The longstanding dispute over the sovereignty of the Falkland Islands in the South Atlantic between Britain and Argentina is once again in the news; this time as a result of an open letter to David Cameron from Argentina's president Cristina Fernandez de Kirchner, published in the Guardian. In her letter, the Argentinian president accuses Britain of having taken possession of the islands - known in Argentina as Las Malvinas - in a "blatant exercise of 19th century colonialism."

Any objective rendering of the history of the Falklands reveals that she is right.

Located 300 miles from Argentina and over 8,000 miles from Britain, the Falkland Islands have long been the subject of territorial dispute. At the beginning of the 19th-century Spain held sovereignty over the islands, occupying them for 40 years up until 1811, after which its former colony of Argentina asserted sovereignty. The islands came under British control in 1833, when seized by force, and have remained a British territory ever since.

Britain's act of colonialism over its seizure of the islands has been admitted to in private by various British officials over time. For example, John Troutbeck, then head of the FCO's American department, outlined the problem surrounding Britain's control of the Falklands in a memo in 1936. He wrote that "our seizure of the Falkland Islands in 1833 was so arbitrary a procedure as judged by the ideology of the present day. It is therefore not easy to explain our possession without showing ourselves up as international bandits."

In 1982 the war against the then Argentinian government's attempt to seize back the islands by force cost the lives of 258 British and over 600 Argentinian servicemen. It proved a turning point in the fortunes of the nascent and up to then deeply unpopular Tory government led by Margaret Thatcher. Jingoism swept the country, allowing Thatcher to press ahead with the structural adjustment of the UK economy, which in the process devastated working class communities and delivered a resounding defeat to the trade union movement over the course of a series of hard fought strikes and industrial disputes throughout the early and mid 1980s.

Yet what we know now, thanks to recently released government papers, is that Thatcher's projection of steely determination when it came to asserting Britain's right to the islands by force in truth belied a willingness to seek a diplomatic solution with the Argentinians prior to their military assault.

The argument against British sovereignty of the Falklands was harder to make in 1982. Back then Argentina was governed by a brutal military junta which had ruthlessly suppressed any and all dissent to its authority at home. Three decades on, however, the situation is markedly different. Argentina is now a centre-left democracy, one of a series of progressive governments that have swept the region over the past decade or so, and is pursuing its claim via diplomatic means. Moreover, her claim is supported by its neighbours and fellow members of Mercosur, the trading bloc of South American states.

Regardless, the current British government refuses to negotiate, citing the democratic rights of the 3,000 British citizens who currently inhabit them. It should be noted here that according to a census carried out on the Falkland Islands in 2006 only a third of its residents were born there. It should also be noted that the same rights were not granted to the inhabitants of another distant British colony, the islands of Diego Garcia in the Indian Ocean. The islanders in question, Chagossians, were forcibly repatriated to Mauritius, a thousand miles away from their home, to make way for a US airbase in the mid 1960s. Subsequently, the islanders and their dependants fought and won a historic High Court judgement in 2000, declaring their expulsion illegal.

However, in response the then Blair government promptly rejected any possibility of them being allowed to return to the island, citing Britain's treaty with the US which had handed the islands over for use as a military airbase. That the former inhabitants of Diego Garcia happen to have dark skin while the 3,000 residents of the Falkland Islands are white, English speaking colonists, is of course completely irrelevant.

The truth is that when it comes to the Falklands self determination is being used as a smokescreen. The real issue is the sizeable oil and gas deposits located in waters close to the islands, where drilling began by British oil companies in 2011. In 1995 both countries signed a joint declaration to cooperate on off shore oil explorations in the South Atlantic. In 2007 Argentina voided the declaration because Britain refused to view it as a step towards meaningful negotiations over sovereignty.

Any British government must be aware that it risks precipitating a South American trade embargo if it continues with an obdurate and intransigent stance of refusing to budge from the status quo. This is a region which has emerged from centuries of European and North American domination and is determined to assert its rights accordingly. Seen in this light the ability of 3000 people living on a tiny group of islands in the South Atlantic to dictate the foreign policy of a nation of 60 million over 8000 miles away, up to and including war, is surely absurd.

The Falkland Islands constitute one of the last remnants of British colonialism, part of a history of economic piracy stained with the blood of millions who suffered as a consequence. The sooner this history is brought to a close the better.

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