LONDON – When Moammar Gadhafi told the world he was a changed man, some leaders were skeptical. Others, like Britain’s Tony Blair, were quicker to see the benefits of rapprochement with the oil-rich nation.

Now, as Gadhafi’s regime crumbles, questions are being raised about whether Britain, the United States, and others were too quick to embrace a volatile despot linked to terrorism and oppression as they sought lucrative business deals.

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Britain’s Prime Minister Tony Blair, left, meets Libyan leader Moammar Gadhafi outside Sirte, south of Tripoli, in May of 2007. Blair’s role in Gadhafi’s international rehabilitation is now being questioned as his regime crumbles and the strategic decision to build ties with the despot is a major source of anti-Western anger. The Associated Press

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Those deals worth billions are now in jeopardy as Libya hurtles toward civil war. The strategic decision to build ties with the likes of Gadhafi, Egypt’s Hosni Mubarak, and Tunisia’s Ben Ali also threatens to further inflame anti-Western anger in the Arab world.

Blair’s role was particularly vital in Gadhafi’s international rehabilitation.

The former British prime minister flew to Libya in 2004, holding talks with Gadhafi inside a Bedouin tent. He praised the leader for ending Libya’s nuclear and chemical weapons program and stressed the need for new security alliances in the wake of the Sept. 11 terror attacks. British commercial deals soon followed.

Britain sold Libya about 40 million pounds ($55 million) worth of military and paramilitary equipment in the year ending Sept. 30, 2010, according to Foreign Office statistics. Among the items: sniper rifles, bulletproof vehicles, crowd control ammunition, and tear gas.

“What did the Foreign Office think Colonel Gadhafi meant to do with sniper rifles and tear gas grenades – go mole hunting?” asked Britain’s Guardian newspaper.

Although Britain’s current government led by David Cameron has revoked dozens of export licenses to Libya in the wake of the Libyan violence, many say the very weapons and equipment Britain has sold to Libya are being used against the country’s people.

Britain’s elite Special Air Service, or SAS, also participated in recent training for Libyan soldiers in counterterrorism and surveillance. Robin Horsfall, a former SAS soldier, said at the time that the training was a mistake: “People will die as a result of this decision,” he warned.

Since Scotland’s release of Abdel Baset al-Megrahi – the only man convicted in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland – U.S. lawmakers have accused Britain of backing the Libyan’s freedom in exchange for oil deals. The former Libyan intelligence agent was accused of placing a bomb on the plane. The bombing killed 280.

“Moammar Gadhafi is a terrorist – plain and simple,” said U.S. Senator Robert Menendez, a Democrat from New Jersey, after Libya’s former Justice Minister Mustafa Abdel-Jalil told the Swedish tabloid Expressen Wednesday that Gadhafi had personally ordered the Lockerbie bombing.

But Washington has also cultivated ties with Gadhafi.

In 2008, former president George W. Bush sent his top diplomat Condoleezza Rice to Libya for talks with Gadhafi. She called the trip “historic” and said it had “come after a lot of difficulty, the suffering of many people that will never be forgotten or assuaged.”

The same year, Texas-based Exxon Mobil signed an exploration agreement with the Libyan National Oil Corp. to explore for hydrocarbons off the Libyan coast.

The U.S. also approved the sale of military items to Libya in recent years, giving private arms firms licenses to sell everything from explosives and incendiary agents to aircraft parts and targeting equipment.

The Bush administration approved the sale of $3 million of materials to Libya in 2006 and $5.3 million in 2007. In 2008, Libya was allowed to import $46 million in armaments from the U.S. The approved goods included nearly 400 shipments of explosive and incendiary materials, 25,000 aircraft parts, 56,000 military electronics components

The U.S. State Department has not yet provided figures for materiel licensed to Libya during the Obama administration. But according to one U.S. government official, Congress spurned a 2009 Obama administration request for approval of a license to allow the private shipment of M113 armored personnel carriers.

The official, who insisted on anonymity because the licensing process is classified, would not detail the number of armored cars sought by Libya. Libyan military officials had pressed U.S. officials as far back as 2007 for the cars and troop-carrying Chinook helicopters, but the Bush administration balked at the requests, the official said.

U.N. High Commissioner for Human Rights Navi Pillay recalled that U.S. leaders discouraged her from pressing Libya on its poor human rights record.

Many in the intelligence community say they viewed Gadhafi’s supposed transformation with cautious optimism at the time.

“He said he wanted to fight extremism, which we viewed positively much like the Americans,” Ilan Mizrahi, former deputy in Israel’s Mossad intelligence agency told the AP on Wednesday. “But we also said to be cautious of these moments of sanity.”

Few European leaders have escaped the wrath of newspaper editorials or embarrassing photo montages with the eccentric leader. Former British prime ministers Blair and Gordon Brown, France’s Nicolas Sarkozy, Germany’s then-chancellor Gerhard Schroeder and Italy’s Premier Silvio Berlusconi are among them.

The West’s dance with Gadhafi and others has already angered some protesters, who feel big powers kept their oppressors in power and enriched them, while cheating ordinary people out of the riches that foreign oil companies have garnered.

For Italy, Libya’s proximity to Italian islands and the potential for a refugee influx has long encouraged Rome to foster close ties. Italy, an energy-poor country, also has a large stake in the North African nation’s oil production.

For Germany, Schroeder’s 2004 visit followed Libya’s agreement to pay compensation to victims of a 1986 disco bombing in West Berlin.

France, too, courted Gadhafi in 2007. The leader pitched a tent in the elegant garden of the official guest residence in Paris and stayed three days longer than expected. Sarkozy said of the visit, “If we don’t welcome those who take the road to respectability, then what do we say to those who take the opposite road?”

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