Sovereign Wealth Fund for the Falklands

The Falkland Islands, known to the Argentinians as Islas Malvinas is an island chain located in the Southern Atlantic Ocean. The Falklands comprise of two key islands and more than 700 minor ones. It lies 290 miles from the coast of mainland South America. The islands are currently under the rule of the United Kingdom. There is a possibility of a major oil windfall off the Falklands. For 2012, oil explorers are aiming for 8.3 billion barrels of oil around the Falklands. As major drilling successes come to light, it is increasing political tension between Argentina and the United Kingdom. In fact, the Argentine government is asserting political dominance through various blockade-like threats and measures.

The Falklands have a 200-mile territorial zone that belongs to them. The local government has sold exploration licensing to several companies. In return, the government will levy a 9% royalty fee on the value of all oil & gas that is produced. In addition, the government will also charge a 26% tax on corporate profits derived in this area. The surplus cash may be used to create a sovereign wealth fund to invest income for future generations.

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