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The UK government has offered to frontload a tranche of payments to Mauritius in order to finalise the draft deal over the sovereignty of the Chagos Islands, according to people familiar with the talks.
Britain is offering to pay Mauritius about £90mn a year for the initial 99-year lease of Diego Garcia, the main atoll in the Indian Ocean archipelago, which hosts a strategically crucial UK-US military base, the people said.
London has issued a new proposal to pay an initial tranche covering several years’ worth of payments as a sweetener to finalise the stalled deal before Donald Trump’s inauguration on January 20.
It is seen as a compromise between the new Mauritian administration’s demand to increase the financial settlement underpinning the draft agreement, and the UK government’s refusal to increase the overall cost of the 99-year lease.
People briefed on the negotiations told the Financial Times that the full details of any final financial settlement agreed between the two nations may never be made public, on the grounds of national security given it relates to a military base.
Sir Keir Starmer agreed an initial draft deal last October with the previous Mauritian leader Pravind Jugnauth. But after Jugnauth was ousted from office in a general election weeks later, his successor as Prime Minister Navin Ramgoolam raised concerns about the plan.
Last month Ramgoolam declared the proposed agreement, which had not been ratified by treaty, “would not produce the benefits that the nation could expect” and that negotiations had restarted.
People familiar with the talks said late last year that money had been a key sticking point for Port Louis, but also questions about the terms of the lease and the UK’s right to review it.
UK officials remain optimistic that the deal is close to being finalised and believe it can be sorted before the US presidential inauguration in under a fortnight.
Some of Trump’s senior allies have voiced scepticism about the plan, including president-elect’s pick for secretary of state Marco Rubio, who has claimed it could “provide an opportunity for communist China to gain valuable intelligence on our naval support facility”.
The issue has flared up into a major dispute at Westminster, with Conservative leader Kemi Badenoch accusing Starmer of “taking the knee” in international negotiations and giving “things away for free”.
Reform UK leader Nigel Farage has also been deeply critical of the deal and warned it would be met with “outright hostility” by the incoming Republican administration.
However, UK foreign secretary David Lammy last month told MPs that officials across the US establishment – spanning the intelligence agencies, state department, Pentagon and White House – had welcomed the deal.
British officials have privately expressed confidence that Trump and his Republican colleagues will back the deal when they see the full details.
Jonathan Powell, Starmer’s national security adviser, has led the negotiations for the UK government and travelled to the US last month for talks with key members of Trump’s incoming administration.
The Foreign, Commonwealth and Development Office did not immediately respond to a request for comment.