31 May 2025

UK agrees handover of Chagos Islands to Mauritius to protect key US Diego Garcia base

Jean Shaoul


After decades of international legal battles, Britain has finally signed an agreement to hand over the Chagos Islands, home to the US/UK naval and bomber base of Diego Garcia in the Indian Ocean, to Mauritius. The UK government will lease back the base from Mauritius at a cost of £101 million a year for an initial period of 99 years.

Announcing the deal at the Northwood military base, near London, Prime Minister Sir Keir Starmer said the base was crucial for British counter-terrorism and intelligence and is “right at the foundation of our safety and security at home.” He added, without explanation, “By agreeing to this deal now on our terms, we’re securing strong protections, including from malign influence, that will allow the base to operate well into the next century, helping to keep us safe for generations to come”.

UK Prime Minister Sir Keir Starmer (centre) gives a press conference after signing a deal to secure the military base on Diego Garcia at Permanent Joint Headquarters in Northwood, May 22, 2025 [Photo by Number 10/Flickr / CC BY-NC-ND 4.0]

Britain separated the Chagos Islands from Mauritius in 1965 before it became independent in 1968 and incorporated them into the specially created British Indian Ocean Territories (BIOT), violating 1960 UN resolution 1514 banning the breakup of colonies before independence. In one of its most shameful episodes of post-war colonialism, it forcibly evicted up 2,000 islanders from their homes in the late 1960s to early 1970s, deporting them to Mauritius and the Seychelles, another former British colony. A leaked internal Foreign Office memo notoriously belittled the Chagossians as “a few Tarzans and Man Fridays”.

This was done to make way for the leasing of Diego Garcia, the largest island in the 50-island archipelago, to the US Naval Support Facility. Britain’s purpose in granting Washington the initial 50-year lease on Diego Garcia—kept secret from both Parliament and the US Congress—was to secure an $11 million discount on the US-made Polaris nuclear weapons system, which the Labour Party had pledged to scrap when in opposition.

The Islands occupy a strategically placed location in the Indian Ocean, halfway between India and East Africa. By the late 1980s, Diego Garcia, which hosts between two and five thousand US military personnel, had become one of the leading overseas military bases of the US and the main base available to Britain in the area. US imperialism has used Diego Garcia to support its criminal operations from Vietnam to Iraq and Afghanistan. It has facilities to accommodate nuclear submarines, aircraft carriers and large airplanes, plays a key role in US intelligence-gathering and serves as a surveillance centre for the Middle East, as well as providing a “dark site” where the CIA detained and tortured people and refueled extraordinary rendition flights.

A US Air Force B-1B Lancer taking off from Diego Garcia as part of Operation Enduring Freedom during October 2001 [Photo: enior Airman Rebeca M. Luquin, U.S. Air Force]

Britain’s decision to surrender sovereignty over the Chagos Islands comes six years after the International Court of Justice (ICJ) issued an advisory opinion in 2019 noting that “the process of decolonization of Mauritius was not lawfully completed” and that the UK had violated United Nations resolutions prohibiting the breaking up of colonies before granting independence. With its customary imperial arrogance, the British government ignored this and similar rulings.

But there was another much more important opinion issued by the United Nations International Tribunal for the Law of the Sea (ITLOS) that the British government could not ignore, despite its protestations at the time. ITLOS had ruled that the UK had no sovereignty over the Chagos Islands and thus it considered all the seas and therefore airspace around the Chagos islands as belonging to Mauritius.

Although the 2021 ruling was, like the ICJ’s, only advisory, the maritime court—a court that affects international trade—can make its opinions binding in law. It would mean that Mauritius could take legal action against Washington and London or any company supplying their operations for invading its air or sea space if they had done so without permission from Mauritius. Furthermore, Mauritius would be entitled to open up the Islands to Chinese or Russian bases.

This was a risk the US and UK governments were not prepared to take. Starmer said, “We had to act now because the base was under threat”, adding that Mauritius would have taken Britain to court within weeks and the UK had no “realistic prospect of success.”

The deal sets a 24-mile exclusion zone around Diego Garcia, where nothing can be built without UK consent. Foreign military and civilian forces will be banned from the other islands in the archipelago, with the UK retaining power to veto access to the islands, provisions aimed at China. Under the terms of the deal the UK must notify Mauritius if it plans to use Diego Garcia to launch an “armed attack on any third state” and give Mauritian companies priority when awarding contracts related to the maintenance of the base.

The UK will pay Mauritius £101 million a year, with the rent set to rise with inflation, for 99 years, at which point the lease can be renewed for up to 40 years if both sides agree. Starmer sought to justify the cost as “value for money”, even as his government plans £5 billion in welfare cuts, because it is “slightly less than the running cost of an aircraft carrier minus the aircraft”.

Starmer said the UK’s four partners in the “Five Eyes” security alliance—the US, Canada, New Zealand and Australia—backed the agreement, while Russia, China and Iran opposed it. US President Donald Trump had backed the deal when he met Starmer in the White House in February, saying “I have a feeling it’s going to work out very well”. Secretary of State Marco Rubio welcomed the deal, saying it “secures the long-term, stable and effective operation of the joint US-UK military facility at Diego Garcia, which is critical to regional and global security.”

Mauritius Prime Minister Navin Ramgoolam hailed the deal as a “great victory for the Mauritian nation”. He added, “I have always said we must obtain our sovereignty over the totality of the Chagos, including Diego Garcia”, adding that it symbolised the completion of “the total process of decolonisation”.

The deal rides roughshod over the claims of the 1,344 Chagossian islanders who were forcibly displaced from Diego Garcia. They have been denied the right to return to their homes, which international lawyer Professor Philippe Sands QC, said was arguably “a crime against humanity within the meaning of Article 7 of the [International Criminal Court] Statute.” Under the terms of the agreement, to be ratified by parliaments in London and Port Louis, Mauritius is “free to implement a programme of resettlement” on the islands, excluding Diego Garcia. But it does not require the residents to be resettled. The deal establishes a trust fund to benefit the Chagossians.

For more than five decades, Britain carried out one crime after another against the Chagossians while lying, ignoring court decisions, invoking Royal Prerogative and then covering up its actions. The islanders have lived in impoverished conditions ever since, with just a few allowed into Britain.

None of the promises of support and compensation were kept. Many of the islanders were simply abandoned when they landed. The islanders, as a condition of accepting Britain’s derisory offer of compensation in the 1980s, which largely failed to materialise, were required to renounce their right to return. In 2016, the British Foreign Office set up a £40 million fund to compensate the islanders. Five years later, after it had distributed just £12,000 in direct support to them, Croydon Council, tasked with assessing how to allocate the money, abandoned the work.

The displaced islanders, having fought unsuccessfully in UK courts for years for the right to go home, brought an 11th-hour legal challenge to try to stop the UK transferring sovereignty of the Chagos Islands to Mauritius to enable their case for their right of return to their homeland to be settled. Later that day, another judge discharged the injunction, enabling the agreement to hand over the Islands to go ahead.

The two British Chagossians Bertrice Pompe, 54, and Bernadette Dugasse, 68, both born on Diego Garcia, who brought the injunction, accused the British government of betrayal. They have vowed to keep fighting to try to realise their dream of returning to their place of birth. Pompe said, “We’ve been ignored, we’ve been invisible, we don’t exist. They don’t even mention us. When they expelled us, everything was hidden [as if] there were no human beings on the island, just some Man Fridays. And they’re not saying it [now], they’re not pronouncing the words, but by their actions they’re doing the same thing. We’re being scammed over and over again.”

Jemmy Simon, from the Chagossian Voices group, told the BBC that there was “nothing in there [the deal] that is any good for us”. “I’m beyond horrified and angry right now.” “They [the British government] promised to look out for our best interests—absolute rubbish”, she said, adding “It is up to Mauritius to decide if we will get to resettle on the outer islands or not, but they don’t have to if they don’t want to”.

Boeing receives sweetheart deal to avoid criminal prosecution over 737 MAX crashes

Bryan Dyne



In this March 11, 2019, file photo, Boeing 737 Max wreckage is piled up at the crash scene of Ethiopian Airlines flight ET302 near Bishoftu, Ethiopia. [AP Photo/Mulugeta Ayene]

The US Department of Justice announced Friday that it has reached a non-prosecution agreement with Boeing that will allow the aerospace giant to avoid criminal prosecution over two fatal crashes of its 737 MAX 8 aircraft that killed 346 people in 2018 and 2019.

Under the agreement, Boeing will pay approximately $1.1 billion in fines and compensation, retain a company-selected “independent compliance consultant,” and avoid the felony fraud conviction that would have threatened its status as a major defense contractor. The deal reverses a previous agreement reached under the Biden administration in July 2024, in which Boeing had agreed to plead guilty to criminal fraud charges.

The move represents the calculated intervention of the American state on behalf of the military-industrial complex. Boeing is not merely a civilian aircraft manufacturer but a cornerstone of the US military-industrial complex, receiving over $20 billion for the next-generation fighter jets and representatives accompanying President Trump on lucrative arms deals in the Middle East.

The timing of this deal is particularly significant. It comes just months after Boeing was awarded the contract for the F-47 fighter jet, designed for warfare against China, and follows Trump’s announcement of a $96 billion order from Qatar Airways brokered with Boeing’s CEO in attendance.

The legal maneuvering that enabled this outcome was brokered by US District Judge Reed O’Connor. The judge is a notorious right-winger appointed by George W. Bush, who previously served as chief counsel to Republican Senator John Cornyn. He initially rejected the plea deal from Boeing over purported concerns about diversity, equity and inclusion policies in selecting an independent monitor to reject the deal.

As Friday’s ruling exposes, O’Connor’s December finding was designed to provide time to more completely whitewash the aerospace giant’s role the 346 deaths and prevent even the previous fraud charges from sticking.

The ruling also confirms the warning made by the WSWS at the time, that the “rejection of the plea deal does not mean confidence can be placed in the US judicial system to justly punish those responsible for the deaths of 346 men, women and children. The response by the federal government is a naked expression of class justice in America.”

Attorneys for the families of the crash victims have condemned the agreement as a “slap on the wrist” and “morally repugnant.” Paul Cassell, representing many of the families, called it “unprecedented and obviously wrong for the deadliest corporate crime in US history.”

Boeing’s crimes were not the result of mere oversight or technical failures but represented a systematic conspiracy to prioritize profits over human life. The company deliberately concealed the existence of the Maneuvering Characteristics Augmentation System (MCAS) from pilots and regulators, knowing that the faulty software could override pilot input and force aircraft into fatal nosedives. Internal communications revealed Boeing employees boasting about “jedi-mind tricking” regulators into approving training materials while systematically covering up the dangers posed by their aircraft.

The scale of Boeing’s criminal conduct extends far beyond the initial crashes. Even after the first crash killed 189 people in October 2018, Boeing and the Federal Aviation Administration allowed the aircraft to continue flying, with internal FAA analysis determining that the MAX would average one fatal crash every two to three years. This analysis was suppressed from the public even after the second crash occurred just five months later, killing 157 more people.

The financial penalties imposed on Boeing represent a fraction of the company’s total value and the profits generated by the MAX program. The $445 million compensation fund for crash victims amounts to less than $1.3 million per death. To put Boeing’s arithmetic into perspective, the single $96 billion Qatar Airways deal that Boeing secured with Trump’s assistance is worth more than 215 times the compensation fund for all 346 victims combined.

Moreover, Boeing’s market capitalization increased by nearly $200 billion from the time the MAX was announced in 2011 until the fleet was grounded, while company executives personally enriched themselves through well-timed stock sales worth tens of millions of dollars.

The International Association of Machinists union sabotaged the recent strike by 33,000 Boeing workers at facilities across the Pacific Northwest, ensuring that Boeing’s defense production remained uninterrupted. The union apparatus worked hand-in-hand with the Biden administration to shut down the strike and maintain Boeing’s profitability, demonstrating once again that the labor bureaucracy serves as an instrument of corporate control rather than worker defense.

Boeing’s sacrifice of lives to profit is not an aberration. The ruling on Boeing comes after autoworker Ronald Adams Sr. was crushed to death on April 7 while working at Stellantis’ Dundee Engine Complex in southeast Michigan. Initial reports indicate that he was killed when an overhead gantry unexpectedly engaged and crushed his torso.

Taiwan’s currency destabilized by its trade deal with Trump, signaling escalating currency and trade wars

Shih-Yu Chou


The value of the Taiwan dollar (TWD) against the US dollar jumped by approximately 10 percent in a few days in May. This sparked public speculation and concern over any undisclosed concessions made by President Lai Ching-te’s government to secure a trade deal with President Donald Trump. The Central Bank of the Republic of China (CBC, commonly known as Taiwan’s central bank) intervened to curb the spike in the TWD.

As JPMorgan stated, “Such pronounced volatility is extremely rare for the TWD, given that the currency is highly managed” by the CBC.

Board of Governors of the Federal Reserve System (US), Taiwan Dollars to US Dollar Spot Exchange Rate, retrieved from FRED, Federal Reserve Bank of St. Louis [Photo: FRED, Federal Reserve Bank of St. Louis]

A global trade war is a currency war

The events that preceded the rise in the TWD shed some light on what is going on and what is to come. In an interview with Nikkei this month, Lai asserted that Trump’s “reciprocal tariffs” were intended to improve US “fiscal sustainability,” lower “tax burdens on Americans,” boost industrial capacity, and “promote world peace.”

While the 32 percent tariffs imposed on Taiwanese exports posed “a major challenge” to the island, Lai vowed to “work with” the US through “negotiations,” which would include additional procurement and investments in the US, as well as the elimination of tariff and non-tariff barriers to imports from the US.

Taiwanese President Lai Ching-te delivers a speech during National Day celebrations in front of the Presidential Building in Taipei, October 10, 2024 [AP Photo/Chiang Ying-ying]

The honeyed phrase “promoting world peace” refers to the US using every available means to bring China to its knees.

Minority leader of Taiwan’s Parliament Ker Chien-ming, was the first to articulate this stance. The Democratic Progressive Party (51 seats) is the ruling party, while the “opposition” Kuomintang has 52 MPs.

Following Trump’s declaration of the “liberation day,” Ker stated in early April 2025 that the US administration’s global trade war was “first and foremost a currency war against China” or “World War III.” The currency war would be “the fiercest conflict ever fought in the absence of a shooting war.” If the United States successfully “brings down China,” this “will eradicate communism” and “bring about world peace.” It would constitute “the greatest achievement in human history.”

By this definition, the economic turbulence fueled by the Trump administration’s global social counterrevolution is unfortunate collateral damage. Further sharp increases in the TWD are to be expected, which could trigger a financial catastrophe with global ramifications.

Taiwan’s US treasury and bond holdings

Taiwan’s economy is export-oriented and has grown steadily over the past two decades. As of April 2025, the island had US$582.83 billion in foreign exchange reserves. US bonds and treasuries accounted for around 92 percent of forex reserves in March 2025, the Deputy Governor of the CBC said.

In comparison, as of May 2025, Britain has just overtaken China ($759.0 billion) as the second largest holder of US Treasuries ($779.3 billion).

According to numerous studies conducted by economist Brad Setser, a senior fellow at the Council on Foreign Relations and a former US Treasury official, Taiwan’s holdings of forex reserves and overseas fixed income assets, which total US$1.7 trillion and account for more than 200 percent of the island’s GDP, are even more unusual.

In his Financial Times article in mid-May, Setser wrote that with the backing of its regulators, Taiwan’s life insurance industry had amassed “over US$1.1 trillion in total assets (and liabilities), and an insane two-thirds of those (US$750 billion) were invested in foreign bonds.”

Moreover, one-third of life insurers’ investments were (and are) not hedged against a loss of value.

Setser stressed in his 2019 and early 2025 studies, Taiwan’s holdings of US dollar-denominated assets were the result of life insurers acting as “the primary intermediator for Taiwan’s savings” and actively recycling trade surpluses into US bond markets.

Such a practice has persisted to this day. The CBC is awash with US dollars from trade surpluses. This encourages the life insurance industry to swap large cash stockpiles denominated in Taiwan dollars for US dollars with the CBC and then invest overseas. By doing so, the central bank not only effectively slows the pace of US dollar reserves growth but also avoids being viewed as a currency manipulator and being retaliated against by the US Treasury. Life insurers can, in turn, profit from channeling cash stockpiles into investments in higher-yielding and longer-maturity bonds denominated in US dollars.

Bureau of Labor Insurance, Ministry of Labor building and Central Bank of the Republic of China headquarters [Photo by Supanut / CC BY 4.0]

It is not difficult to understand why the US imperialist bourgeoisie did not regard the CBC and life insurers’ actions as currency manipulation. Similar to the US Federal Reserve’s quantitative easing, which involved bond purchases, the flow of liquidity from Taiwan served the interests of US finance capital, which prospered from outright criminal speculation and swindling.

In an FT article, “How Taiwan became a quiet bond market superpower”, Setser and Josh Younger, a former JPMorgan analyst, warned that Taiwan’s life insurance sector’s approach to investment had resulted in a huge mismatch between the industry’s liabilities and assets. More than two-thirds of its assets were (and remain) denominated in US dollars, while more than eighty percent of its liabilities would be paid in local currency.

This currency mismatch, as Setser and Younger showed, amounted to around US$460 billion, accounting for more than 40 percent of life insurers’ portfolios or more than 60 percent of the island’s GDP.

Screenshot of Financial Times article, "How Taiwan became a quiet bond market superpower" [Photo: ft.com]

In their words, the industry “has bet its solvency (with the support of its regulators) on the assumption” that the CBC would be capable of preventing the appreciation of the TWD.

This is not the case, though. Taiwan’s successive governments subserviently carry out whatever US imperialism dictates.

Funds rate spikes and the appreciation of the TWD

Setser went on to stress the potential for the TWD to rise further and Taiwan’s life insurers to go under, stating, “The financial maths in the face of this kind of mismatch is brutal—a 5 percent move in the Taiwan dollar costs the insurers $10 billion or so, a 10 percent move would constitute a $20 billion hit, and so on.”

This year’s surge in the Taiwan dollar had “likely already exhausted the roughly $9 billion of reserves kept as a buffer against FX fluctuations. Further foreign exchange moves would cut into the insurers $80 billion in reported capital,” Setser wrote.

The life insurer’s business model worked well when the federal funds rates were at historic lows, and investing in US corporate bonds, agency bonds, treasuries and mortgage-backed securities yielded higher returns. This strategy had became precarious after Federal Reserve Chair Jerome Powell inflicted economic pain to bring about unemployment and drive down wages.  

The FED raised the federal funds rates at the fastest pace since the 1980s. Bond prices and interest rates are inversely related. As a result, bonds purchased before rate hikes by investors and speculators were trading 15 percent below par between the end of 2021 and the end of 2023.

Setser noted, Taiwan’s “generous” regulators, however, allowed “most of those underwater bonds to be held in parts of the balance sheet that don’t have to be marked to market.”

This, in turn, conceals the extent of the losses.

It is worth recalling how US rate hikes sent shock waves across the financial system and rattled the global financial market. As the FT indicated, by the end of 2022, SVB “held $91.3 billion in a ‘held-to-maturity’ portfolio—bonds you plan to hold on to until they are repaid—and $26.1 billion in an ‘available-for-sale’ portfolio, which is marked to market.”

As the WSWS wrote in March 2023:

The market value of the bonds held by SVB fell as interest rates rose, such that it has been estimated its bonds lost $1 billion for every 25-basis point (0.25 percentage point) rise in the Federal funds rate, which has now been lifted by around 450 basis points.

Taiwanese life insurers have much greater bond holdings than SVB and have already been hit by a combination of falling bond prices and the rise of the TWD against the US dollar.

According to the Economist’s Big Mac Index published earlier this year, the TWD was undervalued by 58.8 percent against the dollar.

To compound the problem, the island continues to be the fifth-largest foreign creditor in the world. The data released by the CBC in June 2024 showed the island had a net international investment position of US$1.735 trillion by the end of 2023.

The CBC, financial regulators, and the Taiwanese bourgeois press have thus far deliberately downplayed the island’s financial vulnerability and extreme dollar exposure as these dollar-denominated assets are a graphic expression of a growing financial and economic disease.

Financial engineering created by the CBC and regulators has only preparing the way for a much bigger financial disaster. A rush on Taiwan’s life insurance sector will dwarf the collapse of SVB, the second-largest bank failure in US history.

It would be naïve to suppose that any looming financial calamity of this scale will stay in Taiwan.

Developing countries and investors are losing appetite for US treasuries and the dollar as safe haven assets because of the US-China rivalry, the weaponization of finance by Washington against Russia, the global economic warfare launched by the Trump regime and the skyrocketing level of US debts brought on by decades of tax cuts and increasing military expenditures.

Consequently, developing countries have begun to gradually repatriate a portion of their funds. According to Eurizon SLJ Capital analysts Stephen Jen and Joana Freire, Bloomberg reported, “these dollar hoardings by Asian exporters and institutional investors may be extremely large—possibly on the order of $2.5 trillion or so—and pose sharp downside risks to the dollar vis-à-vis these Asian currencies.”

Diversification has also occurred in the most advanced countries. As the FT reported, head of FX strategy at Deutsche Bank George Saravelos, warned the erosion of the dollar’s safe haven attributes put “a significant cost on unhedged dollar holdings.” This would threaten “a self-fulfilling unwind of extreme US asset overweights” from countries in the developed world. A drop in the dollar, stock slide and a rise in term premium in US treasuries combined would be “the strongest market signal that a process of US disinvestment is accelerating.”

The fight for “world peace

Taiwan is experiencing a perfect storm. As Trump’s economic offensive against the world’s second largest economy escalates, the Taiwanese ruling elite’s complicity in US manoeuvres against China (be these economic, financial or military) will also intensify.

The stance on “world peace” taken by Lai Ching-te’s government is comparable to that of US-backed Arab despotic regimes.

President Donald Trump and Saudi Crown Prince Mohammed bin Salman gesture as they meet delegations at the Royal Palace in Riyadh, Saudi Arabia, Tuesday, May 13, 2025. [AP Photo/Alex Brandon]

Arab client states have enabled the Gaza genocide by serving as the border Gestapo and supposed peace brokers. They praise the would-be führer Trump, who has been carrying out US-Israeli ethnic cleansing operations on a scale unseen since the Holocaust, as “a man of peace” who “wants to bring peace,” to quote Qatar’s Emir Tamim bin Hamad al-Thani. “We can continue working together to achieve it,” the Emir told Trump.

On May 20, 2025, Lai marked one year in office by delivering a speech easily matching the cynicism of the Gulf monarchs, claiming Taiwan, the United States, and “our democratic allies” had actively participated in exchange and cooperation to advance common interests and economic growth. While there were always disagreements among “friends,” these were always resolved. Just as the proverbs 27:17 stated, “As iron sharpens iron, so one person sharpens another.”

Amid the sharpening of divisions among capitalist powers and an accelerating collapse of US hegemony, he then pledged to transform Taiwan into “a global beacon, a pilot for world peace, and a force for global prosperity.”