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The South Atlantic: Looking Ahead

A conference organised by the South Atlantic Council on 15 April 2011

The views expressed below were those of the speaker. None of the presentations are endorsed by the Council.

Lease-Back: The Only Solution

Presentation by Richard Gott

Argentina has not had an ambassador in London since July 2008. The decision by the government of Cristina Fernández to appoint no fresh ambassador, one step short of a break in diplomatic relations, is an indication of its discontent at the continuing refusal of successive British governments to take part in negotiations about the future of the islands, as well as concern about the efforts made by international oil companies to search for off-shore oil. This situation cannot continue indefinitely, and soon, when the thirtieth anniversary of the Malvinas war arrives in April 2012, an opportunity will arise for the Argentine government to take fresh initiatives.

A change of mood in Britain

There are encouraging signs. First, there has been a clear change of mood in Britain, where, in an atmosphere of economic crisis, influential figures within civil society have begun to question the obdurate stand of the political elite on the Malvinas question.

Second, international support for the Argentine campaign to oblige the British to consider negotiations about sovereignty has grown stronger, with Britain becoming increasingly isolated. In February 2010 at Cancún, the countries of Latin America and the Caribbean decided unanimously to support the Argentine desire to open negotiations with Britain about the future of the islands. The British government, in upholding its own claim to the islands (and still under pressure from the Falkland Islands Lobby the islanders and their supporters in parliament and the press), is now faced not just with the hostility of Argentina but with that of the entire Latin American continent, including such traditional allies as Chile, Uruguay, and Brazil. Even more surprising, perhaps, is the fact that the Commonwealth islands of the Caribbean (as well as Guyana and Belize) signed up to the Cancún declaration. At the same time, the United States has been less than supportive of the British position.

Third, the exploration for oil in the deep waters off the Malvinas, if successful, will eventually give Argentina the opportunity to discuss with large international oil companies (who will be the eventual beneficiaries of any substantial finds) the nature of its possible future exploitation in what are considered to be Argentina’s sovereign waters.

Argentina’s position

Over recent years, the Argentine government has done little more than to reiterate its simple claim to sovereignty over the islands, now rooted in the current constitution, yet it has given no indication of how this might be achieved. Argentina’s armed forces no longer have the capacity to mount an attack on the islands, and the government has formally renounced the use of force to achieve its aims. The apparent assumption is that international pressure will force the British to give way, yet there is no sign of this being effective.

The task before Argentina today is to develop a fresh and positive plan for dealing with the Malvinas over time, and to provide a public indication by April 2012 of how it believes the future of its campaign to recover the islands might develop.

The strategy of lease-back

The most obvious strategy for Argentina is to revive the idea of the “lease-back” of the islands. Under this scheme, first discussed in the 1970s, the actual governance of the islands would be left in the hands of the British for a (negotiable) period of 50 years, while Britain would formally give up its sovereignty.

The attraction of “lease-back” is that it was actually supported by the Conservative government of Mrs Thatcher in the early 1980s (before the Malvinas war), as well as by an earlier Labour government in the 1970s. It is also a familiar formula that formed the basis of British-Chinese negotiations in the run-up to the return of Hong Kong to China in 1997.

For Argentina to promote this strategy for the Malvinas today would be to work with the grain of Britain’s historical experience in winding up its empire. Any Argentine government should have little difficulty of securing the backing of Argentine public opinion since the securing of sovereignty would be in the first paragraph.

What of the recalcitrant British who have steadfastly refused to discuss the subject since 1982? Encouragingly for Argentina, Britain is now rather alone in the world in claiming sovereignty over the Malvinas, and in recent times, a new tone can be detected in some British newspapers and in their leader columns. Several commentators have actually revived the leaseback proposal. It is worth rehearsing what has been written recently.

First, under the headline “The Falklands can no longer remain as Britain’s expensive nuisance”[1], Simon Jenkins argued that “the best hope for a stable and prosperous Falklands under British occupation is a revival of leaseback under UN supervision.” (Jenkins, a former editor of The Times, knows of what he speaks; he was the author, with Max Hastings, of The Battle for the Falklands, published in 1983.) His article concluded with the thought that “distant colonies are a post-imperial anachronism. Britain will have to negotiate with Argentina because the world, either at the UN or at The Hague, will insist on it. The government and the media can bury their heads in the sand, but that will not make the Falklands dispute go away or atone for the dead of the silliest of wars a quarter of a century ago.”

Second, under the headline “Think of Hong Kong. Give the Falklands back”[2], Matthew Parris, a regular columnist and also a former Conservative MP who had supported the Falklands war in 1982, reflected on the lessons of Hong Kong. “For 99 years Britain occupied and administered Hong Kong, and flew the Union Jack there, on the basis of a lease from China of the New Territories, land on which the island itself depended. Is it really unthinkable that Argentine pride might be assuaged, British administration secured, the islanders’ way of life guaranteed, and the economic spoils divided, on the basis of something similar?”

Parris pointed out that this was the proposal that Conservative ministers had been discreetly pursuing with Argentina in the early 1980s. “Isn’t it time to return to those ideas?” he concluded.

Third, a Guardian leader a week earlier, entitled “Imperial pride”,[3] referred to what it described as Nicholas Ridley’s “reasonable plan [in 1980] to lease the islands from Argentina after a formal exchange of sovereignty.” The plan was indeed serious, but “patriotism and posturing on both sides,” the Guardian argued regretfully, “has obstructed what would otherwise be the natural way forward, a pooling of sovereignty that would allow the islands to develop normal relations with their nearest neighbour.”

Fourth, and more recently, under the headline “Ditch the Falklands”[4], Peter Preston, the former editor of the paper, wrote of Britain’s dire economic situation and the idiocy of British admirals who wished to spend “zillions... on defending aircraft carriers in general and the Falkland Islands in particular”.

“If we’re broke,” he wrote, “why are we hanging on to these islands?” The Argentine government, he pointed out, “settled in democratic routines long since, is not going to invade anyone. It has specifically renounced taking the Malvinas by force.” For Britain, “hanging on to the Falklands is a drain on resources without end.”

The solution, Preston thought, was obvious: “the islanders can stay where they are under shared sovereignty... or go to Argentina to live like the ancestors of Welsh immigrants there... or they can choose to come to Britain, the merest drop of a presence in our migrant ocean.”

Most arguments in Britain today about the future of the Falklands are conditioned by people’s recollections of the Falklands War of the 1980s. To remember much about the war, you have to be over forty. Yet is there now a possibility that, with Britain’s stone-walling position on sovereignty under considerable attack at home and abroad, a new generation might look again at the leaseback proposal that once looked so promising.

The Hong Kong experience with leaseback

Leaseback lay at the heart of the British agreement with China over Hong Kong in 1984. Under its terms, the Chinese government committed itself to establishing a “Special Administrative Region” in Hong Kong once it had resumed sovereignty over the territory (which it did in 1997). Hong Kong would continue to be governed as it had been in the past, and the rights and privileges of the local population would remain unchanged for fifty years.

Translated into a deal over the Falklands, the British-Chinese agreement would read as follows:

The Malvinas Special Administrative Region would come “directly under the authority of the Argentine government”; it would “enjoy a high degree of autonomy, except in foreign and defence affairs.” It would be “vested with executive, legislative and independent judicial power, including that of final adjudication,” where the “laws currently in force in the Malvinas would remain basically unchanged.” Its government would “be composed of local inhabitants” and its chief executive would be appointed by the Argentine government “on the basis of the results of elections or consultations to be held locally.”

The principal officials would be “nominated by the chief executive... for appointment by” the Argentine government. The Malvinas Special Region would keep its existing social and economic system as well as its existing lifestyle, whereby “rights and freedoms, including those of the person, of correspondence, of speech, of the press, of assembly, of choice of occupation, of academic research and religious belief will be assured by law. The Argentine government would pledge to implement its commitments in a Basic Law that would “remain unchanged for 50 years.”

This was the deal that the British made with China in 1984, yet the British had been considering a similar leaseback proposal with Argentina some years earlier. The proposal had been discussed gingerly by the Labour government in the 1970s, but it did not move up the agenda until after the election of the Conservative leader, Mrs Thatcher, in 1979. Then, over 15 months between September 1979 and December 1980, the plan was seriously considered and promoted.

Mrs Thatcher’s support for lease-back

A few months in to Mrs Thatcher’s new government, on September 20, 1979, the foreign secretary, Lord Carrington, sent the prime minister a letter (prior to a meeting of the Cabinet’s Defence Committee) that laid out the nature of the Falklands problem as he saw it. He argued that the long-term economic development of the islands depended on a political solution, for which leaseback was the best option available.[5] Carrington further suggested that although a 99 year lease would be the preferred option, it might be necessary to settle, “as a last resort”, for something like 30 years, and that special arrangements might have to be made “to enable some of the islanders to settle in the UK”.

The Defence Committee meeting was postponed for four months because of the ongoing negotiations about the future of Rhodesia (now Zimbabwe). Sir Geoffrey Howe, the finance minister, had expressed doubts “whether we should deliberately promote another initiative which involves issues of sovereignty.” But finally, on January 29, 1980, it was agreed to renew talks about sovereignty with Argentina.

At this stage, records the Official History, the islanders were extremely wary. The most they were prepared “to contemplate was a sovereignty freeze requiring Argentina to leave the dispute in abeyance for a given period, say 30 years, at the end of which both [sides] would review the sovereignty claim”.[6]

Preliminary talks with junior officials took place in the early months of 1980, and Carrington presented an outline agreement for consideration by the Defence Committee in June. Titular sovereignty over the islands, the dependencies and the maritime zones would be transferred to Argentina, while all these areas would simultaneously be leased back to Britain, “ideally (and possibly) for an indefinite period.”

Carrington noted carefully that “any arrangement involving a transfer of sovereignty... would cause great anxiety in the islands, and opposition both in parliament and among the public in the United Kingdom... But if we do not explore these possibilities, the dispute could develop into a confrontation which we would find very difficult and expensive to handle”.[7] Prescient words!

A meeting with Argentine representatives at a more senior level took place near Lake Geneva in September 1980, with Nicholas Ridley, Carrington’s deputy, talking to Air Commodore Carlos Cavándoli, the Argentine deputy foreign minister. Ridley presented a brief memo suggesting that “titular sovereignty over the Falkland Islands... would be transferred to Argentina”, while “continued British administration of the islands... with a view to guaranteeing to the Islanders and their descendants the uninterrupted enjoyment of their way of life under British institutions, laws and practices, would be simultaneously assured by means of a lease-back to the United Kingdom for a period of 99 years”.[8]

The Argentine reaction was positive, and suggested that the length of the leaseback was negotiable (an Argentine official suggested 75 years). Ridley then set off in November to Port Stanley to talk to the islanders. There, he was left in little doubt of their continuing hostility towards any deal with Argentina.

Worse was to come, for, as the Official History records, “the initiative was... killed not so much by the lukewarm reception in the Islands but the hostile reception in Parliament”.[9] Ridley gave his views to the House of Commons on December 2, 1980, and was promptly attacked by a succession of speakers of all political persuasions. Both Labour and Conservative MPs had their own agenda. Labour could not envisage doing business with an Argentine military dictatorship, while some of the Conservative speakers, humiliated by their failure to do anything about the perceived sell-out of the whites in Rhodesia (taking place at the same time) were determined to speak up for their “kith and kin” in the Falklands.

Peter Shore MP, speaking for Labour, was among the most critical, specifically criticising the leaseback proposal: “Is not the Minister aware that proposals for a leasing arrangement represent a major weakening of our long-held position on sovereignty in the Falkland Islands, and that to make them in so specific and public a manner is likely only to harden Argentine policy and to undermine the confidence of the Falkland islanders?“ Other speakers raised similar objections.

The only faintly supportive voice for the government’s proposal came from another Labour MP, Frank Hooley, who asked rhetorically whether it was not “the Government's argument that the interests of 1,800 Falkland islanders take precedence over the interests of 55 million people in the United Kingdom?”

Ridley got a better audience that evening when addressing the Foreign Affairs Committee of the Conservative Party where some 30 per cent of the questions were supportive.[10] Yet with the solid opposition of Labour MPs, this was not enough.

That moment marked the end of the road for the leaseback proposal and for the relatively secret diplomacy in which Ridley had been involved at that time. When the Defence Committee met the following day, December 3, 1980, it concluded that “while the ball should continue to roll, we should put no pressure of any sort on the islanders: and should also consider how to manage our future relations with the Argentine Government.” Sovereignty was off the agenda for the foreseeable future, and the question of “managing” the relationship with Argentina became the new diplomatic mantra, to be invoked without passion over the following three decades.

The situation today

British diplomats have become notably passive in recent years. Once in the forefront of initiatives to solve the Falklands problem over two decades - that paved the road to disaster - the Foreign Office has clearly felt damaged by the experience and its outcome. It has long resolved not to play a protagonistic role again. “Managing” the disagreement is as far as most diplomats (and ex-diplomats) are customarily prepared to go. With the closure of several embassies in Latin America in the past decade, there is less of a “Latin American lobby” within the Foreign Office than there once was. Britain now lags behind its European partners with regard to investment in Argentina, and perhaps as a result the Conservative Foreign Secretary, William Hague, has recently promised a new, more commercial approach to the continent.

Today, the fact that most of the outside world is now supporting Argentina’s request for negotiations over the Malvinas may soon put pressure on the British to negotiate, and the long-term future of oil exploration in the South Atlantic cannot be discussed without the participation of Argentina. Lack of political courage in the 1970s and in the 1980s, in the period before the war of 1982, led to growing Argentine distrust of British intentions. Thirty years on, the problem is still there; it has not gone away.

There is of course not the same likelihood of war. The islands are currently well defended by the British (at a price to the British taxpayer), and Argentina’s democratic government has no plans to launch a suicidal attack. Yet Argentina has no intention of abandoning its claim, and it is safe to say that no future Argentine government will ever do so. At the same time, the islanders, too, are adamant in their desire to remain as a British overseas territory.

Only the British government is potentially a free agent, if the British people can be persuaded to re-examine the issue. The task for Argentina is to help them to do just that. Public discussion about the Malvinas lease-back proposal, in both Argentina and Britain, taking place in a less frenetic atmosphere than in 1979-1980, would be a good place to start.

The future

Argentina will eventually send a new ambassador to London, and when this happens it is important that he or she should be armed with a well-thought-out plan to recover the Malvinas, that goes beyond anything that has been considered so far.

First, the ambassador should come with a concrete plan for lease-back. This ought to be Argentina’s stated ambition, discussed with its friends and allies, and argued for in the United Nations. China might be asked to discuss its own experience with negotiating lease-back, while Cuba could be asked to explain how it has managed to secure support from 99 percent of the UN countries for an end to the US embargo. Useful lessons might be learnt.

Argentina will then need to do two things: to win support from British public opinion for the Argentine leaseback proposal; and to convince the islanders of the benefits of future Argentine rule. Both will be difficult.

Winning the support of the British will have to be done through raising the level of awareness in Britain of the Malvinas issue (and its large cost to the British taxpayer). The new ambassador would have to argue the Argentine case with the universities and the trade unions and the media, as well as with the regional governments of the United Kingdom. Mounting large-scale information activities, using the techniques of advertising, public relations and opinion polls, will involve a far larger embassy presence in London, and greater expense, than has been considered thus far.

To win over the islanders, over time, will require spelling out what the Buenos Aires government can offer them. This would need the promotion of a future for the islands during the leaseback period and after that would be at least as attractive as that currently provided by the British government.

Some of the battle will be over the economic future, notably fish stocks and off-shore oil. At present, the islanders imagine that they can do everything on their own, as they already do with the fishing industry.

Oil and gas would be more difficult. Theoretically it would be possible to organise everything on the islands, but in practice future oil production if it ever happens - would almost certainly be undertaken, not by a small exploration company, but by a large international oil company. Such companies would only be likely to invest in a settled political environment with ready access to the nearby mainland. In such circumstances, they might well become useful lobbyists for Argentina, pushing the British government towards a settlement.

In the light of this, Argentina will have to reconsider its current attitude towards oil exploration in the Malvinas. It will need to consider sharing future production with the citizens of the islands, just as it has to do with the citizens affected by production in the Argentine provinces of the south of the country. It will have to consider supporting the islands by establishing mainland facilities in support of the oil industry, securing the support of the oil companies for a peaceful settlement.

Only with international support for a realistic proposal on the table - and the lease-back project is the only one available that once enjoyed British government approval - can Argentina hope to move towards its eventual goal in the course of the 21st century.

*** ***

Richard Gott is a British writer and historian who worked for many years as a correspondent in Latin America for the Guardian newspaper. He visited the Islands in 1968, when the British government first sent a minister there to try to persuade the islanders to envisage a different future, and he has written frequently on the issue.


1) Guardian, 26 February 2010
2) Times, 27 February 2010
3) Guardian, 19 February 2010
4) Guardian, 13 November 2010
5) Sir Lawrence Freedman, The Official History of the Falklands Campaign, 2005, Vol.1, p.104
6) Freedman, Official History, Vol.1, p.106
7) Freedman, Official History, Vol.1, p.112
8) Freedman, Official History, Vol.1 p.116
9) Freedman, Official History, Vol.1, p.129
10) Freedman, Official History, Vol.1, p.130





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