Rarely in the history of political reporting – this year, at least – has there been a story that has been so confused by red herrings. We hope to provide a public service today by unravelling the real story of the release last month of Abdelbaset Ali al-Megrahi, who was convicted of the Lockerbie bombing.

The first red herring is Scottish devolution. It has been written both that Gordon Brown has been embarrassed by an unintended consequence of Labour's creation of a Scottish parliament – and that the Scottish National Party administration is in cahoots with Mr Brown in carrying out his dirty work. Neither is right. It should be obvious by now that the British Government was looking for ways to get Megrahi back to Libya long before the SNP took over two years ago.

When the process of rapprochement with Libya began, Megrahi was in jail in a Labour Scotland. Part of the confusion arises from the fact that, while the decision to release Megrahi on compassionate grounds was taken by the SNP government, the outcome was what Mr Brown wanted all along.

The second red herring is the idea that Megrahi's release was in exchange for British access to Libya's oil. It has been alleged that the £550m deal signed by BP and the Libyan government early last year lay behind the pressure for Megrahi's release. There is of course some truth in this, as Jack Straw, the Justice Secretary, said yesterday, which is why it has been difficult for Mr Brown to set the record straight. "Yes," Mr Straw said, trade and BP were "a very big part" of his decision two years ago to include Megrahi in the agreement that would allow prisoners to be transferred between the UK and Libya.

However, it should be clear from our account that the trade deals were the consequence of a political decision rather than the cause of one. As we reveal today, that decision was taken by Tony Blair and George Bush in December 2003. Two days after British, US and Libyan intelligence chiefs met at the Travellers' Club in London to discuss how Libya might be brought in from the cold, Mr Blair telephoned Colonel Gaddafi. That call marked the beginning of the end of Libya's isolation: the next day Mr Blair and Mr Bush announced that Col Gaddafi had abandoned his attempt to acquire nuclear weapons and renounced weapons of mass destruction altogether.

The normalisation of trade relations with Libya therefore flowed from a geo-political decision taken by Messrs Blair and Bush; it was not the reason for it. If anything, the immediate stimulus for the rapprochement was the embarrassment felt by Mr Blair, Mr Bush and their respective intelligence agencies over the failure to find weapons of mass destruction in Iraq. Desperate for an intelligence "coup", and eager to suggest that the Iraq invasion had had a salutary effect on other rogue states, Mr Blair claimed the deal with Col Gaddafi as a personal vindication.

Like any good story, you have to hear the start of it to make sense of the ending. Once it is realised that the story began in 2003, the puzzling parts of last month's chapter fall into place. It explains why, although the Americans were angered by Megrahi's release, administration officials and President Obama did not sound properly outraged; they sounded as if they were reading from a script. It is doubtful whether the US would ever have been reconciled to Megrahi's transfer as a price worth paying for Libyan engagement, but the Bush administration was certainly closely involved in the broader policy of reconciliation. Partly because both Mr Obama and Mr Brown were acting out parts assigned to them by their predecessors, the feeling that a game is being played has been inescapable in the past few weeks.

Once again, it is as if Mr Blair has got away with something – he is like a mischievous schoolboy who has rung the doorbell and run away, leaving his friend Gordon on the doorstep, taking the flak. Yet, once we have cut through the hypocrisies of diplomacy, the basic policy objective of drawing Libya into the international community was a justifiable one. Whether Megrahi's release was a price worth paying for that objective is a question that changed when it emerged that he had only a short time to live.

But let that argument be contended on the basis of a clear-eyed understanding of what "the deal" really was. And let us not be distracted by red herrings from the bigger picture of Megrahi's release – and from the pursuit of the more elusive truth of what happened over Lockerbie in 1988.