Update: The Falkland Islands

We always wondered why that war happened. And suddenly, we have an inkling. As it always is, the Benjamins were at the root of the equation. Argentina invaded the Falklands in 1982, before Britain seized back control in a short war that cost the lives of 649 Argentine and 255 British service personnel. This week an explanation for the war better than we had ever heard before surfaced.

Desire Petroleum towed an oil rig to the Falkland Islands over the last several weeks. The oil rig was towed over 8,000 miles from Scotland to the Atlantic Ocean's deep waters off the coast of South America. The BBC reports that the Falklands have the equivalent of 60 billion barrels of oil in total. Only a fraction is currently commercially extractable. Argentina says the move violates its sovereignty, but it has already ruled out renewed military action and is trying to pressure Britain into negotiations.

The Falklands Legislative Assembly, which sold the license to explore for oil to Desire Petroleum, asserted that it had "every right" to develop "legitimate business" in off-shore oil.

The United Kingdom's Foreign Secretary said British oil exploration in the area was "completely in accordance with international law".

The Brits damp squib of a Prime Minister, Gordon Brown, also said the British government had "made all the preparations that are necessary to make sure the Falkland Islanders are properly protected."

The more things change

The more they stay the same, or so the old expression goes. Our northern most New Jersey reader related a sad story that underlined there is still a kernel of this old saw holding true even under the Obama administration.

According to the website Gadling.com, "An Air France flight from Paris to Mexico had to make an unscheduled stop in Martinique when US air traffic controllers notified the jet that it would not be receiving permission to fly over US airspace...on board the plane was Colombian Journalist Hernando Calvo Ospina."

Uh, oh, a scary journalist!

After all, "Ospina has written articles about the United States involvement in Latin America, and is currently writing a book about the CIA."

Reason enough to divert a plane from flying over American airspace. Who knows he might have been throwing anti-CIA fliers out the window!

Snap goes the Wilkins Ice Shelf

Not quite yet, but it is being reported that a key ice bridge linking two pieces of an ice shelf the size of Jamaica snapped this week. This area is on the western side of the Antarctic Peninsula. It is an area that has been frequently pointed to as indicator of rapid change in Antarctica. The Wilkins Ice Shelf has been stable since first being documented in the 1930s, but has begun a rapid retreat in the last two decades.

The BBC reports, "Newly created icebergs were seen to be floating in the sea on the western side of the peninsula, which juts up from the continent towards South America's southern tip."

Rising Expectations in Peru

from Peru

President Alan García's approval rating is estimated as low as 26%. Protests and strikes are becoming rampant especially in the countryside. Peru has seen impromptu roadblocks, burning of government offices and even one incident where police were taken hostage by protesting miners.

According to the Christian Science Monitor Peru's economy has grown for 84 consecutive weeks and is expected to grow by 9% this year in the face of a global slowdown. The percentage of persons living below the official poverty line is down by 5%.

Where is the disconnect?

The Monitor gets to the crux of the problem when it says that so far, "the windfall has fueled wealth much faster than it has reduced poverty."

A classic "Rising Expectations" Revolution is fomenting in Peru. As the Clarion understands the argument, which we first encountered in late 80's researching the Latin American development debate: relatively rapid economic growth occurs before individual inequality is addressed. Folks expectations are raised by the growth they see around them, then dashed when they don't feel as though they are partaking. Backlash is especially likely without a sizable middle-class as a buffer. If the growth is fueled by commodities and accompanied by inflation the backlash may be bigger and a full blown overthrow of the existing state system is possible. If there is widespread underemployment, even the middle class might not be enough to keep a lid on society. Some analysts see the 1979 Iranian Revolution through the lens of a "Rising Expectations" Revolution.

In the classic scenario the rich-poor gap is expanded because the rich suffer less from inflation. They are more shielded. They spend a much lower percentage of their income on staples. They may be able to offshore their wealth. They may own land or other assets, (including companies participating in the boom) that are rising in value in-line with inflation. The poor, conversely see money and investment flowing into their country, which raises their expectations of their relative possibilities, only to be jarred by the reality of inflation. The money they are making is worth less, they are somehow even poorer with growth going on all around them. The collective feeling of cognitive dissonance can be even worse if the rich present ostentatious displays of wealth, new cars, new homes, etc. Venezuela's Hugo Chavez has been stopped (thus far) from completing the trajectory of total revolution only by the bulwark of a strong established middle class of Venezuelans. Peru doesn't have that...

It does have demagogic admirers of Chavez and Bolivia's Evo Morales, amongst the most powerful are the brothers Humala and the head of the regional government Puno, Hernán Fuentes.