The protesters condemned what they called a "CIA-dictated" verdict and demanded compensation for the victims of the 1986 US air raids on Tripoli and Benghazi.
For more on doubts about Libya's role in the bombing, see the excellent summary of powerful evidence that the Libyans may have been framed, evidence not presented at trial, on Wikipedia. (While Wikipedia should not be considered a definitive source, it is often a good roundup of what may be found elsewhere and thus a starting point for further inquiry.) The troubling elements, which constitute a very long list, include an alleged offer from the FBI of $4 million for certain incriminating testimony, the subsequent admission by a key witness that he had lied, details of strange goings-on in the FBI's crime lab, and indications that the bomb may have been introduced at an airport where the defendant was not present.
Nevertheless, Megrahi's conviction, and the media's dutiful reporting of it as justice done, meant that Libya, and Qaddafi, would continue under sanctions that had already isolated the country for a decade from the international community.
Qaddafi had sought to undo the cordon, including handing Megrahi over for trial in 1999. But that had not done the trick, and the January 31, 2001 conviction, coming 11 days after the inauguration of George W. Bush, threatened to make things worse -- much worse. Qaddafi particularly had to worry about how it might impact his own survival.
By May 2002, with US troops in Afghanistan having ousted the Taliban and four months after Bush listed Iraq, Iran, North Korea and Syria as part of an "axis of evil" seeking "weapons of mass destruction," Libya was feeling the heat. That month, it offered staggered payments to the Lockerbie victims' families, as part of a trade for the cancellation of UN and US trade sanctions, and removal of Libya from the State Department's list of states sponsoring terrorism. By August, 2003, several months after the invasion of Iraq and removal of Saddam Hussein, Qaddafi cut a deal, as reported in the New York Times:
Libya and lawyers for families of the victims of the 1988 midair bombing of Pan Am Flight 103 over Lockerbie, Scotland, signed an agreement today to create an account for $2.7 billion in expected compensation, a lawyer said.
"Libya and the lawyers representing families of the victims have signed an agreement to create the escrow account at the Bank for International Settlements," said the lawyer, Saad Djebbar, an Algerian living in London who has followed the case since 1992.
As a result, he said United Nations sanctions might be lifted.
With the agreement, Libya is expected to deposit the money in the account and to send the United Nations Security Council a letter accepting responsibility for the bombing, in which 270 people died.
In Washington, family members said today that the State Department had invited the victims' families to a briefing on Friday.
It was a package deal, with many tentative aspects. Libya told the UN it "accepted responsibility" in the bombing -- though, notably, it did not admit guilt. Indeed, as late as 2008, Qaddafi's son Saif told a BBC documentary crew that the only reason Libya "admitted responsibility" was to get the sanctions removed. The documentary noted that several victims' families had declined compensation because they felt Libya had not actually been behind the bombing.
The 2003 deal was enough, however, to begin welcoming Libya back into the family of nations. The Bush administration moved quickly to begin trade with Libya. By December, 2003, Libya had agreed to give up whatever WMD programs it purportedly had in return for the US lifting sanctions.
This heartened not only Libya, but also major Western companies, which had been champing at the bit for years to get a piece of Libya's assets, including its vast oil reserves and the income they generated.
The inexorable trade machine kept grinding along. Within a few weeks, Bush signed an executive order restoring Libyan immunity from terror lawsuits and ended pending US compensation cases.
In 2007, strongly encouraged by the UK oil company BP, Britain began pushing for a transfer of Megrahi back to prison in Libya, resulting in a series of events that concluded with his 2009 release from incarceration -- on purported medical grounds. (New information on BP's role has come out recently, with Hillary Clinton and key US senators expressing outrage and declaring their intent to investigate -- see here. No mention by the Dems of the doubts about his guilt, just indignation that a "murderer" had been freed.)
In 2009, the same year Megrahi was released, Qaddafi, faced with stiff ongoing Lockerbie payments, began pressing oil companies to pay more to help cover his debt.