade and Industry".
"It would also impact directly on UK exports to Libya, likely to have been worth over £230 million in 1995, approximately £100 million of which was related to the oil sector," he said.
Britain also doubted that the Security Council members would back the measure and believed France took the same view.
Sharpe said Britain should ensure that "any blame for blocking the US objective for a new resolution sticks to the French rather than us alone".
"Ideally we would wish to ensure that the French take at least their fair share of the blame."
Clinton in August 1996 signed a US law that imposed sanctions on foreign companies that invested heavily in Libya and Iran.
Kadhafi handed over the two Lockerbie suspects in 1999 and Abdelbaset Mohmet Al-Megrahi was convicted in 2001 by a Scottish court sitting at a military base in the Netherlands.
Al-Megrahi, a former Libyan intelligence officer, consistently denied involvement until his death in 2012.
His family is awaiting the verdict of a posthumous appeal against his conviction at Scotland's highest court of criminal appeal.
Kadhafi was killed in 2011.