Libya denies embassy killing

In an extraordinary aboutturn, the Libyan government today denied all responsibility for the shooting of Pc Yvonne Fletcher, killed outside its embassy in London.

The country's prime minister, Shukri Ghanem, said there was no evidence that the fatal shot came from the embassy or that a Libyan was to blame. And he declared the issue was "settled".

In another declaration which threatens new trouble with both Britain and the US, Mr Ghanem also denied responsibility for the Lockerbie bombing, saying his country had paid damages to the victims' families only to escape sanctions.

The disclaimer is a serious and embarrassing setback for Tony Blair, who has spearheaded moves to improve relations between the two governments.

Only two weeks ago, Mr Blair welcomed Libya's foreign minister to Downing Street, ending more than two decades of hostility. He also signalled he was ready to go to Tripoli this year to meet the country's leader, Colonel Muammar Gadaffy.

Britain broke diplomatic ties in 1984 after Pc Fletcher was shot in the back as she policed a demonstration outside the embassy in St James's Square.

Both sides agreed that the shot came from inside the embassy and in 1999 Libya accepted " general responsibility" for the killing and agreed to pay compensation-The Government and Pc Fletcher's family, however, continued to press for the killer to be brought to justice.

The visit by the country's foreign minister, Mohammed Abdulrahman Shalg am, appeared to pave the way for a solution.

In what were described as landmark talks with Foreign Secretary Jack Straw he agreed to "enhance co-operation" over the case. And at a press conference at the Foreign Office he promised that his government would tackle the issue "with a spirit of co-operation, transparency and honesty" to "close the file."

Those hopes appeared to be demolished by Libya's prime minister today. In an interview with BBC Radio 4's Today programme he said there was no real evidence the bullet came from the embassy. And he declared: "The whole subject has been settled to the satisfaction of both governments."

Asked why his government had offered to pay more than a billion dollars in compensation to families of the victims of the bombing of Pan Am flight 103 in 1988, he said it was merely an effort to lift crippling UN-backed economic sanctions and not an admission of guilt.

"We thought it was easier for us to buy peace," he said.

His comments are likely to dismay Pc Fletcher's mother who had welcomed the possibility of a breakthrough. Last month, Queenie Fletcher, 70, said: "I hope Yvonne's murderer is made to pay for taking her from us and that Britain and the US will now allow Libya to rejoin the international community."

Libya's relations with Britain and the US thawed after Gadaffy promised, in December, to renounce its development of weapons of mass destruction. But Mr Blair and Mr Straw have made clear that the issue of the shooting must be settled.

Britain's ambassador to Libya, Anthony Layden, said today that he was "surprised" by the broadside but that they were "making progress" on the case.