GEOGRAPHY: The Falklands are 200 rocky and wind-swept islands in the South Atlantic, about 400 miles northeast of the southern tip of South America. Two main islands, East and West Falkland, make up the bulk of the 4,600-square-mile land mass. South Georgia, where the latest conflict began, is about 900 miles east of the main group. Port Stanley, on East Falkland, is the capital and largest town, with 1,100 residents.

ECONOMY: At present the territory's economy is based on about 600,000 sheep, whose wool is sold to Britain. Geological studies, however, have pointed to the existence of two oil deposits off the islands. Argentina has tried to encourage exploratory drilling off the islands' coast, but Britain has blocked the efforts. The area also has a large concentration of protein-rich sea animals known as krill and of alginate, a seaweed-based chemical used in food processing.

PEOPLE AND GOVERNMENT: Most of the Falklands' 1,900 residents are of British descent, speak English and follow British traditions. The territory is administered by a British governor who is also the high commissioner of the British Antarctic Territory.

HISTORY: The archipelago was discovered by a British explorer in 1592 and named after Viscount Falkland, the treasurer of the Royal Navy. British, French and Spaniards, mostly whalers, settled the islands and made various claims of sovereignty. Spain purchased the islands from France in 1767, and Britain claims sovereignty on the basis of a treaty signed in 1770.

Britain formally took control of the islands in 1833 and established a colony.

Argentina immediately contested the British claim of sovereignty, saying it had inherited the islands from Spain.

The issue was taken up by a hemispheric conference in Havana in 1940 and the United Nations in 1958, but no settlement was reached. In 1971, Britain and Argentina signed an agreement to settle the dispute that called for the gradual integration of the residents into Argentina. In 1973 negotiations broke down and relations became more tense. Argentina recalled its ambassador from London in 1976.

Talks resumed at the end of 1978, and full diplomatic ties were reestablished in November 1979.

The Falklands dispute is one of several longstanding territorial conflicts between Argentina and other countries, principally Chile, with whom Argentina contests a long border running along the Andes Mountains, and ownership of small islands in the southern Beagle Channel.

Despite the Falklands dispute, there remains a strong British influence in Argentina beginning in the late 18th century and reinforced early in this century, when British railway workers came to build the Argentine rail system. A large bilingual community, whose members are known as Anglo-Argentines, remains in Buenos Aires, and there are many vestiges of Anglo-Saxons in Argentina. A large number of Welsh immigrants also settled in Patagonia, the southern part of Argentina, where the names of cities and towns, as well as the language spoken by some of the inhabitants, are still Welsh.