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How seafood, oil and tourism made ’squidionaires’ and the Falklands’ rich

Caroline Graham in the Falklands

Caroline Graham from London's Mail on Sunday visited the Falkland Islands for a week and chance had it she arrived when a commercial oil strike was announced by one of the several companies exploring offshore the Islands.

The current round of oil exploration and the prospects of huge deposits can be a great temptation, but the Falklands in the last thirty years since the end of the 1982 conflict have undergone their own astonishing transformation, in the words of Caroline, based on fisheries (mainly squid), tourism and prudent investment.

Even the commodities surge is giving the traditional industry of the Falklands, wool farming a big boost.

But Falklanders are also concerned that the booming economy and prospects could radically change the Islands, their way of life and present new political challenges.

The article “The squidionaires of Baa-rain… or how seafood, oil, tourism (and penguins) made the Falklands rich”, follows:

 The bar is packed, the beer and the cash are flowing freely. Burly oil men down pint after pint to celebrate a ‘strike’ on the rig 120 miles away across the freezing ocean.

Tonight, like every other night, the air is thick with accents – from Russia, Poland and Scotland – the steady thrum of conversation broken only by bursts of laughter, the beeping of the cash register and the sharp slam of the till drawer.

Stanley, capital of the Falkland Islands, may be sovereign British territory. The union flags in the Victory pub make that clear enough. But there is no recession here.

The once- barren rock, defended at the cost of 255 lives during the 1982 war, is undergoing an economic revolution.

In the past, the name ‘Falklands’ summed up images of a windswept archipelago covered in thousands of sheep and penguins, and populated by a rugged rural people rather cruelly dubbed ‘Bennys’ by British soldiers after the simple soul in Crossroads.

But in the nearly 30 years since the war, the place has undergone an astonishing transformation. The population now enjoys a higher average income than the UK, the education and health system is second to none and a booming fishing trade has created at least seven ‘squidionaires’.

In recent days the Falklands, 8,000 miles from London but just 300 from Argentina, have again been in the headlines. Argentine President Cristina Kirchner accused Britain of being ‘a crude colonial power in decline’ as she called for ‘Las Islas Malvinas’ to be returned to Argentine rule.

But her sabre-waving is more than just nationalistic pride. For today’s Falkland Islands are a prize indeed.

The prospect of potentially 60 billion barrels of oil less than 150 miles offshore has led to an influx of hundreds of oil workers who have dubbed the remote sheep-filled islands ‘Baa-rain’ after the oil-rich Arab state.

I traveled to the Falklands – a place roughly the size of Wales – to see what life is like now for the 3,000 islanders. And what I discovered was a revelation. The combination of massive profits from fishing the local Illex squid – a rare delicacy in the Far East – and a Klondike-style oil boom means islanders who once relied on a declining wool market are now rolling in money.

Even those who remained in the sheep business through tough times are now laughing all the way to the bank, thanks to record wool prices.

The islands’ economy is so prosperous there is zero unemployment. The average household income is £45,000 compared with around £25,000 in the UK.

Since 1982 there has been a housing explosion with the average home costing £150,000 and some reaching £500,000.

The recent arrival of hundreds of oil workers (mostly Scottish) to man the Ocean Guardian rig 120 miles off the north shore has injected another £10 million into the local economy. Wages are good and income tax is just 21 per cent above £13,000.

Last Monday, hours after my arrival in Stanley, Rockhopper, the company which has been carrying out exploratory drilling, announced a confirmed oil ‘strike’ – a well generating 9,000 barrels a day – leading to those raucous celebrations in the bar of the Malvina House Hotel, where many of the oil workers stay.

The hotel (named after local girl Malvina Felton and nothing to do with the Argentine name for the islands, Las Islas Malvinas) has more than doubled in size from 17 to 37 rooms to accommodate oil workers, and it is fully booked for the next year.

The hotel menu is the first revelation. Appetisers including cajun-spiced crocodile tail (£9.95) and frogs legs (£7.25) are offered alongside Tournedos of Prime Aged Beef with pan-seared foie gras (£22.95) and medallions of Highland venison (£16.95).

Chef Matthew Clarke, from Weybridge, Surrey, who once worked for Pink Floyd and the Spice Girls, tells me: ‘The islanders are surprisingly sophisticated.

They are well travelled and demand fine cuisine. I have haggis on the menu to keep the oilmen happy but I was brought here to pander to the palates of a population who are well educated and expect the local cuisine to reflect that.’

The islands’ economy was transformed after the war. Before 1982, the annual GDP was just £3.9 million. The economy was based on the production of wool – there are 250 sheep for every resident – but plummeting prices in the Eighties caused mass emigration.

Farms were owned by absentee landlords. There was no international airport, few proper roads and nightlife was non-existent.

After the war, the British Government backed a 200-mile exclusive fishing zone around the Falklands (which locals had been demanding for years) that enabled the islanders to start selling lucrative squid and fishing rights to Japan, Spain, Russia and Korea.

Today, the islands have an annual GDP of £90 million. There is no national debt and the Falklands government has £103 million in savings which generate a further £5.1 million in interest each year.

Booming fishing and tourism industries earn £42 million and £7.6 million a year respectively and high wool and meat prices means agriculture brings in a further £6.4 million a year.

Everyday life is also obviously good for families. Though it costs a fortune (£10 for 10 minutes), 85 per cent of homes have internet access – and typically pay between £350 and £600 for the privilege.

Islanders enjoy free healthcare and education up to university level. A new secondary school teaches children up to GCSE level. Pupils are then offered free flights, have all tuition fees paid and get £8,000 a year to study at colleges and universities in the UK.

The island’s chief financial officer Keith Padgett tells me: ‘That eight grand is basically beer and fag money.

On top of having one of the best education systems in the world, all healthcare is free. If the doctors at our hospital can’t cope then patients are flown to Chile or the UK for treatment with all costs being met by the government.’

It is currently winter in Stanley. Locals joke that the town ‘experiences four seasons each hour’.

Mornings dawn crisp and clear with blue skies but, within minutes, disintegrate into a blustery gale with horizontal sheets of rain and sleet. During the summer the streets throng with tourists, but even now pubs, shops and businesses bustle with life.

As I tramp down the High Street – past Thatcher Drive – I adopt the ‘Falklands swerve’, a 45-degree lean into the prevailing wind, as locals whizz past in new 4x4s, the most popular being £50,000 Land Rovers.

At the large West Store, one of four supermarkets, shelves laden with Waitrose products offer everything you would find in the UK for around the same prices.

Fresh fruit and vegetables, however, do sell at a premium; a mango is £5, half a cabbage costs £2.50, a single nectarine is 99p. Ten days ago locals were outraged to see a solitary cauliflower on sale for £14.

As proof of the tourist invasion, at the nearby Harbour View gift shop, owner Leif Pollard points to shelves heaving with penguin-themed merchandise.

She explains: ‘The tourism industry really took off a few years back and in the summer it is not unusual for cruise ships to disgorge 5,000 passengers here.

They strip the shelves like locusts. It’s nothing for us to clear £25,000 worth of merchandise in a day.’

Most of the tourists – there were 64,000 in 2010/2011, an increase of 16 per cent on the previous year – are bussed about to see the islands’ colonies of king, magellanic and gentoo penguins.

Pollard says: ‘They all want something with a penguin on it. We have the usual stuff like T-shirts and key-rings but it always amazes me what you can stick a penguin on. We’ve got flip-flops, baby bottles, socks and nail files. And we sell 45,000 postcards.’

Other popular tourist draws include traditional red-painted post boxes and phone booths and even a red double decker London bus.

The richest man on the island is Stuart Wallace who owns Fortuna, a fishing company. He has five boats which employ 200 people and a chain of convenience and gift stores.

As he ushers me into his company’s plush boardroom he smiles when I ask if he minds being called a ‘squidionaire’ and says: ‘I’m not about to tell you what my company is worth but let’s just say times are very good indeed. No, I don’t have a Ferrari. It wouldn’t last long on our roads.’

And he explains: ‘The setting up of a fishing exclusion zone transformed our fortunes. Before that, other countries would come in and plunder our stocks. Now we sell licenses and we are building up our own fishing industry.’

The South Atlantic is rich in Illex squid, a delicacy in Japan, and the smaller Loligo that provides 80 per cent of the calamari served in Spain and Portugal.

Wallace is married to an Argentine woman but adds: ‘She’s been here for 25 years now so is a Falkland Islander through and through.

People here have never been anything other than totally welcoming to her. There are a handful of Argentinians on the island but most have integrated well. No hard feelings.’

Another squidionaire is Jan Cheek. A Member of the Legislative Assembly – a group of eight elected councillors who are the islands’ parliament – she can trace her family back nine generations to James Biggs, a sapper who arrived on the islands in January 1842 with the first British Governor, Richard Moody.

A former teacher, her late husband John co-founded Fortuna fishing which she sold to Wallace for £8 million. I meet her at the parliamentary building – Gilbert House – a modest white wooden structure with a green tin roof overlooking Stanley Harbour.

As in most buildings in Stanley there is a framed photograph of the Queen proudly displayed on the wall alongside an autographed picture of Margaret Thatcher.

Cheek recently purchased farmland on the island for £800,000 – to protect its penguins. She says: ‘I’m fortunate enough to have made money.

I have no intention of living on the farm but it houses the largest population of king penguins on the islands and I was concerned it might fall into foreign ownership. I believe it is my duty to give back and reinvest in the Falklands.’

Roger Edwards, another member of the legislative assembly, says: ‘We are self-governing and self- sufficient economically.

One of the biggest myths is that the Falklands are somehow costing the British taxpayer a fortune. In fact, the only cost is £70 million to maintain a military presence here and that is only one seventh of one per cent of the UK defence budget.

If the oil hits big then the aim would be for us to contribute to the cost of defence.

‘The economic situation is so good here that we have negative unemployment; we are bringing in people, mostly Chileans and Peruvians.

Salaries are high. There is no crime to speak of except the occasional drunken outburst.’

Then he adds, intriguingly: ‘Ideally we would like to be independent but we still need Britain for defence. If it wasn’t for the Argies, life would be great. But they are a constant cloud over our heads, causing aggravation and grief.’

But could it really be possible – as Falklands War veteran Admiral Sandy Woodward recently declared – that the UK could not defend the islands against another attack?

There are still 1,200 UK military personnel garrisoned at Mount Pleasant, a 45-minute drive from Stanley, which is also the site of the island’s international airport. Four Typhoon fighter jets are often seen swooping over islands’ vast expanses of pampas grass and peat bogs.

The Commander of the British Forces, Brigadier Bill Aldridge, declined to speak to The Mail on Sunday saying he would prefer all inquiries to go via the MoD in London for ‘sensitivity’ reasons.

Many islanders I spoke to said they felt ‘under siege’ from Argentina, and Councillor Edwards says: ‘They have pretty much put us under an economic blockade.’

But he thinks fears of another conflict are unfounded. He said: ‘I can understand why Sandy Woodward would try to make a point to protect his Navy from cuts but he is sadly misguided. Things have moved on since 1982.

‘I think if the Argies were planning something we would know about it. They are still in no position to take us on.’

He adds: ‘Since the Kirchners [president Cristina and her husband Nestor] have been in power it’s been nothing but aggro. The facts are simple: We are Falkland Islanders and that is the way we wish to stay. There is nothing to talk about.’

Part of the ‘aggro’ he refers to is that Argentina refuses to allow flights over its territory, meaning getting in and out of the Falklands is expensive.

There is a once-a-week flight out of Santiago in Chile that costs £2,000. Every five days there is an ‘air bridge’ flight from RAF Brize Norton in Oxfordshire (via Ascension Island) which brings supplies and men to the garrison. Spare seats on the air bridge sell for £1,800 each for the 18-hour flight.

And though Edwards says things have ‘moved on’, every visitor is given a leaflet in English and Spanish which states: ‘The displaying of an Argentine flag anywhere in the Falkland Islands has the potential to cause alarm and distress.’

Some feel that it is the oil industry that represents the biggest threat to the islands. Phyl Rendell, the Falklands Director of Mineral Resources, says: ‘We want their money but not their mess.’

He confirmed that a second rig, the Leiv Ericksson, will arrive later this year. ‘If oil prices stay high the idea will be to use offshore floating production, storage and offloading facilities.

We would hope the hydrocarbons would be brought to the surface, stored and then transferred and sent on their way without ever having to come to land. The workers would also fly in and fly immediately out to the rig, to prevent too much hassle to us here.’

The oil workers are equally cool towards the locals. Kevin Green, a foreman on the rig, tells me: ‘They don’t want us here and we know it. It’s all still cloak and dagger out there but I can tell you there is oil and no matter how the companies or the Falklands government tries to play it down it will hit big and it will change the face of the Falklands.

‘Everyone is trying to keep it quiet but we’ve already hit it. There is oil, there’s lots of it and it’s viable.’

Green then reveals that radar operators on the rig have detected a submarine patrolling the waters around the islands in recent weeks as the rhetoric with Argentina has increased.

He said: ‘We were told to not mention it. But there’s a sub out there and I’m pretty sure it’s not Argie.’

Most tittle-tattle on the island revolves around Prince William and rumours that he is to continue his search-and-rescue helicopter training in the Falklands.

Claudette Anderson-Prior, Clerk of the Legislative Assembly, says: ‘We’re really hoping William comes here to train and that would be the perfect opportunity for Catherine to come, too.’

Despite the economic boom the islanders are keen to maintain their traditional lifestyle, where they get by without traffic lights or cash machines.

There is one bank where visitors can change dollars into Falkland Islands pounds, which have parity with the UK pound.

Even getting about is still difficult. Dave Morris, an ex-Royal Marine who served during the war and married a local, worked his way up through the ranks of the small local police force to become Chief Constable.

He volunteered to drive me around the island. Many of the ‘new’ roads are potted with fiendish holes.

Morris says: ‘They have built around 100 miles of Tarmac roads but they cost a fortune to maintain because of the weather.

They used the wrong Tarmac so the roads are cracking up, and when they dug the ditches by the side they misread the annual rainfall as monthly. So the roads are terrible and when you slide off you end up in a ditch like a crevasse.’

Many tourists and veterans visit war sites including those which became only too familiar to those who lived through the war – Mount Tumbledown, Darwin and Goose Green, Mt Longdon.

Stark red signs warning of mine fields dot the landscape and there are still an estimated 30,000 mines left. The last casualty of them was a cow. At least the penguins are safe – they are not heavy enough to set the mines off.

Despite the reminders all around, Morris says a new generation doesn’t understand the conflict: ‘It’s odd in a way when I meet these kids who weren’t even born then.

‘It’s hard to explain to them what it meant, that this was the last war in which you had guys fixing their bayonets and going at each other in the dark. It was brutal.’

But some youngsters still have a fierce pride in their homeland. Teslyn Barkman is a pretty 23-year-old who earned her arts degree in Brighton and returned home to work on the local paper, the Penguin News, which has an enviable 90 per cent readership in the islands.

She says: ‘I felt a sense of obligation to come home. My education was paid for by the islanders. I came home because it’s time to repay the investment.’

Out in the ‘camp’ – the barren wilderness outside Stanley – away from talk of oil and squid, little has changed. Neil and Glenda Watson have farmed Long Island Farm for 30 years.

It is a two-hour drive to the farm which is still warmed by peat.

Mr Watson greets me saying: ‘We were shooting Upland Geese. They mate for life so if you shoot one you have to shoot the other. We’re a bit sentimental.’

He worries about the economic boom changing the fundamental pleasures of the island: ‘I’m not against change but I worry we will lose our way of life.

It is wonderful to having a thriving economy but I worry that people will put money ahead of more important things like peace and quiet, a rural life, the beauty of nature.

‘Men gave their lives to protect all those things that we so value here on the islands. We owe it to them that money and oil doesn’t destroy the place they fought so hard to protect’.-