Falkland Islands and Brexit

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'We're hoping against hope': Falklands' fishing boom threatened by no-deal Brexit

by Uki Goñi
Published: 2019-09-02
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Since Stuart Wallace’s ancestors first arrived in the Falklands in 1842, the family has born witness to the islands’ transformation from an impoverished outpost of empire to the setting for a remarkable economic boom powered by the modern-day fishing industry.

Nowadays, however, Wallace spends little time dwelling on that past: he’s too preoccupied by the threat to the islands’ new-found wealth posed by the UK’s looming departure from the European Union.

For much of the 177 years since the Wallace family arrived, the Falklands’ economy was based on mutton exports to the United Kingdom.

The likeness of a sheep still appears on the Falkland coat of arms, but the islands’ trade is no longer primarily bound to the the UK – and their main export no longer grazes on land.

If the Falklands crest were to be redesigned now, the sheep might be replaced by the image of a South Atlantic squid, swimming not towards the UK, but in the direction of the European Union.

“The seafood industry is what sustains our entire economy,” says Wallace, who three decades ago set up the Fortuna fishing company.

Of the Falklands’ exports, 82% (mostly squid) go to Spain alone. The US comes a distant second, with 4.2%, trailed by South Africa with 3.6% and the UK a mere 2.3%.

So, having just commissioned a 70-crew trawler from a Spanish shipyard to add to his five-ship fleet, Wallace is understandably concerned how a no-deal Brexit could affect the islands’ future.

“It’s not for us to get involved in what the British people decide to do, we can only point out the potential impact to us,” the businessman says. “And if there is no deal the impact could be that we would have to pay tariffs: 6% for squid and up to 18% for other fish. That would be of significant consequence.”

Falklanders pick their words carefully for fear of offending pro or anti-Brexit sensibilities in the UK.

And for good reason: the Falklands have no say in the Brexit battle raging 8,000 miles away in London. As residents of an overseas territory, Falklanders could not vote in the 2016 Brexit referendum, nor do they vote in UK elections – unless they happen to be residing in the UK at the time.

Some Falklands officials would like to negotiate a post-Brexit agreement directly with the EU. “In the event of a no-deal Brexit in which we lost our tariff- and quota-free access, our first port of call would be to seek permission from the UK government to engage directly with the EU to see if it would be possible to come to a bilateral arrangement,” said Richard Hyslop, the Falklands senior policy advisor on Brexit.

The importance of the EU market for the Falklands cannot be overstated.

“All our fishery products go through Vigo, in Spain,” says Teslyn Barkman, 31, a sixth-generation Falklander and member of the Falklands legislative assembly who is working with Hyslop to navigate a soft Brexit landing.

Most of the Falkland fishing companies operate joint ventures with Spanish firms, Barkman explains. “It’s a completely symbiotic business relationship that’s developed over time. About a third of all the calamari that Spain imports comes from us, so there’s a one in three chance that if you’re eating calamari in Spain, it comes from the Falkland islands.”

The symbiosis is so strong that 6,000 jobs in Spain are tied to the Falklands fishing industry. “Since the UK lost the expertise in the specific vessels that we try to build, Falklands shipping companies have been putting multi-million pound contracts through Vigo,” Barkman says.

At risk is one of the highest GDP per capita in the world. Falklanders are snuggled up in the 12th slot between Norway and the United Arab Emirates. On average, they earn a yearly $70,800. The United Kingdom, by stark comparison, is ranked 39th, with a GDP per capita of only $35,200, slightly less than half.

The Falklands’ fishing boom followed the brief military occupation of the islands by Argentina, which has a long-standing sovereignty claim on the archipelago it calls “Las Malvinas”. The 1982 military incursion claimed the lives of three islanders, 655 Argentinian and 255 British servicemen.

After the conflict, the Falklands government began handing out fishing quotas for its surrounding South Atlantic waters after the war, opening the way for today’s squid boom.

Not all Falklanders believe Brexit will be completely negative.

Assembly member Roger Spink has suggested reflagging Falklands fishing vessels as Spanish, dipping into the healthy Falklands budget surplus or seeking financial support from the UK to ride out the storm.

But his comments to the Falklands news site Penguin News prompted sharp rebukes from Falklands officials and business representatives. His statements “should not be confused for the government’s view”, Barkman said.

“A no-deal Brexit would not be a great starting point for negotiating a new relationship with the EU.”

EU buyers, anticipating the imposition of tariffs, have already started playing shy, said Hyslop. “The uncertainty surrounding a no-deal is having an effect on meat exports to the EU, with lower prices and slower sales already experienced.”

Agriculture only contributes 1.6% of the GDP today, but sheep farming is still the main job-provider after the islands government: farmers outnumber fishery workers by almost four to one.

The Brexit effect on agriculture is therefore of tantamount concern to Falkland officials.

“Meat products would likely be subject to tariffs of an average of 42%, rendering the EU market unviable for our products,” said Hyslop.

Wallace foresees difficult days ahead. “Fishing companies will take a hit on their bottom line immediately on day one.”

Asked if he had a message for 10 Downing Street, Wallace replied: “We’re sitting here hoping against hope that things will work out in a way that is not negative for us. We’re talking to the UK government, making sure that they know what our situation is. But I don’t suppose that the impact on us is at the top of the UK national agenda.”

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