Falkland Islands Government warns about the negative impact of an EU Brexit on the Falklands’ economy

The UK Parliamentary Foreign Affairs Select Committee (FAC) recently published a cross-party report on the UK’s membership of the European Union (EU) in advance of the UK referendum on 23 June. This revealed that the Falkland Islands Government (FIG) had submitted a paper (see full text) raising concerns about the negative implications for the Falkland Islands’ economy and people of a UK withdrawal from the EU.

Key points were:

  • Falkland Islanders might lose the right, as British citizens, to free access and movement within the EU;
  • quota and tariff-free access to the European single market would be put at risk;
  • EU funding, particularly for environmental conservation, would probably be lost; and
  • Argentina might be encouraged to take advantage of the loss of protection that the Falkland Islands enjoy from the Treaty of Rome and its successor treaties.

Economically, the EU is the largest single market for Falkland Islands’ exports of fish, meat, wool and other agricultural products. These total about £180 million a year, representing over 70% of the Falkland Islands’ GDP. Restricted access of any form could, the FIG paper said, be ‘catastrophic’ to the Falkland Islands’ economy and future development.

The Falkland Islands benefit from the provisions of the EU Overseas Association Decision 2013/755 which sets out the relationship between the EU and the Overseas Countries and Territories (OCTs) of various EU Member States, including the UK, France, Netherlands and Denmark. The current European Development Fund (EDF 11) makes available some €364.5 million between 2014 and 2020 to OCTs for development grants and technical assistance and €100 million for regional co-operation, along with access to preferential loans from the European Investment Bank (EIB). EDF funds are distributed according to OCT population size, GDP, previous EDF allocation, and constraints due to geographical isolation of isolated OCTs. The Falkland Islands are deemed to be geographically isolated as are St Helena and its Dependencies and French St Pierre and Miquelon. Although the EDF 11 allocation to the Falkland Islands is relatively small, various environmental groups operating in the Falkland Islands benefit considerably from EU funding.

The UK Overseas Territories, including the Falkland Islands, also benefit from the certainty of EU support from all EU Member States by virtue of Part 4 and Annex 2 of the Lisbon Treaty of 1992 which identifies the OCTs’ special relationship with the EU. The Lisbon Treaty and the Maastricht Treaty of 1992 form the two core treaties of the EU, both deriving from the original Treaty of Rome of 1958. The FIG paper warns that "were the UK no longer a member of the EU, that support would be much less certain from a large number of those EU member states, and might encourage Argentina to be much more aggressive in its approach.” Argentina might be emboldened to pursue its sovereignty claim to the Falklands more forcefully against what they might perceive as a politically and diplomatically weakened UK.

Comment: it is not for the Falkland Islands Association to seek to influence the debate on EU membership before the 23 June referendum. Each voter must make his/her judgement on the basis of the issues presented. But voters should at least be aware of the potential implications for the UK Overseas Territories, which may have been overlooked under the weight of the wider issues at stake – and the tiny British community in the Falkland Islands, which has for many years been self- sustaining (apart from the costs of its defence), will almost certainly be made more vulnerable and less secure, economically and politically, if the UK leaves the EU.