Argentine officials said today that they remained hopeful that a U.S. effort to defuse the confrontation with Britain over the Falkland Islands would continue despite what appeared to be a standoff between Britain and Argentina on several key negotiating issues.
Knowledgeable Argentine sources said the government had rejected a formula for resolving the crisis because it involved British participation in a temporary administration for the islands.
Argentina has been willing to agree to a multinational administration for the disputed archipelago while negotiations were initiated, the sources said, but it has rejected British participation in the body while insisting on an Argentine representative.
With U.S. Secretary of State Alexander M. Haig Jr.'s shuttle diplomacy in the dispute temporarily sidetracked as he returned to Washington, Argentina launched a new diplomatic initiative by telling the U.N. Security Council that it would withdraw its troops from the islands when Britain recalled the naval fleet headed for the South Atlantic and stopped trying to "sanction a return to the previous colonial situation" on the territory. The Argentine letter to the Security Council, released here by the Foreign Ministry, represented Argentina's first formal response to a U.N. resolution passed April 3 calling for a withdrawal of Argentine troops as a prelude to a negotiated settlement.
Argentina, which calls the islands 300 miles off its coast the Malvinas, maintains that Britain has occupied them unjustly for 149 years and made no serious effort to negotiate Argentina's claim of sovereignty during 15 years of fruitless talks.
The Argentine letter to the Security Council said that "the Argentine government believed in a negotiated diplomatic solution and to that effect promises its strongest effort."
Argentina, it said, "is always prepared" to comply with the resolution by withdrawing its estimated 6,000 to 8,000 troops, "when the United Kingdom fully respects that which is laid out in the resolution" for suspension of hostilities, "and does not try to use the resolution as a tool to sanction a return to the previous colonial situation."
With a threat by Britain to sink Argentine naval ships within 200 miles of the Falklands in effect for the second day, there were no indications here that the Argentine military intended to test the blockade.
The Navy chief and junta member, Adm. Jorge Anaya, who visited the base for much of the Argentine fleet last night at Puerto Belgrano, said Argentine authorities had not recorded "any act susceptible to being encompassed by that operation," a reference to the blockade. A naval communique said that the Argentine ships were "in the docks" and awaiting orders. A communique issued yesterday said the fleet is ready to head out "when the command is given."
The Bolivian Air Force minister, Gen. Natalio Morales, announced in La Paz Tuesday that Bolivia is ready to send its planes into action against Britain in support of Argentina's claim to the Falklands, United Press International reported.
There was no immediate reaction here this evening to a vote by the Organization of American States to offer its services in the resolution of the conflict, although commentators here quickly hailed the organization's rejection of a motion similar to the previous U.N. Security Council resolution.
As the threat of war and an economic boycott of Argentina continued to take its toll on an already stricken economy here, however, officials announced early this morning that they had suspended Argentine imports from the European Community nations in retaliation for similar measures taken against Argentina Sunday.
Long lines formed in front of banks in Buenos Aires today as nervous depositors withdrew about $2.5 million in savings in reaction to the worsening diplomatic and economic situation.
Interest rates, pushed by the flight of capital, have soared to around 200 percent for short-term, private loans here in the past week, according to reports, and the Central Bank has suspended most foreign payments while attempting to ease the economic crunch with special subsidized interest rates.
The stall in Haig's efforts to arrange a temporary accord between Argentina and Britain came after marathon talks both here and in London and at least one phone call made yesterday by Haig to Foreign Minister Nicanor Costa Mendez.
Haig left Buenos Aires for London early Sunday with what were believed to be several possible scenarios for an agreement, and attention apparently narrowed yesterday to a plan calling for a withdrawal of Argentine troops and a lifting of the British blockade and recall of the fleet, combined with a multinational administration to govern the islands while negotiations over its future proceeded.
Argentine sources, informed about the talks, said officials here had indicated their willingness to agree--while Haig was here--to a formula calling for a multinational council, possibly including representatives of Argentina and as many as four other countries, with Britain and Argentina naming two members each.
Argentina, under this formula, was expected to nominate Venezuela and Peru to the body, the sources said, while Britain's choices were expected to be the United States and Canada. Argentine officials also insisted that the Argentine flag remain on the islands during the interim period, and that negotiations be limited to a fixed period ending before the end of this year, the sources said.
The key difference came when Britain, while not rejecting the multinational administration, insisted that it be represented in the group. Argentina rejected this, as well as a suggestion that membership be limited to the United States, Argentina and Britain, according to the account provided by Argentine sources.
The government here is considered to be unyielding in its position that the islands have always belonged to Argentina, that Argentina's dominion over them--at least in name--cannot be negotiated.