Oil ‘goldmine’ surrounding Malvinas islands revives Argentina/UK clash
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Oil ‘goldmine’ surrounding Malvinas islands revives Argentina/UK clash

A set of small, desolate islands located approximately 400 kilometers off Argentina’s Patagonian shore, the Malvinas (or Falkland Islands, as they’re known in the United Kingdom) have taken center stage these last few weeks as Argentina and the U.K. battle it out over the legitimacy of multinational oil companies’ purported right to drill in the South Atlantic waters surrounding the archipelago.

It may have ditched the fleets, but the South American nation is no less determined to stake its claim to the islands’ hydrocarbon resources, 21st-century style: via legal action.

On April 21, Argentine prosecutors filed a criminal complaint against the energy companies, which include three British interests, drilling for oil and gas off the islands’ shore. They argue that the companies in question – Falkland Oil and Gas (FOGL), Edison International, Noble Energy Inc. and its affiliate Noble Energy Falkland Limited, Premier Oil and Rockhopper Exploration – failed to obtain the appropriate authorization from Argentina’s Energy Secretary.

“Argentina has been forced to resort to defensive measures making use of the law and political action as its main tools in order to protect the natural resources in the area under dispute,” Argentine minister to the Malvinas Daniel Filmus declared.

In turn, the islands – officially U.K. overseas territories – maintain what they see as their right to develop their economic resources.

“The Falkland Islands Government (FIG) fails to see how drilling is in any way a provocation,” an official statement from the islands’ Legislative Assembly reads. “We have the right to develop our economy, including the hydrocarbons industry, and we are exercising that right. Exploration drilling has been happening in Falkland Islands waters for many years.”

According to analysts, the suits mostly represent of a political gesture and pose little threat to the companies’ continued drilling.

A multibillion-dollar industry right under the water’s surface

To date, the Malvinas islands’ major exports have primarily consisted of wool, animal hide and meat. However, the seas surrounding it are said to contain substantial oil reserves; so substantial, in fact, that oil explorers have targeted 8.3 billion barrels – or three times the U.K.’s reserves.

Accordingly, the FIG has drafted a fiscal policy to allow it to collect 9 percent royalty on petroleum that is eventually extracted and a 26 percent corporation tax on future licensees.

Argentina, by contrast, suffers from declining oil production, which has opened up a $7 billion energy deficit. In a bid to solve this impending energy crisis, the South American nation has linked up with Russia to engage in joint exploration and development of shale gas in Argentina’s Neuquén province.

Reportedly responding to rumors that Russia and Argentina were working out a bombers-for-beef and wheat exchange, the U.K. announced it would be investing 180 million pounds into strengthening its military presence on the islands. Argentina denied the claim and condemned the British military escalation.

The FIG later claimed an increase in the size of the military would serve to strengthen the island’s infrastructure rather than its defense. The islands’ current lack of infrastructure is an impediment to the import of exploration equipment.

A patriotic matter

The islands’ sovereignty remains a hot-button issue, fresh in the minds of Argentines today who see the Malvinas as Argentina’s patrimony.

In November 2014, the Argentine Congress passed a law stating that all forms of Argentine public transport – bus, train, plane, etc. – as well as their stations must display the words “The Malvinas are Argentine.” The law came into effect in January 2015.

Earlier this month, Argentina rolled out a new 50 peso note displaying a map of the archipelago in commemoration of the 32nd anniversary of the 1982 war.

“We live in a changing world. I have endless confidence that we will recover these islands,” President Cristina Kirchner said during a ceremony unveiling the bill.

Although public sentiment in Argentina appears to be overwhelmingly in favor of reclaiming the islands, various public figures have denounced what they see as a means for governing officials to galvanize public opinion.

Notably, in February 2012, a group of 17 Argentine intellectuals presented a document requesting that the Argentine government revise its hardball line.

“Obsessively insisting that ‘The Malvinas are Argentine’ as well as ignoring or showing contempt for the fact that this slogan points to subjugation [of the islands] is detrimental to our just and peaceful request that the U.K. remove itself and its military base [from the islands],” the document, titled “Malvinas: An Alternative Vision,” reads.

In a 2013 referendum, 1,513 islanders out of 1,517, representing a 90 percent voting turnout, claimed to be in favor of remaining a U.K. overseas territory.

“It also makes it impossible for Argentina to take steps toward negotiating with the islanders in regards to the islands’ natural resources,” the document continues.

It was received with sharp criticism by President Kirchner’s government and many others.

An embattled history

By turn claimed by the Spanish, French and British, the embattled islands came under Argentine rule in 1820 after the new South American nation secured its independence from Spain.

The islands were then seized by the British in 1833 and resettled by U.K. residents.

The conflict famously came to a head in 1982, when the Argentine government, then under dictatorial rule, attempted to reclaim the land by sending poorly trained and ill-equipped young soldiers to the slaughter, resulting in 650 Argentine and 255 British deaths. Needless to say, the endeavor was unsuccessful.

The international community, spearheaded by the United Nations, has encouraged the two nations to negotiate some sort of accord. Thus far, none has been reached.

The Argentine position maintains that the right to self-determination – under which residents of the islands have accepted British rule – does not apply in this instance since Argentine settlers were expelled from the island and replaced by British transplants in 1833.

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