Today, a British-engineered occupation enters its fifth decade. There will be no commemoration, despite the human toll and murkiness surrounding what is going on there. Yet an entire population, exiled from their homeland and betrayed by the British government, are stepping up their campaign to return home. The coming weeks may decide their fate. Forty years ago this week, while African and Asian countries were throwing off British rule, Whitehall officials were busy establishing a new colony. The British Indian Ocean Territory (Biot) was created by detaching the Chagos island group from Mauritius and other small islands from the Seychelles, then both British colonies. Mauritius was given £3m in compensation; the following year, Britain signed a military agreement with the US leasing it the largest island, Diego Garcia, for 50 years.

Washington wanted the island as a military base and made clear it was not prepared to put up with any inhabitants there – so Britain forcibly moved all 2,000 of them, the last leaving in 1973. Ever since, the Chagossians, most of whom live in poverty in Mauritius where they were dumped by the British, have fought for their right to return. In 2000, the Chagossians won an extraordinary legal victory allowing their return to the outlying islands in the archipelago. But last year the government overturned this decision by issuing orders in council to ban the islanders from ever returning. Unless this decision is overturned by the high court next month, the Chagossians’ fate may well be sealed.

Such action might be expected to be a matter of public outrage. Yet the Foreign Office boasts in its annual report: “We have defended successfully a legal challenge from the Chagossian people … who had sought compensation and assisted resettlement.” The government has probably spent around £1m of public money to defeat the Chagossians.

Such government ruthlessness over Diego Garcia is long-standing. Foreign Office officials in the Wilson government stated in secret files the day after the creation of the Biot that it would be “best to avoid all references to permanent inhabitants” of the islands. “Best wicket … to bat on,” they went on, was that “these people are Mauritians and Seychellois”. Britain ignored a UN general assembly resolution urging it not to dismember the territory of Mauritius, while British officials secretly wrote of the “urgent need to evacuate its permanent inhabitants” to make clear that the islands were “defence installations and not a new colony”.

The latest phase of deception involves the claim that resettlement of the Chagos islands is unfeasible, refuted by independent environmental analysts and the experience of the Asian tsunami last December. Even the 6ft wave that hit Diego Garcia caused no damage to facilities. Moreover, the islands have already been resettled – by the US military, which has built a library, post office, bank and chapel for the 1,700 troops there and enough housing for 1,500 civilian workers. The US navy website assures incoming servicemen that “personal living conditions on the island are excellent” and fails to trouble them with any mention of the exiled population.

B2 stealth bombers based on Diego Garcia have been used against Iraq following the Blair government’s approval in mid-2002 of a US request to base them there. The secret Downing Street memo of July 2002, leaked a few months back, made clear that the US military regarded the Diego Garcia base as “critical” to all Iraq invasion options.

Even murkier are the US and Canadian media reports about Diego Garcia being used to hold terrorist suspects beyond the reach of US and international law. The British government has consistently denied that any detainees from Afghanistan or Iraq have been held on Diego Garcia. Yet Amnesty International told a US senate hearing in June it had evidence that the island was one in a network of secret CIA detention facilities, where “detainees are being held arbitrarily, incommunicado and indefinitely without visits by the Red Cross”.

The Chagos islands are, like Iraq, occupied territory, yet this small community has had few international friends. The story of Diego Garcia is an indictment of Britain’s political culture as well as government policy. If, next month, the government succeeds in its victimisation of this long-abused community, it will be our responsibility.

· Mark Curtis, author of Unpeople: Britain’s Secret Human Rights Abuses, was director of the World Development Movement

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