60 billion barrels of oil lie under the ocean around the Falkland Islands, say experts. Twenty years after the war in the South Atlantic, the islands have struck it rich. But who does the oil belong to? Argentina continues to eye the archipeligo even as British oil companies start moving in for the drill.
It's a glorious summer day on the Bay of Fitzroy. The deep blue waters of Port Pleasant fjord shimmer in the bright midday sun, as a formation of gray-headed geese rises into the sky above the distant hills. It's a peaceful, idyllic scene.
Billy Baynham, 46, doesn't notice. An entirely different scene is running through his mind as he gazes out at the bay -- a scene from 20 years ago: An Argentine Skyhawk fighter jet swoops low over the surface of the bay and discharges its belly full of bombs onto the British landing craft "Sir Galahad," lying at anchor in the bay. Within seconds, the vessel is transformed into a raging fireball as the ship's cargo -- tons of ammunition and weapons -- goes up in violent detonation. Michael Dunphy -- a thin, quiet, 22-year-old from Wales and a member of the First Welsh Guards -- is one of the 47 crew members who perish on that day.
The memory triggers irrational feelings of guilt to well up inside of Bahnham. "Why him, why not me?" he implores. His powerful 6'6" figure shakes as he kneels, weeping, on the hard tufts of grass that grow along Fitzroy's shoreline. Today, Baynham has returned for the first time to this place where he and Dunphy fought against the Argentines, more than 22 years ago. He has been haunted by the bloody images of that battle -- fought in one of the most remote corners of the world -- ever since.
On April 2, 1982, Argentine dictator Leopoldo Galtieri ordered his troops to occupy the archipelago, about 375 miles over the Atlantic Ocean from Buenos Aires. In response, then British Prime Minister Margaret Thatcher dispatched the largest British fleet assembled since the end of World War II. Its mission? To liberate the 1,800 inhabitants of the Falkland Islands, a barren collection of rocky islets governed by the British Empire since 1835. Together, the two sides lost about a thousand troops, or more than half the territory's population. The war -- like the Falklands themselves -- was quickly forgotten by the rest of the world.
60 Billion Barrels
Now, 20 years later, the islands are once again creeping into the world's conscious. And this time, the Falklands' reputation is not dependent on the geo-political real-politicking of world leaders, but rather is being spread by people like Phyl Rendell, 55, the Falkland Islands' Minister of Raw Materials. The island territory is still connected closely with London, but when Rendall travels there, she doesn't meet with strategists and generals, rather she negotiates with scientists, oil experts, politicians and market speculators.
Her most important asset is a dark, viscous liquid encased in a transparent plexiglass cube on her conference table. "Falkland oil," says Rendell. Rendell, who has a degree in history, is well aware of the potential the liquid in this small container holds for the Falklands: prosperity and independence for entire generations of Falklanders who, ever since settling on the barren islands, have consistently been faced with the dual threats of poverty and war, and have been forced to accept domination by their British colonial masters. But things are changing. The small group of islands, home to 750,000 penguins, 600,000 sheep, and all of 2,934 people, now stands a chance of becoming the "new Kuwait," as the Times of London wrote. And that's exactly what Rendell has in mind.
The future of the waters around the Falkland Islands: 60 billion barrels of oil. The Falklands, an almost forgotten place since the 1982 war, returned to the limelight when the price of oil broke the $40 per barrel mark earlier this year. Prospectors and speculators were suddenly interested in what may be one of the world's last untapped reservoirs of oil.
Experts from the renowned, Edinburgh-based British Geological Survey have long believed that enormous oil reserves, possibly up to 60 billion barrels, lie beneath the deep waters surrounding the Falklands. If this estimate is correct, the islands' oil reserves would almost equal those of Libya and Nigeria combined, and even amount to half the Iraqi reserves. The astronomical estimate is the result of a study conducted by geologist Phil Richards, who has been researching the Falklands' potential oil reserves for the past 15 years. "I am convinced that these figures are correct," he says.
The Falkland Islands deposits aren't even mentioned in the lists of known oil reserves kept by the oil giants Shell, BP and Exxon. These multinationals, known in industry parlance as the majors, already have their hands full in regions such as West Africa, the Brazilian coastal waters and the Caspian Sea. Until now, searching for black gold in the rough and deep seas (up to 10,000 feet) of the South Atlantic seemed too complex and expensive, as well as being a highly speculative proposition. It's a risk the major corporations prefer to hand over to smaller oil exploration outfits. After all, if the venture turns out to be unsuccessful, the majors won't have incurred any costs. But if the prospectors make a strike, they'll be quick to move in.
If the British geologists are right, this may be the right time to start drilling for oil in the Falklands. Whereas terrorist attacks on oil pipelines and pumping stations make the Middle East an increasingly unreliable permanent source of energy, terrorism is not a problem on the Falklands. Oil minister Rendell has, in fact, already granted drilling rights for large areas surrounding the islands. British oil companies plan to begin boring into the sea floor as early as next year. They calculate that the future wells will be profitable even at a world oil price of $25 a barrel.
From Backwater Basics to Basic Business
It's 6 a.m. in North Arm, a settlement about 60 miles southwest of Stanley, the capital of the Falkland Islands. A sharp odor of wool and fat fills the air in 32-year-old sheep farmer Paul Phillips' pens.
Phillips turns up his portable stereo to the sounds of the Pet Shop Boys singing "New life, new love. Where's the heart I was dreaming of?" He pulls the first sheep from the pen, turns it around and wedges it between his knees, and bends the animal's right foreleg backward. Then, within the space of two minutes, he sheers its wool and pushes the newly shorn animal down a ramp into a cellar. By the end of the morning shift, Phillips has shorn 45 sheep, making him the clear winner in a friendly competition among six men. They earn 49 pence per animal. "It's good, hard work," says Phillips, lying on the plank floor of the stable and smoking a cigarette, after devouring a breakfast of pork chops and eggs.
Life in the Falklands has changed rapidly in the past 22 years. Before the 1982 war, there were few roads and almost no one owned a television. When farmers wanted to make a phone call on the island's single line, everyone else could listen in on their conversation. In the summer, the islands' young men would jump on their mopeds and drive 60 miles across swampy meadows and rocky slopes to meet local girls at dances in settlements like Goose Green.
Today, the island boasts 800 Land Rovers, 300 Mitsubishi vans and a small fleet of aircraft owned by the government. The two local supermarkets sell fresh flowers and raspberries, and their shelves are well-stocked with high-quality Italian wines. The radio station plays pop music from the United States and the stores sell Toshiba large-screen TVs. Every citizen is entitled to free healthcare, and seriously ill patients are flown, at government expense, to a joint German-Chilean private clinic in Santiago de Chile for treatment. The government pays for the Falklands' most promising students to attend British universities, even throwing in an annual stipend of £8,000 ($15,370). Stuart Wallace, 50, likes to get to work early at his office on Stanley's Philomel Street. He wears inexpensive eyeglasses and a plain blue tie. The only indication that Wallace is one of the Falklands' more well-heeled inhabitants is the Dior label on the inside of his jacket.
His company deals in fishery licenses, which Wallace, acting as the government's broker, sells to Taiwanese, Korean and Japanese fishermen who fish here to meet the demand back home for a particular species of squid (Illex) found in the Falklands' waters. Wallace himself already owns five large fishing boats of his own.
Wallace, like most people here, only has an eighth-grade education. He left school at the age of 14 to work for the local telephone company, where he was still earning only about £400 a month by his mid-thirties. But then the war happened. Since then, the Falklanders have been taking advantage of their 200-mile sovereignty zone, which the British had declared off-limits until 1984, citing tensions with Argentina.
When the men here refer to the period following the war as their "emancipation," they're talking about emancipation from both the Argentinean occupiers and the British colonial masters, who owned almost everything in the Falklands for years: the land, the farms, even what was then the islands' only junk shop. Since then, a few hundred Falklanders have started their own companies, and the government's annual revenues have increased from £3 million ($5.76 million) in the mid-1980s to £45 million ($86.5 million) currently.
The Coming of Oil
The Brasserie in downtown Stanley is the better of the capital's two restaurants. Lewis Clifton, 46, explains the basic tenets of the oil business as he cuts up his plate of poached salmon: "high risk, high costs, enormous profits." Clifton represents Desire Petroleum, a British oil company based in London. The company secured drilling rights in the north basin of the Falklands years ago, and has just announced that the most recent seismic tests produced "significant indications of the presence of natural gas and oil." Clifton is sure of one thing: "Oil will soon be the big factor here."
Roger Spink, 44, is sitting at a table at the opposite end of the restaurant. This thick-set man from England is the director of the powerful Falkland Islands Holdings. The company, a holdover from British colonial days, is reputed to have forced out entire generations of local farmers to the benefit of major English landholders. Today, the company still owns a lot of real estate, the island's largest supermarket, a building materials supplier and the leading travel agency. Spink's company also has its hands in the oil business. The subsidiary it established in May, Falkland Oil and Gas Limited, plans to drill in the Falklands' south basin.
The Falklanders know that once the oil starts flowing, there will be no turning back. Oil will flood the island with money and outsiders, and it will seep into the hearts and minds of the islanders.
Take Sue Backett, for example. The 47-year-old blonde, a manager for a shipping company in Stanley, is investing every penny she can spare in oil stocks. "The oil is coming," she says, and she looks excited. "I pray for it every day," admits Stephanie Middleton, 41, the mother of three children. She too owns stock in each of the oil companies involved. The Falklands' main weekly, the Penguin News, even began printing current stock prices a few weeks ago.
This isn't the first time Falklanders have become mesmerized by oil. Six years ago, a number of foreign companies, including Shell, built a drilling platform in the waters off the islands. They found oil, but only in small amounts, at least at first. But then the price of oil plummeted to $9.50 a barrel on the world market, making expensive drilling a losing proposition. The oil companies quickly decided to abandon the project, which had already consumed $200 million. The drilling platform disappeared overnight, leaving behind a disappointed local population. The Falklanders had already expanded their hotels and built office buildings for the oil managers. Once again, powerful men from across the ocean had given them false hope and failed to deliver on their promises.
No one locks their doors in the Falklands. Children play in the street, and 55-year-old police chief David Morris's jail is almost always empty (with the exception of visits from weekend drunkards). The government, which consists of eight elected representatives, deals with issues like fishing quotas and improving roads, and the British governor, a distinguished gentleman usually dressed in a pinstripe suit, routinely invites the island's leading citizens to his residence for plum pudding or to celebrate the Queen's birthday. The island is a safe world in its own tiny nutshell.
The Minister of Raw Materials, Phyl Rendell, playing with her plexiglass cube and the droplet of oil it contains, believes that "everything will remain the way it is." But most people here share businessman Stuart Wallace's opinion: "Everything will change, the city, the bars and, most of all, we will change."
But it's a change that the islands sorely need. The Falklands are still a long way away from prosperity. Last fishing season, the Illex squid suddenly disappeared from the islands' waters. Experts still disagree over whether this was caused by overfishing or ocean warming. Either way, the loss of fishing license revenues has already put a hole in the government's previously ample budget.
The islanders also feel threatened by their old enemies, the Argentines. Buenos Aires has never given up its claim to the Falklands, and it began a new phase of provocation late last year, closing its air space to charter airlines bound for the Falklands. During the fishing season, Argentine coast guard vessels patrolled what Buenos Aires claims is Argentine marine territory, an area where fishing zones overlap. In September, Argentina forced the Chilean cricket association to bar the Falklanders from the South American championships if Stanley's team refused to play under the Argentinean flag.
The war hasn't ended. It's just being fought with different means. Since 1982, however, the British have made it clear where they stand: For the past 22 years, the British have maintained a constant presence of about 1,500 British troops to defend the territory, if necessary.
The Human Cost of War
After returning from the shore, Falklands War veteran Billy Baynham sits at the counter in the Victory Bar in Stanley, the same place where he was sitting when the war ended 22 years ago. The war's local casualties included three women -- killed by an errant British rocket-propelled grenade. Baynham talks about the horrors of days gone by, the horrors he experienced as a British soldier, about Fitzroy, about the many comrades lost, and about his friend Dunphy, who died on board the Sir Galahad. He also talks about his own life, which was never the same after that experience.
For 24 years, Baynham lived with his wife and two children in a small house in the county of Surrey, southwest of London. He never mentioned Fitzroy. One morning two years ago, he woke up, packed a suitcase and never returned home. He had been suffering from severe depression. "If someone had said to me, 'do you want me to shoot you?' I would have handed him a bullet," he says. The Falklands War cost the lives of 255 British soldiers. But the number of Falklands veterans who committed suicide after the war is even larger -- at least 264.
Baynham lives alone today. He has found other Falkland veterans who share his story of constant nightmares and ruined marriages and careers, and he finds some solace in his interactions with these men. He plans to return to London anyway. But before leaving he made one last trip to the Bay of Fitzroy. The images in his head have quieted down a little, and he's better able to control his anxiety. He stands on the same spot where he stood at 1:00 p.m. on June 8, 1982, watching the ship explode that carried Michael Dunphy, his best friend.
Baynham says that he became withdrawn after his friend's death. When he dies, he wants his ashes scattered in the sea, at the same spot where Dunphy's life so abruptly came to an end. Somehow, he says, the idea gives him peace.
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