In today’s issue:

• There are rich oil and gas deposits in British territorial waters
• The British fought over them 43 years ago, and won
• Might the Labour government decide to reap the rewards?

Forty-three years ago this week, Argentina began its invasion of the Falkland Islands, or Malvinas, as they are known to the Argentines.

The small Royal Marines force on the islands received only a day’s warning that a large amphibious assault force was closing in. They did what they could to prepare, mounting a brief defence – but the situation was hopeless.

They surrendered and were taken prisoner. Thousands of Argentine troops arrived on the islands set about preparing defensive positions in the event the British decided to mount a counter-invasion.

They did, and quickly. Within days, a task force of some 150 naval and merchant marine vessels assembled and steamed towards the South Atlantic. It was a full amphibious assault force.

Weeks later, after fierce fighting in the air, on land and at sea – and the loss of thousands of soldiers and sailors – Britain successfully re-captured the islands.

The Falklands thus remain a Crown Protectorate of the United Kingdom to this day. Each year, they commemorate the occasion of their liberation.

As with so many historical events, things could easily have unfolded differently. The difficulties the British forces faced operating some 8,000 miles from home were immense. The Argentines had several important advantages in addition to that of position.

Through a combination of skill and luck, the British forces prevailed. But the entire affair could have been avoided had a diplomatic solution been found.

That’s right. There were extensive diplomatic efforts made to try and avoid the conflict altogether. US Secretary of State Alexander Haig, former Supreme Commander of NATO, intervened personally to try and broker a deal.

Haig believed that the Argentines would settle for some kind of shared sovereignty, if not over the islands themselves, then perhaps over the territorial waters.

Why might the Argentines be interested in the territorial waters? Well, they were prime fishing grounds. But would Argentina settle for fishing rights?

Probably not. But what about mineral rights?

It was already suspected in 1982 that there were substantial oil and gas deposits in the shallow waters around the Falklands and south into the Antarctic. Haig surmised that, were Britain and Argentina to agree a way to share the mineral rights, that war could be averted.

As we know, negotiations failed. But Haig tried. He genuinely believed a mineral rights deal was not only possible but the key to avoiding war.

But neither Haig, nor anyone else, knew just how vast the oil and gas deposits were.

Today, we know better. The Falklanders have already developed the small Sea Lion field, expected to produce some 200k barrels a year.

That’s a trivial amount of global production, although meaningful to the Falklanders themselves, now enjoying the royalties income.

Meaningful to the entire world, however, is that it is now believed that the combined Falkland and Argentine oil and gas deposits are larger than those of the North Sea. They might even be as large as those of the Persian Gulf.

The Sea Lion field is but a drop in the ocean. In my opinion, it’s only a matter of time before a far larger development in the region gets underway.

That will require some sort of agreement between Britain and Argentina, the kind that proved elusive in 1982. Argentina is keen to drill, but the Labour government has to date been less enthusiastic.

That may be about to change. We first alerted our readers to the prospect last September in our publication The Fleet Street Letter. And last December I wrote the following in these pages:

Might Labour “go to China” and not only tactically retreat from a handful of green policies but go so far as to outright embrace fossil fuel development to fill their emptying coffers with royalties?

That low-hanging fossil fruit might be tempting indeed. The Falklands might be far away, but they remain a Crown Protectorate of the United Kingdom, the country that went to war to defend them in 1982, costing many lives.

Just one phone call from 10 Downing Street to Government House, Port Stanley, could put something spectacular in motion. Something that would even impress former Prime Minister Margaret Thatcher.

Things have got only worse for Labour since. They’re sinking in the polls for obvious reasons. The economy has slipped back into recession. Tax revenue is below expectations.

Hence the government is desperate to get growth going. And desperate governments do the most expedient things.

Like renege on promises, such as those having to do with net zero.

They’ve already backtracked on multiple net zero goals. Might they actually do a complete volte-face, take a leaf out of Trump’s book and “drill, baby, drill”?!

A windfall in Falklands oil and gas royalties would go a long way to shoring up government finances, possibly to the point of allowing for tax cuts. If you truly want to get growth going and win back the electorate, that’s a sure-fire way to do it.

So, perhaps it’s not such a stretch but in fact a solid investment thesis, one that could make early movers a tidy profit.

We’ve pinpointed six companies we believe are best positioned to soar if major development of the Falklands’ oil and gas fields moves forward. This could be a historic – and potentially spectacular – investment opportunity. Want to get ahead of the curve? Start here.

Until next time,

John Butler
Investment Director, Investor’s Daily

Food for Thought

Bill Bonner, writing today from Baltimore, Maryland

“Whenever there are great strains or changes in the economic system, it tends to generate crackpot theories.”

– David Stockman

Once again, we are witness to an epic battle. Like David Stockman’s historic showdown in the early ‘80s. Economics vs. Politics. Economics wants stable money, honest interest rates, balanced budgets, and a smaller federal government. Politics wants what it always wants – more money and more power.

The Triumph of Politics, is the title Stockman gave to his memoir on the subject. It tells you all you need to know.

Politicians find ways to explain away their mistakes…and new theories to justify more. In the early ‘80s they claimed the need to fight communism. Today, the fight is against drugs, Russia, Iran, terrorists, immigrants… and unfair trade policies.

In the early days of the Soviet Union, collectivization of agriculture was an inevitable bust. People just didn’t work as hard for the workers’ paradise as they did for themselves. And the lessons, learned by bitter experience over generations of peasants – about what to plant, when to plant, and how to cultivate crops – were often lost on the bureaucrats and central planners in Moscow.

The result: millions of people went hungry.

It was into this challenging situation that a young, persuasive agronomist came forward with a solution. Trofim Lysenko claimed he could create a whole new genre of agriculture based on the Soviet model. Instead of competing with each other for water, nutrients and light, seeds would cooperate… and even produce bountiful yields – even in the wintertime.

The theory had crackpot written all over it. But in the early ’30s Stalin was grasping at straws and Lysenko had one. And who was going to tell Stalin he was wrong? Nikolai Vavilov – a traditional botanist – dared to speak the truth. For his trouble, he was sent to the Gulag… and then executed.

‘Lysenkoism’ was triumphant and declared official policy in the Soviet Union. The collective farms dutifully put it into practice. Crop yields collapsed even further. And an estimated ten million people starved to death.

Soviet policy had a profound effect on other communist regimes. It wasn’t long before Mao, in China, picked up Lysenkoism and gave it the go-ahead. Later acknowledged as one of Mao’s big errors, the death toll between 1959 and 1961 was as many as 45 million. Not all the deaths were directly caused by Lysenkoism, but by a combination of political mismanagement, political science, and political chaos.

Big Man leaders are often subject to Big Man delusions. Their yes-monkeys laugh when they say something meant to be funny. They cheer when the Big Man makes an outlandish promise. And after a while, the Big Man falls victim to his own sycophantic entourage. They listen to him so intently; he must know what he is talking about!

The problem is well known. In Ancient Rome, a triumphant general would be assigned a slave whose job was to whisper in the great man’s ear – Memento Homo (you are human) – to warn him.

Donald Trump has no such luck. Instead, he has another crackpot policy. And it’s coming to you on April 2.

We’re talking about his reciprocal tariffs. Trump says that when they are implemented, it will be ‘liberation day.’

Liberation Day? Liberation from what? Tariffs have been coming down all over the world since the end of WWII. Rarely do they pose a significant impediment to US exporters.

America imports about $3.4 trillion worth of goods each year. These imports are subject to a weighted average tariff of 1.6%. It also exports to the rest of the world, on which our exporters pay an average of about 1.85%. The difference – a quarter of one percent – is caused largely by India’s protectionist policies.

And who will tell Donald Trump the truth…that the ‘reciprocal’ concept is unworkable and that US tariffs are actually higher than many of our major trading partners? Japan’s tariffs average only 1.45%. Taiwan’s tariffs don’t even rise to a single percentage point. What about US tariffs on Chinese electric cars, at 100%? And what about the 140 foreign companies subject to US ‘export controls?’

If the ‘reciprocity’ were based only on the tariffs, the US would have to lower its barriers in many instances – just to make them ‘fair.’ This is not at all what the White House intends to do.

Because tariffs are a feature of politics, not economics. There is nothing about them that suggests they would lead to a healthier economy. And there’s nothing about them that is ‘fair’… unless fairness means that if you whack Peter with a stick you must also whack Paul. And if they whack each other… you have to whack yourself just to stay even.

But wait… there’s more to the story, isn’t there? Treasury Secretary Bessent is also supposed to consider Non-Tariff Barriers as he attempts to find reciprocity. Let’s look at how these NTB’s affect the calculations. Tomorrow.

Regards,

Bill Bonner
Contributing Editor, Investor’s Daily

For more from Bill Bonner, visit www.bonnerprivateresearch.com