The Falklands: The Luckiest Colony?

Tensions are rising between Argentina and Great Britain over the Falklands Islands, located 300 miles off Argentina’s coast. The row has to do with the imminent arrival of a drilling rig, the Ocean Garden, in the service of British firms, to explore for oil and gas in the waters around the islands. The frigid south Atlantic that isolates the Falklands may contain 60 billion barrels of oil, a prospect that has stirred nationalist passions in Britain. Argentina, which insists “Las Islas Malvinas son Argentinas,” says that permits will be required for any ship crossing its territorial waters en route to the islands. Prime Minister Gordon Brown recently proclaimed the Falklands “protected” from outside threat, harkening the Argentine riposte: Britain was “whipping up the specter of war.”

In 1982, Argentina and Britain went to war over the Falklands. Governed by a feckless military junta, Argentina was in the midst of one of its infamous economic crises, putting the government on a quest to boost their support. They decided to attack the token garrison on the Falklands, long claimed by Argentina but occupied by the British since 1833, calculating that Britain wouldn’t commit to a large-scale naval deployment from 8,000 miles away.

Hindsight makes that calculus seem suicidal, but a recent history of the conflict uncovered a secret British attempt to handover the Falklands to Argentina two years prior to the war. And the Falklands weren’t much of a prize. The economy had long been based on fishing, especially whaling, and wool, but by the 1980s the wool trade was about the only commercial game in town.

For Argentina’s junta the Falklands invasion brought ruination: the final defeat of Argentine forces in July sparked protests through the streets of Buenos Aires leading the government to relinquish power. Argentina held elections in 1983. For Britain, the Falklands campaign proved to be the last imperial gasp of the world’s great liberal empire. The British economy had been in the dumps; worker’s strikes and stagflation had the UK on track to converge with Albania’s GDP by 2000. A quick and resounding defeat of the Argentine military was key to Prime Minister Thatcher’s re-election.

The conflict was all but forgotten by the British for a generation, excepting the loved ones of the 258 Britons who died there. It most certainly was not in Argentina. In the Plaza de Mayo, perhaps Buenos Aires’ most storied public space, wounded veterans of Las Malvinas continue to ask for donations to help treat their disabilities, handing out tiny light blue and white ribbons, Argentina’s national colors, in return for a donation.

Much has changed in the 28 years since the war’s end. The Falklands are still sparsely populated—around 2,500 inhabitants—and still battered by the cold winds coming off the Drake Passage. But the economy has taken off. Fishing licenses have become the primary source of the island’s wealth. Vessels from Japan, Korea, Spain, and other nations frequent the outpost in order to fish its waters, and in the 1990s a preliminary round of oil drilling brought more activity to the islands. Thanks to tourism and the global demand for fish over the past two decades per capita income in the tiny Falklands eclipsed $35,000 in 2002, making the Falklands the wealthiest region in Latin America by a wide margin.

And Britain hasn’t fallen lax on defense, spending lavishly to secure the Falklands. As of 2002, the last year for which I can find figures, Britain spent 70 million pounds on defense of the Falklands, equal to Argentina’s entire military budget.

The islanders have gone from the state of subsistence to a state of lonely utopia in a generation. Today the Falklands are, as one resident told the BBC, “the luckiest people that was ever mixed up in a war.” Argentina has progressed democratically, if not economically. Britain’s economy has recovered, and convergence with Albania is no longer a worry. Now, for the first time since 1982, Argentina and Britain have had to endure prolonged recession simultaneously, and that windswept outpost, closer to Antarctica than Buenos Aires, is once again giving cause to the diversions of two governments waning in popularity.