90 Argentina had become a wealthy nation; income per capita rivaled the US (Spruk, 2019). Argentina’s strong trade relationship with the UK continued for nearly a century, through the mid-1900s. In 1930, Argentina accounted for 10.6% of British investment globally (Erazo, 2010). During World War II, Argentina was an important source of foodstuffs for the UK, while Argentina relied heavily on UK coal and oil. An arrangement after the war transferred full ownership of the railway, a project the UK helped finance, to the Argentine government. Additionally, global relations changed dramatically, including Argentina’s with the UK. The US, the Soviet Union, and China were beginning to or had eclipsed the UK as world powers; thus, Argentina sought to broaden its relationships around the globe. At the same time, the UK, facing significant debt, was undergoing change, with the pound sterling being replaced by the US dollar as the world’s currency. Between 1945 and 1982, economic interactions between Argentina and the UK steadily declined, and British investment in Argentina decreased. For much of that period, the UK’s focus was on gaining membership to the European Economic Community (Robson, 2019). In 1982, Argentina’s then ruling military regime abandoned peaceful negotiations with the UK and invaded the Islands. The decision was primarily political: to build nationalism. It also was believed that regaining control of the Islands would provide a better atmosphere for negotiations with the UK (Robson, 2019). To understand the decision to invade, the hardship Argentina was facing needs to be put into perspective. Argentina was on the verge of defaulting on its public and private foreign debt, owing almost $40B (Schumacher, 1982). The military regime relied heavily on foreign borrowing to fund domestic expenditures, with the UK Argentina’s second-largest creditor (Robson, 2019). To compound matters, at the beginning of 1982, the peso was at 10,000 to the dollar; nine months later, the peso had collapsed to 39,000 (Schumacher, 1982). Apart from the economic climate, the regime was being internationally criticized for human rights abuses. An estimated 30,000 plus people “disappeared” as the regime tried to maintain control; this was known as the Dirty War. To regain stability and domestic credibility, the regime sought to unite the country behind the government in a patriotic effort to reclaim their lost lands. The economic relationship was minimally important to the regime compared to the possible political effects of maintaining control and regaining the Islands (Robson, 2019). Hence, on April 2, 1982, Argentina went to war, landing an invasion force on the Islands. That bloody war lasted 74 days and cost more than 640 Argentine and 250 British lives. The impact of the war essentially was the opposite of what the military regime intended. Instead of rallying the nation behind them, its failure led to their ouster in the election of 1983. Moreover, the invasion did nothing to fix the economic challenges. In the decades since, Argentina has continued to struggle to maintain its economy and social stability. In May of 2020, Argentina defaulted for the ninth time, failing to pay $500M in international debt (Politi, 2020). Inflation is expected to reach 48% in 2021, the second highest in the world (AFP, 2021). Argentina’s post-war leadership continues to use the Islands dispute for political/nationalist purposes, echoing the military regime. History must not continue repeating itself. Initial Efforts at Reconciliation Diplomatic ties between Argentina and the UK were severed for eight years after the 1982 war, while economic ties were severed for approximately six months. On April 3, 1982, the UK froze Argentina’s assets and forbade UK banks from issuing Argentina new loans. All imports from Argentina into the UK halted. The European Community initially rallied around the UK and banned importing Argentine goods into the continent. However, in June of 1982, the European Community removed the embargo. Three months later the UK and Argentina dropped all sanctions, although diplomatic ties remained severed until 1990 (Evans, 1991). Before the invasion, Argentina’s debt was immense, and the economy suffered the highest inflation in the world. The war may have initiated a nationalist fervor and distracted attention from the economic woes, but it severely exacerbated the economic crisis. The financial sanctions put in place by the UK and
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