Argentina is subjecting the Falklands to “economic warfare”, the leader of the British overseas territory’s government has said.
As the country ramps up political pressure on its claim of sovereignty over the territory, restrictions are making life more difficult for the residents of the remote Atlantic islands, Andrea Clausen told the Financial Times. And at the centre of the power struggle with Britain is the Falklands’ first oil project: Sea Lion, a joint UK-Israeli venture.
What is life like on the islands?
The Falklands are home to about 3,500 people, most of whom live in the capital, Stanley, with the remainder spread across the sprawling archipelago roughly half the size of Wales. “People are always amazed by the scale when they visit,” one resident told the Metro.
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Leaving the islands “isn’t simple – or cheap”. There are two 18-hour direct flights a week to the UK, on a military plane, or one commercial flight a week to Chile. A monthly flight from a small city in southern Argentina is considered a domestic flight by Buenos Aires, although not by the Falklands’ authorities.
Because of the limited connections, imported goods can cost more than double their price in the UK. There’s currently only one shipping link, to Uruguay, which sometimes leads to shortages of cheese and other food staples, said the FT. Most international suppliers “refuse to serve Falklands’ businesses” out of fear of angering Argentina. Officials are preparing a second shipping link to Chile, scheduled to open between November and December. But some islanders worry that Buenos Aires “could try to disrupt those efforts”.
What resources do the Falklands have?
There is a “huge capital programme” underway to boost the islands’ infrastructure, said resident Traighana Smith in The Independent, including a new power station and port, and “a hydrocarbon industry is also on the horizon”.
There are “vast energy reserves” just 136 miles north of the islands, said The Telegraph. Surveys suggest the Sea Lion oilfield contains up to 1.7 billion barrels of oil: “larger than anything remaining in British North Sea waters”.
Two oil companies, Britain’s Rockhopper Exploration and Israel’s Navitas Petroleum, are due to begin a joint project extracting from the oilfield within two years. The $2.2 billion venture, the Falklands’ first commercial oil project, aims to produce 50,000 barrels per day. It could be “economically transformative for the islands”, said the FT. It could “triple GDP” and reduce dependence on the inconsistent fishing industry.
“We never want to rely on handouts from the UK,” said Stirling Harcus, a director at the islands’ Chamber of Commerce. “We’re already a growing self-sufficient economy, but oil would supercharge that process.”
What is Argentina doing?
At the start of September, President Javier Milei announced restrictions on companies involved in oil extraction, along with additional military funding. His new sanctions regime “appears to target both oil and fishing”, said the FT, which is responsible for more than half of the islands’ GDP.
And on Monday, Milei warned that his government would request an emergency order to stop development of the Sea Lion oilfield if drilling is not halted within two weeks. If the “illegitimate exploitation” does not stop, his statement said, Argentina will ask the International Tribunal for the Law of the Sea, a Hamburg-based maritime court, to order a temporary halt to the project. Argentinian officials argue the project is “an inflection point”, said the FT, because it violates a UN resolution banning “unilateral” changes to the status quo on the islands.
“Time will tell” if Milei follows through on his threats, said Smith in The Independent. But in the meantime, the Falklands will “continue to grow its industries and care for its people”.
