South Atlantic Council

Promoting communication and understanding
between Argentina,  Britain and the Islanders

South Atlantic Council, Briefing Paper, June 1997

THE FALKLAND ISLANDS: THE OPTIONS FOR THE FUTURE

The South Atlantic Council believes

that it is in nobody's interest that the Falklands / Malvinas dispute should continue;

that fishing, the development of oil, tourism, farming, communications and the general welfare of the inhabitants of the South-West Atlantic area can best be guaranteed by normal peaceful relations between the peoples of Argentina, the Falklands and Britain;

that it is to the advantage of each of the three parties to adjust their current positions, in order to achieve a long-term settlement of the dispute;

that a permanent peaceful settlement has to be acceptable to the peoples of Argentina, the Falklands and Britain; and

that this requires

1. the Argentine government to acknowledge the right of the Islanders to be governed in a manner that guarantees their liberties and their way of life under the law;
    
2. the Falkland Island Government to acknowledge the profound changes which have taken place in Argentina since 1983 and hence the possibility of establishing mutually-beneficial links between the Islands and Argentina; and
    
3. the British government to acknowledge that preserving the status quo does not resolve the latent dispute and consequently evolution of the sovereignty arrangements must be open for discussion.
    

Fifteen years after the war the moment is propitious for negotiations to begin to explore, in a creative and co-operative manner, ways of moving towards new political and legal arrangements to govern activities in the Islands and their surrounding waters. A new government in the UK, even with a crowded agenda, can fairly early in its term in office take steps towards a solution at limited political risk. In addition, the present Argentine government is disposed to find a reasonable solution and still has two more years to run. Electioneering in Argentina will begin in earnest in 1998 prior to the presidential elections in 1999. The period from mid-1997 to mid-1998 is therefore a window of opportunity.

Various considerations make a solution desirable from the British side. The maintenance of a garrison on the Islands and the logistical support–––in the Falklands, in Ascension and in Britain–––for reinforcement of the garrison are a burden for Britain's over-stretched defence capabilities. At the same time the military in Argentina has been brought under civilian control and the government has forsworn, in the constitution, the use of force to regain the Islands. However, the Argentines still feel the need for some form of acknowledgement of their long-standing claim and feel aggrieved about the obstacles to them visiting the Islands. Economic and cultural links between Britain and Argentina have grown substantially since 1990 and it is in our interests to remove any possible impediments to trade and investment. An agreed solution would provide a substantial impetus towards closer political and economic relations. While good progress has been made on a bilateral basis with co-operation over both fishing and oil, the current arrangements are not sufficient to guarantee the future of either industry nor the environmental and economic security of the Falkland Islands.

A number of possible solutions have been proposed in the past. The Council does not endorse a specific solution and recognises that at the moment none of them have the support of all three governments and peoples. However, we believe exploration of the various options could develop the necessary understanding for each side to appreciate the needs and wishes of the other two, identify the possibilities for mutual accommodation and gain the benefits of full co-operation.

It is as important to understand what is apparently unacceptable, and why, as it is to understand what is preferred by each side. In the process of discussion, seemingly insuperable contradictions may become capable of reconciliation. The following significant options should be considered, as part of a full exchange of views.

• A Permanent Umbrella

  : the current sovereignty umbrella would be enshrined in a bilateral treaty that provides new permanent institutions to promote co-operation.

• Independence

  : the Islands would become a sovereign state in their own right.

• Integration with Argentina or with Britain

  : the Islands would become a full and equal part of one country, forming a single constituency to elect one member of the appropriate legislature.

• Shared Sovereignty

  : Argentina and Britain would create joint institutions to exercise the role of the current Governor and to represent the Islands in international diplomacy. (Andorra used to be governed by a special form of shared sovereignty, between the French President and the Spanish Bishop of Urgel.)

• Greater Antarctica

  : the Falklands would be incorporated in the Antarctic Treaty System and provide a base to support scientific work, tourism and fishing in the Antarctic region. Sovereignty would be exercised de facto by the Antarctic Consultative Parties.

• Autonomy

  : the Islanders would have complete control over all their internal affairs and all decisions that will affect their way of life, but would be an integral part of another state. The Aland Islands is an example.

• Self-Government as a Dependency

  : the Islands would be regarded as a separate territory and could choose to play a distinct role in international affairs, but ultimately be subject to the authority of another state. The Isle of Man, Jersey and Guernsey are currently in this position.

• Self-Government in a Free Association

  : the Islands would be independent and not subject to an external authority, but their foreign affairs and defence would be conducted by another country on their behalf. The Cook Islands and Niue have such a relationship with New Zealand.

• Lease-Back

  : title to the Islands would be transferred to Argentina and then effective control returned to Britain for a fixed time period. This was endorsed by the British and Argentine governments in the past, but rejected by the Islanders.

Some of the above options provide sharp alternatives to each other, but they are not all mutually incompatible. A simple, orthodox, exclusive view of sovereignty does not offer a plausible solution, but some form of permanent co-operative arrangements between Britain and Argentina, combined with assured self-government for the Islanders is most likely to succeed.

The Council's distinguishing characteristic is that it believes a permanent solution, acceptable to all the parties, is possible. While the Council does not endorse any specific solution, it does wish to encourage the movement of political thinking about the future of the Falkland Islands. It has worked to promote greater communication and understanding among all the parties, as a contribution towards this end. The Council's limited membership is designed to bring together interested individuals with experience of all aspects of the issue - such as oil, fish, defence, the environment, the Antarctic and diplomatic relations - and it is ready to use its varied contacts to help in the achievement of a solution.

Chairman:     Martin O'Neill MP

Secretary:     Alastair Forsyth

THE FALKLAND ISLANDS AND OIL

It has long been acknowledged that the seabed surrounding the Falkland Islands could well contain commercially viable oil and gas reserves. The Falkland Islands Government (FIG) awarded geophysical survey contracts in the early 1990s which confirmed this view. HMG and the Argentine Government then negotiated, in September 1995, a Joint Declaration providing a structure within which the exploration and exploitation of oil reserves in the South-West Atlantic could go forward. By specifically stating that the "umbrella" over sovereignty of the Islands applies to all activities concerning oil, it was possible to establish a Joint Commission to regulate the activities of oil companies in the "area of special co-operation" between the Islands and the mainland, straddling the de facto maritime boundary. The Joint Declaration also implicitly cleared the way for FIG to proceed within "its own" offshore limits.

In October 1995 FIG launched a licensing round, leading to bids and the award of licences in October 1996 to five oil groups covering seven tranches of blocks, all lying to the north of the Islands. The bidding was open to all parties, but no Argentine oil interests are directly represented in the groups being awarded the first exploration licences. Although the decision was defended in commercial terms, it was seen as being politically significant by some Argentines. No bids were received for the less attractive tranches to the south. The groups are committed to work programmes for a minimum of twelve years.

The offshore activities will require the support of significant supplies and services, from onshore sources. The business has to be open to all parties. On the mainland there already exists an established offshore oilfield supplies and services industry. FIG is also interested in offering services from the Islands. However, no requirement was made in the FIG licences for operators to obtain a proportion of their needs via the Islands, and FIG has decided against taking a positive role in the development of offshore services, preferring instead laissez faire encouragement.

The Islanders are interested in providing offshore services, but have no experience of what may be required, nor how to provide it. They invited a deputation of Aberdeen interests to the Islands (who are thought to have returned unimpressed by what they heard). Approaches to the government and the Chamber of Commerce, by very experienced consultants seeking to develop a strategy with them, have come to nothing. Ultimately the participation of the Islands in offshore services is likely to be a function of future decisions by the offshore operators as to their procurement strategies and the interest of established firms in working with the Islanders. There will, of course, be limits to what is physically and socially sustainable in the Islands.

It is generally assumed that the Argentines will share with the Islands the benefits from such offshore oil developments. Of crucial importance to the proposals for a more settled relationship between the Falklands and Argentina is the singular fact that such offshore oil development establishes a community of interest shared between the two parties, the exploitation of which can only further co-operation and understanding.

However, there is a major contradiction in current policy on Argentine firms. The Joint Declaration encourages companies from Britain and Argentina to co-operate, to form joint ventures and elaborate joint projects in all oil activities. At the same time, the Falklands Executive Council continues to refuse permission for Argentine personnel to land on the Islands. This is an important concern for the future.

Successful oil exploitation could provide revenues to FIG approaching £500 millions per annum, i.e. some tenfold increase over their peak revenues from fishing. Revenues of this order would allow FIG to pay in full for its own defence requirements, and to have resources with which to pursue some overseas investment policy. Given a more settled relationship with Argentina and the size of possible oilfield income, the Islanders may begin to feel more secure and hence have more confidence in engaging in discussions about their future.

FISHING IN THE SOUTH-WEST ATLANTIC

Negotiation and ratification of the UN Convention on the Law of the Sea (UNCLOS) took twenty-two years from 1973 to 1994. Despite the wide-ranging scope of UNCLOS, it did not directly provide a regime for high-seas fishing. Technological, economic and environmental changes have made fisheries conservation a much more pressing problem than was foreseen in the 1970s. UNCLOS has two provisions that are relevant to Argentine-British relations.

Under Article 63(1), where one stock of fish occurs within the Exclusive Economic Zones (EEZ) of two or more adjacent states, they should agree on measures to manage the stock. The agreement can be either direct or through regional organisations. Thus for stocks such as Patagonian Hake and Whiting it is appropriate for Argentina and Britain to have a joint South Atlantic Fisheries Commission, under the sovereignty umbrella.

Under Article 63(2) there should also be agreement to manage stocks that occur both within an EEZ and in the waters of the high seas. The obligation here is for the coastal states and the fishing states to act collectively. At the moment the valuable stock of Illex squid, which migrates through the high seas, through the EEZ defined from the Argentine mainland and through the waters around the Falklands, is managed by the same bilateral Fisheries Commission. This is not in accord with UNCLOS Article 63(2), because the governments of fishing countries, such as Spain, Japan and Korea, are not included in the decision-making.

As a result of a Canadian initiative at the Rio Earth Summit, a special UN conference on high-seas fishing took place from 1993 to 1995 and an agreement was opened for signature on 4 December 1995. It is officially called

the Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, (UN document A/CONF.164/37).

As of December 1996, this High-Seas Fishing Agreement has been signed by 43 states and the European Community. The signatories include Argentina and eleven members of the EC, (but not Belgium, Spain, Germany and France). The United Kingdom has signed, at various times, on behalf of ten colonial territories, including the Falkland Islands on 4 December 1995. The UK signed on its own behalf in June 1996, with the other EC members and the EC itself.

It will be some time before the Agreement comes into force and, when it does so, it will not necessarily have the support of Japan, Spain, South Korea or Taiwan. All these countries are important for the Illex fishery. The Argentine and British governments should recognise their political commitments under UNCLOS and the High-Seas Fishing Agreement to reach a multilateral agreement. The bilateral South Atlantic Fisheries Commission is not in accord with the general development of international law.

There are substantial pressures on the Illex fishery, from high-seas fishing, early in the season, when the Illex are young. With a bad co-incidence of environmental factors and increased fishing effort, both Argentina and Britain face the possibility of the Illex being overfished before they reach the waters covered by the SAFC. At best this would result in the loss of revenue for one year. At worst the stock might be insufficient to breed and the fishery could collapse for several years or perhaps permanently. This problem can only be addressed by the fishing countries agreeing to restrict their activities early in the season.

The legal, environmental, economic and political factors all point to the superior nature of a multilateral arrangement. The priorities are

1. for Argentina and Britain to ratify the High-Seas Fishing Agreement;
    
2. for Argentina and Britain to encourage other governments to ratify the Agreement; and
    
3. for all the governments involved to negotiate a conservation and management regime.
    

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