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From 538′s Tom Dollar

When Argentina went to war with the UK in 1982 over the Falkland Islands, Jorge Luis Borges likened it to “a fight between two bald men over a comb.” Last February, British oil companies began to explore in Falklands waters. Argentina declared this was a violation of its sovereignty: it continues to claim the Falklands, called las Islas Malvinas in Spanish, as an integral part of its territory–even enshrining the claim in its Constitution.

For a few weeks it seemed as if these two bald men would fight another battle, though this time of words and not of weapons. Initial geological tests showed little petroleum, and tensions cooled down to their normal state of disagreement. A second test last week showed much bigger reserves, threatening to set things aflame once again (though the recent disaster in the Gulf of Mexico may make all parties less keen on deepwater drilling). Potential oil reserves aside, what is it about these treeless, windswept, South Atlantic islands that arouses such great passions?

Well for one thing, passion over the Malvinas rests almost entirely on the Argentine side. Understanding why requires a bit of political history. From hearing Argentina’s stance (and this issue is one of few that unite left and right–more on that in a bit), you’d think that the Malvinas were the great spiritual homeland of the Argentine people–Kosovo times Jerusalem plus Mt. Ararat–and that the British takeover in 1833 must have resulted in the displacement of thousands, if not millions, of Argentines.

In truth, Argentina never maintained a permanent settlement on the islands. Prior to 1833 no one had; there is little evidence that even pre-Columbian peoples stayed there long-term. The islands had been alternately claimed by Spain, France, the UK and the US, which used the islands as a way-station for fishing, whaling and seal-hunting. Upon independence, Argentina (then the United Provinces of the River Plate) retained Spain’s claim under the principle of uti possidetis juris, and briefly used the Falklands as a penal colony in the 1820s.

After the Royal Navy asserted control over the islands in 1833 (primarily to prevent Monroe-indoctrinated Americans from taking them), they were settled by Welsh and Scottish sheepherders. The Falklanders–who are culturally, ethnically and linguistically British and wish to remain so–have lived there continuously for over 170 years. They claim the right to self-determination under the UN Charter.

To Argentina, the Falklands are an illegal outpost of an alien power, a last vestige of European colonialism in South America. Argentina maintains that the right of self-determination does not apply to the Falklanders, because they are not the Islands’ indigenous population. This position takes a fair amount of chutzpah coming from Argentina, which is itself a country of European settlers, and which expanded to its present borders through a series of wars, incursions and territorial aggrandizement.

As such, bringing up the Malvinas is the dog-wagging, Hail Mary pass, trump card for floundering politicians from the left and right. When Gen. Leopoldo Galtieri–leader of the military Junta then in power — ordered the invasion in 1982, he meant it to distract the populace from an economic crisis and forced disappearances at home. It worked brilliantly, sparking an outpouring of patriotic fervor and massive pro-Junta demonstrations–until the UK unexpectedly (to Argentina) retaliated, took back the Falklands, and dealt the Junta a fatal blow.

Since the restoration of democracy in 1983, the Malvinas situation has provided a good font of political theater for Argentine presidents. Argentina will now refrain from invading the islands by force, as it is now clear that Britain would retaliate–and win. Nor will Britain ever negotiate the sovereignty of the Islands as long as the Falklanders express the overwhelming desire to remain British. (And the fact the Argentina invaded in 1982 only hardens this position.)

But there is also little incentive for Argentina to abandon its claim–and considerable intangible benefit to maintaining it. “Melting pot” nations, like Argentina and the United States, require invented instruments of social cohesion to make up for a lack of ethnic unity. These can be political and economic institutions (historically weak in Argentina), shared culture, and national mythology. Irredentism unites left and right in the common belief that “we wuz robbed,” and allows diametrically (and violently) opposed factions to unite behind a common cause. Marxist student groups at the Universidad de Buenos Aires can believe in the same Malvinas myth as the old Junta did–amazing, given that 30 years ago the same Junta was torturing them and throwing them out of airplanes.

This left-right alliance brings us back to the current posturing by Peronist President Cristina Fernández de Kirchner. Fernández, like her husband and predecessor former President Néstor Kirchner, claims to inherit the social justice, economic populist legacy of Perón’s first presidency–most associated with his wife Evita (Fernández has actively promoted her Nueva Evita image). Mr. Kirchner was elected president in 2003 on the heels of Argentina’s economic meltdown.

La crisis, as it’s known, was precipitated by the unsustainable policy of one-to-one peso-dollar convertibility that existed during the 90s (see analogy with Greece ). Convertibility was one component of the Washington Consensus policies of then-President Carlos Menem (also a Peronist–partisan identity is complicated in Argentina). Others included privatization of state industries, “carnal relations” with the United States and NATO, and a restoration of diplomatic relations with Britain. Though Argentina continued to claim the Falklands during this time, Foreign Minister Guido di Tella pursued a soft-pitch approach, sending every child on the Islands a toy once a year.

Kirchner took his election to be a rejection of all things Menem. He re-nationalized industries, broke with Washington in favor of closer ties with Venezuela and other Latin American countries, and played up his spread-the-wealth credentials. He also took a hard line against the former military dictatorship, reopening prosecutions against Junta officials fifteen years after they were pardoned by Menem. The Kirchners forced themselves to walk a fine line: placating their poor and working-class base, without frightening the Argentine business interests and foreign investors needed for recovery. This has not been an easy task, and in the last two years, President Fernández has stumbled from one mini-crisis to another.

Therefore, the Malvinas issue is an easy rallying cry–not only within Argentina, but to unite other Latin American countries behind it against European “colonialism.” Hugo Chávez and Evo Morales have vociferously demanded that Britain turn the Falklands over to Argentina. Even more moderate leaders like President Lula of Brazil and President Calderón of Mexico have come to answer Fernández’ call for unified Latin American support.

Even US Secretary of State Hillary Clinton offered to moderate discussions between the UK and Argentina over the Islands. This is a tactful and costless way to demonstrate that the United States under President Obama is a Good Neighbor to its fellow American nations. Presumably, Clinton understands full well that Britain will no more negotiate the sovereignty of the Falklands with Argentina than the US will negotiate the sovereignty of Hawaii with Japan or Morocco with the Western Sahara. The result is a perfect diplomatic charade — everyone looks good, but no one has to do anything.

Still, Fernández has problems that can’t be covered up by Malvinas posturing. Shortly after succeeding her husband in 2007, she pushed for a dramatic increase in export tariffs on beef. This infuriated the cattlemen’s association, which shut down rural roads with protests. The Senate ultimately rejected the tariff increase after Vice President Julio César Cobos cast a tie-breaking vote against the president (as in the US, the president and vice president are elected on the same ticket). Inflation is over 20 percent, despite the statistics bureau’s official estimates that place it under 10 percent. The government re-nationalized Aerolíneas Argentinas and took over the country’s largest pension fund, which critics have called a cash-grab to meet debt obligations.

Despite calling early congressional elections last summer, a coalition of anti-Kirchner parties took over both houses of Congress. The vultures have begun to circle, and opponents are lining up for the 2011 presidential election–including Vice President Cobos. Still, this has not made the president any more conciliatory (conciliation is difficult when you see your opponents as “coup-plotters” — in a country where coup-plotting means something). She fired Central Bank President Martín Redrado last January, jeopardizing the Bank’s supposed autonomy. Her attempt to appoint a new president then appeared to be doomed in the Senate due to lack of a quorum. The appointment was saved only at the last minute by the miraculous appearance (and vote to abstain) of…Carlos Menem, now a senator from La Rioja province.

So with the writing on the wall, the Kirchners perhaps should be plotting their political resurrection in a few years’ time. While in American politics, there are seldom second acts (for some reason we never saw Senator Nixon, Republican of California, nor Secretary of Agriculture Larry Craig of Idaho), in Argentina they are a way of life. While the political wave of the Malvinas is likely to raise the Cobos and Menem boats and lower the Kirchners’, the next time around the rallying cry of the Falklands may sweep the Kirchners back from the political hinterlands.

This article was authored by research assistant Thomas Dollar. Please send comments or suggestions to sexton538@gmail.com

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