(Bloomberg) -- The UK is considering front-loading its funding package for Mauritius as part of a sweetened deal ceding sovereignty of the Chagos islands, including a key UK-US military base, to the Indian Ocean nation.
The British government, which believes a deal sealed in October with the previous Mauritian government is generous, will tell the new administration in talks this month that it isn’t willing to hand over more money but is open to accelerating delivery of the financial package, according to people familiar with the matter who requested anonymity discussing private negotiating positions.
Options under consideration include paying the first tranche of the package up front as a lump sum, or condensing the annual payments so more money is paid earlier in the agreement, they said.
Prime Minister Keir Starmer is seeking to complete a deal that New Mauritian Prime Minister Navinchandra Ramgoolam has re-opened, questioning whether it delivers all the benefits his country expects. The UK hopes resolution of the matter will provide certainty for the strategic military base on the island of Diego Garcia, while putting to rest a decades-old territorial dispute after the International Court of Justice ruled in 2019 that Britain’s continued administration of the islands was unlawful.
If finalized, the deal reached last year would see the UK cede sovereignty of the archipelago while retaining control for 99 years of Diego Garcia by exercising Mauritius’s sovereign rights there. That pact includes an indexed annual payment to Mauritius for the duration of the agreement.
Neither nation has been specific on the amount that was preliminarily agreed, though the former Mauritian administration said in October that the sum ran to “many billions of rupees.” One billion Mauritian Rupees converts to about £17 million, or more than $21 million. Starmer’s spokesman, meanwhile, late last year rejected reports that it could cost the UK £800 million a year, saying that figure was “completely out of the ballpark” of anything discussed. That amount, nevertheless, comes close to matching Mauritius’s projected budget deficit for this year of about 48.5 billion rupees.
Ramgoolam’s government entered office shortly after the deal was signed, and has been pushing for better terms and more cash as it grapples with a weakened currency and high levels of public debt. The country’s new attorney general, Gavin Glover, is expected in London this week for further discussions with the UK, Port Louis-based Le Défi Quotidien reported on Wednesday.
Recently revised economic figures for Mauritius show a higher level of public debt and wider budget deficit than previously thought, with a projected budget gap for 2024-25 amounting to about 6.7% of gross domestic product.
Mauritian Deputy Prime Minister Deputy Prime Minister Paul Berenger told his National Assembly last month that the country “needs this money to get out of the economic mess in which the former government has put us into, but not at any price, not at any condition.”
The UK government hopes that offering to front-load the payments will help clinch the deal and believes that Ramgoolam is more supportive of the agreement than his deputy Berenger, according to the people.
Nevertheless, the push-back from the new government in the African nation has delayed ratification of the deal, which now seems unlikely to occur before US President-elect Donald Trump re-enters office later this month, potentially complicating the agreement’s path to completion. That’s because while the outgoing administration of Joe Biden supported Britain’s deal, it’s been criticized by figures in Trump’s team, including his pick for secretary of state, Marco Rubio.
Rubio told Politico last year that the deal “poses a serious threat” to US security interests in the Indian Ocean. Still, the UK believes that Trump is unlikely to veto the agreement because the Pentagon and State Department pushed Britain to negotiate the pact in the first place.
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