TERRITORY : Argentina Angles to Take Back Disputed Falklands

TIMES STAFF WRITER

Ten years after their bloody conflict over the Falkland Islands, Argentina and Britain are engaged in a painstaking dialogue that Argentines hope will lead eventually to their recovery of the disputed territory.

The two countries cannot avoid a lingering aftertaste of bitterness as they mark the war's 10th anniversary. But both governments seem eager to smooth out rough spots as they negotiate patiently on new measures of accommodation and cooperation.

BACKGROUND: Argentina has never given up its claim to the South Atlantic islands--which it calls the Malvinas--since Britain seized them in 1833. On April 2, 1982, the military government then ruling Argentina invaded the islands, which lie 300 miles from Argentina and 8,000 miles from Britain.

Britain counterattacked with a naval task force, and fighting left more than 900 dead before final British victory on June 14. Democracy returned to Argentina in 1983. London and Buenos Aires resumed full diplomatic ties in 1990.

Still, Britain has steadfastly refused to discuss the issue of sovereignty over the islands. London rejects any proposal opposed by representatives of the 2,000 islanders, who still show symptoms of allergy to all things Argentine. The local island government, for example, wants no transportation links with Argentina, so none are planned.

KEY ISSUES: Commercial flights are expected to begin soon between the islands and Uruguay, just across the River Plate from Buenos Aires.

Argentine officials see that as progress toward re-establishing a link with the island, because it will be easy for islanders landing in Montevideo to pop over to Buenos Aires for shopping or visits with Anglo-Argentine relatives.

Meanwhile, trade between Britain and Argentina has been increasing steadily. And British investors have bought major shares of privatized state enterprises here.

Since last year, the two governments have been cooperating on the conservation of fisheries around the Falklands. A joint commission on petroleum exploration, a key issue in the mending relationship, held its first meeting in February and is to meet again in June.

Both countries hope to reach some kind of agreement that will permit seismic tests for oil-bearing formations in the disputed undersea territory. Exploration firms are unlikely to accept the work without a clear understanding for dividing oil rights.

But inventing a formula that gets around the sovereignty dispute won't be easy.

OUTLOOK: Argentina hopes that by showing a reasonable attitude on economic issues, it will begin to persuade the British and Falklanders that this country can be a reliable and trusted friend.

At the same time, Argentine authorities predict that their nation's recent successes in strengthening democratic institutions and putting the national economy in order will further contribute to a climate of confidence.

Then could come economic integration between Argentina and the Falklands, the Argentines suggest, and then perhaps talks on sovereignty.

"The moment will come when it will be natural for us to talk about that subject," an Argentine official said.

President Carlos Menem was more emphatic in remarks made on the 10th anniversary of the 1982 invasion: "Sooner or later, maybe before the year 2000, we will recover the Malvinas Islands without shedding a drop of blood."

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