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South Atlantic Council
Occasional Papers




No. 10

The Falkland Islands Update:
A Record of the Proceedings
  Edited by Peter Willetts.

August 1998





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The South Atlantic Council exists to promote better relations between the people of Britain, Argentina and the Falkland Islands, with the ultimate goal of resolving the dispute about the future of the Islands. In 1997 the Council felt it was timely to review the major changes that were taking place in the international position of the Falklands. It was decided to hold a one-day conference, in which there should be an informed and reasoned exchange with participation from a variety of perspectives from the three societies. The Council was pleased to obtain encouragement from, and involvement by, the Foreign and Commonwealth Office, the Ministry of Defence, the Argentine Embassy, the Argentine Council for International Relations (CARI), the Falkland Islands Government and the Falkland Islands Association.

This paper is a record of the proceedings of the Falkland Islands Update, held at the Royal United Services Institute in London on 3 February 1998. Some speakers provided the text of their presentations and these have been printed below, with no more than minor copy-editing. For the other speakers, notes taken on the day have been produced by the editor: it is hoped there has not been any misinterpretation of what was said. As the Update was under 'Chatham House rules', only those speakers from the floor who wished to be named have been identified.

While it was clear at the Update that there is no immediate opportunity for a settlement, participants from the different perspectives showed a greater mutual awareness and respect than used to be the case in the 1980s. Many practical questions arise in the fields of oil exploration and fisheries conservation where continuing co-operation is necessary and is occurring to the benefit of the three societies. However, political positions still provide impediments to full co-operation. A stalemate remains over access by Argentine personnel to the Islands. Each government needs to make trade-offs and adjustments in a sensitive manner.

[End of p. 1]


The Main Speakers at the Falkland Islands Update

Welcome and Opening of the Conference

Martin O'Neill MP, Chairman of the South Atlantic Council

First Session on Oil

Baroness Gloria Hooper, President of Canning House, was in the chair

John D'Ancona CB, former Chief Executive of the Offshore Supplies Office of the UK Department of Energy

Dr Phil Richards, Chief Geologist, British Geological Survey and Adviser to the Falkland Islands Government (FIG)

Tim Bushell, General Manager South Atlantic and South America, LASMO plc

Dr Antonio Estrany y Gendre, Senior Vice-President, Bridas Corporation

Second Session on the Fisheries

Viscount David Montgomery, former President of Canning House and current Vice-President of the Anglo-Argentine Society, was in the chair

Professor John Beddington, Imperial College, University of London and Fisheries Adviser to the Falkland Islands Government (FIG)

Dr Carlos Alberto Verona, Scientific Adviser, Under-Secretariat of Fisheries and Director of Research at Instituto Nacional de Investigación y Desarrollo Pesquero (INIDEP), Mar del Plata

Thomas Boyd, Managing Director, Boyd Line Management Services

Third Session on Defence

Rear Admiral Richard Cobbold, Director of the Royal United Services Institute for Defence Studies, was in the chair

Commodore Jeremy de Halpert RN, Director of Overseas Military Activities, Ministry of Defence

Fourth Session on Future Relations

Baroness Gloria Hooper, President of Canning House, was in the chair

Roberto Alemann, former Minister for the Economy in the Argentine Government

Sukey Cameron, Falkland Islands Government Representative in London

Professor Victor Bulmer-Thomas, Director of the Institute of Latin American Studies, University of London

[End of p. 2]


The South Atlantic Oil Perspective

Notes on the presentation by John d'Ancona

It is obvious that, if oil is found, the impact on the Falkland Islands will be profound. There needs to be planning for this eventuality. Such discoveries have a disproportionate effect on small isolated communities. I will try to put the possibility of oil being found in some sort of context.

A commercial find does not bring automatic benefits. The revenue in relation to the small population is potentially vast. There could also be commercial and industrial benefits. The organisation of the benefits requires careful thought and planning. Preparation is needed before a discovery occurs.

How confident are we that oil will be found? Seismic data is insufficient. Only drilling gives answers. The take-up of seven tranches by five consortia shows the faith of the operators in the prospects. But similar prospects elsewhere have proved disappointing. Finding oil is still an art not a science.

If there is oil, will it be developed? It is a commodity whose price goes up and down. It will be developed, if it is commercially viable to do so. As a result of the opening up of the communist bloc and privatisation, there is now a wide selection of countries open to operators. Many political barriers have been removed. The extent of political mischief-making is not what it was. However, politics remains one of the several factors that operators have to take into account.

Operators have choices. Competing financial returns will be the key. The cost of development will be another factor. The Falkland Islands is not a cheap area in which to operate. Substantial reserves will be necessary for production to start.

It is impossible to predict prices: it is better to talk of trends. There was a five-year low for Brent crude last week at $15 per barrel. A year ago the price was $25 per barrel. There will possibly be a downward trend until first part of next century. Then, as a result of industrialisation and population increases, there will be a sharp upturn. At the present price of $16 per barrel, there are no pressures to bring Falkland oil on-stream in a hurry. Falkland oil is marginal.

Uncertainty is a deterrent, the political framework matters profoundly. If gas, rather than oil is found, the problems multiply. Very big fields will be necessary for any production to occur, so the Islanders will be very rich. This can be socially damaging. The Treasury may step in for the Islanders' own good.

Whatever is produced will be marginal in world terms. So commercial considerations will rule.

The authorities need to take great care with the development of support industries. They last a long time. There is an important distinction between capital and labour intensive developments. The latter have greater impact on small societies. Some activities will have to be on the Islands, but most probably will not.

[End of p. 3]



The oil industry is not a good fairy. Eternal vigilance and profound scepticism must be the watchwords.

Managing Oil

Notes on the presentation by Dr Phil Richards

Managing oil is like managing any other business. The primary objectives are efficiency and effectiveness, at the at lowest cost, keeping all stakeholders motivated and happy. This means ensuring oil companies explore in the most effective way. It is desirable that they should find oil, but safely and with due regard to the environment. Oil companies want to minimise costs, while governments want to maximise expenditure.

If each hole drilled costs $20 million, it is difficult to persuade companies to go on drilling. The key is to persuade oil companies to drill where it will be most effective. The stakeholders in this context are governments, oil companies and the environmental lobby.

The Falklands government has an oil committee, including a senior administrator and two councillors. It co-ordinates government departments and manages consultants (the British Geological Survey, the UK Health and Safety Executive and Dunstaffnage Marine Laboratory). They have learnt from what happened in the North Sea. The Falklands has an innovative structure in its oil department. The local administrator makes things happen and takes advice from independent sources. It is important, due to rapid changes, that advisers are up to date. The functions break down into technical, marketing and local management, including taxation, legislation and the protection of fish. They seek to maintain the spirit of the oil agreement with Argentina.

At the start-up in 1992, there was a view that oil companies should be left to get on with it. In 1992, on basis of seismic data at the time, the overwhelming interest was in an area south of the Islands. No-one was interested in the north. If it had been left to the companies, there would have been no drilling at all. We would not have known of the North Falklands Basin. The area of interest in the North Falklands Basin is about the same size as the Viking Field in the North Sea. Using seismic data, a good map of the North Falkland Basin has been obtained, showing the biggest potentially-drillable structures.

In 1995, the area was subdivided, for the purposes of the bidding round, into tranches for further exploration. There were no takers for the area to the south of the Islands. Seven blocks in North Falkland Basin are the most attractive. Devising the size and the structure of the tranches was most important. The Falkland Islands Government tried to ensure attractive drilling areas in each tranche, with drillable structures crossing the boundaries of tranches.

The objective was to obtain a fair and decent return to the Islanders, in case of success, but at the same time to make it attractive for the oil companies, taking into

[End of p. 4]



account the high costs and the remote area. There are plenty of other places in world to explore, including some where oil is known to exist, so the arrangements had to be generous. Nevertheless, the terms are not as generous as in the UK.

The environmental impact is of great concern, because of the importance of fishing to the Islands. The illex fishing grounds overlap the oil areas. Exploration has to be managed to avoid damage to the fishing industry and to the environment. The Islands are an unspoilt nature haven.

The government gathered as much information as they could. Operators had to prepare an Environmental Impact Assessment. This was checked for soundness by the Dunstaffnage Marine Laboratory and, as a result, operators have agreed to re-write their assessment.

Some mistakes have been made along the way. It was assumed we knew more than we did. More work could have been done on environmental baselines. The southern area is the most sensitive. In the North, ocean currents would carry oil spills northwards away from Islands, whereas in the South they would go onto the coast and the habitat of Rockhopper Penguins. (It has only just been discovered that these birds swim 100 to 200 miles daily to the south west.)

The infrastructure has to be compatible with both governmental and industrial requirements. There will not be huge oil platforms as in the North Sea nor huge onshore terminals. The most-likely choice will be floating, offshore, production and storage, systems. Oil would be taken from the sea-bed to tankers moored offshore.

Is there any oil? To give an answer, it is necessary to consider certain geological parameters. To arrive at the risk factor, the parameter values are multiplied. If any parameter is nil, then there is no oil. The British Geological Survey have calculated there is a one in eight chance, or a 13% risk factor for the Falklands. Hundreds of millions of dollars has to be spent on exploration. We will shortly know whether it is worthwhile.

Exploration offshore from the Falkland Islands

Notes on the presentation by Tim Bushell

I will describe the activities of LASMO and the other operators since the end of 1996, when licenses were awarded.

In the North Falkland Basin, LASMO operates in two tranches, in partnership with Desire, Clyde Petroleum and a Falkland Islands company. LASMO is interested in the whole region, having farmed into two YPF blocks in Argentina.

First, we needed more seismic data, to define locations for drilling. This took a few months at the beginning of last year. Second, the data had to be processed. Third, the data had to be interpreted. Then at the end of 1997 and in early 1998, there were site surveys to locate dangers, such as shallow pockets.

[End of p. 5]



The key ingredients for the discovery of oil are the source rock, a structure to form reservoirs, the existence of a cap (an impermeable seal over the reservoir) and a trap. There needs to be sufficient volume - a great deal - for the field to be commercial, and the oil must flow at a sufficient rate to make it commercial.

[A slide of the cross section of a typical seismic line was shown.]

We were looking for a source rock, where oil or gas could be present. There is a line of north-south peaky mountains, which could provide a trap. One will probably be the site of the first drilling.

In planning for drilling, LASMO decided early on to use a North Sea rig. There is a rigorous regulatory regime, as in the UK. Exploration would be very expensive, so it was decided to share the basic costs. LASMO entered into the Falkland Offshore Sharing Agreement (FOSA) with Shell, Amerada Hess and IPC. It is a unique co-operative arrangement. Amerada Hess already has the rig.

The logistics for providing supplies to the rig was a major challenge. Alternative sites were studied (on the South American mainland of Chile and Argentina), but Stanley was the most appropriate. It was open to commercial bidding. Stanley CSM won. They will use the Falkland Islands floating dock. Siderca of Argentina was awarded the tube contract, Bristows of UK the helicopter contract and Falkland Islands Airways the fixed wing contract (for flying out crew etc.).

Much work was done on the environment by FOSA during the seismic phase, to establish baseline conditions on the seabed, winds, currents, seabirds and marine life. At the exploration stage there would be little risk of an oil spill, but we are studying how to contain one if it should occur. The Falkland Islands Exploration and Production Environmental Forum (FIEPEF) was established on the Shetland pattern. Alastair Macintire is an independent chairman.

What will the timetable be? It took seventy days to tow the rig out to the Islands. Amerada Hess will use it first, then LASMO, Shell and IPC, and then back to Amerada Hess. LASMO will drill five or even seven wells and we expect a pretty good answer by the end of 1999. My assessment is that we have a one in ten chance of success. If it is successful, then appraisal wells will be needed, perhaps six or seven for each location. There could be a need for two or three more rigs. Then we would move quickly to production, but 2003 or 2004 is the earliest we could start producing.

It is more challenging than the North Sea. A floating system would not need more than perhaps a dozen people, but support would be needed in Stanley. Later there would have to be a more permanent port. It is up to the government whether development will be on the Islands or on the mainland. All the work could be done on the mainland.

In a few months, the rig, Borgny Dolphin, will reach the Islands and Amerada Hess will begin drilling.

[End of p. 6]


Argentine Exploration in the South Atlantic

Notes on the presentation by Antonio Estrany y Gendre

I have been asked to speak as an Argentine business man, but nationality does not affect the approach to oil. There is the same method of risk assessment for all.

Firstly of all, the geography: there have been discoveries on both sides of the South Atlantic, in Brazil and in Angola. [A slide was shown of the Patagonian Shelf.] The continental shelf is an area up to the 200 metres depth line, beyond that is the slope. Experience on the shelf has not been good, except to some extent in the South, offshore from Tierra del Fuego, where Bridas has a joint venture with Total and Deminex. The continental slope is the important area. It is possible to drill up to 2000 metres deep. The discoveries in Brazil were at 2000m and in Angola at 1500m. As yet, there has been little effort from Argentina at these more difficult depths. Much more investment is required.

Next, the economics: how deep will oil be? This determines costs. The size of any discoveries and oil prices are fundamental. The relation between oil and gas in any find is important. Gas is more complicated to develop. Where would the pipelines go and where are the markets? Output from the Bridas concession in Turkmenistan could be supplied through pipelines to Europe, or to Pakistan and India, or to China and Japan. A similar choice of markets would not be available in the South Atlantic. The plant for treatment and petrochemical developments would need more investment, in the case of gas. Prices then become more important. At the moment, oil prices are declining, but gas prices have been more stable. An oil find therefore has to be bigger than would have been necessary two or three years ago. A major offshore find would take ten years to develop.

Finally, oil and gas are important now, but may be less so in the future. Technological change could lead to new sources of energy. Oil companies are investigating the alternatives. Large oil and gas developments may not continue to be justified.

The continental slope, from Brazil south to Argentina, presents many possibilities and uncertainties. Because companies have many alternatives and may not invest in the area, governments have to encourage the process of development.

Questions and Answers during the Session on Oil

Q.    Will LASMO pay royalties to Argentina on output from the Falklands? If gas is found, will it be piped to the mainland?

A.    LASMO is aware of the implied 3% levy payable to Argentina. I do not know how it will be handled. However, we have business in Argentina. It is something for the future. We want to find oil rather than gas. It is unlikely that gas would be economic. Only gas in vast quantities would justify exploitation. Brazil could take liquefied natural gas (LNG), but there is already some competition.

[End of p. 7]



Q.    What do we know about the Area of Special Co-operation?

A.1.    In terms of geological knowledge, not much. No-one has had a chance to analyse seismic data, certainly not in the UK. There are some interesting geological features, but not as interesting as the North Falkland Basin. It is a different geological province, with a different structure and prospects. We are working as hard as possible to gather and analyse the data, but there is much work to be done.

A.2.    A gas find would have to be very large. There is a network of pipelines in Mercosur. The economic solution must be a pipeline link to Mercosur.

Q.    Where would support facilities be located?

A.1.    There would probably be a permanent floating platform for each oilfield, each with a dedicated vessel. Tankers would go to and from the platform. Supply boats would be needed and some warehousing. The onshore base could be in a number of locations. It could be on the mainland. Some services such as helicopters would have to be local. There is a political dimension to this debate.

A.2.    There would be no FIG pressure to go for a non-commercial location. There is no support for one location rather than another and no obstacles would be raised to any location. Only commercial criteria should apply, but there are some socio-economic considerations. Some Islanders think location on the Islands would be desirable, some do not think so.

A.3.    There has to be a certain minimum on the Islands. The requirements for safety and health mean there must be a helicopter within reach. The rest is a matter of options which have to be costed. If there are going to be political constraints, then costs could rise. There is a bottom line to the choice of location.

Q.    If there is an onshore base on the Islands, does the present political situation allow imports from Argentina?

A.    There is no obstacle. It is a matter for commercial considerations only. However, suppliers cannot use Argentine nationals or Argentine-flag vessels.

Q.    How much oil is there likely to be?

A.    I would be surprised if there could be a thriving oil province round the Falklands with a production of less than 100,000 barrels per day. At the present price of £10 to £12 per barrel and with the government take as expected, the income for the Islands would be around £500,000 per day or £250 per person. It will be good to be an Islander, if the Treasury does not intervene.

[End of p. 8]



Q.    What will the social impact be? What manpower will be required? Can one assume one supply boat per week? How many helicopters per day will be needed?

A.1.    The Falkland Islands Government asked the same questions. In a comparable Australian case, there has been only one warehouse onshore and team of six staff, with a relief team of six. This means accommodation for just twelve people. If there are five or six boats, then there will be 30 more people. A good runway is needed. In the Falklands, there would also have to be a supply network, providing cleaning, hotels accommodation, etc. The total manpower will be in measured in hundreds rather than thousands.

A.2.    The Islands already have experience of a large military influx and this has been absorbed.

A.3.    The Argentine experience is that big companies are more careful now than they were five-years ago in minimising their impact.

A.4.    In the case of the North Sea, the greatest impact was from large-scale construction. There was a workforce of hundreds in the Aberdeen area. The requirement for management of the oil fields is minimal.

Managing the Fisheries

Notes on the presentation by Professor John Beddington

While oil is a potentiality, fish are a reality. World-wide, fisheries are in a disastrous situation. The UN Food and Agriculture Organisation (FAO) estimate the collective loss at US $50 billion per year, which is made up primarily by government subsidies. In contrast to this, the Falklands regime is a success story, thanks to John Barton and his Fisheries Department team and their advisers, the Imperial College team.

In the management of stock, there is an ineluctable need for co-operation. I am pleased my colleague and friend from the Mar del Plata marine institute (INIDEP) is also present. There is a number of species in the South Atlantic. They are mainly in the Patagonian Shelf area. From joint cruises, INIDEP and Imperial College estimate the biomass at 100 million tonnes. This is a significant amount.

The southern blue whiting is one species of importance. It is caught by fleets on both sides of the boundary. On the Argentine side they are caught by large boats and the chief interest is in fish sausage, turned into "crab sticks". On the Falkland side smaller boats are used and the chief interest is in fish and fillets. From historical figures, the blue whiting situation looks disastrous. There has been an inexorable decline, but one need not be too worried. It is a long-lived species, with a lifespan of twelve or thirteen years and there is no dramatic pressure on the stock. At the moment, the effects of El Niño are beneficial. The stock does need management. Since 1991 there has been exchange of information through the joint South Atlantic Fisheries Commission.

[End of p. 9]



The species of paramount importance is the illex squid. The value of the major species in the area is around $US 1 billion per year and illex are dominant. The total Falklands GDP used to be £10 million per year and the income from illex increased it to £40 million. It is an eccentric species. They are born and die in a single year. They are hard to manage. If you fail in any one year, you have failed permanently. In the North West Atlantic, there was a total collapse of the stock of a similar squid. As we have seen in our session on oil, the area for the illex squid overlaps the area of maximum interest for oil exploration.

The fishery cannot be managed by Argentina or Britain in isolation. It has to be managed jointly. This was recognised fairly early on and the South Atlantic Fisheries Commission was formed in 1990. It meets twice a year. There is a technical sub-committee headed by Dr Verona on the Argentine side and myself on the UK side. How do you manage this sort of stock? It is highly variable and very short-lived. The focus has to be on what is left to breed at the end of the fishing season. It is impossible to regulate catches. The regulation is by licences. This means there is no incentive to mis-report catches as happens around the UK.

There is a survey, which is undertaken jointly by INIDEP and two scientists from Imperial College, at the start of the season, to estimate the size of the stock. We then try to estimate the trajectory of the stock during the year, using information from weekly exchanges between INIDEP and Imperial College and reports on catches. The target is to ensure that a certain amount of adults are left to breed. If the stock is likely to drop below a safe level, the fishery is closed. It was closed by the Falklands government in 1990 and it was closed in 1992 by a joint Argentine-British decision.

The fishery should have been closed in 1996, but the information for the decision to be taken was not available in time. Luckily we were saved in 1997 by very favourable oceanographic conditions and the stock recovered. The information that came too late was about the expansion of the Argentine fleet. It had grown substantially over some five years, whereas the fleet licensed by the Falklands remained constant. Steps are now being taken to speed up the flow of information.

There are two major problems at present. Firstly, the expansion of fishing effort is not only by the Argentine fleet, but also by the high-seas fleet, especially from the People's Republic of China. To tackle this, some form of international solution is required. Secondly, the fishery is too good. There are too many vessels and the market price of illex has halved. Not only is the price low currently, but the collapse of the Korean economy has reduced demand.

For the future, how do we get genuine joint management, so as to meet conservation standards and avoid over production and collapse? The best of all possible worlds would be to achieve – in the exclusive economic zones (EEZs) and on the high seas – both effective conservation and a productive and profitable fishery. It is a difficult time. A lot of talking is needed.

[End of p. 10]


Facing The Issues in the South-West Atlantic Fisheries

Text of the presentation by Carlos Alberto Verona

I would like to express my high gratitude for being invited to participate in this session of the South Atlantic Council. I feel deeply honoured.

In this presentation, I would like to point out some considerations on the evolution of fishing activities in the South-West Atlantic, with the intention to contribute to a better understanding of this issue and its implications for British-Argentine relationships.

On the occasion of the tenth meeting of the Scientific Sub-Committee of the South Atlantic Fisheries Commission, held in Mar del Plata last November, I had to formulate from my own perspective, a general view of this matter. I found myself a newcomer in the scene, with the responsibility to chair the Argentine delegation and preside over the discussions that would take place among experts with great experience of the business. However, I had the personal belief that my lack of involvement with previous steps would serve to enrich the general discussions.

Some years before, at one of the initial meetings of the Scientific Sub-Committee, I had briefly to deal with the same issue. At that time, in the position of Research Director of INIDEP (National Institute for Fisheries Research and Development), I had invited Professor Beddington to give us a lecture on the management of natural resources. I distinctly remember his words when he kindly accepted the invitation. Then, he said: "It is a good idea to open a parenthesis on the political issues, to speak about scientific matters".

Up to this day I have never commented to John my impressions about that answer. Now, I shall share it with you. Since then, I have been with the feeling that those impressions could be expressed by means of two questions. The first is one of a general and theoretical nature. "How far can we advance on scientific matters under the prevailing political limitations?" The second question, more specific and pragmatic, is: "What kind of contribution to the purposes of the Fisheries Commission could be expected from the Scientific Sub-Committee?"

When the deliberations at the tenth meeting started, I felt that I could clearly answer the first question. As long as the discussions run in a scientific arena, we could let our minds speak freely. But, with regard to the second question, my doubts persisted. To make things worse, I had to give an answer to an unexpected inquiry by Mr Marsden, the British Ambassador in Buenos Aires. Overwhelmed by the circumstances and the shortcomings in my command of English, I tried my best to produce an answer that would be, at least formally, correct. In my answer I pointed out that we have been expecting progress within the sphere of the Scientific Sub-Committee, if we worked hard enough in order to improve and consolidate previous agreements.

[End of p. 11]



Since then, however, I felt that I had not reached the core of the matter. Something tells me that it is possible to find a better answer. What follows should be considered an attempt to advance in that direction. Essentially, my thoughts seek to find a way to overcome the status quo situation, which I do not hesitate to describe as "a rhetorical stagnation" in the conversations. I am trying to perceive solid alternatives for progress, in spite of the existence of a controversy.

Epistemology teaches us that there are two kinds of problems: those having solutions, and those having only consequences. The problem I am dealing with aims at finding the best answer to the question "What kind of contribution to the purposes of the Fisheries Commission could be expected from the Scientific Sub-Committee?" Before describing the nature of the problem, I want to anticipate a personal truism about this subject: there is a positive solution to this problem, but it will solely appear if we search for it in a more general framework, in which all the main related issues are involved.

Facing the issues

Several issues, not always explicitly presented, comprise the framework that confines the discussion on fisheries between Argentina and United Kingdom. I shall now enumerate those, which, in my opinion, are the most consequential, because I am convinced of the need and the convenience of bringing them to the surface, if we want to understand the problem thoroughly and if we are honestly committed to finding a solution.

  • Two paradigms describe the factual situation of the Islands. One that considers it as a settled matter, whereas, for the other, it is amenable to modifications.
  • That situation worsens the controversy between the two states that nevertheless agreed to work together in order to achieve some understanding.
  • The existence of this background controversy confers a political dimension to the discussions on fishing matters.

Projected against this background screen some additional questions appear that affect all matters in dispute. Among these, it is important to point out the following issues:

  • At present, the South-West Atlantic supports one of the richest, yet, until recently, least-developed fisheries in the world. Focusing our attention on the main resources of the area, we can conclude that in spite of the fact that the Polish fleet fished in this region from 1970, the total catches of squid and blue whiting prior to 1977 were practically negligible.
  • Since then the South-West Atlantic fisheries have been developed without pause until the present.
  • Over the period 1987-1997, a total of about £250 million was obtained by the government of the Islands from fishing licences.

[End of p. 12]

  • In the past, the annual income reached some £30 million, but this amount was considerably reduced in 1997, barely exceeding £20 million.
  • This figure is however significantly larger than that expected for the current year, due to the fall in the international prices of squid, and the financial crisis of the East Asian countries.

Finally, there is one more issue to be considered. Fisheries deliberations that take place at the level of the Scientific Sub-Committee sometimes occur, as if there were something else but two sides in the discussions. At times, the United Kingdom delegation states that even though conceptually agreeing to an initiative suggested by the Argentine side, this will not be implemented until the clearance from the Islands is obtained. Both sides might, for instance, coincide on a survey design that, for example, may extend the sampling area to cover the territorial waters of the Islands. In such an instance no matter the scientific rational, we are certain that the authorities of the Islands would systematically refuse the necessary permission.

All these issues give rise to a general framework that prevails over every academic matter derived from the deliberations of the Scientific Sub-Committee. So much so, that every scientific subject included on the agenda is previously interpreted in terms of its political consequences and the economic interests. For this reason, at present, we must admit that the conservation of fish resources very often yields to the political and economic demands of both sides. Probably it would be better if we could modify this scenario.

Obviously, the basic change was the return to democracy. After half a century of weak constitutional governments interrupted by strong de facto regimes, the Argentines are learning to live in a democracy and cherishing the experience.

But this is not all. The transition to democracy has been accompanied by deep economic transformations that brought an end to a chronic inflation spiral that had led to hyper-inflation rates of 2% per day. Argentines know how difficult it was to explain such a peculiar phenomena to others, but it is even harder now to accept that we are living with one of the most stable currencies in the world and to acknowledge the corresponding changes associated with this new reality. Additionally, state assets, amounting to $30 billion in value, were sold through public and international bids, thus dismantling a huge, but inefficient, state apparatus.

Outstanding among these changes is the opportunity to rebuild the prosperous country that Argentina was in the past, but with the full awareness that there exist painful instances of marginality and pending tasks in terms of justice, education and public health.

Today we may cast a critical eye on how the circumstances evolved, but the present reality is frankly promising. Speaking about fisheries, for example, we are aware of the state of over-exploitation of common hake, our most important fish

[End of p. 13]



resource. But, facing this problem, the Argentine Government took the initiative of summoning an international group of prestigious experts, to analyse the new fisheries model to be imposed in the country. In the coming March a second group of experts (with one member from Britain), will convene to review, for the first time, the assessments of the stocks and the technical advice, given by the INIDEP to the authorities, on total allowable catches.

Within this context of radical transformation the meetings of the Scientific Sub-Committee of the Fishing Commission have been held regularly since 1991.

Concluding remarks

I shall return now to the question that I left unanswered "What kind of contribution to the purposes of the Fisheries Commission could be expected from the Scientific Sub-Committee?"

If what is expected from the Sub-Committee is the solution of the conflict between both countries, I definitely have reasons to be pessimistic. As far as I understand it, the work of the Sub-Committee is not focused on solving conflicts, but on building relationships. Building relationships is not merely an exercise of tolerance. It properly means gaining mutual understanding, acceptance, respect and appreciation.

In this regard, the Sub-Committee has been, at least, partially successful. Furthermore, the excellent working environment, created in the course of these years, opened a channel to develop instances of scientific co-operation that, from our own perspective, exceeded our initial expectations.

But besides the efficient work carried out by the Sub-Committee, we feel that Argentina has made many proactive contributions towards a fruitful relationship and to create a more positive atmosphere. In this respect, our government has encouraged the participation of INIDEP and supported the important survey programmes for squid and blue whiting carried out in our research vessels.

The Argentine authorities have also endorsed the technical advice for preservation of the short-fin squid, Illex Argentinus, observing the recommended date for the start of the fishing season and the early warning approach adopted for its exploitation. An early opening of the fishing season would imply not only an irresponsible behaviour in fishing activities, but also a reduction of the resources later available to the fleet operating under United Kingdom licenses.

As regards the southern blue whiting, Micromesistius Australis, the present condition of the fishery is obviously a cause of deep concern, particularly in reference to the dramatic decrease of the massive spawning concentrations around the Islands, that could be observed before the expansion of the fishery in the mid-1980s. In this matter, INIDEP has proposed several activities in order to understand the causes of this decline, its degree of dependence on environmental factors, and to monitor the very delayed recovery of the stock.

[End of p. 14]



In my opinion, the fishery of the Patagonian squid, Loligo Gahi, deserves a similar treatment pointed out for blue whiting, in order to understand its general behaviour, characterised by wide oscillations in abundance, and to prevent any further decline in catches.

At this point, I could finalise this presentation, but heuristics, the art of solving problems, recommends that when facing a difficult issue, a solution could arise by reversing the question. To do so, I would like to reformulate my previous query in the following way: "What contribution to the progress of the discussions of the Scientific Sub-Committee could we expect from the negotiations of the Fisheries Commission?". In other words, if every political and economic constraint that we face today were removed, then "could we be in a position to anticipate progress in the scientific advice for the proper management of the fisheries resources?". The answer is absolutely positive.

However, as long as the governments of both countries do not make a move to reverse the question, I am afraid that scientists will find no options other than to continue building relationships.

Let me finish with a quotation from an article by Simon Jenkins, that recently appeared in The Times, under the title "Tango diplomacy". Mr Jenkins wrote: "In Buenos Aires one dances as if on a cliff-edge. Ever since 1982, British and Argentines have been out of step ... Buenos Aires ... now wants to resume the dance ... Some of the steps might even need relearning. But lasting enmity is absurd between two countries who once agreed a proper tune and must again dance it into the night". [The article appeared on 10 January 1998. If resuming the dance means facing the issues and accordingly removing the political constraints that today hamper a better management of the fisheries, I agree with Mr Jenkins. If resuming the dance allows us to introduce a break from the dialectic standstill where the discussion often ends, then I agree with Mr Jenkins. Finally, if resuming the dance imply new opportunities to make progress in terms of the complete accomplishment of common purposes between the countries, I fully agree with Mr Jenkins.

Thank you very much.

Economic Aspects of Managing the Fisheries in the South-West Atlantic

Text of the presentation by Thomas Boyd

From a fisherman's perspective, the various conditions and regulations under which the fisheries of the world are sub-divided and managed, are all too often set from (outwardly) political rather than economic considerations. Whereas this is understandable, and indeed in the world in which we live largely unavoidable, it is my objective to emphasise to those who have the responsibility for managing national and international fisheries, the need to understand as well as they are able, the major economic considerations under which vessel operators manage and run

[End of p. 15]



their ships and which significantly influence their ability to survive. My brief paper is aimed at some of the specific issues of the South-West Atlantic.

I am not going to speak on logistics which affect fishing, fuel costs in the South-West Atlantic and the factors which influence them; I am not going to speak about reefer (refrigerated cargo vessel) costs; I am not going to speak about changing cost percentages on fish values. That would bore you to death and I feel nothing meaningful would be retained. If anyone would really like these figures, please contact me later. I will, therefore, speak on those issues which those present may be able to influence.

For those not involved in the fishing industry – or indeed shipping – it is difficult to appreciate that a ship's life is finite unlike many buildings or factories, which can be refurbished and modernised or redeveloped for a different purpose. Any day lost from a ship's operational role, and for a fishing ship that means its fishing activities, through whatever constraint, be it political, economic, mechanical, quota-based or crew personnel, is lost forever and can never be recovered. A ship's working life for all practical purposes is measurable and finite.

The markets for the world's produce, as had been mentioned by John d'Ancona when he spoke on commodities, are inevitably becoming increasingly "across border" and international. They are also becoming more sophisticated. The developed-world's food requirements, its wholesale, retail and catering industries become more particular and more demanding: so it is for the world's markets for fish products. The fisherman who ignores the fact that he is in the food industry is living in a fools' paradise. As a result of these market changes, fishing ships have tended to become more complex and more costly. The processes on the fish, undertaken either at sea or on shore, become more sophisticated and, of necessity, more rigorously controlled. Quality and consistency are paramount. In fish, quality once lost is never recovered.

Turning specifically to the development of the South-West Atlantic fisheries – they are prosecuted by a variety of vessels for a fairly wide variety of markets, certainly when viewed from the narrow confines of the market for North Atlantic products. For those responsible for the revenue and employment aspects of running the South-West Atlantic fisheries, this is a very healthy situation, but it should not lead to complacency.

At the one end of the spectrum of fishing ships operating in the area is the simple, basic, totally rudimentary (typically Taiwanese) squid jigger, often second- or third-hand, with a value of less than $1 million and a crew of 25-30. It freezes its catch whole and unprocessed at a rate of some twenty tonnes per day in eight kilo blocks, transporting this product by reefer to the Far Eastern markets. At the other end of the spectrum, there is the highly sophisticated surimi-type factory ship, a state of the art vessel, the latest capable of a raw material intake of 1500 tonnes a day, if she can catch it, and costing some $50 million. Such vessels can produce up to 300 tonnes a day of finished surimi and have a crew of over 90.

[End of p. 16]



In the South-West Atlantic fisheries there are trawlers, jiggers and liners targeting mid-water – pelagic and demersal – groundfish and squid. Many operating, as Tim Bushell mentioned, at the end of lengthy and expensive supply lines, with many a long way from home.

Although each type of vessel has her own particular requirements in the form of operational parameters, the basic economics of running all these vessels are remarkably simple and similar. Ideally, the cost of any one voyage and certainly the cost of the year's fishing operations has to be met out of the proceeds of the catch or the operator is in trouble. It is very simple and very basic, but a vessel's achieved results can easily be unseen, or unknown, to those directing the fishery. Furthermore, if fishing has been difficult over a period, the vessel owner may be deeply "in hock" to his bank or financiers. A situation he will seek to hide. In these circumstances, most will stretch their resources to the very limit or indeed over the limit, in the hope that the next trip will be a bumper one which will rescue them from their immediate plight. The fisherman is the eternal optimist and it was no accident that our Lord chose fishermen amongst his Apostles.

For those running and managing the fisheries, it is so easy to be unaware of a deteriorating economic situation amongst the catchers, under the plethora of other problems and considerations. John Beddington in his paper alluded to the very significant losses incurred by the world fishing industries, losses made good in certain countries by grants to the industry and disregarded by others. However, to be unaware of or ignore the immediate and long term financial and economic viability of each class of vessel is to court inevitable revenue problems.

Pointers as to the health of the fleet.

The spread and age of ships in a particular section of the fleet is a good indicator of the health of the fish-catching side. If vessels are being replaced and re-equipped, this gives an indication of the fleet well-being and the anticipation of those involved in the fishery of the long-term stability of that fishery and the market for the product. Where the age of a fleet is increasing without reasonable replacement tonnage appearing on the scene, the warning signs are manifesting themselves. The operating and licence costs are too high, the fishing somewhere in the year's fishing pattern too poor, the market too unstable or changing: the overall risks are too great for the fishing vessel owner or his bank to run with. Even if "our" fishery is the most profitable in the yearly fishing plan, as managers we have a dilemma.

In the joint Falkland Island/Argentine fishery – and in world terms it certainly is joint – fishery managers need to keep their finger on developing situations, if success of the fishery, a reliable market for the product and long-term licence revenue is to be maintained. For the Falkland Islands – which are without a meaningful domestic flag fleet, in world terms – this is certainly the case. For the Argentine part of the fishery, employment at sea and onshore, employment in infrastructure, employment in food processing with added value export earning

[End of p. 17]



potential, and food for internal consumption, all are more important aspects. Notwithstanding, the fishery is, in generic terms, a shared one and co-operation on the resource is vital.

Even though the objectives of the coastline states are different, even though a competitive spirit enters the licence sales pitch, neither side wins if unnecessary economic damage is done to the vessels which fish their waters.

We live in an environment of real change as far as the levels of many national fishing capabilities are concerned. The fisheries and fishing industries of the world have witnessed the decimation of the vast former Soviet Bloc fleet world wide and specifically in the South-West Atlantic over the last ten years. Today the Russians have practically no fishing presence, the Bulgarians have gone from fourteen vessels to just two and the Poles from 68 to only two. What is more significant, however, is that this fleet is unlikely to be replaced, certainly within the next decade, certainly with anything like its former catching capabilities. In any of the famous former Eastern Bloc fishing ports, hundreds, literally hundreds, of ocean-going trawlers and factory ships lie rusting, never to go to sea again. These vessels will have a replacement cost of $14-30 million each, $300 million for ten ships. Where will this money come from? Will such expensive ships be able to pay the way? It is a salutary example of the economics of running fishing vessels in today's competitive fish commodity markets.

Today, if any of us as vessel operators cannot perform a fishing operation economically ourselves, whatever it is, if a valuable resource is there, someone will do it for us and we are out of the game. The world market will pay the price and no more. If, as managers, we render a fishery uneconomic through criteria we can influence, i.e. excessive licence costs or interference with free-market forces or open competition, vessels have to go elsewhere, maybe never to return. Those providing licences for the various fisheries of the world hold critical responsibilities as well as power: be they states, governments, companies or individuals (often sadly for their own short-term pocket). Many will have to undertake a significant rethink on where their catching capability (and investment for this) will come from in future. The previous easy access to heavily-subsidised Eastern Bloc fishing capacity is a thing of the past.

Our company involvement in the South Atlantic and Antarctic fisheries dates back to the mid-1950s, when we advised British Antarctic Survey of the likely capabilities of the Soviet Bloc vessels, whose photographs and certain other details BAS provided to us.

As operators of deep-sea fishing vessels in the North Atlantic since the 1930s, we were most concerned to see in the South-West Atlantic in the mid-1980s apparent almost total disregard paid to the operating parameters and economics of "foreign" fishing vessels involved in these fisheries. Many on the fringes of the licensing policies were lulled into a false sense of security by a surfeit of vessels, "if this present fleet does not take up the licences another will". In many instances,

[End of p. 18]



the prime consideration had been short-term gain – a get rich quick attitude from those with licences to broke. This was an understandable scenario and one fairly prevalent in international terms, but a damaging scenario nonetheless.

The latest United Nations convention for the management of "straddling stocks and highly migratory species" is excellent in its world-wide understanding and appreciation of widely spread and multi-faceted fishing vessel operations. The UN's proposals, for the distribution of what can only increasingly be fully exploited ocean resources, are calmly logical. The understanding and concern of how to sort out "who catches what" in an equitable and sensible manner is admirable. All too seldom has such concern been echoed in the legislation enacted by the individual international coastline states, who control and partake in many of the world's emerging fisheries.

The effect of this short-term approach has been that the fishing vessel operators' own company resources, which are finite international resources (mankind's resources, of time and money) have all too often been wasted to no purpose. Ladies and gentlemen, we cannot afford this and should not condone it.

Widespread and increasing concern is expressed about the Earth's finite biological and consumable resources (many being renewable we hope). However, a similar protest has yet to emerge globally on economic wastage and nowhere is this more critical than in fishing.

The name of the world game for the last ten years and probably the next ten years is competition and we are all of us conditioned and influenced by this. There are bound, we accept, to be winners and losers, but for the losers there is all too often potentially disastrous economic damage and wastage, in financial resource and human terms. The fishing industry of the world cannot afford this wastage. It is much fragmented, it has no collective unanimous voice with which to raise these issues. Conversely, by comparison, economic wastage by the world's mega-institutions must be and is addressed in-house if they are to survive.

A significant share of the responsibility to avoid unnecessary wastage amongst those harvesting the oceans' resources must therefore rest with those who plan and control the fisheries. In most instances, these are only answerable to their governmental or political masters.

To return to some very simple fishing vessel economics. A fishing vessel has a maximum life of 25-30 years (with or without the necessity of significant and costly refit or refits during this life). Today's new building, state-of-the-art fishing vessel can be a very sophisticated machine, from the 25 metre 200 mile "inshore" boat, to the factory trawler capable of roving the world's oceans. Generally, the higher the standard of living in the flag state, the more sophisticated the vessel's outfit. This is a trend which has developed to keep the crew levels as low as possible and earnings as high as possible. Banks need reassurance to finance a new vessel over ten years and a second-hand one over seven years. To make an

[End of p. 19]



investment in a new vessel an owner requires to be able to see seven to ten years ahead with some confidence and with as much stability in his field of operation as he can. Whatever he can be reasonably sure of, however, there are many, many other factors outside his control, of which he is aware but can in no way influence.

  • Ocean/climatic conditions, affecting the breeding conditions and recruitment to the stock and the food chain.

  • Fishing activity by others, affecting either the stocks or the market.

  • Alterations in licence availability, affecting his essential years' operational plans.

  • Internal oil supply and fuel costs: fuel is a major cost for many fishing operations.

  • Cost of fishing gear and equipment, much of this oil based.

  • National flag state inflation, employment, wage rates, crew availability.

  • Interest rates

  • Currency variations

  • Market variations, based on supply and demand and particularly alternative food resources.

  • Reefer rates, again based on supply and demand.

Ladies and Gentlemen, you would agree, it is a nightmare scenario.

How can the managers of the world's fisheries provide assistance? How can we gathered here best assist the South-West Atlantic fisheries to avoid unnecessary wastage of the catchers' finite and limited resources? The following responses are needed.

  1. Stability of fishing opportunity. Can there be long-term licences?
  2. Assistance in and appreciation of the need for a vessel to have a year round fishing plan. Fishing vessels require 300-320 operational days at sea to survive.
  3. The encouragement of progression towards free exchangeability of licences between the South-West Atlantic coastline states is vital.
           For those not close to the fishing, a specific example of the difficulties is that all the fish for one year or a year class may position itself in Argentine waters. This is not really a cause for celebration in Argentina, particularly if those who have bought Falkland Islands licences suffer significant losses. The following year or season the boot may be on the other foot; those vessels with Argentine licences may suffer similarly. The result, ladies and gentlemen, is a destruction of the catchers' capital base to no-one's advantage. Nor should we forget that only the most efficient vessel is able to meet today's market requirements and can afford to pay the highest licence fees in the long term.

[End of p. 20]



Those vessels which face loss or suffering this year may not be able to come next year or may choose to go elsewhere, where fishing may not be as prolific, but the risks may be less. Ships continue to depreciate whether they are fishing profitably or not; the crews have to be fed and paid; and vessel costs continue – insurance, maintenance, classification requirements. In the South-West Atlantic and indeed elsewhere, we need urgently to find a solution to the problem of needless and destructive waste. The situation within the Falkland Islands is similar to a blind man drinking from a straw: all the time he has something to drink he feels no concern for the future.

Questions and Answers on Fish

Q.    The Argentine Government has been criticised for inactivity in an Argentine Greenpeace report. There is an urgent need for a long-term fishing agreement. Why is there no action?

A.    There is agreement to stop fishing. The main problem is over-capacity – too many boats, for too small a resource. Allocation of effort between the Falklands, Argentine waters and the high seas has to be agreed and the allocation must be within the resource. It is difficult for Argentina or Britain to take a position without knowing each other's policy on licensing.

Q.    The UK has acceded to UNCLOS. The ratification of the straddling stocks treaty is getting closer. But do not the politicians still have too much to say?

Q.    Because of the high seas fishery, is not the bilateral agreement between Argentina and Britain a stupid inadequacy?

A.    That was an overstatement. The Argentine-British joint commission is valuable. High seas fishing can undermine the current agreement, but there are other means available, such as voluntary restraint agreements. In any case, the high seas is marginal.

Q.    More oceanography is needed for fish management. Any there any studies under way?

A.1.    Oceanography is the key to the future, but it is very difficult. We want to know each year whether the Falkland Current is going to be thin and long or short and fat. It is unpredictable. Large scale models are necessary. We need to know in September the shape of the Falkland Current in the following March.

A.2.    At the moment, only an autopsy is possible. Research is costly. It is a long term goal, which should be justified. It is difficult to establish a baseline to understand change. New activities like oil will have an impact.

Q.    Would funding from oil companies for oceanography be welcome?

A.    Several speakers said yes.

[End of p. 21]


British Defence Interests in the South Atlantic

Notes on the presentation by Commodore Jeremy de Halpert

I listened to General Balza, the C-in-C of the Argentine armed forces, in this room about a year ago. It was a most stimulating and interesting speech. Since then I have been involved in bilateral contacts with Argentina.

As Director of Overseas Military Activities, I am responsible for the UK military commitment everywhere outside NATO and the former Soviet Bloc, including the Middle East, the Falklands, Latin America, Africa, Asia and Australia.

For the UK our defence interest in the South Atlantic rests with our commitment to sustain the right of the Falklands Islands to determine their own future and to the security of the South Atlantic dependencies. We are as committed to these aims as we ever were.

There are two strands to meeting these objectives: first, maintenance of the garrison and the capability to reinforce it through the Mount Pleasant Airport and, second, defence contacts with Argentina in all areas and at all levels, to increase the level of trust and understanding between the two armed services.

With respect to the garrison, because of the current strategic defence review, it is impossible to predict its future size and shape, but it will be appropriate to guarantee the security of the Islands most efficiently. The garrison is tri-service and commanded from Northwood. The current commander is a one-star Air Force officer. The post rotates among the three services. The cash cost of the garrison in the financial year 1996-97 was £81 million.

In addition to securing the right of self-determination, the great benefit of the garrison is joint service training. For the Navy, the benefit includes experience of a challenging climate, live ranges, co-operation with Royal Artillery, command training especially for junior officers, and supporting and working with the civil authority. For the Army, there is considerable low-level training, junior officer development and low-level engineering experience. For the RAF, there is low flying in an isolated terrain, joint exercises, a permanent Rapier squadron, a demanding environment for helicopters and practise in long-range sea rescue.

The other strand is the development of relations with the Argentine armed services. There has been the visit of General Balza in late 1996 and the visit of the Defence Minister, Dominguez in late 1997. There were visits by ships in 1995 and 1997. We are working together in Cyprus, where there are 400 Argentine troops with 400 British. There are formal talks each year, the last were in November 1997. General Guthrie, the Chief of the Defence Staff, is due to visit Argentina at the end of 1998.

[End of p. 22]


Questions and Answers on Defence

Q.    No mention was made of South Georgia or Antarctica nor the work of Endurance. Also, what about St Helena, Ascension Island and Tristan da Cunha?

A.    HMS Endurance is important. It is doing survey work in the South Weddell Sea and has a full programme this year and next. The commitment is the same for the other dependencies as it is for the Falklands.

Q.    How are the troops kept occupied? What about clearing minefields?

A.    There are heavy training programmes. The minefields are a major problem. They are receiving more attention since the Ottawa convention. Specialists are needed. It is difficult terrain, with insufficient records. When in doubt, areas are fenced off. Troops maintain minefield security.

Q.    What is the interaction of the troops and the civil population? What are the long-term social consequences of the garrison?

A.1.    There are plenty interaction, but Stanley and Mount Pleasant are far apart.

A.2.    Relations are good.

A.3.    The bomb disposal people are excellent. Dangerous areas are well cordoned off. The relations between the military and civilians are as good as in the UK, perhaps better. The troops are welcome.

Q.    There are other comparable facilities for training, for example Labrador, and other opportunities for co-operation with the civil power, for example Northern Ireland. Is not the only reason for the presence of troops Argentina? Are there any other security threats?

A.1.    The forces on the Islands are those we believe to be able to do the job most efficiently. Being there, they use the facilities as best they can.

A.2.    The UK Government's responsibility is to ensure the right of the Islanders to determine their own future. It is government policy. The military discharge their duty as efficiently as possible.

Q.    Argentina has a democratic government, it has renounced the use of force and has reduced its armed forces by two thirds. Is not the maintenance of a force in the Islands counterproductive?

A.    The UK has duty to discharge. It does not want to maintain more forces than necessary.

The Argentine Ambassador, Rogelio Pfirte, made an intervention from the floor:
I reaffirm the Argentine commitment to an exclusively-peaceful solution. The position in the South Atlantic has not been adjusted to reflect the improved relations between Britain and Argentina. Hopefully, the Falkland Islands will see advantages in getting together. We deeply regret

[End of p. 23]



the existence of the minefields. Argentina has offered to remove the mines. This is technically difficult. We are seeing how, with the Americans, they can be removed.

Q.    How long will the garrison stay?

A.    It depends on politics.

A View from Argentina

Notes on the presentation by Roberto Alemann

It is now fifteen years since the conflict occurred, but the main subject of sovereignty still has not been resolved. We in Argentina still assert the islands are ours. For 156 years we have longed for them. All sections agree about this, all of our society, civilian and military. We have written it in the constitution. What is new is that in the 1994 constitution we have renounced the use of force, so we proceed with diplomatic endeavours to negotiate. Britain does not accept the Argentine position. Despite the UN asking them to negotiate and OAS support for negotiations. The Islanders prefer to be independent under British protection. These three positions are quite impossible to put under one compromise. Sovereignty is not to be in partnership: it is either one thing or the other.

In 1989, a solution was found to gain time, the famous sovereignty umbrella. Juridically it consists of a reservation on sovereignty, by all the parties. It permits Britain and Argentina to come together on other subjects. We have normal, good relations, except for this particular matter and its consequences. So, for some time to come, we should stick to this umbrella. We cannot find any kind of permanent solution. If we agree to that, we could find other ways to reach agreements and to solve all problems.

Fifteen years is a long time, about time to start talking. These are personal thoughts. I am not speaking for the government. Britain and Argentina might come to terms to share some responsibilities. For instance, defence – we have some common interest in the South Atlantic in deterring marauders. And fishing – I recently suggested a simple solution for fishing. I proposed sharing the proceeds from licenses. The allocation could be made on the basis of the last ten-years experience and written into a treaty. The total catch each year could then be agreed, in order not to deplete stock. Both parties could fish in the whole area and the 150 mile zone around the Islands could be removed. This would solve the allocation problem and guarantee income to the Islanders. In addition, the present co-operation could continue.

The Islands should be run autonomously. They should elect their governor, like an Argentine province or a state of the Union, and run their own affairs. They should keep their culture, traditions, language and laws. But together with this, Argentines should be able to travel and do business. The Berlin wall has come down, that prevented East and West Germans from travelling and doing business.

[End of p. 24]



Paradoxically, there is still a wall in the South Atlantic, contrary to international law and UN and European conventions to which Britain is party.

It is very important to solve this dispute and get together. There should be Islander contact with the continent, as there was before the conflict. Argentines should be able to do business in the oil sector and others, without restriction. This is very important. There should be an agreement to cover all these items, and others that I am not able to cover now.

There have been big advances, as we have heard, in defence, fish, oil and other areas. The present situation is emotional and difficult to understand from a rational point of view. The fact is, bluntly, one thousand five hundred adult Islanders control, by their veto, the policy of ninety million Britons and Argentines. You see Argentina developing as a peaceful, democratic country, a market economy, with no inflation and strong growth (8% last year). It is part of Mercosur with 200 million people, now including Chile. This area will grow and get stronger. This small problem in the South Atlantic should be solved.

As an economist, I think of alternatives. What happens, if it is not solved? Argentina can live with the situation for years, for decades. So can the Islanders. But we never know whether it will erupt. Argentina has relinquished the use of force, but diplomatic means and others remain open. There will be a new government in October 1999. We do not know who it will be, but usually new governments take new initiatives. If the problem is not solved, somehow in some terms, between now and then, we might see changes. The present President and Foreign Minister are seeking a good faith solution. The position may not remain exactly the same.

The time is ripe to find solutions, always under the umbrella, to see how we can come back to terms, in a civilised way and solve our problems.

A View from the Falklands Islands

Text of the presentation by Sukey Cameron

We are pleased that Argentina is now a democracy. Our hope is that they recognise democracy for others. Some people still like to think of the Falkland Islands as undemocratic, a suppressed British Colony, a remnant of the Empire, and Islanders as rather downtrodden poor relations. This could not be further from the truth. The Falkland Islands are a democracy, they have been for over a hundred and thirty years. It is worth noting that the eight elected Councillors represent a total electorate of about 1500 (out of a population of 2200). Therefore the democratic process enjoys a precision and clarity that is often lacking in larger democracies.

We are completely self-governing on internal matters and have recently amended our constitution to take account of changing situations, such as population moves in the Islands. Councillors, whilst part time, are very much involved with the day to day running of the Islands and wholly involved in all

[End of p. 25]



decisions affecting the Islands. All Officials are appointed by the Falkland Islands Government and not by the Foreign and Commonwealth Office. We hold elections for our Legislative Council every four years and, each year, three of them are elected by their peers to the Executive Council. The Governor, senior officials and the Commander British Forces also sit, ex officio, on both Councils. Only elected Councillors have the right to vote. The Governor does, however, have powers to overrule in exceptional circumstances but these powers have never yet been invoked. The Legislative Council meet three or four times a year, depending on the pressure of legislation, the Executive Council meet once a month and Councillors all meet together in advance of those meetings, to discuss fully the issues that will be placed before them.

There is no party system in the Islands and, as yet, no ministerial system. We do not have, like some other dependent territories, a Chief Minister or a leader of the Council. However, we do expect this to develop in the future but, in the meantime, the system works very well. There is a strong public interest in the political life of the Islands with Legislative Council proceedings broadcast and a résumé of Executive Council meetings is reported to the local media. HMG is responsible for our external relations and defence and our relationship with them is very good. The Governor fully briefs and involves Councillors in decisions on those matters. We have excellent channels of communication and these are well used.

With our democracy, we also have self-determination, our Constitution states "Whereas all peoples have the right to self-determination and by virtue of that right they freely determine their political status...." It goes on to say "Whereas the realisation of the right of self-determination must be promoted and respected in conformity with the provisions of the Charter of the United Nations". This point needs to be reiterated, because in some quarters it is believed that we should not have this right, including, ironically, in the United Nations Decolonisation Committee.

The Committee whilst pursuing its programme of decolonisation for other territories apparently wants the Falklands to be transferred from one country which recognises our right to self-determination, to another, which does not, and to resume a colonial status, which we have long since outgrown. I have never understood how this fits into their agenda, but each year our Councillors attend the United Nations to respond to the resolution put down by Argentina.

Whilst the claim to our sovereignty hangs over us, it is hard to envisage any circumstances where normal relations with Argentina could exist. We do, however, welcome the development of relations between Britain and Argentina, particularly in the area of trade, which is increasing annually, and we look forward to seeing it continue to grow. We hope that such improvements will lead to a greater understanding and acceptance of our position by Argentina. We welcome the agreements on fisheries and hydrocarbons in the South-West Atlantic. These are elements of co-operation most countries could expect with their neighbours, but

[End of p. 26]



what is different in this case is that these agreements were reached despite the continued threat to our sovereignty.

Falkland Islanders are neither insular nor isolationist. We have excellent relations with other countries in Latin America and throughout the world. Our Councillors participate in many international groupings and our government was a founding member of the Dependent Territories Association, which, as some of you may be aware, is hosting its second conference here in London, tomorrow.

We would wish to have a normal neighbourly relationship with Argentina, but we cannot be expected to develop this relationship further whilst the threat remains of a much larger country over our few people. Our refusal to befriend Argentina has an historical basis but relates more strongly to that Country's constitutional claim and their ongoing belligerence towards us. Continued statements from Argentina that they will 'recover' the Islands by the year 2000 does not lead to any confidence amongst the Islanders that Argentina can be trusted.

The decision by the Falkland Islands Government not to admit holders of Argentine passports into the Islands was taken because we believe that unrestricted access to the Islands would be used by the Argentine Government to further promote their claim and to disrupt our lives. This decision has been accepted by the British Government, who have stated that "the decision as to who should be admitted to the Islands is a matter for the Islanders and not for the British Government". We do, however, allow visits by the Argentine next of kin. There have been several such visits and more are planned for this year. In his New Year's message to the Islanders the Prime Minister said, "You have been generous in your own gestures towards the Argentines. I know that the recent next-of-kin visit was a great success and your readiness to allow such visits is a great tribute to you".

Attempts to find a 'solution', whether by Argentina or by third parties, are based on the premise that there is a 'problem' and that the views of the Falkland Islanders are at best inconvenient and, at worst, unimportant. As far as we are concerned, there is simply no point in discussing any permanent solution or settlement which ignores the concept of self-determination since we are completely happy with the current constitutional arrangement over sovereignty and regard it as entirely permanent.

The Falklands are a vibrant, developing country. We have gone through some dramatic changes and with those changes people's attitudes have changed. People have prospered and gained a new self-confidence.

We are working hard to ensure that we have a bright and prosperous future. We invest heavily in education, to give future generations a good foundation. We protect our fishery to the highest standards and would like to see a jointly negotiated high-seas fishery agreement. We are planning for the development of the oil exploration. No-one knows what this will bring but, whatever happens, we

[End of p. 27]



will be well placed to cope. We are striving to ensure that our human and natural environments are protected.

We wish for nothing more than the right to live in freedom in the country of our birth, to remain British and to shape our future in peace. We seek support from those who share our ideals of self-determination and self-sufficiency, to help ensure that our future is secure.

A View from Britain

Notes on the presentation by Professor Victor Bulmer Thomas

I will focus on sovereignty. It is clearly central. I am not a spokesman for the official British position, but it is necessary to start from the official British position to get to the overall British situation. It is based on four propositions.

  1. The UK has no doubts about its sovereignty over the Falkland Islands.
  2. The Islanders have the right of self-determination.
  3. The UK government will respect the wishes of the Islanders, although Robin Cook does not refer to these as paramount.
  4. Implicitly, the conflict settled the matter.

It is easy to criticise the official position, but it also easy to criticise Argentine and Islander positions.

First, the UK clearly did have doubts about its sovereignty claim before 1982. This is incontestable. Maybe there were no doubts about South Georgia and the South Sandwich Islands, but we are not talking about these. The UK was willing to negotiate sovereignty before 1982. Secondly, it is not clear that war changes anything. There are still disputes about Gibraltar 300 years after the Treaty of Utrecht, about Sakhalin 100 years after the Russo-Japanese war, and about Northern Ireland. Lastly, in relation to self-determination, this was not granted to Hong Kong, nor were the wishes of the people of Hong Kong respected. When Mrs Thatcher was asked why not, she replied that the Chinese would have turned off the water. This raises the question of what would happen if the costs of the British official position became unbearable.

The public official position and the private official position differ. The UK government, however, sees no point in starting negotiations, if there is no chance of success.

The British public, in my view, is not opposed to negotiation per se. It did not, after all, oppose negotiations with Guatemala over British Honduras in the 1960s and 1970s, nor over Northern Ireland. However, the British public is still concerned about the Argentine record. There is little understanding of achievements over last fifteen years. The negative image is still quite strong.

[End of p. 28]



Compare the difficulties with Japan and Germany even twenty years after the war. Nevertheless, almost any outcome would be acceptable to the British public, if it were acceptable to the Islanders.

Here is the problem. Anything acceptable to the Islanders would be far short of the minimum requirements of Argentina. And what is acceptable to Argentina would almost certainly be rejected by the Islanders. Hence we have the British reluctance to embark on negotiations. So what does Britain do? There are three options:

  • To wait for a change of heart on the part of Islanders. It could be a long wait.

  • To force negotiations through against the wishes of the Islanders. This would not be attractive politically.

  • To pressure the Islanders to establish links with Argentina, in the hope that they will ultimately become more flexible on the issue of sovereignty.

Of the three, the last is by far the best bet. It raises constitutional issues. It may need the use of Governor's veto, which has never yet been used. The Governor's job is a difficult one. He has the power, but cannot use it. The only way would be if he was told, very publicly, by London to do so. This may be necessary at some time in the future.

It may be possible to start with a piecemeal approach, to test Islander reactions. The most obvious start would be to permit Argentine passport holders to visit the Islands. Clearly, oil, fish and perhaps diamond developments will create new opportunities. All this will take time. At least a generation? Territorial disputes can go on a long time.

Argentina has to be patient, which is not one of their national characteristics. What if Argentina chooses to raise costs, like China turning off the water? In the case of fish, Argentina could cause delays and make things difficult for the Islands. It could also make life difficult in the case of oil. What would happen if the Argentine Government took exception to Siderca sending tubes to the Islands in non-Argentine vessels with non-Argentine crews? It could make things quite unpleasant, if it chose. But Argentina will not be difficult, for two reasons. It would risk the loss of international support, especially from the US, when it does not want to lose its credibility. And it would risk a UK backlash. It could make life difficult but it will not do so.

Pressure could be applied from other quarters. Argentina is a member of Mercosur, which is expanding. It might give Argentina full support. Pressure might come from the UN, probably not from the Decolonisation Committee, but from other quarters, perhaps even from the US.

[End of p. 29]


Questions, Answers and Comments on Future Relations

Q.    The Falklands are a minuscule democracy. There are only 220 people per Councillor. It is difficult in these circumstances for individuals to speak out. It is up to the UK government and the Foreign Office to make sure they can.

A.1.    They did not seem to have any difficulty in speaking out to recent visitors from the UK.

A.2.    Councillor Norma Edwards made a comment from the floor: I have been in politics in the Islands for more than 20 years. I have never known anyone frightened to speak out – and I know them all.

C.    The Consejo Argentino para las Relaciones Internacionales, CARI, has been involved for many years in organising meetings to bring Argentines, British and Islanders together to achieve normalisation of relations. I have been surprised by usefulness of this seminar. We would like to do something similar in Buenos Aires and I hope we can count on the support of the South Atlantic Council.

C.    Professor Bulmer-Thomas said it might take a generation or more for things to change. This would be a long time, whereas there is an opportunity now to pursue an attractive community of interest. The bogeyman is sovereignty. Let us find a way of putting it aside, burying it for a generation, or a hundred years. It might then be forgotten. In the meantime, let us pursue the community of interest. Perhaps in doing so, each side will come to appreciate each other more.

C.    Sovereignty means different things to different people. Though when threatened, people will fight to the death for it. Do not forget geography. Few people in Buenos Aires want to live in distant Patagonia. Ushuaia is not a popular exile. The damaged relationships of Germany and Japan are taking a long time to heal. In the meantime, let us work together on practical issues, oil, fisheries, tourism and so on. This is the end to work from.

C.    A territorial claim need not prevent interchange. Poland and Germany were a long-term example of this. Some things have changed in the relationship between the Islands and Argentina. There is co-operation, there could be more.

C.    Governments can only do what their electorates will allow them to do. The Islanders say there can be access only if Argentina first drops its claim. The Argentine Government cannot do this: first, because of the constitution; second, because of the UN resolution: and third, because of the feelings of the Argentine people. Argentines know little of the strength of the Islanders' feeling. Islanders refuse to accept the legitimacy of strong Argentine feeling. There will be movement only if there is contact. If there is interchange between governments and between peoples. Then in a

[End of p. 30]



generation, or less, attitudes may change. But, in the present situation the Argentine Government cannot move. Things are immobilised by the rigidity of the status quo and by the total opposition of Islanders to contact.

C.    This has been a useful session, because it has gone beyond restatement of official positions. It has underlined differences of opinion on sovereignty and lack of agreement on the nature of sovereignty. Thus, the present situation serves us well. I agree with the Ambassador that relations have advanced and are 98% excellent, culminating this year with visit of President Menem. Can we bury sovereignty for 100 years? The problem is that the UK government has repeatedly said it will respect the wishes of the Islanders, so their wishes are sovereign. It is not the same on the Argentine side. The constitution renounces the use of force, but it also says the full exercise of sovereignty cannot be renounced. How can Britain and Argentina negotiate, if the end of the negotiations is already written in? However, progress to date is 98% excellent.

Q.    The Falkland Islands Council recently debated establishing a new air link with Uruguay or Brazil, because Chile is expensive. Why not have a link with Rio Gallegos?

A.    It is neither the time nor the wish of the Islanders for there to be a direct link with Argentina.

Final comments by the presenters

Roberto Alemann

I do not agree with shared sovereignty. For the time being there should be shared responsibility. Shared sovereignty might come later. With shared responsibility specifics can be dealt with. Andorra was mentioned. Before independence in 1993, it was autonomous under the co-dominion of France and the Bishop of Catalan. This is the interesting comparison for the Islands - Andorra before independence. Hong Kong is not a proper comparison. Diégo Garcia is. Britain removed the islanders and without asking them handed over the islands.

Sukey Cameron

The discussions were very interesting, both for myself and I am sure for my colleagues, the Councillors.

Victor Bulmer-Thomas

I am struck by the amount of agreement. I did not believe there would be so much. It is a sign of maturity. I have a great respect for the work of Martin Dent and others on constitutional solutions, but they are premature and when the time is ripe such work is probably not necessary.

[End of p. 31]



Series Editor, Dr Peter Willetts.

The Papers are published by the Council, in order to promote public and media discussion of the Falklands/Malvinas question and other issues affecting Argentine-British relations. Any views expressed are those of the respective authors and not of the Council, whose sole aim is to improve communications and understanding between Argentines, British people and the Islanders. The following papers have been published. All except the first are still available.

1   Options in the Falklands/Malvinas Dispute, by Bruce George MP and Walter Little, 1985, 12 pp. (out of print).

2   British Defence Policy and the South Atlantic, by Gen. Sir Hugh Beech, 1986, 12 pp, £1.

3   The Aland Island Solution, by Don Bullock and Christopher Mitchell, 1987, 12 pp, £1.

4   Fishing in the South-West Atlantic, by Peter Willetts, 1988, 28 pp, £1.

5   Shared Sovereignty: A Solution for the Falklands/Malvinas Dispute, by Martin Dent, 1989, 20 pp, £1.

6   Peronism Today, by Celia Szusterman, 1989, 24 pp, £1.

7   Argentine-British Trade and the South Atlantic Conflict, by Alan Tabbush, 1989, 20 pp, £1.

8   Commercial Relations between Britain and Argentina in the 1990s, by Alan Tabbush, 1997, 28 pp, £2.

9   Contrasting Approaches to Relations between the Falklands, Britain and Argentina, edited by Peter Willetts, 1998, 16 pp, £2.

10   The Falkland Islands Update: A Record of the Proceedings, edited by Peter Willetts, 1998, 32 pp, £2.

Copies of the papers may be ordered from Dr Peter Willetts, City University, London EC1V 0HB. Cheques should be payable to the South Atlantic Council. Please add 26p per paper, to cover postage costs.
[Please do not use this postal address now, but e-mail to enquire about hard copies.]


[End of p. 32]



The views expressed in this Occasional Paper are those of the people to whom they are attributed and are not necessarily shared by members of the Council.



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