Why Is Russia Trading Fighter Jets for Argentine Beef and Wheat?

A deal closed by Russia last month to trade a dozen supersonic, all-weather attack planes in exchange for Argentinian beef and wheat might not seem to have caused a big disturbance in the global equilibrium. But it demonstrates Russian President Vladimir Putin’s skill in exploiting diplomatic confrontations and advancing Moscow’s interests.

The deal has been brewing since Putin visited Argentina in July. Food prices have soared in Russia due to Western sanctions. Meanwhile, Argentina is eager to upgrade its air force. In October, the country attempted (but eventually failed) to procure 24 Saab Gripen fighter-bombers as part of a deal between Brazil and Sweden. The Russian-made Sukhoi Su-24 bombers are aging Cold War-era aircraft but are still considered “super-fighters” by NATO due to their 2,000-mile range and laser-guided missiles.

The deal has alarmed Britain, which sees the new fighters as a potential threat to the British-held Falkland Islands. The two countries have disputed the sovereignty of the islands since the 1982 Falklands War, when Britain thwarted an Argentine invasion. Although the islands are governed by the Falkland Islands Government (FIG), Britain is still responsible for their defense. However, budget cuts have reduced the forces stationed on the islands to four RAF Typhoon fighters, Rapier surface-to-air missiles and fewer than 1,200 troops as well as one naval warship that visits throughout the year.

Britain plans to send an aircraft carrier and several F-35B fighters to the islands by 2020 but British officials reportedly fear the 12 Russian aircraft will be delivered to Argentina before those forces can be deployed.  

The dispute over the islands has escalated this year. In the spring, Argentina accused the UK of engaging in “hostile acts” for conducting military drills on the Falklands. Argentine President Cristina Kirchner has repeatedly called for the islands to be reappropriated by Argentina and even brought the issue before the United Nations.

Argentine lawmakers passed a public transit bill that included an addendum requiring all public transport vehicles to display signs declaring the country’s claim over the Falkland Islands.

Meanwhile, the British announced at the end of 2014 that they planned to erect on the Falklands a $62,000 bronze statue of former Prime Minister Margaret Thatcher, who led Britain during the defense of the islands.

Around the same time, Kirchner used the historic deal between Cuba and the United States to call on Britain discuss Falklands sovereignty.

However, Britain is unlikely to concede control of the islands due to a recent discovery of vast oil deposits off the Falklands' coast. Oil seekers have been exploring the area around the Falklands for decades. But in 2010, the British oil and gas company Rockhopper Exploration discovered an oil field in the Falklands that could produce at least 242 million barrels. Experts say more oil fields are likely to be nearby.

Exploiting the Falklands’ offshore oil resources could make the islands, with only 2,563 residents, one of the richest communities on earth, which might explain why in a 2013 referendum all but three Falkland voters chose to stay with the UK. The local Falklands government has already put forward a proposal to collect a 9 percent royalty on the extracted petroleum and a 26 percent tax on future drilling licenses.

Argentina responded to the oil discovery by warning that any companies drilling off the Falklands’ coast would not be allowed to exploit Argentina’s vast oil fields in Patagonia.

The escalating confrontation between Argentina and Britain is unlikely to turn into a full-scale military conflict. In fact, the biggest winner in the Falklands dispute is probably Russia. Putin has been able to exploit Argentina’s aggressive posturing to strengthen Russia’s presence in South America at a time when most Western powers are focused on Asia and the Middle East. In the process, Putin has snapped up some food resources while simultaneously offloading old military equipment.

In the past, Russia relied on its oil resources to advance trade deals. But with oil prices plummeting, Russia is looking to boost its weapons industry. Indeed, Russian arms sales increased by 20 percent in 2014 while global weapons sales have decreased. At the end of the year, Putin promised to invest $108 million to support Russia’s weapons exporters.

So while Britain and Argentina squabble over the Falklands’ oil fields, Russia is sharpening its knives—and looking to sell them. 

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