Falklands Dispute Intensifies

Sources: BBC News – Oil drilling starts in Falklands / Mail Online – Falklands oil row: Argentina crisis deepens / Mail Online – The Falklands betrayal: U.S. fails to back British oil claims after row over American torture secrets / Financial Times – Argentina asks UN for help on Falklands row / Financial Times – Summit backs Argentina claim on Falklands / Financial Times – Moment for truth near in search for Falklands oil / Financial Times – UK company begins drilling for oil / Financial Times – Call to stiffen Falklands defense

The dispute between Argentina and Britain intensified over the past month as Britain moved forward with oil exploration. British based oil company, Desire Prospect, commenced exploratory oil drilling operations in the Falklands on February 22, 2010. Four British drilling companies are planning to drill around the islands. The companies are single asset companies, which investors set up specifically to drill for oil in the Falklands. The dispute centers on the archipelagic waters surrounding Argentina. Geologists predict that the seabed surrounding the Falklands could contain up to 60 billion barrels of oil.

The dispute began in 1833, when Britain reasserted control over the islands from Argentina. Britain and Argentina have disputed the sovereignty of the islands throughout the last 177 years. In 1982, Britain and Argentina fought a brief war over the islands in which Britain succeeded in claiming sovereignty over the Falklands. During that war, 255 British soldiers and 469 Argentina soldiers perished. Following that war, Britain and Argentina signed a joint oil exploration agreement. In the late 1990s, several oil companies obtained licenses under the joint agreement to drill in the Falklands, but abandoned the licenses because of low oil prices. The dispute began intensifying again in 2007, when Argentina abandoned the joint oil agreement and oil prices began reaching record levels. Argentina claimed that it abandoned the agreement because Britain kept changing the terms. During 2009, Argentina filed a claim with the United Nations asserting sovereignty over the islands.

The rhetoric between the two nations heated up over the past month as British oil company, Desire, commenced operations. Last week, a summit comprised of 32 Latin American and Caribbean countries declared that the disputed territory belongs to Argentina. Argentina has also petitioned the United Nations for resolution of the matter. Britain has resisted calls for negotiations. Argentina foreign minister called the drilling operation an invasion of Argentina’s sovereignty. The Tories have called for Britain to deploy more warships to the region to show Argentina its resolve to drill in the Falklands. UK Defense Minister Bill Rammell informed the House of Commons that Britain was prepared to take “whatever steps [were] necessary” to protect the islands and that it made Argentina “aware of that.” Argentina tightened the navigations rules surrounding its waters in response. A senior MP asserted that the U.S. has failed to support British claims in retaliation for a British court releasing details about the treatment of a Guantanamo Bay prisoner. The region hopes for a quick resolution to the matter, as the regional conflict threatens foreign trade and regional security in Latin America.

Discussion Questions:

What are the ramifications on world trade if this dispute intensifies further?

Will the dispute reside after Argentina holds elections?