Chagos deal: As UK and Mauritius spar over money, Starmer stares at his Rwanda Plan stalemate

As the British and Mauritian governments continue to spar over payments, the Chagos Islands deal appears to be becoming an embarrassment for Prime Minister Sir Keir Starmer in the way the Rwanda immigration plan haunted his predecessor Rishi Sunak.

In a historic announcement in October 2024 , the British and Mauritian governments said they had agreed that the United Kingdom would hand over the sovereignty of Chagos Islands, a cluster of some 60 islands around 1,000 kilometres from the Indian subcontinent, to Mauritius and secure a 99-year lease for the strategic US-UK military base at Diego Garcia — one of the islands of the archipelago.

Shortly after the deal’s announcement, Mauritian PM Pravind Jugnauth, who presided over the negotiations of the deal, lost elections in a landslide defeat. The new Mauritian government of PM Navinchandra Ramgoolam ordered a review of the deal . It has since been learnt that Ramgoolam has essentially stalled the deal as his new government has demanded more money from the UK than stipulated in the deal negotiated originally by Jugnauth’s government.

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The stalemate that Starmer is facing is similar to the one that Sunk faced over the Rwanda immigration plan. In 2022, the Conservative government floated ‘Rwanda Plan’ that said that all illegal immigrants entering the UK since 2022 would be transferred to Rwanda in Africa where their asylum claim would be processed. The plan was never implemented amid widespread domestic opposition.

Starmer proposes frontloading payments to Mauritius: Reports

While the Mauritian government never clearly said in public that its problem with the Chagos Islands deal was about money, its leaders have indicated it.

Indicating that his governments stalled the deal over money that it considers less, Mauritian Deputy PM Paul Berenger told the parliament last week that the British government was “quibbling on a small amount” of money, according to The Daily Telegraph.

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In the weeks since the first reports the deal’s stalling emerged, it has been reported that the British government has proposed frontloading money worth payments of several years to keep the deal alive as per a middle-grounds approach, according to Bloomberg.

However, the Mauritian government may still not be satisfied as its demanding too much.

The GB News reported a source as saying that the Mauritian government has demanded £800 million along with “billions of pounds in reparations”.

Even as the Starmer government has never specified the amount, the British Foreign Office told The Daily Mail that “an amount this high has not been considered at any point in negotiations between the UK and Mauritius”.

The GB News reported that one of the reasons why the previous Sunak government did not sign the deal was because of the price that Mauritius was asking.

What was the original deal, where it stands now?

Originally, the British and Mauritian governments agreed that the UK would cede sovereignty over Chagos Islands and would instead lease the Diego Garcia island with the US-UK military base for 99 years. The deal said the UK would pay annually for 99 years for the lease of the island as well as fund infrastructure development in the region. The new government in Mauritius has stalled the deal as it finds the money offered inappropriate.

As a middle-grounds approach to this, Starmer has offered to pay several years worth of payments upfront.

The Financial Times has reported that deal on the table involves the payment of £90 million a year for 99 years in a nearly £9 billion deal and Starmer’s proposal would therefore offer Mauritius a lump sum payment of hundreds of millions of pounds without altering the overall amount of the deal.

However, as GB News has reported, Mauritius is also understood to have asked billions more in reparations.

The Times of London has reported a British government source as saying that the Mauritian government is asking for too much that the UK is unlikely to agree on.

“There’s not a bottomless pit of money we can sign over. There’s a ticking clock. If they want the money and they want the deal, then there is a hard deadline coming up,” said the source.

Will Trump tank the Chagos Islands deal?

As the UK operates the Diego Garcia base jointly with the United States, the US government needs to be onboard with the plan.

While Trump has not yet said anything on the deal, people part of his incoming administration, such as National Security Advisor Mike Waltz, have opposed the deal.

“Diego Garcia remains our most critical basing option to counter the rising threat of the Chinese Communist Party in the Indian Ocean region and ceding control of the Chagos to Mauritius could deliver the CCP an enormous strategic win,” said Waltz in 2022.

However, an unlikely reason might still keep the deal afloat: the partnership between Trump and Indian Prime Minister Narendra Modi.

The GB News quoted an official as saying: “Trump has said nothing about this… Trump has described [Indian PM Narendra] Modi as his best friend in the whole world - and Modi wants this deal.”