Falklands in the South Atlantic comprise a British Overseas Territory. Argentina tried to seize the islands in 1982 but was repulsed by Britain. The 74-day war led to more than 1,000 deaths of fighters and civilians and a formal Argentine surrender.
Argentina revived its sovereignty claim when the Falklands government and British-backed oil firms resumed drilling for oil in 2009 on the strength of seismic reports that promised an oil bonanza.
Results of exploratory undersea drilling have been mixed but Argentina now claims support of Latin American neighbors who see Britain as a colonial power holding on to territory seized in the days of empire. Argentina campaigned for and won diplomatic support for its position at the Union of South American States.
Britain says the Falklands' sovereignty isn't negotiable. Meanwhile, Argentina is finding new ways to squeeze the islanders' economy. Last year it began blacklisting shippers that traded with the Falklands.
Officials said the islanders' plans to expand container shipping and promote their produce of fish, meat and wool in wider markets could be jeopardized because of difficulties with maintaining a shipping service between the Falklands and South American mainland ports in Chile and Brazil.
Clients of the South American Atlantic Service were told a container service between Falklands and South America was at risk. SAAS Director Hamish Wylie said the company's shipping partners had come under pressure to terminate the arrangements. Many of the partner firms also operate in Argentina.
He told Penguin News the pressure was exerted through the introduction of exorbitant fees and other restrictive measures "to ensure the Falkland Islands fishing industry cannot develop any further."
Wylie said the container shipping service to South America would end in June because of the prohibitive costs, MercoPress reported.
Stuart Wallace of Fortuna, one of the companies that planned increasing the volume of trade from the Falklands, said the planned suspension of service was a "very serious development for the whole of the Falklands economy."
Economists and islanders say the South American link is essential for the Falklands' future economic development.
Argentina is pursuing its plan to curtail shipping between the Falkland Islands and Latin America and recently issued presidential decree 256/10, which requires vessels bound for the Falklands to seek permission from the Argentine government.
Recent attempts to circumvent the Argentine curbs led SAAS charter vessel Anja to sail around Cape Horn in order to reach Stanley from South America. The shippers feared their vessel might be detained by Argentina.
Original SAAS service between Stanley, Montevideo in Uruguay and Punta Arenas in southern Chile has already run into difficulties because of Argentine pressures.