(Washington DC, 27th May, 1999) The historical claims on the Falkland Islands/Malvinas have principally two differing versions. The recent meeting in London between officials from Britain, Argentina and the Falklands/Malvinas to discuss resumption of Argentine links with the islands, was a positive step forward in the process of improving relations between London and Buenos Aires. Under discussion is establishing air-links between Argentina and the Falklands/Malvinas and allowing Argentine nationals to visit the Islands; co-operation on oil exploration and conservation of fish stocks in disputed waters.


David Michaels, the British born senior vice president of Norman A. Bailey, Inc., the Washington DC based ‘Decision Oriented Economics’ consulting firm, suggested today that, “a principal step towards a ‘diplomatic’ solution to the dilemma, which would simultaneously secure a peaceful ‘economic’ remedy and dispel any future thoughts of aggressive acts, is to invite the Islands to become a member of Mercosur, the South American common market.”


He further proposed, “all economic claims by the Falklands/Malvinas and Argentina could be irrevocably vested with a ‘Falkland Islands/Malvinas Development Fund’, created to finance exploitation of its natural resources. The Islanders would be the principal partner of the ‘Falklands/Malvinas Islands Development Fund’, but like any corporation or government that requires investment capital, utilization of the international capital markets to raise funding for development of its resources, would be a normal course of action. The central banks of the Mercosur members could be invited to subscribe to a minority percentage of the fund; the majority percentage being globally marketed by a consortium of Anglo-Argentine investment brokers.”


David Michaels continued, “in ‘yesterday’s’ world, power was principally in the hands of the politicians of the nation-states. However, in ‘today’s’ world, power is vested and balanced within, not only the nation-states, but also with the global markets and, more significantly, individuals. Globalization has ‘wired’ the world into networks, giving more power to individuals to influence both markets and nation-states. This era of ‘globalization’ will shape the domestic politics and foreign relations of practically every country. The more that market forces govern and economies are opened to free trade and competition, the more efficient and prosperous economies will be. Globalization will be the prime mover in converting the myopic mind sets and reactive nature of many politicians to be proactive leaders and solution seekers.”


Norman Bailey, president of the consulting firm added, “David Michaels’ idea for resolution of the Falklands/Malvinas controversy is exactly the kind of ‘out of the box’ thinking that is needed for such awkward conflicts. Adding the Islands to Mercosur and setting up an investment fund is exactly the kind of thing that could provide all interested parties with a win-win situation and permit everyone not only to save face but to begin a long and fruitful collaboration.”


Since sovereignty is becoming less important in a global economy, the differences over the Falkland’s/Malvinas sovereignty can be mitigated by including the islands into a regional trading block. In time the Falklands/Malvinas will be considered politically aligned with the Mercosur countries, while maintaining its traditional ties with Britain. With its rich natural resources, it will be a boon for the entire region and the friction over their sovereignty will be reduced.


Dr. Norman A. Bailey is President of Norman A. Bailey, Inc., the Washington DC based “Decision Oriented Economics” consultants. He has worked on international economic and strategic issues for over 30 years and served as advisor for international economic policy during President Reagan’s election and 1984 reelection campaign and President Bush’s 1988 campaign. Dr. Bailey was President Reagan’s Special Assistant; a principal author of the Caribbean Basin Initiative (CBI); and was Senior Director of National Security Planning for the National Security Council of the United States. He was recently appointed to George Bush Jr’s international economic advisory group.

David P. Michaels is the Senior Vice President of Norman A. Bailey, Inc., and is an advisor to corporations and governmental entities on matters associated with economic restructuring, and the related financial and economic negotiations. Notably, he was the principal proposer of the “International Central Clearing House” for the registration of public and private sector debt instruments, and is credited with anticipating the concepts behind the Brady Plan and the Enterprise for the Americas programs launched by the Bush Administration.

David Michaels