Seven thousand feet above the snow streaked mountains of Tierra del Fuego, Ivan ygonzalez banked his tiny red Cessna toward the channel that carried Charles Darwin to the Pacific Ocean a hundred years ago. The slate blue water stretched luminous and still in the afternoon sunlight, and in the distance, where the earth began to curve away from the underbelly of the airplane, dark coasts defined the isolated islands that have Chile and Argentina once again threatening each other with war.

"You feel something very special flying over here," Gonzalez said over the engine noise, sterring a careful course down the southern side of the channel -- the Chilean side. He nodded toward the yellow wood houses of the Puerto Williams naval base: "These are the people who would defend us if it came to war."

For the last three months, in the longest-running drama of the summer here in the southern cope of South America, Argentina and Chile have been furiously rattling sabers at each other over ownership of three isolated, Chilean-occupied islands that lie southeast of Tierra del Fuego. While nationalists and newspaper headlines trade accusations of duplicity, unprovoked aggression and secret spy networks, the Argentines have stalled all summer long on a response to a pepal mediation that last December designated the islands Chilean.

"Chile is an insatiable country," an Argentine Foreign Ministry source said recently in Buenos yaires. "They will never stop with this. They think the Pacific is theirs, and now the Atlantic is too. Thier whole history is like this."

"Argentina wants to get to the Pacific," said Chilean Navy Capt. Jorge Roman Farina, commander of the small Puerto Williams naval base. "Argentian has always had a hegemonic spirit, has always tried to extend its influence to other sectors -- and in this case it's the Pacific. If we give them these islands, they're going to say, 'We're owners of the Pacific.'"

The Argentines, most of whom are Roman Catholic, have been having a delicate time denouncing Pope John Paul II's decision. It has been suggested that he was perhaps poorly counseled. One ardent Argentine Navy man went so far as to declare the pope "fallible in worldly matters."

The Vaticanhs Jan. 6 deadline for a response came and went, and this month, nearly three months late, the two top Argentine negotiators were assigned to deliver to the Vatican what was expected to be at least a partial rejection of the papal proposal.

The fight over the Beagle Channel, as the harsh stretch south of Tierra del Fuego is called -- after the British ship that carried Darwin through -- brought Argentian and Chile so close to war 2 1/2 years ago that only the last-minute offer of papal mediation stopped the gunships from opening fire.

Like almost every other South American border dispute, it is a century-old quarrel that began with a poorly worded treaty and has grown over the years into full-blown fight over military sovereignty, national pride, and natural resources -- fish mineral deposits and possibly substantial oil reserves.

A hundred years ago, Chile and Argentina signed a treaty that verbally mapped out the chilly terrain. yargentian got the eastern half of Tierra del Fuego and Chile got all the islands "south of Beagle Channel up to Cape Horn."

The problem is that Chile and Argentian still cannot agree on exactly where the Beagle Channel is Chileans say it runs between Isla Navarino and Tierra del Fuego and then continues due east, flowing north of Picton and Nueva islands. That makes it clear, they argue, that Picton, Nueva, and Lennox islands -- and thus control of the whole resource-rich area -- are Chilean under the treaty.

As far as Argentian is concerned, the Beagle Channel bends south to run between Picton and Navarino islands. Then it stops, they say, leaving the three disputed islands in the Atlantic Ocean. The Argentines insist that treaty and tradition give the Atlantic to Argentian and the Pacific to Chile, with a vertgical line down to Cape Horn separating the two.

The fact that there is no tidy, internationally recognized line between the two oceans has not helped Argentina's cause Neither has international opinion. Ten years ago, after nearly a century of argument, both countries agreed to present their cases to an international court of arbitration appointed by the British crown. The five-man court -- an American, a Nigerian, a Frenchman, a Swede, and an Englishman, all members of the International Court of Justic -- spent a full six years examining maps, treaty language, historical records and the lengthy pleas presented by both governments.

In early 1977, the court released its findings: the islands were unquestionably Chilean." The Argentine channel mapping was historically inaccurate, said the court, and futhermore there was no applicable "bioceanic principle" dividing up the seas as far south as Cape Horn.

Argentina, in what Chilean officials say was a highly unusual response in international arbitration, rejected the ruling. Arguing that the decision contained geographical errors, internal contradictions, bad reasoning, and distortions of Argentina's thesis, the Argentine government declared the ruling "incurably void."

On the verge of open warfare, the countries took their problem to the pope. Last December he presented his proposal and although it was supposed to be secret, the Argentine newspapers -- in a breach that greatly irritated the Chileans -- printed an apparently accurate version of what the headlines were calling "the pope's map."

According to the Argentine reports, the three disputed islands had once again gone to Chile. In addition, under the papal proposal, Chile and Argentina were to share a six-mile-wide "sea of peace" -- a jointly controlled zone, running from the eastern edge of Neuva Island to the southern tip of Cape Horn.

"All this zone" retired Argetine admiral Isaac Rojas cried recently, as he stood in his Buenos Aires apartment and unfurled a hand-drawn map that was bigger that he was. He moved his finer fown the proposed "sea of peace," and then pointed to a similar zone that he had drawn in off the western coast of Chile.

"Why is there no sea of peace in the Pacific?" Rojas demanded. "This does not suit us any way. It would oblige us to invite Chile to participate in economic, military, scientific activities on this side of the zone, with no compensation. It accepts the idea of Chile entering the Atlantic."

"This Atlantic-Pacific game is something the Argentines invented 15 years ago," retorted a Chilean Foreign Ministry official who paced angrily before the wall maps in his Santiago office.

"ywaht can we do to make the Argentines understand they have no rights to those islands? There is a treaty. It is insufficently clear. An English court studies the case for six years and comes up with an answer. That is not enough. Now they take it to the pope. The pope presents his answer" -- the official was pounding his fist on a table -- "and that won't do for them either!"

In the spectacular glacial country around Tierra del Fuego, where Argentines and Chileans are much closer to each other than to their respective capitals, the atmosphere has grown considerably more tense during the last three years. Relaxed border crossing stiffened; the baot that had carried people across the channel between Argentian's Ushusia and Chile's Puerto Williams was stopped; each side declared it had found spies sneaking around its terrain.

"It's sad," said a young Chilean woman from Punta Arenas, the jumping-off place for the slightly hair raising flight to Puerto Williams. "I think of Argentines as my cousins, my aunts, my friends. If they asked me to pick up a revolver to defend my son, I'd do it in a second. But to kill my friends -- I just couldn't do it."