UK curbs military exports to Argentina as tensions rise

The UK has suspended all exports to the Argentine military as tensions rise between the two countries over the Falkland Islands issue.

The UK government said that the halting of exports should "ensure no British licensable exports or trade have the potential to be used by Argentina to impose an economic blockade" on the Falkland Islands.

Business Secretary Vince Cable has intimated that the UK intends introducing the export control policy with immediate effect. The move follows "recent actions by the Argentine government aimed at harming the economic interests of the Falkland islanders," said Cable.

At the heart of the issue is the sovereignty of the Falklands, which has been controlled by the UK since 1833. Argentina has never relinquished its claim on the islands. The two countries went to war over the issue in 1982 and earlier this month, both nations commemorated the 30th anniversary of the start of the conflict.

Tensions have been rising since Argentina kick started a trade war between the two countries, focussing on the oil and gas industries. The Falklands stand to benefit from a US$176 billion tax windfall as the result of oil and gas drilling in 2012 if exploration is successful, explained Fraser Thorne from the independent research house Edison Investment Research. Thorne expects the issue to "intensify over the coming months". 

Since 1998 the UK has exported only those products that would maintain, rather then enhance, the Argentine military. These exports have been worth £3m over the past five years.   

According to the Department for Business, Innovation and Skills, an estimated 25 companies exported to the Argentine military over the last five years. An additional 37 licences worth some £1 million are expected to be outstanding.

With the new policy becoming effective, these supplies will come to a halt, while existing and outstanding export licences will be reviewed and cancelled if they do not comply with this policy.