Colonialism, the Gift That Keeps on Giving

In today’s world, the extraction of resources is carried out by corporations owned by an investor class that knows no national boundaries nor is accountable for any liability as a result of their company’s actions.

Like so many others, the British 'Union Jack' is synonymous with pursuit and conquest.

(PATAGONIA, Argentina) - Britain is preparing to defend once again its colonial interest in the Malvinas Islands in the South Atlantic. According to the UK’s Telegraph, since February, “Royal Navy ships have already been put on standby to protect commercial shipping heading to the region” in anticipation of conflict with Argentina over offshore oil drilling.

Despite Argentina’s public position that renewed “war is excluded from our horizon,” the British press has asserted that the economic phase of the war has already begun as “HSBC and Barclays are thought to be on a list of companies that could be hit in revenge for the exploration.” Even since renewed drilling began and oil was found in May, Argentina has held fast to the position that the sovereignty of the islands and the right to undersea resources is a colonial issue to be resolved by negotiation, not military force.

The stakes are high. According to Peter Glover in the Energy Tribune, “The economic yield to Britain from corporation taxes and royalties from the fields to the north of the Falklands alone could well be over $145 billion.” For Britain, this would appear to be a payback for the loss of the lives of 259 of its servicemen in the 1982 war that evicted the Argentine military from the islands. For Argentina, British oil exploitation of South Atlantic waters would be a painful reminder of centuries of colonial exploitation of South America by England, Spain, Portugal and others.

In today’s world, the extraction of resources is carried out by corporations owned by an investor class that knows no national boundaries nor is accountable for any liability as a result of their company’s actions. The investors in Rockhopper Exploration PLC, the company that struck oil in the Malvinas in May, have seen share values soar on their drilling investment so far, but are understandably nervous about future profits in the wake of any negative news about their investment. Should Argentina ultimately prevail in pressing its claim that the Malvinas are a colony, share prices would most certainly drop.

Argentina and the OAS assert that the Malvinas are a colony while the United Kingdom calls the Falklands (Malvinas) a dependent territory of the UK. Since Margaret Thatcher’s war in 1982 clouded the issue of sovereignty with it’s use of force, it would be a good idea to look at the historical evidence for who has the right to these isles.

Before the mid-eighteenth century, there were a number of competing names and claims on the islands from Spanish, English, Dutch, French and even Turkish explorers. In 1764, France established the first settlement on the Iles Malouines, as they were then called, but relinquished their claim and colony to Spain two years later. In 1767, Britain established a colony at the western end of the archipelago which lasted only until they were expelled by Spain in 1770. Britain did, however, manage to salvage its colony in 1771 by means of a treaty with Spain that mandated co-sovereignty between Britain and Spain. Niether colony survived long. The British left in 1774 and Spain withdrew in 1811. Both powers left behind only plaques to commemorate their claims.

In 1820, the flag of Argentina (then known as the United Provinces of the Rio Plata) was raised at the deserted French settlement at Port Louis. Since all that had belonged to the old Spanish Viceroyalty of the Rio Plata now belonged to Argentina, the Argentines felt firm in their claim when they set up their own colony there in 1828. When Charles Darwin landed in the Islands in February of 1833, he was surprised to learn that Britain had just weeks earlier sent a warship to the islands to reassert its old claim. The remaining Argentine colonists were adopted and a boatload of new colonists from Buenos Aires turned back by the Royal Navy. From then on, Britain held on, establishing a naval base and refueling station for ship traffic heading around Cape Horn.

Argentina’s historic claims on the Malvinas were dealt a severe blow by the failed military expedition in 1982. The forces sent by the llegitimate military government of Leopoldi Galeteri were no match for Margaret Thatcher’s boys. Galeteri had hoped to prop up his crumbling dictatorship with his military solution to Argentine anti-colonial sentiment. Britain’s quick victory in the war proved the death knell for militarism and military intereference in politics in Argentina, but did not extinguish legal claims or popular sentiment against colonialism. The current administration in Buenos Aires has made pressing Argentina’s claim by diplomacy a top priority, but London has preferred to consider it a closed issue, settled in 1833 and again in 1982 by military force.

For Britain there is a lot more at stake today in the South Atlantic than there was in 1982. Then, Margaret Thatcher, facing sagging popularity and possible collapse of her government was able to use war with Argentina to propel herself to the top of the political polls and cement her hold on power. Today, the issue for Britain is oil and all the money that it brings both to the British treasury and to all the shareholders in Britian’s oil related corporations.

In the wake of BP’s ongoing Gulf of Mexico disaster, oil investment money needs somewhere to go. As BP’s shares and credit crumble, investors will flock to more promising and hopefully more stable companies. Rockhopper, the first company to succeed in twelve years of drilling in the island’s waters, would seem to be that promise. It’s shares have skyrocketed since the announcement of their first successful well in early May of this year.

Having capped that initial well for now, Rockhopper has embarked on an ambitious campaign to raise funds for a second proven well before competing companies can find their own pool of riches beneath the sea. With the British Geographical Society estimating the area’s reserves at 60 million barrels, the equivalent of Britain’s North Sea reserves, there is a lot for investors to be happy about. The only fly in their ointment is the faint possibility of Argentina reasserting its sovereignty over the Malvinas.

Should, by some miracle, Argentina get Britain to agree to discuss the issue of sovereignty, the results would be disastrous for the global investment community and probably mixed for the islands’ population. With either sole or joint sovereignty over the Malvinas and its resources, Argentina would most likely apply its current policies toward development of national resources. Taxes and royalties would most certainly flow to Buenos Aires and restrictions would be placed on the who, when and where of future development.

The islanders would have to look at the experience of other colonists and immigrants to Argentina to predict how they would fare under Argentine sovereignty. Their “expressed, democratic wish...to remain British” need not be denied. The Welsh colonists who came to southern Chubut Province in 1865 have thrived, maintaining their culture, independence and even Welsh language until today. Separated from the mainland by 300 miles of open sea, it is highly unlikely that the islanders will be speaking anything but English in the next century. As a permanent resident of Argentina myself, I know that Argentina has the option to grant to foreign nationals a permanent residency status with all the rights and privileges that we normally associate with citizenship. Whether or not British citizenship would be retained and passed on to heirs would be up to the UK government to decide. Distribution of oil royalties to islanders would look a bit different as the custom in Argentina is to redistribute export profits back to the provinces where they originated. In oil-rich Chubut and Santa Cruz provinces abaundant public works and a higher standard of living make local residents much more comfortable than the average Argentine.

All the “what-ifs” are just hot air as long as no one wants to talk. Hillary Clinton offered that new negotiations with Britain would be a good idea, but England is not interested . The only remaining conjecture is, what if Argentina should decide again to fight?

The possibility of another Argentine invasion is nil, nada. Since the end of the dictatorship in 1983, the military here has been cut down to practically nothing. Argentina spends less than one per cent of its GDP on military expenditures and has no financial resources or public support for rearmament.

Nonetheless, the government of Cristina Fernandez de Kirchner and probably the government that succeeds hers, will continue to try to talk. For Argentines, the issue is colonial usurpation of territory and extraction of its resources. It is the long and tragic history of South America that the governments of Argentina and other Mercosur countries are trying to reverse. Whether it was silver from the mines of Peru flowing to fill Spanish coffers or cheap Patagonian wool supplying English mills, northerners have had the habit of taking the resources and the profit and leaving barren mines and desertfied pastures behind. That’s the way colonialism works and Argentina will probably continue trying to negotiate away this last vestige of it in the Southern Hemisphere.

In my previous story on the Malvinas dispute there were several inaccuracies that some of the commenters were kind enough to correct. Rockhopper’s sea lion well is not in 3,000 meters of water, rather it is nearly 3000 meters from the top of the well to the pool of oil which it taps. This well would appear to be far safer than BP’s infamous deepwater horizon well and safer still at this point as it is currently capped awaiting a deal to pump and distribute the oil at a later date. As far as the ownership of Rockhopper is concerned, some commenters set me straight on that; it is not BP who is financing and profiting from this enterprise, but a community of international investors from the UK, the USA, Australia and Europe. Many of the investor comments were thoughtful, informative, polite and quite helpful in writing this piece. The threatening and insulting comments less helpful.

Eddie Zawaski's previous article:

June-18-2010: BP and Falklands Oil Row - Eddie Zawaski Salem-News.com

Response article by Salem-News.com's Dexter Phoenix:

Jun-20-2010: Oil and the Falklands - Dexter Phoenix Salem-News.com