Historically, there has been a level of friction between Argentina and Chile. In sharing one of the longest borders in the world, the countries had countless border disputes, primarily concerning Patagonia through the 1800's and early 1900's. During the Baltimore Crisis, the United States and Chile almost went to war. Argentina even offered its ports for the United States to use in exchange for minor Chilean territory in the event that a war took place and the U.S. won. This did not sit well with Chile.

In the 60's, there was a large dispute over islands in the Beagle Channel nearly leading both countries to armed conflict, until the Pope intervened urging peace. Both countries subsequently withdrew a large majority of their forces from an already tense border and war was avoided.

Fast forward to the conflict in the Falkands, Chile is still weary of Argentina's position in the wake of the Beagle Channel Crisis. In turn it considers/believes that if Argentina is willing to take head in obtaining the Falkands through the use of force, what is stopping them from doing the same in the Beagle Channel? Therefore Chile chooses to be neutral in the conflict, overall primarily due to border tensions between the two nations and the Beagle conflict still being so recent. At the time, Chile was the only Latin American country to have serious territorial disputes with Argentina leading directly up to the Falkands War. And in so being, they were reluctant to give Argentina their support.