Is the US-UK Rift Putting the Falklands Back on the Table?

On April 6th, Chilean President José Antonio Kast’s first foreign trip since taking office landed him in Buenos Aires, where he signed a joint communiqué with Argentine President Javier Milei that covered trade, defense cooperation, and regional security. Of more interest to Europeans and Americans, it also included a pointed stab at Great Britain, with the two presidents backing Buenos Aires’ sovereignty over the Falkland Islands (known locally as Las Malvinas), South Georgia, and the South Sandwich Islands, and calling on London to resume negotiations.

While Chile's recognition of Argentine sovereignty over the islands isn't new—Santiago has backed the claim since the early 1990s, following a policy of clandestine support for the UK under the Pinochet regime—Kast's visit is the latest addition to a network of alliances that has transformed Argentina's position in just a few years.

The most consequential of those alliances is with Washington—where Donald Trump’s relationship with Milei has rapidly become the closest Washington has had with any South American leader in either of his terms. The two have met multiple times since Trump's re-election, and the financial, diplomatic, and political backing that has flowed south makes it difficult to characterize the partnership as anything other than a full-throated American bet on Milei's Argentina.

That would matter on its own, but matters considerably more given that Operation Epic Fury has since triggered the worst crisis in the US-UK alliance since Suez. Trump and Starmer have repeatedly traded public attacks over the divergence between Washington and London over the war with Iran, and the future of the special relationship is openly being questioned.

In short: the country whose unofficial backing quietly helped save British control over the Falklands in 1982 is now closer to Buenos Aires than it is to London. Argentina is not going to retake the islands by force—its military isn’t anywhere near ready to do so even if it wanted to, and Milei has been clear that all approaches going forward would be diplomatic in nature. But between a rapidly expanding defense budget, a campaign to strangle offshore drilling in waters it claims as its own, and an alliance with Washington that seems to have no limit, the Argentines don’t need to.

The question facing London is no longer whether Argentina can challenge its hold on the Falklands, but whether Britain can still afford to maintain it—especially if Trump begins to use this against Starmer as leverage, punishment, or both.

The Breaking Point

The one time Britain's hold on the Falkland Islands was tested for real was in 1982, when the special relationship was arguably at its peak—the partnership between Ronald Reagan and Margaret Thatcher was so ideologically aligned that it has variously been described as a political marriage.

And yet even with all of that going for it, American support for Britain's war was agonizing to secure. Secretary of State Alexander Haig spent three weeks flying back and forth between London, Washington, and Buenos Aires attempting to broker a deal that he later acknowledged amounted to a "camouflaged transfer of sovereignty"—designed to hand Argentina substantive control under terms the islanders might eventually be persuaded to accept.

The Americans ultimately did back Britain's campaign, in particular through supplying London with the Sidewinder missiles that played a pivotal role in retaking the islands—Thatcher herself wrote that without them, “we could not have retaken the Falklands.” But the lesson of 1982 wasn't that Washington would always be there—it was that even under the best possible conditions, British sovereignty over the islands was not something the US cared all that deeply about.

Britain managed to paper over that reality for the next four decades through a combination of military deterrence and diplomatic determination—a garrison stationed there strong enough to make any invasion suicidal, and a flat refusal to discuss sovereignty issues with Argentina under any circumstances. That Latin America had backed their regional counterpart’s claims never particularly mattered—because anyone thinking about pressing the issue had to reckon not just with the garrison on the island, but with the broader assumption that challenging Britain meant challenging the Western order behind it. This, despite the Falklands sitting outside the geographic scope of NATO, which limits its protection to territories above the Tropic of Cancer (thereby creating the slightly absurd situation wherein Hawaii is the only US State not covered by the military alliance).

Of course, there are other factors beyond raw military power that have helped keep the post-1982 status quo intact. The desire of the islanders themselves to maintain their constitutional arrangement with Britain, for example, with a 2013 referendum on the subject seeing 99.8 percent vote to keep things the way they are, on a turnout of 92%. While Argentina rejected the result, Buenos Aires is all too aware that peacefully incorporating a territory inhabited by people who do not want to be part of Argentina would not be an easy task.

When Milei announced on April 2nd—the anniversary of the Argentine invasion of the islands—that ten percent of privatization revenue would go towards military equipment, he framed it as correcting decades of deliberate disarmament that had kept the islands “forever in foreign hands”—language that should put this issue squarely on analysts’ radar once again.

Now, Buenos Aires is not preparing for another 1982-style invasion—even if it wanted to, it would take years to rebuild its severely dilapidated armed forces to the point of standing a chance against the British garrison there. But as is often the case, the threat of armed conflict can be more effective in bringing about negotiations than an actual conflict would be. An expanding Argentine military coupled with a deep partnership with Washington would be in better shape to force this issue back into the limelight than an invasion ever would.

And the expansion has been significant. The first six of 24 F-16s purchased from Denmark have recently arrived, restoring a supersonic combat capability that Argentina hasn’t had since it retired its Mirages more than a decade ago. Defense spending, meanwhile, is set to quadruple from 0.5 percent of GDP to 2 percent over the next eight years.

On the other side of the equation, Britain’s garrison at Mount Pleasant is real but thinner than it may initially appear. The four Typhoons are the last Tranche 1 variants in RAF service—the oldest, least capable models in use. Retirement is officially scheduled for 2027, but no replacement has been publicly confirmed. More broadly, the Royal Navy has shrunk by roughly 74 percent since 1982, to the point where a service member stationed at Northwood headquarters concluded in an essay that assembling a task force equivalent to the one Thatcher sent would require committing the entirety of the Royal Navy.

None of which changes the fact that in any direct confrontation, the odds would still favor Britain—Mount Pleasant's defenses were designed to hold long enough for reinforcements to arrive, and even a diminished Royal Navy outclasses anything their Argentine counterparts can muster up. But a direct confrontation isn’t what anyone is planning for—London has been able to treat the garrison there as an afterthought for two decades precisely because Argentina’s military was in no shape to test it—even modest improvements would force Britain to start paying attention again no matter how unlikely any Argentine aggression would be, and doing so  from 13,000 kilometers away is expensive.

Milei’s April 2nd speech also took direct aim at the Sea Lion project—a $2.1 billion venture licensed by the Falkland Islands Government and backed by UK-listed Rockhopper Exploration alongside Israeli firm Navitas Petroleum, to extract what may ultimately amount to over 1.7 billion barrels of oil from waters that Argentina considers part of its continental shelf. Milei’s government has enacted domestic legislation explicitly prohibiting unlicensed operations in those waters, and when the companies made their final investment decision in December last year, the Foreign Ministry issued formal protests rejecting not just the drilling itself, but every related step along the way: licensing, supplier contracts, the whole nine yards.

The firms involved now have to weigh the political risk of doing business with the Falklands—and political risk increasingly includes the possibility that Washington might simply decline to object to, or outright endorse, Argentine escalation. It’s been made clear that Sea Lion is not a minor issue for Buenos Aires: despite being a longtime supporter of Israel, Milei’s government has reportedly delayed its planned embassy move to Jerusalem—which represents a recognition of unified Israeli control of the city, the eastern half of which remains disputed—over the involvement of the Israeli firm Navitas.

All of which matters considerably more given what’s been happening between Washington and London.

With Friends Like These…

Cracks have been forming for months between Washington and London—Trump slapped tariffs on British goods in January as retaliation for London backing Danish sovereignty over Greenland, and the UK had quietly suspended intelligence sharing on suspected drug trafficking vessels in the Caribbean over concerns about the legality of American strikes on them. None of this, on its own, was terminal—the relationship has survived quite a bit over the years, including both British refusal to get involved in Vietnam, and the entirety of Trump’s first term.

Operation Epic Fury is what blew everything wide open: When Starmer refused to let the US use British military bases—including RAF Fairford and the joint facility at Diego Garcia—for the initial strikes on Iran, the fallout was immediate: Trump declared Starmer was "not Winston Churchill," then escalated over the following weeks to comparing him to Neville Chamberlain, and the two have traded increasingly pointed public attacks since.

What's unfolding now is a divergence over whether the special relationship still exists at all: Starmer insists the Iran conflict is "not our war" and has questioned its legality, while Trump has openly threatened to pull the US out of NATO over allied reluctance to support it. Even as the transatlantic relationship deteriorates, the bond between Washington and Buenos Aires has been deepening at a pace that would have been difficult to imagine just a few years earlier. When Trump won re-election back in November 2024, the first foreign capital he called was Buenos Aires. Milei was the first head of state through the door at Mar-a-Lago after the result, attended Trump's inauguration in January, and has since visited the United States more than a dozen times. Trump has called him "my favorite president.”

Unlike the performative warmth he extends to leaders he’s on considerably worse terms with, this relationship has already bought Milei concrete benefits: a $20 billion financial support package was arranged through the US Treasury ahead of Argentina's midterm elections, there was a formal Oval Office bilateral that was the first extended to any South American leader in either Trump term, and the Carnegie Endowment has described the relationship as an unprecedented "complete and total endorsement" of Milei's re-election campaign.

It likely helps that Trump sees something of himself in the flamboyant, freewheeling Milei. But the affinity goes beyond just a similar style. Washington has spent decades dealing with Latin America as a problem to be managed, often with leaders who are either hostile or, at best, indifferent. Milei is the first leader in a generation to offer ideological alignment on economics, deregulation, and foreign policy all at once—and his success, Trump hopes, will spread to other countries in the region.

Everything Short of War

It bears repeating that Argentina has shown no indication of having any plans to invade the Falklands, and Milei himself has repeatedly stressed that he is seeking a diplomatic solution. But there is a considerable amount of room between escalation and all-out invasion, which leaves Milei with multiple options to explore.

As Argentina begins its long, uphill battle to rebuild its armed forces combined with a more assertive foreign policy, Britain may be forced to confront the prospect of having to bolster its own position in the region. The scars of Whitehall’s lack of preparedness on the issue run deep, after the surprise 1982 invasion caught them off guard and under-prepared—uncharacteristically for Thatcher given her hawkish reputation, she had actually authorized a withdrawal of Britain’s only naval presence in the region as part of budget cuts in the preceding years. So far this century, London has had the luxury of being able to dismiss any Argentine operation as more of a theoretical concept given their lack of combat readiness, but it does appear those days are drawing to a close.

Argentina, for its part, has a legal toolkit worth considering as well. Buenos Aires has already driven every major oil company that once held exploration licenses off the islands—BP, Shell, Anadarko, and Harbour Energy all left, some of whom explicitly cited Argentine political pressure. This campaign has accelerated under Milei given the country’s new legislation on drilling in waters it claims as its own, which extends criminal penalties not just to the operators but to the banks, insurers, and contractors behind them. For any firm with business interests elsewhere in Latin America—particularly in Argentina’s Vaca Muerta, one of the largest shale oil and gas fields in the world—the choice between Falklands revenue and access to the Argentine market is not a difficult one to make.

This would all be magnified should Washington choose to enter the dispute on Milei’s side. Trump has already singled out the islands before—the “Liberation Day” tariffs imposed in April last year hit the Falklands’ exports with 41 percent, four times the rate applied to the UK. While those ultimately were scaled back, a State Department advisory questioning the legality of hydrocarbon development in disputed waters would put Sea Lion’s financing under immediate pressure, and open it up to tariffs with a higher chance of surviving legal challenges than previous rounds. None of this would even require Washington to change its stance on the islands—recognizing that the waters are contested would be entirely consistent with the official neutrality it’s maintained since the Monroe era.

Previously, though, that neutrality always had a quiet tilt toward London, one that rested on the strength of the broader, once-unshakeable special relationship—and given the current state of affairs, it’s looking as though it very plausibly could level off, if not begin to lean in the other direction entirely.

Beyond that, backing Argentina’s long-standing calls for bilateral negotiations could allow Trump to put pressure on Starmer over what is increasingly set to be a pain point issue for London, and would hand Buenos Aires a diplomatic win that they’ve spent decades lobbying for. It’s not as if it would be out of character for Trump to use such a sensitive issue to hurt an ally he sees as disloyal - the argument over the Iran War has already seen the president threaten to tear up Britain’s trade deal from last year, after all.

Whether Trump plays that card or not, the conditions that kept this dispute frozen for four decades—a strong garrison, a stronger alliance, and a Latin America that couldn't do anything about either—are eroding on all three fronts simultaneously. For the first time since 1982, the question of the Falklands may be back on the table.

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