Mauritian newspapers have been filled with speculation over a report in The Times of India on November 25, 2006 that negotiations have been initiated between the governments of India and Mauritius for the latter to cede Agalega islands to India.

89644 12/15/2006 8:26 06PORTLOUIS752 Embassy Port Louis CONFIDENTIAL 06PORTLOUIS752 "VZCZCXRO5994

PP RUEHMR RUEHRN

DE RUEHPL #0752/01 3490826

ZNY CCCCC ZZH

P 150826Z DEC 06

FM AMEMBASSY PORT LOUIS

TO RUEHC/SECSTATE WASHDC PRIORITY 2846

INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

RUEHAN/AMEMBASSY ANTANANARIVO 0530

RUEHLM/AMEMBASSY COLOMBO 0219

RUEHIL/AMEMBASSY ISLAMABAD 0253

RUEHNR/AMEMBASSY NAIROBI 2932

RUEHNE/AMEMBASSY NEW DELHI 0252

RUEHBI/AMCONSUL MUMBAI 0250

RHMFISS/HQ USCENTCOM MACDILL AFB FL

RHHMUNA/HQ USPACOM HONOLULU HI

RUETIAA/DIRNSA FORT GEORGE G MEADE MD

RUEAIIA/CIA WASHDC

RUCQSOC/USSOCOM MACDILL AFB FL

RHEHNSC/NSC WASHDC

RUEIDN/DNI WASHINGTON DC

RUEKJCS/JOINT STAFF WASHDC

RUEHNR/KUSLO NAIROBI KE

RUEKDIA/DIA WASHINGTON DC

RHPIGXW/CJTF HOA" "C O N F I D E N T I A L SECTION 01 OF 03 PORT LOUIS 000752

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/14/2016

TAGS: PREL, MARR, EPET, PBTS, ECON, PHSA, PINS, IN, MP, IO,

SF

SUBJECT: MAURITIUS DENIES PLAN TO CEDE AGALEGA ISLANDS TO INDIA, BUT ISSUE SHOWS MAURITIAN SUBORDINATION

PORT LOUIS 00000752 001.2 OF 003

Classified By: DCM Stephen Schwartz. Reason: 1.4 (b/d)

1. (C) Summary: Mauritian officials deny any intention to cede Agalega islands to India, as alleged in an Indian newspaper report. They have said that India agreed to help with economic development and infrastructure improvement but they were unable to deny categorically that India has no ulterior motives on the islands. This has led to much speculation that India wants the islands, located northeast of Madagascar, for strategic purposes such as a military or naval base, listening post, and/or oil prospecting. The Mauritian public seems to accept that India can have its way as long as the islands remain Mauritian. This is indicative of Mauritius, willing subordination to India which is its most important foreign partner. End summary.

/// MAURITIANS DENY PLAN TO CEDE ISLANDS ///

2. (U) Mauritian newspapers have been filled with speculation over a report in The Times of India on November 25, 2006 that negotiations have been initiated between the governments of India and Mauritius for the latter to cede Agalega islands to India. The two Agalegan islands have a population of about 200 and are located northeast of Madagascar and south of the Seychelles at (10 degrees 25, S, 56 degrees 35, E). Responding to a parliamentary notice question December 5, Prime Minister Ramgoolam categorically denied any intention to cede the islands to India. He said India,s role in Agalega, if it materialized, would be limited to economic development and infrastructure improvements.

3. (U) Ramgoolam said that he asked Prime Minister Singh in October 2005 in New Delhi and President Kalam in March 2006 in Mauritius for India,s assistance. A three-person survey team from India visited the islands in October but the Mauritian government has not yet seen the results of their assessment. Ramgoolam said that the Government of India was willing to develop an economic development plan for the islands focused on coconuts, fisheries, and agricultural diversification. It also might improve the currently unusable landing strip. Ramgoolam also noted that on its own initiative India carried out a hydrographic survey of the Agalega region at no cost to Mauritius.

/// SPECULATION ON INDIA,S HIDDEN AGENDA ///

4. (U) Notwithstanding official denials, Mauritian commentators continue to suspect that India wants to use Agalega for strategic purposes, possibly by establishing a military or naval base or an eavesdropping station. Pundits have warned the government against repeating the 1965 mistake of their predecessors who accepted Britain,s offer of independence but without the Chagos Archipelago. Subsequently, the British removed the inhabitants of the archipelago to make way for the construction of the U.S. naval support facility at Diego Garcia.

5. (C) Ramgoolam,s top two aides, his Chief of Staff Kailash Ruhee and the Secretary for Home Affairs Raj Mudhoo, have told the Embassy that this affair is much ado about nothing. They asserted that Mauritius was not going to cede Agalega to India and that the discussions were limited to economic and infrastructure development. Indian DCM, Sanjiv Ranjan, corroborated this account, adding that India initially did not agree to Ramgoolam,s request but changed its position after the he raised it with President Kalam. Nevertheless, Mauritian officials have displayed an unusual degree of nervousness and word parsing, which might indicate that there is more to these reports that the government has admitted.

/// OIL PROSPECTS? ///

PORT LOUIS 00000752 002.2 OF 003

6. (C) Oil is another possibility. An article on November 30 in L'express newspaper cited several differing views of Texaco,s 1975 exploration of the Saya de Malha zone, after which the company claimed to have found nothing of interest. On December 13, Capt. Guy Adam, the President of the Seychelles Petroleum Company, told Conoff that he suspects there is exploitable oil reserves in the region between Seychelles and Agalega, and that this explained India,s interest.

/// AGALEGA,S FRAGILE ECOLOGY ///

7. (C) The size and activities of a new foreign presence in Agalega would have to be limited or all-inclusive. Mauritius, Commissioner of Police, who overseas all security services, told DCM December 13 that the previous Mauritian government was right to block a plan for a 15 villa eco-tourism project because the islands eco-system was too fragile to support it.

8. (SBU) On the other extreme, the Mauritian government has approved a preliminary project proposal from the South African firm Arcon for Agalega valued at USD 450 million. Mr. Gawtam Davay, General Manager of the Outer Island Development Corporation (OIDC), told Commercial Specialist that the tourism development project would be largely self-sustaining. It includes a wind energy plant, a waste water treatment plant, and a waste disposal facility. It also contains administrative block, bungalows, a marina, restaurants, and shops. Arcon plans to produce hydroponic vegetables. It would also upgrade the islands schools, health centers, and sports facilities.

//// COMMENT: INDIA CALLS THE SHOTS ///

9. (C) Comment: Whether or not India has any strategic designs on Agalega, this issue has shown the Mauritian public the extent of their country,s subordination to India. The political class already knew it. The Leader of the Opposition privately told the DCM in early 2006 that he supported the government,s tilt towards India because "India is the wave of the future and Mauritius is going to ride that wave." As ties with India have grown in breadth and depth the importance of relations with France and the United Kingdom have continued to decline. For decades relations with India were limited by poverty and differing worldviews. The modest bilateral relations were based on a relative proximity and shared culture, since at least 70% of Mauritians are of Indian origin.

10. (C) The post-Cold War period changed the circumstances of the relationship. Indian diplomats say they have worked hard over the last five to six years to persuade Mauritius to allow Indian firms to compete in the cosseted local market. The defenses of the Mauritian business community are dropping as it grows increasingly attracted to India as a new commercial partner.

11. (C) India,s domination of this relationship is skewed further by Mauritius, sense of economic vulnerability. This stems from the EU,s 2005 decision to reduce the price it pays for sugar by 36% as well as continuing struggles in the textile and apparel sector since the expiration of the multi-fiber agreement. Amidst this economic uncertainty, Mauritius and India are in the throes of negotiations over two important economic agreements: a Comprehensive Economic and Commercial Cooperation Agreement and a Non-Double Taxation Agreement. The latter is hugely beneficial to Mauritius and sustains the country,s financial services sector but has come under fire by the left wing in India which alleges that it leads to a loss of tax revenue and jobs.

PORT LOUIS 00000752 003.2 OF 003

12. (C) In the past five years, Indian money and labor built the two most modern showcase buildings in the country, the Swami Vivekananda Conference Center and the Ebene Cybertower. Fewer and fewer Mauritians still think that the motivation for India,s assistance stems from cultural affinity or magnanimity. Indian diplomats in Mauritius have scorn for the quaint Mauritian notion that "Mother India" will help for cultural or sentimental reasons. The new bottom line is that if India wants something from Mauritius ) short of territory - they are likely to get it.

CABRERA