I do not expect hostilities to break out just yet, but Argentina and England appear to be on course for a Falklands War part two. If Argentina does not back down I would expect to see some English Navel and air forces move into the area to bolster the few forces they have already. I would also expect a few nations to try to intervene diplomatically. At that point it will either spiral out of control or the Argentina's will back down as England is unlikely to give in on any substantive points. It is not something to be overly concerned about just yet, but definitely something worth keeping an eye on.
"Argentina has declared that it is taking control over all shipping between its coast and the Falklands, in effect awarding itself the power to blockade the disputed islands.
According to a decree issued by President Kirchner last night, all ships sailing through the waters claimed by Argentina must hold a permit. The measure seems likely to deepen a row over conflicting claims to oil beds lying inside the Falkland Islands’ territorial waters.
Argentina still claims sovereignty over the islands it calls “Las Malvinas” nearly three decades after the end of the Falklands conflict in which more than 1,000 people died. Tensions over the islands remained buried until the discovery of potentially rich energy reserves in the Falklands’ seabed. Argentina protested to Britain this month over plans to begin offshore drilling near the islands.
Yesterday’s decree amounts to an Argentine move to control all traffic from South America towards the islands, including an oil rig due to arrive today and start drilling next year."