Will UK have to pay more to Mauritius for Chagos deal?

The British government appears set to pay even more than previously reported to Mauritius for the Chagos Islands deal.

In a historic agreement in October 2024 , the UK and Mauritius announced that the UK would transfer the sovereignty over Chagos Islands, a cluster of around 60 islands in the Indian Ocean, to Mauritius and secure a 99-year lease for the British-UK military base at Diego Garcia, the largest island in the archipelago.

While they did not give specifics, reports said the UK would pay £90 million per year for the lease , which would come to be around £9 billion in total. However, there are signs that the actual cost of the deal could be much higher.

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Has Mauritius extracted more money from UK?

Mauritius has now indicated that the British government has agreed to adjust the annual lease payment for inflation which would mean that the reported £90 million annual payment would keep rising for 99 years, increasing the actual cost of the deal by potentially hundreds of millions.

Speaking to Mauritian MPs on Tuesday, Mr Ramgoolam said he had secured a new deal from the UK that was more favourable, according to The Daily Telegraph.

Ramgoolam said the original deal, negotiated by his predecessor Pravind Jugnauth, did not factor in inflation. He renegotiated the deal after assuming office after beating Jugnauth in elections last year.

“The previous package was very badly negotiated. It seems somebody who didn’t know that inflation existed. [The deal] has to be inflation-proof. What’s the point of getting money and then having half of it by the end?” said Ramgoolam.

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Sources in the British government told The Telegraph that the true cost of the deal was unknown as no one knows how inflation would work and raise the cost.

Mauritius eyeing more concessions

There are two more key concessions that Mauritius appears to have secured from the UK.

Firstly, Ramgoolam told MPs that Mauritius would hold the veto for the extension of the lease beyond 99 years, according to The Telegraph.

Previously, it had been reported that the UK could extend the lease by 40 years by itself.

Secondly, The Telegraph had previously reported that the UK would frontload several years of payment in one tranche to Mauritius. The upfront payment worth several years is expected to sweeten the deal for Mauritius.

The Chagos Islands deal is in limbo as the Donald Trump administration of the United States is said to be opposed to it. Moreover, the deal has been opposed within the UK as well. The Conservatives have dubbed it as a strategic blunder. The foothold in the Chagos Islands and the base at Diego Garcia are deemed critical to checking the influence of China in the Indian Ocean Region.

Dama Priti Patel, the Shadow Foreign Secretary, dubbed the deal “epic failure of diplomacy” in her latest criticism.

“It seems Keir Starmer has learnt absolutely nothing – and is still putting his Leftie shame of our country’s history over our national security, and our longstanding relationship with our closest ally,” said Patel, as per The Telegraph.

Previously, Patel had called the deal “economically illiterate”.

Patel said, “At a time when public spending is under serious pressure, they are also signing up to spend billions of pounds of taxpayers’ money leasing back a site that is currently under our sovereignty. And to add insult to injury, they are doing all this in secret, with Labour ministers keep refusing to explain the details to Parliament and the British public. They must urgently come clean on what exactly this surrender is going to cost us.”