Southern Rock – Another British Bailout

In news that will shock nobody, Kelpers/Bennies, or residents of the Falklands, voted overwhelmingly to stay tied to Britain.

In a plebiscite of more than 1,500 residents, (nobody asked the 700,000+ sheep and more than 1 million penguins on the islands) brought on by increasing tensions with Argentina over the islands ultimate sovereignty, only three residents voted against the continuation of British rule over the barren windswept chain of South Atlantic islands.

Not suprisingly, Buenos Aires is not recognizing the most recent sovereignty vote as legitimate. 

Alicia Castro, Argentina’s ambassador to the UK remarked:

“Son británicos. Respetamos su modo de vida, su identidad. Respetamos que quieran seguir siendo británicos, pero el territorio en el que habitan no lo es”.

(We get it – they’re British. We respect their way of life, their identity. We respect that they want to continue being British, but the land they live on isn’t”.)

Argentina, after years of calling for self-determination by the islanders, has shifted slowly towards a view that any vote would be tainted from the outset, because the land isn’t theirs anyway. Argentine President Cristina Fernández stoked emotions further by surreptitiously filming a national Olympic commercial ahead of the 2012 London games on the Falklands.

For those in the know with Argentine politics and history, conventional wisdom would say that  the saber-rattling is another attempt by a weak government to prop up nationalist support and distract voters away from a deteriorating economic situation. The last time this happened, a military-led Buenos Aires provoked and lost a full-scale war with London, and gave the world a few more years of Margaret Thatcher.

So now that the Kelpers have spoken and the Argentines still don’t care, could this turn into a decades-long tepid disagreement like Britain has with Spain in Gibraltar? Or will this conflate into another opportunity for both wilting countries to show off the little muscle they have left (as they did in 1982)?

More careful analysis shows a different picture in 2013 from 1982, and a less-isolated, better-supported Argentina with friends in higher places than ever before. Good friends include China and all their neighbors in Latin America, along with “why can’t we all just get along?” acquaintances Russia, Spain and surprisingly even the United States (although President Obama once incorrectly referenced the Falklands, or “Las Malvinas” as “The Maldives”).

Now Brazil is beefing up its military to strengthen its claim on the South Atlantic, U.S. oil companies are actively seeking sweetheart deals with the reinvigorated, expropriated Argentine national oil company, and China is likely to veto any action on the Falklands in the U.N. With a Prime Minister that is no Margaret Thatcher, and a foreign policy increasingly hard up for friends, Britain might think twice before throwing too much fuel on the fire.

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