The prize of oil

Today the Falkland Islanders are by far the richest in South America with an annual per capita GDP of £28,000 which compares with similar figures for Spain, New Zealand and Israel (The Economist, July 15, 2006).

But how has this come about in an island territory that was losing population and wholly dependent for its export income on sheep and wool at the time of the Falklands War? The answer lies in the creation of the 200-mile territorial zone around both the Falklands and South Georgia and the sale of fishing licenses to exploit the valuable squid and tooth fish stocks in island waters.

Additional income comes from the annual visit of some 55,000 summer cruise ship passengers who go on shore at the capital, Port Stanley, and some of them who visit the small offshore island nature reserves. But facilities in Port Stanley are modest with only three good restaurants, some pubs and a few souvenir shops. Visitor accommodation is very limited with only 28 establishments listed throughout the islands, half of them situated in Port Stanley.

Good air access underpins growth in the tourism industry and present capacity in this regard is limited to weekly LAN Chile flights to Puerto Montt and Punta Arenas in Chile and return flights every five days to Brize Norton in the UK on aircraft operated by the Ministry of Defence. Indeed, it is hard to imagine much growth in visitor numbers unless air links are re-established with Argentina. This seems a distant prospect as one of the first acts by Nestor Kirchner (President of Argentina from May 2003 to December 2007) was to stop the charter flights linking the islands with the mainland (The Economist, July 15, 2006).

Optimistically, the anticipated discovery of exploitable new energy reserves may provide just the incentive required to bring both countries back to the negotiating table. But as Australia has found over its joint arrangements with Timor Leste, where oil is concerned achieving a satisfactory outcome will be far from easy.