Thirty Years Later…
Argentina and Britain have been raising the heat on a long simmering dispute over the sovereignty of the Falkland/Malvinas Islands. Having fought and lost a brief, but vicious, war with Great Britain over these same islands in 1982, the issue was laid to rest for three decades. Argentina has never renounced her claims to the islands and periodically brings the issue up in the United Nations to keep it alive.
Now, however, the government of Cristina Fernández de Kirchner has brought this dispute from the realm of quiet diplomacy to the forefront of the newspapers. In December during a MERCOSUR summit in Uruguay, Argentina convinced the other members of the trading bloc to deny entry to their ports to all ships flying the Falkland Islands flag. (1) This was agreed to partially out of a sense of South American solidarity against what many in that continent consider a vestige of European colonialism; partially to avoid a row with Argentina at a time when no one’s economy wants it; and partially because the matter is purely one of form: there are almost no ships flagged with the Falkland Islands flag. A few fishing boats is all; almost everyone and everything else arrives on the Islands on British flagged ships, which are not barred from any of the MERCOSUR ports.
Britain, at first, merely denounced the measure and reaffirmed its commitment to protecting the Falkland Islanders and their right to self-determination. The Falkland Islanders are all transplanted Britons and have not the slightest interest in becoming Argentines. In January though, the British government announced that it would dispatch a destroyer, HMS Dauntless, to replace the frigate that is currently in the South Atlantic, HMS Montrose. The deployment is entirely routine: it is neither unusual nor threatening, though the Dauntless is a much more formidable anti-aircraft platform than the frigate. Regardless, Argentina has protested the “militarization” of the South Atlantic as well as the deployment of Prince William as a military S&R pilot to the islands. (2)
HMS Montrose HMS Dauntless
Historically, the Falkland Islands were a vital geostrategic possession for the worldwide British Empire, a coaling station for ships on their way from home waters to the Pacific. That is also why Britain fought the Dutch and Boers for South Africa (to control the Cape Horn route) and the Mamelukes for Egypt (to control the Suez Canal route). But the sun has finally set on the British Empire: there are no more British colonies to protect in the Pacific. The Falklands, as a British outpost, have outlived their purpose. So what is this all about anyway? Why does either nation care about a heap of frozen, wind-swept rocks deep in the South Atlantic?
Oil and Politics
It turns out, not surprisingly, that there are sound economic reasons for desiring the islands. The South Atlantic fisheries remain exceedingly rich and the Falkland Islands economic exclusion zone covers a vast stretch of water.
More importantly, there appear to be large exploitable reserves of oil and gas on the continental shelf that extends out to the Falklands from Patagonia. The hydrocarbon reserves are estimated to exceed 8.3 billion barrels – three times the United Kingdom’s current reserves. With Brent Crude going over $100 per barrel, this previously underexplored and unexploited area is becoming a profitable prospect. (3)
There are already 5 UK-based exploration companies with a presence in the South Atlantic. Falkland Oil & Gas plans to drill in the Loligo prospect this year, searching for an estimated 4.7 billion barrels. Borders & Southern is exploring both the Darwin and Stebbing Prospects (760 million and 1.2 billion barrels respectively). Currently, Rockhopper PLC is the only company with a commercially viable claim. The 2010 Sea Lion discovery may have more than 400 million barrels of oil and the company is actively seeking partners to finance the estimated $2 billion investment required to develop it. (4)
There is naturally a political element as well. Argentina went to war in 1982, not so much as to recover the islands, as to prop up the tottering military junta whose utter incompetence was ruining the country. The military troika had brutally suppressed all civil opposition in the name of fighting communism and had conducted a campaign of terror and assassination which was unrivaled in its vicious depravity. Given the history of military dictatorships in Latin America, that’s saying a lot.
Argentina’s junta: Anaya, Videla and Dozo
It is estimated that up to 30,000 Argentines disappeared during the 10 year inquisition by their own government and military. (5) The economy was in shambles, unemployment was surging and hyperinflation was crushing the ordinary Argentine. Yet the moment the government sent troops to reclaim the Malvinas, it won immense popularity. The people were genuinely frenetic with joy. Military defeat led directly to the collapse of the junta.
Mrs. Fernández is no fool. Her reelection was a significant political feat, and this time in her own right. No one can accuse her of being a front for her deceased husband anymore. Yet for all of that, Argentina faces difficult economic times ahead. The economy is still growing rapidly, but Mrs. Fernández’s government is in continual conflict with Argentina’s export sector and unions. Her government taxes with a heavy hand to pay for popular state benefits and it is not above putting foreign companies and investors under heavy, and sometimes extralegal, pressure to achieve its objectives.
Furthermore, Argentines are again facing the specter of high inflation. Official government figures claim an inflation rate of around 9%, but no one believes them. The actual rate of inflation is in the double digits. And job creation has slowed as well. (6)
So it seems that Mrs. Fernández is picking a fight on purpose to whip up some nationalistic support and perhaps distract the people from difficult economic times at home. Make no mistake: Mrs. Fernández is looking for a diplomatic brawl, enough to allow her to beat the drum for the people at home.
A Military Option?
The simple fact is that Argentina’s military, once the strongest in South America, has never recovered from the 1982 War. Successive democratic governments deliberately emasculated the military to avoid any possible return to power by the generals; and a run of economic crises over the past three decades has ensured that Argentina never had the money to modernize her forces. While it still rattles nicely, Argentina’s saber is made of paper. They lack the means to decide the issue by force. (7)
On the other hand, neither does Britain. The British Navy is a shadow of what it was in the 1980’s. Thanks to the most recent round of budget cuts, the British have even had to mothball their last aircraft carrier, HMS Ark Royal. Her sister ship, the Invincible, which fought in the Falklands campaign, was decommissioned in 2005, leaving only the HMS Illustrious in service. Even so, the British have no aircraft for the Illustrious to launch, having retired the last Harrier GR9s in July of 2010. Britain will have no fixed winged naval aviation assets at all until the new Queen Elisabeth class carriers and their F-35C aircraft are delivered in 2016. (8)
The Last British Carrier: HMS Illustrious
During the 1982 war, the British Task Force had two aircraft carriers. Without naval air power, the British could never hope to recapture the Falklands should Argentina successfully invade again. Any task force the British sent would be too vulnerable to land-based strike aircraft, as the previous conflict demonstrated conclusively (9). Britain suffered unexpectedly heavy naval losses during the previous war including two destroyers, two frigates, two troop ships and a cargo ship full of helicopters for the ground forces, all due to air attack. (10) Luckily for the British, Argentina is in no condition to successfully overcome the strong defensive force deployed on the Falklands.
The Better Way
Short-term politics seems to be the main driver behind the sudden escalation in the dispute, but Mrs. Fernández is pursuing very costly course for Argentina in order to win popular support at home. Argentina has no chance of winning control of the islands through conflict; but a collaborative approach may bring benefits to all the parties.
Argentina should be negotiating economic concessions with Great Britain and the Falkland Islands government. A comprehensive trade agreement would benefit everyone, especially the islanders. For one thing, exploiting the oil and gas reserves in the South Atlantic is extremely difficult – the weather and sea conditions are merciless to men and machines at those latitudes. The risk of failure is high (#) and all supplies must be shipped 8,000 miles from the United Kingdom. Any company that plans to build and operate a drilling platform would benefit from having access to Argentina ports, warehouses and industry.
The Argentine oil industry would benefit immensely both by supplying needed parts and equipment to the rigs, as well as from directly investing in any joint ventures that were agreed upon between Argentina and the United Kingdom. If the exploitation agreement were part of a wider trade agreement, Argentine industry and consumers would benefit even more from increased trade with Britain.
The Islanders too would benefit from the increased investment in their natural resources, from job creation and from servicing the oil platforms. It is far more likely that Argentina would win the approval and affection of the islanders through closer economic ties than through efforts at isolation.
Under such circumstances, it is not inconceivable that a joint sovereignty agreement might not be reached. The Falkland/Malvinas Islands are sufficiently distant from both Buenos Aires and London to not have to worry about any significant interference in their self-government. Any deal struck with Great Britain would undoubtedly include adequate guarantees of non-interference, tax treatment and immigration rules to protect the Islander’s “distinctive character”. It would essentially come down to the Islanders being issued another set of passports and some more Argentine tourists and investment.
If Mrs. Fernández sacrifices these potential benefits through a near-sighted excess of populist rhetoric, she will be doing her country a great disservice.
(1) MERCOSUR consists of Argentina, Brazil, Paraguay and Uruguay. Associate member Chile has also agreed to the prohibition.
(2) Reuters, “Argentina condemns British ‘militarization’ of Falklands”, 8 February 2012.
(3) Swint, Brian, “Oil Grab in Falkland Islands Seen Tripling U.K. Reserves: Energy”, Bloomberg, 25 January 2012.
(4) Ibid. Shell, Desire Petroleum and Argos Resources, Ltd have all drilled in the area without commercial success.
(5) Estimates vary from between 9,000 (1984 Truth Commission) to 30,000 casualties (Amnesty International) of the “Dirty War”.
(6) Instituto Nacional de Estadística (Argentine National Institute of Statistics)
(7) The Argentine Air Force is still flying essentially the same inventory of aircraft as it did in 1982, having been unable to replace or modernize its forces due to deliberate neglect by democratic governments as well as economic crises. Argentine Naval Aviation is in a similar condition, having retired all A-4 Skyhawks and maintaining only the Super Etendard strike aircraft. The Navy has modernized but reduced its light ships, retiring all WWII vintage destroyers and frigates and replacing them with German built MEKO 360 destroyers and 140 frigates. However, the ARA Veinticinco de Mayo aircraft carrier was decommissioned without replacement. Source: Armada Argentina.
(8) “Strategic Defence and Security Review”, 19 October 2010.
(9) British losses included 2 destroyers, 2 frigates, 2 landing ships, 1 container ship, 24 helicopters and 10 Sea Harrier fighters. Argentine aircraft strafed and bombed their British targets “on the deck” in order to avoid detection and anti-air defenses. These low level attacks did not give the retarded gravity bomb fuses time to arm and led to 13 bombs that struck and penetrated British ships without exploding. Retired Marshal of the Royal Air Force, Lord Craig, is supposed to have said of the Argentine air attacks: “Six better fuses and we would have lost.”