Why Britain is in the wrong over the Falklands

The UK has no legal right to the islands and only defends them to exploit oil and gas reserves.

A few years ago, the Chief of Naval Staff, Admiral Mark Stanhope, informed Chatham House that Britain's role in the world is "wielding a big stick" to "compel others to act in a desired manner." In February, Argentina's Foreign Minister Hector Timerman approached the United Nations to complain about the UK's deployment of a nuclear-armed submarine (of the Vanguard class) in the South Atlantic.

The move was confirmed by the Daily Mail and by the BBC. The latter acknowledged that "The Latin America and the Caribbean region is designated a nuclear-free zone under a treaty signed in the 1960s." The deployment of nuclear weapons in response to Argentina's peaceful efforts to resolve the Falklands/Malvinas issue is not only a grave violation of Chapter 1 Article 2(4) of the UN Charter (which prohibits the threat of force), but a particularly egregious example of "wielding the big stick."

Imagine the boot on the other foot. Imagine if Argentina had occupied the Shetland Islands in the 1800s, expelling the inhabitants. Despite Britain's efforts to resolve the issue peacefully in accordance with various UN Resolutions calling for decolonisation, Argentina continues the occupation and expands fishing and oil drilling into UK territorial waters. Under a military junta, Britain invades the Shetlands, and in doing so is threatened with a nuclear attack.

This is what happened in 1982, with the balance of power reversed. Retired Admiral Richard Heaslip was quoted as saying that "The Argentines had a good navy in 1982. But after we got a nuclear submarine down there they went back to port and never dared venture out." As the vessels were retreating, British missiles sank the Belgrano, thereby escalating the war. Foreign Office records also reveal that the Thatcher government vetoed a Security Council Resolution calling for a ceasefire.

The Law

The Falklands/Malvinas were terra nullius when the French colonised the islands in the 18th century. They were then sold to Spain, a transfer of sovereignty which Britain recognised. However, upon decolonisation and under the principle of uti possidetis, sovereignty should have been transferred to Argentina, which declared independence in 1816. In 1833, Britain expelled the islands' inhabitants. Argentina's Foreign Minister Don Manuel Moreno was told by Prime Minister Palmerston that Argentina "could not reasonably have anticipated that the British Government would permit any other state to exercise a right as derived from Spain which Great Britain had denied to Spain itself."

Writing in the Yale Law Journal, W Michael Reisman affirmed that "Upon acquiring independence, a former colony", i.e. Argentina, "ordinarily inherits all the territory of that colony. This principle, enshrined in Latin America and, a century later, in Africa, would certainly appear to apply to the Falklands [Malvinas]." For Britons, the legal status of the islands is an open-and-shut case: Britain has no legal right to the islands. This has been reiterated at the General Assembly.

General Assembly Resolution 2065 (XX), adopted on 16 December 1965, "Consider[ed] ... the cherished aim of bringing to an end everywhere colonialism in all its forms, one of which covers the Falkland Islands (Malvinas)." The Resolution left it to Argentina and Britain to negotiate the issue using bilateral diplomacy. Britain violated this aspect of the Resolution. As a result, in December 1973, General Assembly Resolution 3160 (XXVIII) "Express[ed] its gratitude for the continuous efforts made by the Government of Argentina ... to facilitate the process of decolonization and to promote the well-being of the population of the island." The Resolution also "Urge[d] the Governments of Argentina [and the UK] ...to put an end to the colonial situation."

Oil, Gas, and Fish

Successive British governments have not only consistently violated the Resolution, but the Chatham House journal International Affairs - like the General Assembly - acknowledged Argentina's peaceful efforts to resolve the issue (except, of course, the 1982 War, for which the previous government has apologised). Guillermo A Makin's paper in the journal recognised that "the use of force has not been a permanent feature of the approach of the various very different Argentine political regimes to the [Malvinas] dispute."

Likewise, recent House of Commons papers note that "The catalyst for the renewed Argentinean sovereignty campaign is believed to have arisen as a result of the Falklands decision in 2005 to grant fishing concessions around the Islands over a 25-year period, rather than by annual renewal," recalling the events of 1986, when the Falkland Islanders unilaterally declared 150 nautical miles of fishing rights. [PDF]

The main issue, of course, is energy. North Sea-size fields were discovered in the 1970s following a UNESCO-sponsored expedition. In 2010, the Wall Street Journal explained that "The Falklands government only takes a 26 per cent share of oil earnings in addition to a 9 per cent royalty on each barrel of oil sold, making it one of the most favourable areas in the world for exploration." A few years ago, the "British firm Rockhopper Exploration discovered a massive natural gas deposit - one that could be as big as 7.9 trillion cubic feet," Money Week reported.

"By 2029 there is expected to be a considerable increase in demand for energy. In particular gas will be of increasing importance as states struggle to maintain energy supplies," the Ministry of Defence explained [PDF]. "Many boundary disputes, such as those in the Arctic, Gulf of Guinea and the South Atlantic will become inextricably linked to the securing of energy supplies." Does anyone seriously think that were it not for the oil and gas, 1,400 soldiers (around one per islander) would be deployed at a cost of £40 million a year to defend a bunch of rocks that few Britons could find on a map?

TJ Coles is a PhD candidate at Plymouth University

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Has Brexit burst the British housing bubble?

The fall in value of the pound is having a negative impact on property prices.

The high cost of housing in the UK has almost nothing to do with supply and demand. What matters is political control. Rents are high because landlords have gained the upper hand politically. The consequences are vividly illustrated in Ken Loach’s new film focusing on inequality in Britain, I’ Daniel Blake.  As a student in the 1980s I paid £9 a week to rent a room in a shared house in Newcastle upon Tyne. Private rent was low because for decades before then rents had been regulated. It was the lifting of that regulation that meant rents could rise so that now students have to borrow vast sums of money just to have a place to live. Today’s students pay many multiples more in rent than I ever did, and millions of families with children are also struggling because they have to rent privately.

Because rents have been allowed to rise as high as landlords can get away with, the landlords have been encouraged to buy up more and more properties that were once social housing or lived in by a family, who had bought the property with a mortgage. The number of people renting privately doubled between the last two censuses of 2001 and 2011. That has never happened before. It was the end result of years of deregulation and the withdrawal of our government from representing our interests in housing. Well-regulated private renting is a benefit, but without rent regulation it becomes a social evil.

Housing prices are not determined by supply and demand because you do not have a choice about needing to be housed. Allow an unregulated market to develop when social housing is also being cut and there is no choice not to buy what is on offer, other than sleeping on the streets. Prices will go sky-high. The purchase prices for mortgage borrowers also rise to astronomical levels as first-time buyers are competing with landlords to buy properties, and so have to be able to secure a mortgage equal to the amount a landlords can wring out of people desperate for a home.

In the first blog in this series on affordable housing published by Taxpayers Against Poverty, Stephen Hill, director of C2O Futureplanners, explained: “There are over one million less affordable homes than there were in 1980. The population has grown by nearly nine million people. Incomes at the median level are flat, and secure employment is increasingly scarce.” He is correct, but the situation is even worse than that — it is not lack of housing that is the problem. Each annual census in the UK records the amount of housing that exists at each point in time. It does this by recording the number of rooms in homes over a certain size. The number of rooms per person has risen at every census since 1981.

The 2011 census was the first to count bedrooms and found that in England and Wales there were 66 million for a population of 55 million (21 million of whom were married or in a civil partnership). So even if we make the ludicrous assumption that only married people share a bed and no children use bunk-beds, there were at least 22 million bedrooms empty on census night 2011. We have not been building a huge number of new houses or flats in recent years, but we have been adding extensions on to our existing homes and so we now have more housing than we have ever had before, per person and per family. We just share it out more unfairly than we have ever done before.

If housing prices were about supply and demand then our surplus of bedrooms would result in falling prices, but this is not a free market. You are not free to buy a flat that has been left empty in London to appreciate in value by its owner. They do not want to sell, or sometimes even rent it out, and you almost certainly would not have the money even if they did.

It is in the housing market that the majority of investments are made in the UK, housing is where most wealth is held. As we become more and more economically unequal it is through housing that we most clearly see that most of us are losers while just a few (who own multiple properties) are winners. Recent UK governments have been allowing wealth and income inequalities to rise and rise.

As Fred Harrison explained in the second blog in this series, government has not only withdrawn from regulating housing rents and profits to avoid this winner-takes-all-economics — it is now even prepared to provide £2bn to buy properties that home builders can’t sell so that they don’t need to lower prices even if landlords and first-time buyers will not buy their properties. The government sees renting-seeking as a social good, and believes that the market in housing should be regulated less and less with each year that passes, other than intervening to keep prices high and rising. Meanwhile, street homelessness rises, evictions rise, the debt of mortgage holders rises, housing prices rise and a small minority of the population become richer. So how will it end?

You might have thought that prices would stop rising when landlords stopped buying properties because the return on their investments in terms of rent would not making it worth their while paying, say, one million pounds for a three-bed house in a part of London near a tube station. Suppose that the most a family could pay was £20,000 a year in rent. The landlord’s “return” on their investment would only be two per cent a year, ignoring wear-and tear and anything else that they might be able to off-set against paying tax. If the forces that were actually at play were “supply and demand” then surely prices have to stop rising when people can no longer afford the rents?

However, landlords have another return: the escalating value of the property itself. If the property is rising by five per cent a year in value then they are making a seven per cent return when they rent it out, even if annual rents are just two per cent of its value. The rise of five per cent a year is due to speculation which is itself partly fed by a belief that the government of the day will do all it can to protect their investments, but it will only do that up to a certain point.

Because it needs to raise taxes a little given the state of the national finances, the UK government is now withdrawing its support of reckless profit taking by smaller landlords. In October 2016 a group of buy-to-let landlords lost their appeal in the courts to try to continue to be able to claim their mortgage interest payments as a business expense. From 2017 only the largest of landlords who set up companies to rent out their properties will be able to continue to do that.

The government knows that the housing market is in trouble. That is why Philip Hammond, the current Chancellor, announced that their “Help to Buy” scheme (which was aimed at the very best-off of potential first time buyers) will end in December 2016. The government knows that with the risk of falling house prices in future it cannot afford the guarantees that “Help to Buy” created. “Help to Buy” schemes were the previous Chancellor, George Osborne’s biggest spending commitment. They were designed to help inflate the housing market and keep prices rising, but eventually every speculative bubble has to burst.

On 21 September the first reports of a stalling market were released under headlines that included: “Q2 UK house sales at an all-time quarterly low says Land Registry”. UK Land Registry figures now show housing prices to have fallen in London by 7% so far in 2016, with the number of sales roughly halving. Investors have stopped buying; if a recent investor wants to sell they have to do so at a loss. Nationally prices fell by 4.5%.

So what happened to the magic-money-tree? In short the pound fell in value and it has been continuing to fall ever since the UK voted to leave the EU. There was always going to be “the event” that triggered the end of speculation and it is looking more and more likely as if Brexit was that event. Once the pound begins to fall in value then any overseas investor knows that if they buy property in the UK, even if its value in pounds does not fall, it will be worth less to them in future.

Suddenly UK housing is not a safe asset. Suddenly prospective landlords actually have to try to rely on their tenants’ rent to pay back their borrowings. Suddenly housing prices change despite no great alteration in supply or demand. Suddenly the whole edifice looks unsafe, not just for the majority of young and almost all poor people in Britain, but for the large majority of the population.

It was never “supply and demand” that determined our housing costs and profits. Relying on that belief did not result in greatly improved cheaper housing for most people, but it was easy to claim that somehow tomorrow would be better if we just left it to the market — until we left it to the ever more unregulated market for too long. Housing costs, prices and supply are determined by governments, including those that shirk their responsibilities and have too much concern for the economic fortunes of the affluent few.


This is part of a series of blogs on affordable housing published by Taxpayers Against Poverty. You can read others in the series on their website http://taxpayersagainstpoverty.org.uk/ or sign up to attend their seminar in Parliament on the 16th November here: https://www.eventbrite.co.uk/e/taxpayers-against-poverty-affordable-housing-seminar-tickets-28329123170