Falklands talks deadlock

Sixteen years after the Falklands War, there is still no end in sight to the stalemate over the status of the islands. But, as Steve Crawshaw reports, there are hints of optimism in advance of a visit by the Argentine President later this year. Potential oil wealth could both help and hinder progress.

There was a mixture of optimism and dismay at a conference in London yesterday on the future of the Falkland Islands. All sides agreed on the need for dialogue. But there was agreement, too, that finding a way forward was difficult.

Rogelio Pfirter, the Argentine ambassador in London, said that his government was "fully committed to building bridges with the islands", but also admitted that a solution is "some way down the road".

The potential for economic development has transformed the outlook for the Falklands. Sheep-farming is no longer the only game in town. Oil prospects are still unclear - around a 30 per cent chance, according to one speaker yesterday. But John d'Ancona, a consultant with knowledge of the region, suggested that oil production of 100,000 barrels per day was not unrealistic. This, he speculated, could bring in income of pounds 500,000 a day - thus transforming the islands' economy at a stroke. The possibility of diamonds deposits has also been raised.

Fishing is much more important than it was 20 years ago - and continues to be a source of both friction and co-operation. The co-operation has become necessary in order to ensure that stocks do not decline. But it is difficult to work out how to divide the fishing. Fish, as one speaker noted with some understatement, "do not observe man-made boundaries".

Argentina wants to put shared sovereignty on the table. Britain has so far been cautious. The islanders fear a sell-out. Sukey Cameron, representative in London of the Falkland Islands government, told yesterday's conference, organised by the South Atlantic Council, that the views of the islanders are regarded as "at best inconvenient, at worst unimportant".