In 1989 , Gaddafi was overjoyed by the foundation of the Arab Maghreb Union , uniting Libya in an economic pact with Mauritania , Morocco , Tunisia , and Algeria , viewing it as beginnings of a new Pan-Arab union . Meanwhile , Libya stepped up its support for anti-Western militants such as the Provisional IRA , and in 1988 , Pan Am Flight 103 was blown up over Lockerbie in Scotland , killing 243 passengers and 16 crew members , plus 11 people on the ground . British police investigations identified two Libyans – Abdelbaset al-Megrahi and Lamin Khalifah Fhimah – as the chief suspects , and in November 1991 issued a declaration demanding that Libya hand them over . When Gaddafi refused , citing the Montreal Convention , the United Nations ( UN ) imposed Resolution 748 in March 1992 , initiating economic sanctions against Libya which had deep repercussions for the country 's economy . The country suffered an estimated US$ 900 million financial loss as a result . Further problems arose with the West when in January 1989 , two Libyan warplanes were shot down by the U.S. off the Libyan coast
Pan Am Flight 103
Pan Am Flight 103
Muammar Gaddafi