What Will Happen To Argentina

After Brexit? Economy,

Falklands Could Be Affected As
Britain Leaves EU
BY MARK HANRAHAN @ M A R K D H A N R A H A N ON 06/24/16 AT 11:59 AM

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While much has been written about the impact of the U.K.s decision to
quit the EU on the countrys political and economic relations with big
countries, there may also be significant impacts on Britains relationship
with smaller nations.

One such country is Argentina, which does a great deal of trade with the
EU and has a long-simmering dispute with the U.K. What impact will
Brexit have?

Argentina and the U.K. have been locked in a dispute over the
sovereignty of the Falkland Islands, which Argentina refers to as Las
Malvinas. Argentina invaded the South Atlantic islands in 1982, prompting
the U.K. to declare war and seize them back.
 Campaigners warned in the run-up to Britains EU referendum a Brexit
could weaken the U.K.s diplomatic clout, giving Argentina a greater
chance to promote its campaign for sovereignty over the Falklands.

The Falklands rely significantly on the EU single market to sell its exports.
Loss of unfettered access to that market, plus the prospect of EU import
tariffs, likely will be an economic blow.

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Section 4 of the Treaty of Rome, which established the EUs predecessor,

the European Economic Community, listed the Falkland Islands as a
dependent territory of the U.K., offering the islands a degree of certainty
support from Britains EU partners would be forthcoming. That will now be
removed, which some say could embolden Argentina.

On the economy, the uncertainty caused by Brexit is pushing investors to

move their money out of emerging markets like Argentina and into assets
seen as safer.

Argentina runs a current account deficit of more than 2 percent of its

gross domestic product, meaning it relies on overseas capital and
external financing to underwrite spending. An investor retreat from
emerging markets could deprive Buenos Aires of money needed to
finance spending and damage the countrys economy.

There could, however, also be some economic opportunity for Argentina:

The country is part of the Mercosur bloc, along with Brazil, Paraguay,
Uruguay and Venezuela. Talks on an EU- Mercosur trade deal which
started in 1999 have stalled, raising the possibility the U.K. could strike
a deal with the bloc on its own to purchase beef from Argentina and
Brazil.