Twenty-five years ago an army of young Argentine conscripts landed on the Falkland Islands, claiming the “Malvinas” as their country’s inalienable territory and unleashing a military conflict in the South Atlantic that was to have political and military repercussions far beyond the sparse, remote islands. The war defined Margaret Thatcher’s political leadership. It underlined the strategic value of Britain’s relationship with the United States. It brought to an ignominious end to the junta in Argentina and discredited, probably permanently, the concept of military rule throughout Latin America. And it utterly changed the Falklands — for the better.

Before the invasion, the islands were in slow but inexorable decline. The population was around 1,600 and falling. The islanders were poor, almost entirely dependent on wool exports, living largely on land owned by absentee landlords and largely neglected by Britain, which saw the Falklands as an embarrassing relic of colonialism that would be better transferred to Argentine sovereignty. Since the war, the population, economy, morale and prospects have soared.

There are now around 2,500 inhabitants, with a small but steady inflow of newcomers from around the world. The monopoly of the Falkland Islands Company has been broken, the large estates divided up and bought by residents and the economic prospects transformed by a well-run fisheries policy that is likely to bring in about £20 million this year in licensing fees. The islands’ security is guaranteed by a British garrison, their former isolation ended by civilian and military flights connecting with Europe and the South American mainland, and the future of the next generation underpinned by enviable health and education provision. Brief hopes of an oil bonanza may have made talk of a “new Kuwait” premature; but renewed drilling, after nine years, has revived hopes that an oil income may still make it possible for the Falklands to pay for the British garrison, a gesture that most people consider an appropriate show of gratitude for their liberation.

For the islanders, the most important change is the reassurance that their way of life and sovereignty will not be changed against their will. There will be no deal on their future with Buenos Aires above their heads. But the Argentinians still hold the key to the islands’ long-term future. Relations are, at present, reasonable but not much more. The war wounds healed slowly, and the long ban on visits by Argentinians has sustained an atmosphere of mutual suspicion. Argentina has repaired its relations with Britain, but has not disowned its claim to sovereignty. The issue is still a useful demagogic ploy by Argentine politicians needing to whip up popular support, and President Kirchner is not above invoking it. He has recently denounced the revenue-sharing agreement for oil found in the seas between the islands and the mainland — though since there is currently no exploration there, this is a symbolic gesture for domestic consumption.

There are issues, however, where better relations matter. Transport is one. The Falklands would like a second weekly air route to Chile, but Argentina has blocked this. More exchanges and an end to lingering hostility would bolster the islands’ confidence and prospects. For now, they are doing well. But the anniversary underlines the need to think about the next quarter-century.