Commenting on draft paper on “Potential problems in British foreign policy”, with heading: “New problems with Argentina if oil exploration licences are granted around the Falklands”.
“This problem cannot of course be divorced from the existing problem of the Argentine claim to the Falklands… HMG’s current policy of refusing licences to all applicants is being justified by the need to await the NERC survey. This will be completed in the second half of this year, after which we can expect to be pressed again by applicants for licences. It would, however, be unwise for us to allow any oil exploration by companies until some interim or final political solution is reached. The off-shore oil licensing problem is, however, only part of a wider problem of our marine interests in the South Atlantic. Now that Ministers have agreed that we should support the 200-mile territorial zone, the area which the UK could claim is vast. It is questionable whether we could support this claim based on our historical views about sovereignty over uninhabited islands: it is even more doubtful if we could maintain an effective presence in policing these rights without a friendly nearby base in Latin America, and in the face of concerted Latin American opposition to our claim. Accommodation with Argentina could be the key to our retaining our claim to the marine and submarine resources in this vast area. The solution of the Falkland Islands problem should therefore be seen in this wider context. The islands themselves may prove to be of minor significance compared to the potentially valuable resources which may one day be exploitable in the South Atlantic”.
National Archives: FCO49/499