Windswept, remote...who would want to live in the Falkland Islands?

Not the Argentinians – and even Mrs Thatcher had her doubts about hanging on to them. In fact, discovers John Carlin, only the Falklanders truly love the Falkland Islands.

The loss of life was tragic but in almost all other respects the Falklands war was a comedy of unintended consequences from which those who started it lost the most. Talk to Falkland Islanders old enough to remember the period just before the war and you'll learn that the government of Margaret Thatcher was perceived not as a heroic force for freedom but as treacherous and deceitful.

A plan was under way, spearheaded by the Foreign Office, to go behind the Falklanders' back and cut a deal whereby Britain would share sovereignty with Argentina for a period of time, prior to relinquishing authority over the islands altogether.

The lunacy of the generals who invaded the Falklands in April 1982 was that, from the point of view of Argentina's historic quest to 'recover' the 'Malvinas', their action could not have been more counter-productive. Had they waited, they'd have had the islands on a plate. But they were losing their grip on power and they resorted to the desperate, populist act of dispatching their army to the windswept archipelago.

What happened was that Thatcher dispatched her own troops to get the islands back; the generals, covered in ignominy, were overthrown; all possibility of Argentina claiming sovereignty over the islands any time soon went up in smoke; and Britain was saddled with holding on to them, at considerable cost to the Treasury, until the long distant day when the Falklanders themselves, now fully in charge of their destiny, immune to Foreign Office scheming, deem fit to say goodbye.

And all for what? There's a line from Hamlet when the prince asks a soldier what the mission is of a Norwegian army passing through Danish territory. It turns out they are set for Poland, the soldier replies, explaining, "We go to gain a little patch of ground/ That hath in it no profit but the name". Jorge Luis Borges, an Argentine writer who admired Shakespeare, had his own spin on the theme, applied to the Falklands war. Asked what his opinion was of the conflict on the South Atlantic, he said: "It is a fight between two bald men over a comb".

An inverted version of the same idea might have been more appropriate. Two combs fighting over a bald man. Bald is the word to describe the landscape of the Falklands, and pretty much everything else there. There are no trees on the 760-island archipelago save for a few scattered, stumpy ones in the capital Port Stanley, where 2,200 people – or 85 per cent of the total island's population – lives, and on the British military base an hour away by road, where some valiant horticulturalist planted a dozen, all of them condemned to bend desperately sideways in the direction of the prevailing winds, like a row of umbrellas blown inside out.

Stanley is a long, thin rectangle of squat little Lego constructions by the sea with a couple of gift shops on the shoreline where they sell stuffed penguins made in the UK and, at the town's business hub, one general store where clothes are scarce and stubbornly unfashionable, where the range of chocolates and cigarettes is what you might expect to find at a medium-sized London Tube station, where fresh fruit and vegetables – practically all imported – are few and far between.

On the narrow streets there are no advertising billboards and no traffic lights, because there is no traffic to speak of. The only vehicles are four-by-fours, all amply served by the capital's one petrol station. An unmarked road of mostly gravel links Stanley to the Falklands' second city, Goose Green, a loose arrangement of 18 partially inhabited houses and half a dozen barns so bare, windswept and seemingly barren of human activity that the image comes to mind of a struggling pioneers' outpost in Idaho, circa 1842, after a visit by the Apaches.

But Stanley and Goose Green are New York and Las Vegas compared to what they were before the Falklands war, the worst thing that happened to a thousand dead British and Argentine soldiers, but bonanza time, after it was all over, for the islanders. In all other respects, the mad futility of that war on the South Atlantic, 500 kilometres from Argentina's southernmost coast and 12,000 from Britain's, exceeds anything Borges' dry, despairing imagination was able to come up with. Beyond questions of symbolism, myth and national pride, it is impossible to fathom what use these islands were for a vast country like Argentina, empty of people in much of its geography and unfairly rich in natural resources.

Today there is some money to be made from fishing rights and possibly – but far from certainly – from the discovery offshore of oil and gas, but back then the only thing the economy offered was wool and lamb's meat. What is more, just before Argentine troops invaded and fleetingly 'recovered' sovereignty over the Malvinas in April 1982, the British government was negotiating to hand them over to Buenos Aires. Not surprisingly, Britain saw little point in keeping hold of a far-flung territory that barely a handful of its citizens had heard of (and therefore of negligible political value), where the land was unprofitably rocky semi-tundra and where penguins outnumbered people by a ratio of 250 to one.

But ever since, Britain having invested blood and treasure and national prestige in the islands, and now that the British people know of their existence and believe their troops fought and won the war to safeguard democracy, the government does see political – indeed electoral – value in propping up the islanders' way of life by the provision of a permanent military garrison, at a cost to British taxpayers of ¤70m a year.

For the Falkland islanders, it is a very comfortable way of life indeed. They enjoy the peace of the wild outdoors and the protection of a semi-socialist state. How many people other than the Falklanders would choose to live in a place so windswept, empty and remote – how many Argentines would choose to, for example – is another matter. But, in startling contrast to what we see in Europe today, unemployment is practically non-existent. It stands at 1 per cent, meaning 10 people, six of whom are physically or mentally unfit for work of any kind. Pensions for the old are generous and iron-cast; health care is free and so is education. Even for children who live in the second biggest island, West Falkland, which has a population of 100.

Emma Brook, a teacher at the Falklands' one secondary school in Stanley, explained how schooling reached children who live in the remoter homesteads. There is a system of 'travelling teachers' who are permanently on the move attending to the needs of young children unable to travel to Stanley. They spend a week or two staying on the farms where the children live – it could be four children, it could be one – dispensing highly individualised education. During the remaining weeks the children receive what they call 'telephone teaching'. Three teachers based in Stanley dispense lessons by phone to children who listen in to them on audio head-sets. "It's unorthodox," said Emma Brook, whose family have been on the Falklands for five generations, "but you'd be surprised how well many of these children end up doing academically."

Surprising, too, how bountiful the Falklands government is with those who show promise and ambition at the age of 16. They send them to England to complete their last two years of school and then, if they do well enough in their exams, to university. Everything is paid for: tuition, board, travel. Even pocket money is provided. The remarkable thing is that after spending five or more years in the bright lights of European civilisation, 75 per cent of them return to live in the Falklands.

Emma Brook returned, for example. So did Lisa Watson, editor of the Falklands' one newspaper, the Penguin News. So did Ros Cheek, the Falklands' one qualified lawyer. All of them are women in their forties; all are as intelligent, as articulate and as worldly-wise as anyone of similar social position in London. None of them would want to live anywhere else.

"There's no rush. It's a brilliant way of life," said Brook. "I miss the Falklands when I am away and I go into a pub where I don't know more than 5 per cent of the people," said Watson, who knows everyone in the pubs of Stanley and is uncomfortable with the anonymity of metropolitan life. "I never thought of not coming back," said Cheek, who was nine years away in Britain. "It's home, simply. It's where my family have lived for seven generations. But also it's a question of loyalty. So much has been invested in my education that I feel a strong sense of obligation to the place that made it all possible."

What made it all possible was the 1982 war. Before that the only tarred roads on the islands were in Stanley; all communications otherwise, including to Goose Green, were by dirt track. Except for a handful of landowners, the people were poor farmworkers. The social system was paternalistically Victorian, divided between what they called the 'sheepocracy' and the under-educated sheep herding, sheep-shearing servant classes, who did not even have access to banks. It was like a poor African country but with cold, wind and rain. The elite, if they were lucky, went to secondary school in Montevideo or Buenos Aires; a handful went to university in England.

One such was John Barton, who now heads the Falklands fisheries department, the key to the islands' relative new-found wealth, which in turn rests on the British military presence. The Falklands' economic revolution took place in 1986, four years after the end of the war, when fishing licences began to be sold to big companies from Spain, South Korea and Taiwan. The income of the islands' government went up that year by a factor of 10, from £3m to £30m a year. And it was in that very year that the first scholarships were given to the islands' children to study for free in Britain. (Lisa Watson was part of that first pioneering group, "a massive step forward for me," she said, "and for the Falklands as a whole".)

What made it possible to sell fishing licences was the ability to police Falklands territorial waters, thanks to the permanent presence of Britain's Royal Navy, explained John Barton. The Falklands do have one patrol boat alert to possible licence violations by foreign fishing boats, but the deeper deterrent is the knowledge the foreign fleets have that, in a crisis, a British warship will come to the rescue. "The war transformed the Falklands because we suddenly had physical security, political stability," he said. "Fishing funds our economy and the linchpin is the military protection of the UK."

Similar guarantees lie behind the new dream of the Falklands becoming the Dubai of the South Atlantic. Oil and gas have been found under Falklands territorial waters, enough – according to exploration done in the past two years – to make its exploitation, possibly, commercially viable. According to the constitution of the Falklanders, the natural resources belong to the islanders and to no one else – not even to Britain, the sovereign power.

Big companies from the United Kingdom, the United States and Italy have claimed stakes in it, but the right to drill and sell the oil would generate tax revenue that would increase the Falklands' budget fourfold, said Stephen Luxton, who heads the islands' oil department. Though that, he explained, is in the best of cases.

There is no shortage of oil deposits in the world today, the shale oil industry is growing fast, motor vehicles are being adapted to run on new sources of power and extraction andf delivery of oil from the Falklands will be costly. "There is a lot of potential but only potential at this stage," Luxton said. "There is no meaningful financial projection figure yet. We are confident of success but in the end it all depends on the price of oil."

Luxton is a large, confident man who was one of the beneficiaries of the fishing-inspired education boom. Born into a family that first came to the islands in 1864, he clearly revels in being a player in the global oil game, yet he too would not live anywhere else in the world.

"You might say we are isolated: we like being isolated," he said. "We lack choice in restaurants and bars and entertainment: that's not a worry for us." Nor is Argentina a big worry for him. Luxton scorns his neighbour's sovereignty claims. "How long do you have to live somewhere before you have a right to live there?" he asks. "Me, I am fifth generation here. Even if the Argentine view of history is accurate, which it is not, even if they are right in saying they owned the islands and the British took them away from them in 1833, so what? Look at Europe."

Luxton's point was that it would be just as absurd to pretend to redraw the borders of Europe according to where they stood 180 years ago. So, as far as he was concerned, Argentina was more a nuisance today than a cause for concern. "It's like having a yappy dog in the neighbourhood," he said.

Could there be a deal with Argentina on oil? "There would be a lot of economic benefits for both of us if the political situation were different, as there would with fishing."

The political situation was very different until the Argentine president, Cristina Fernández de Kirchner, decided to go on the offensive, increasing the hostility of the rhetoric and taking commercial measures damaging to the tiny Falklands economy. She and her government have described the islanders as "implanted" people, as British "squatters" on Argentine land, causing grave offence among the islanders, who point out that the Kirchner family has been in Argentina less time than most Falkland families have on the islands.

The Kirchner government has also sought to impose mini blockades on cargo vessels and holiday cruisers sailing to the Falklands. These are small measures by any international embargo standards, but they have an instant impact on the Falklands economy, slashing the income from tourism and increasing the price of oranges, bananas and milk at Stanley's general store. The islanders are angrier with Argentina than at any point since the war. The perceived Kirchner 'aggression' was what prompted them to hold a referendum last month in which 99.8 per cent of the voting population, or 1,513 individuals, said 'yes' to persisting with the Falklands status as an 'overseas territory' of Great Britain.

Talk to some of the older people on the island, though, and you will hear that there was a time, not long ago, when Britain was regarded as an enemy just as much as Argentina was. Worse, in a way, because they were seen as traitors.

Joan Spruce's family has been on the Falklands since 1849. Her husband, Terry, was born in Liverpool but has been living on the islands for 50 years. They are well off. She comes from the 'sheepocracy'; he, retired now, ran the Falklands Islands Company, a practical monopoly on the islands until very recently. Over tea and biscuits at their small home in Stanley (even the richer Falklanders all live in small homes) they recalled the dark times the islanders endured during the late Seventies. "The place was going down and down, there were no jobs, people were leaving and the worst of it all was the political uncertainty," Terry Spruce said. "The British, specifically the Foreign Office, were selling us out."

Margaret Thatcher, with supreme irony, had appointed one of her foreign affairs chiefs to strike a deal whereby sovereignty would be granted to Argentina over the Falklands, but then Britain would keep administering the islands for 99 years. The British and Argentine flags would fly side by side on the islands during this period. "We felt totally betrayed," said Joan Spruce, who recalled that the islanders would demonstrate against the British government with as much feeling as they have done recently, during the referendum, in favour of it.

"The British governor of the islands described us, the Falklanders, as 'rabble'," Terry Spruce said. "We were incensed." They had reason to be. A former British diplomat I spoke to confirmed to me recently that precisely such a deal was indeed in place. He told me that had the military junta not invaded, the Argentine flag would probably have been flying over the Falklands 20 years ago.

This is precisely why, as Terry Spruce recalled, the generals' decision to invade was so insane – and, after the war was over, so beneficial to the hitherto woebegone islanders. As Spruce put it, "The oddest thing happened. Just as things were all going the Argentines' way, they invaded. As a case of shooting yourself in the foot, it's unbeatable." The junta, led by General Leopoldo Galtieri, did not act so much out of cold political calculation as out of despair. As it is now understood, and was obvious at the time to all but those blinded by the theological certainty that 'the Malvinas are Argentina's', the generals had their backs against the wall. They had ruled through terror for six years but the Argentine population was finally losing its fear and rebelling.

The junta's days were numbered so they played the one card they knew would rally round a people fed almost from birth on Argentina's almost divine right to 'recover' sovereignty over the barren islands next door. But they did not bet on Mrs Thatcher sending in the troops, nor did they prepare their army, made up largely of raw recruits, for the task of taking on a highly professional military force.

Through corruption or inefficiency or both, the Argentine soldiers deployed in Stanley were not supplied with the most basic of requirements, food. Argentine soldiers would go from home to home in Stanley begging for something to eat. Joan and Terry Spruce recalled that they would argue as to whether to share their own spare rations with the occupying soldiers. "Joan felt sorry for them," Terry Spruce said. "I remembered we were at war."

Sorrow is the only emotion one can feel on visiting the Argentine military cemetery in Darwin, a small settlement next to Goose Green, where Argentina lost the decisive battle of the war. A mini version of the First and Second World War cemeteries of northern France, rows upon rows of little white crosses mark the spot where the conscripts are buried, half of them their names unknown. 'Argentine soldier only known by God', reads the inscription on half the tombs.

A Chilean driver at the cemetery, who drives the relatives of those buried here to pay their respects, said that the abiding sense among them was bitterness and a sense of waste. They died not as heroes but as martyrs to the generals' desperate and selfish cause. They, along with the 20,000 (some say as many as 30,000) Argentines who the junta tortured, killed and disappeared during 'the dirty war' for which they were so much better equipped. The difference being that at least the soldiers were not tortured, nor were their bodies thrown into the sea; the difference also being that their enemies, the British and the Falkland Islanders, still today come to the Argentine cemetery and leave floral wreaths alongside those of the Argentine relatives'.

The economic revolution on the Falklands sparked by the end of the war, which only lasted two and a half months, was followed 10 years later by a revolutionary change of attitude from Argentina. Bill Luxton, now a retired sheep farmer, was then one of the three members of the 'cabinet' that executes self-rule over the Falklands. Guido di Tella was the foreign minister of the Argentine government of president Carlos Menem. "Di Tella was a charmer," Luxton recalled. "An Anglophile, he set out to seduce us, to win with politics what his country had failed to do through force of arms."

The present foreign minister, Héctor Timerman, refused recently in London to meet with members of the Falklands government, but Luxton said he met with Di Tella four times. "He agreed to disagree with us on sovereignty. He put that to one side and focused on areas where we could do business together, such as trade and fishing and tourism." (John Barton, of the fisheries department, said that in the Nineties, Argentine and Falkland missions would work together on maritime scientific projects, but that today the very same people, his old friends, begged him not to write to them at their government email addresses for fear of reprisals.)

Unfailingly courteous and respectful towards the islanders in his public utterances, Di Tella would send children's videos, such as those of the Pingu series and Winnie the Pooh books, to Falklands families at Christmas.

Various other Falklanders consulted recalled that period, which lasted until 1999, with a mixture of confusion and gratitude. As Emma Brook said, and all others agreed, the Di Tella approach was "dangerous", as the climate he was creating could have led eventually to a political rapprochement ending one day in Argentine sovereignty.

That's all gone now since. Cristina Kirchner's predecessor as president, her husband Nestor, scrapped the deals struck in the Di Tella era, and the damaging measures and insulting rhetoric of the past two years, in particular, from Mrs Kirchner have shot all notion of trust between the islanders and Argentina "for at least one generation, probably two", according to Luxton.

The thrust now on the islands, despite the pro-British vote in the referendum, is for greater independence, less reliance on London. Everyone of some 20 Falklanders talked to said they would dearly love to be able to pay the British for the necessary cost of defending the island. One of the greatest boons of their possible oil wealth would be to come up with the ¤70m to be able to pay Britain for their military garrison.

And here's a clue as to the character of the Falkland Islanders. Self-reliance and independence are in their cultural DNA. Ros Cheek, the island's one lawyer, said that her family, which first arrived in the Falklands in the mid-19th century, was typical in that their lives had been in large measure a battle for survival against a hostile nature. "We have pioneer spirits and we inhabit a pioneer reality," she said. "We are not complainers. We don't have time for that. We have to work hard to get by. It is typical for Falklanders to hold down two or even three jobs."

If you spend time in Stanley you find this is disconcertingly true. A bank teller by day is a barman by night; a supermarket cashier in the morning is a taxi driver in the afternoon; a woman who one sees working as a receptionist at the secondary school one day turns up the next at the airport in uniform stamping passports. The other surprising thing is to discover how many Falklanders have travelled, or even lived, abroad. A small number are recluses, practically hermits, who live alone with their sheep in some of the remotest, most inhospitable places on earth. But Stanley, where almost everybody lives, is more cosmopolitan than one might at first assume.

Lisa Watson, the Penguin News editor, lived in Cyprus for three years, as well as England. Odette Bonner, who works at a small hotel, lived in Spain, on the Costa del Sol, for three and half years. She said she loved the sun and the plaza life but had to leave when the crisis struck in 2009 and her husband lost his job. Bill Chater works as a carpenter, mechanic and builder, among other things, and is never short of work, which allows him to travel far and wide every summer. He has lived for periods of more than a year in Australia, England, Italy and France and has travelled as far as Finland to take part in competitions for the Falklands' 'national' football team, for which he has played for 20 years. Yet the Falklands will always be his home.

"The pace of life is too fast elsewhere for day-to-day living," Chater said. "Here you can set your own pace, have more control of your life. And you don't have to succumb to the pressure of behaving according to a certain lifestyle, being obliged to think and look and dress in certain ways." He needs to get away every year, though, because to live on the Falklands, and particularly in Stanley, is to live in a goldfish bowl, where everybody knows everyone and what they are doing. It is also good to get away from the eternally rumbling conflict with Argentina. It makes Chater angry. "It is nonsense to say this place belongs to Argentina and they want it back," he says. "How can you take something back that you never had? Ridiculous!"

The geographical proximity of the Falklands to Argentina, and the vast distance from Britain, makes the claim less ridiculous. Though it is very hard to imagine that, on the day after a hypothetical shift of sovereignty to Argentina, floods of people will come to settle the islands from Buenos Aires, or even from Patagonia. Argentine journalists in Stanley for the referendum were unanimous that not one of their compatriots would want to make the move.

The weather is appalling; the choice and quality of goods in the shops (or, rather, in the one general store) is worse than in Burkina Faso, where at least the sun shines; the entertainment is limited to pubs where one sees exactly the same people night after night; communications with the rest of the world are limited, with even the internet connections being poor.

To live here it has to be home, where one's sense of roots is and where one's friends and family live, or for those few visitors who choose to stay, there has to be a craving for isolation, maybe for escape, and if possible a passion for bald, wide-open spaces, for penguins and birds. Argentina says the Falklands are Argentine; Britain says they are British. But the truth is, really, that the Falklands are for the Falklanders.