Penguins, Princes and Crude Oil

Home to an estimated 500 000 penguins and until recently Prince William the Falkland Islands have an undeniably rich military history and even rich biodiversity.  Uninhabited by humans until the 16th Century, the ownership of the islands has been bitterly contested for generations between European powers in their quest for Empire and riches.

Situated only 300 miles from the Falkland capital Stanley, Argentina has regularly peddled the claim that the Falkland Islands (or Islas Malvinas in Argentina) and their inhabitants belong to Argentina.  Although vociferously refuted by the British government Argentina has refused to modify its stance throughout the years on such grandiose claims; this infamously culminating in the unsuccessful 1982 invasion in which 649 Argentinian and 255 British military personnel lost their lives.

Whilst still reeling from the events of 1982 Argentina is far from silenced.  Indeed, Buenos Aires is currently engaged in a severe diplomatic (and increasingly confrontational) spat with the United Kingdom.  Why?

At face value the answer is surprisingly simple.  Rocked by domestic problems, Argentina under President Cristina Fernández de Kirchner has suffered from an agonising inflation rate that is among the highest in the world.  Estimated at around 25% per year, only the modern day dictatorships of Venezuela and Belarus can compete in worldwide rankings.  Furthermore President Kirchner has authorised a clamp down on Argentinian media by limiting the importation of newsprint to ‘authorised’ publishers and expanding controls over the content journalists can cover.  And in a final draconian sweep Kirchner has recently introduced a new ‘Terror Law;’ this allowing the state to imprison people for up to 15 years when convicted for a variety of trivial ‘offences’ that range from marching in protests to pulling money from banks in a highly probable economic crisis.

Faced with such unpopularity and domestic criticism, the Argentine government has developed a novel solution which centres almost solely on the Falklands.  Knowing that any rhetoric contesting the sovereignty of the Falklands maintains support, President Kirchner has chosen to whip up a frenzy of anti-British sentiment within Argentina.

Citing the recent stationing of Prince William in the Falklands as a Search and Rescue pilot, President Kirchner has lambasted the British government by declaring that such a stationing is a policy of militarisation by ‘a crude colonial power in decline.’  In retaliation UK Prime Minister David Cameron has blasted Argentina for pursuing a ‘policy of confrontation,’ simultaneously causing outcry in Buenos Aires by suggesting that Argentina’s claim to the Falkland Islands is a form of colonialism.

It should be noted that this diplomatic bickering is nothing new.  Since the formation of the United Nations in 1945 Argentina has attacked Britain both diplomatically, economically and militarily.  Likewise, the United Kingdom has largely done the same.  However, what is concerning Whitehall this time is the ferocity and extent of Argentine action.  For the first time since 1982, there is a fear that Argentina has lit the fuse of a political powder keg which has the potential to alter the balance of the entire region.

In addition to economic embargoes, diplomatic spats and legal intimidation, President Kirchner has succeeded in cajoling several high profile South American nations such as Peru, Chile and Brazil into an anti-British pact.  For example, only last month it was confirmed that several South American nations had been persuaded to turn away Falklands-flagged vessels from their ports.  Furthermore, in a recent high profile move Peru cancelled a scheduled visit by the Royal Navy frigate HMS Montrose as an act of solidarity with Argentina in its dispute with the UK over the Falkland Islands.

Although the Falkland Islands are believed to be virtually impenetrable in Western military circles, the recent British Strategic Defence and Security Review undertaken by the ruling coalition government has no doubt emboldened President Kirchner’s resolve.  Likewise, comments from high-profile Major Generals regarding current British Royal Naval capabilities have almost certainly not helped deter any Argentinian threat.  For many though, the increased Argentine threats and blustering regarding the Falklands have little to do with past grievances or a lack of British military clout.  Instead, the highly charged dispute has emerged due to the recent discovery of vast amounts of commercially viable oil – in 2010 Rockhopper Exploration announced that their preliminary Sea Lion well was commercially viable and that the oil was of a good enough quality to extract.

Showcasing the British ‘fair play’ mentality, the government had offered to share some oil revenue with the Argentinian government – even after the most recent threats.  Of course, to a faltering Argentine economy playing hardball to get the best deal possible is a valid strategy.  Flush with ‘free’ money, President Kirchner would be in a position to offer industry and individuals financial incentives as a means of ensuring political dominance.  In a country with severe economic and political problems such an outcome would no doubt be extremely well received.

Oil: the real reason Argentina is interested in the Falkland Islands

So, despite all the doom and gloom how is the situation likely to play out regarding the Falklands?

Well, it is blindingly obvious that the UK Government will not surrender the islands to Argentina without a fight.  This is not only because the islanders have insisted on numerous occasions that they wish to remain British and under the protection of the United Kingdom, but also because no British government could survive losing the Falklands as they have become a totem of British foreign policy.  David Cameron has more or less explicitly stated this policy by clearly maintaining that there will be no negotiation on the status of the Falklands.  In the meantime Argentina is likely to continue their policy of confrontation for the foreseeable future, or at least until meaningful negotiations are entered into regarding oil extraction and the 30th anniversary milestone of the invasion has passed.

Although grim, this does not mean that we should expect a military confrontation.  The dispatching of HMS Dauntless and unconfirmed reports that British submarines patrol the area are designed to deter aggression – not provoke it – whilst the stationing of Prince William on the islands for 6 weeks has given the conflict an international audience with a British bias.   It is also worth noting that Britain and the EU are quietly making it known to Argentina’s South American allies that trade sanctions work two ways.

This is not exactly gunboat diplomacy.  But it is effective.

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