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Oil in troubled waters

Optimize Blog - February 22, 2010 - 0 comments

Echoes of 1982 are starting to reverberate around the UN as Britain and Argentina once again raise the ante on sovereignty around the Falkland Islands.  For those younger readers, in 1982 Argentina invaded South Georgia Island and the Falkland Islands resulting in a short war where 649 Argentinean’s lost their lives along with 255 British lives as Britain reestablished sovereignty through force.  Whilst that short war might have been ‘won’ by Britain, Argentina has never given up its call for sovereignty but it really hasn’t had much of a global profile since due to what is frankly a ridiculously small plot of real estate in global terms.
So what has changed?  Well in short – oil.  The Falkland Islands represents perhaps an opportunity of 60 billion barrels of oil although realistic recovery levels would be much less than that.  Nevertheless, this is a sizeable prize and significant enough for Argentina once again to be approaching the UN for some form of ruling over the disputed territory.  Of course for Britain and the Falkland Islanders, there is no issue and no dispute.  The drilling will take place in what it considers as Britain’s sovereign waters and therefore it is a legitimate business enterprise.
The good news is that Argentina this time around is taking the route of diplomacy, negotiation and influence rather than resorting to armed intervention.  They are looking to gain support from other South American countries to place restrictions on shipping in the area and not unsurprisingly perhaps have already gained support from Venezuela’s colourful leader, Mr. Chavez.  As for the other neighbours, time will tell.
Should the drilling exploration platform be successful in its search for hydrocarbons 60 miles off the coast of the Islands then it may put any negotiations around sovereignty on hold for a good many years to come.  It will be interesting to hear the views of the UN as Argentina takes its case there in the next week but at this point neither Britain or Argentina appear likely to change their position anytime soon.

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