Chagos deal collapse could see Britain cough up billions as Donald Trump threatens to scupper plan

This week, the US President changed his position on the deal for the third time, arguing that Sir Keir was making a “big mistake” and should not “give away” Diego Garcia, the joint US-UK military base there.

As part of the deal, Britain will pay Mauritius £35billion over the next century to rent back the base and fund Mauritius’s development.

However, Mr Trump’s intervention means the deal could be cancelled entirely, with officials privately admitting that it cannot go ahead without the United States’ support.

Sources told The Telegraph that if Britain is forced to withdraw from the treaty, it will likely face legal action from Mauritius that could trigger a compensation bill worth billions.

Mauritius is experiencing a budget crisis and government debt of more than 80 per cent of the country’s GDP, with prime minister Navin Ramgoolam demanding that much of the money from the UK be front-loaded, with Britain paying £1.8bn in the first 10 years of the 99-year agreement, including rent payments for Diego Garcia and a new development fund.

He is planning to use the payments to rescue the country’s ailing public finances, paying back almost £500m of the national debt.

If the deal is cancelled, officials believe Mauritius will try to recoup the money anyway in the international courts.

Mauritius has a long history of legal action against the UK, and previously employed Prof Philippe Sands, one of Sir Keir’s friends, to sue Britain over the Chagos Islands in cases spanning more than a decade.

International judges have tended to side with Mauritius on the issue, which officials believe may mean the case would go against the UK, requiring the Government, to effectively pay for the deal up front.

The UK has said it will press ahead with the deal despite Mr Trump’s most recent comments, in the hope that he changes his mind about it for a fourth time.

On Wednesday, he wrote on his Truth Social platform that the legal justification for the agreement, which ministers insist is watertight, was “fictitious in nature”.

“We will always be ready, willing, and able to fight for the UK, but they have to remain strong in the face of wokeism, and other problems put before them. Do Not Give Away Diego Garcia".

The US is not required to pay any compensation if the deal is cancelled, because Washington is not a party to the treaty Britain signed with Mauritius last May.

It emerged on Thursday that Mr Trump withdrew his support for the Chagos deal after Britain had not given him consent to use RAF bases, notably Fairford in Gloucestershire, for potential military action against Iran.

The UK is understood to have concerns about the legality of bombing Iran under international law.

Mr Trump performed his about-turn as four Chagossians attempted to establish a permanent base on a deserted island in the archipelago.

The campaigners, with former MP Adam Holloway, arrived on Île du Coin on Monday, having sailed from Sri Lanka, where British authorities served them with eviction papers warning them to leave or face a possible jail sentence.

A court put a block on the deportation order, giving them respite, but with supplies running out, there are fears for the health of Michel Mandarin, 74, who was born on the islands but forcibly removed when he was 14 - his son, Misley Mandarin, is the leader of the group.

Nigel Farage, leader of Reform UK, flew to the Maldives last week with equipment to assist them, but the plans have been thwarted by threats, mechanical problems and an insistence by UK authorities that only trained crew should be on board.

A Foreign Office spokesman said: “The Government inherited a situation where UK sovereignty over the Chagos Islands was under threat.

“Maintaining control of Diego Garcia is the entire basis for the agreement we have reached. It is the only way to ensure that base remains secure and operational for the long-term.

“The deal would enable the UK and US to operate the base just as it always has for generations to come".