THE BRITISH and the Argentines are jostling themselves toward the edge of a cliff. Today may be their last chance to move back. The conflict they are heading for is bound to be exceedingly costly, in ways perhaps not even imagined today. Worse, it is unnecessary. A formula for settlement is available. The United States is doing what it can to put this formula forward, but it cannot save the two contestants from themselves.

The prime American political and moral requirement is, indisputably, to stand with the British against undemocratic Argentina's aggression. But there is more to be said. The British in the first instance did not ask Washington to enlist at their side. They asked Washington to use diplomacy to get them out of the pickle they had gotten themselves in by asserting a sovereignty claim they could not defend, and then by ignoring the plain signs that Argentina intended to move.

Britain, then, deserves warm American support. But Mrs. Thatcher should make the adjustment necessary to give American diplomacy a fair chance. That means easing up somewhat in her demand that the 1,800 islanders maintain an effective veto over sovereignty discussions. The British owe much to the islanders, but not a lock on their policy in the name of "self-determination." Democratic countries have respectable ways of caring for nationals whose personal interests must yield to high policy. So Israel cared for the settlers in the Sinai, the United States for the Zonians in the Panama Canal.

Argentina, which got into its own trap by grabbing the islands on April 2, has an even more basic requirement. It must yield on its grotesque demand that sovereignty be granted even before negotiations begin. The principle that territory cannot be acquired by force must be affirmed. The Argentines are entitled to expect that their claim will be submitted to a prompt and impartial process, but no more. If they have a quarter of the confidence in their claim that they say they have, they can have no substantive objection to submitting it to proper adjudication. Everyone can see the British are eager to unload the islands, if fair treatment for the residents is provided.

There is no irreconcilable issue. There are only two governments stuck on the requirements of pride. A deepening war will signify political failure on both sides.