Turning aside advice to the contrary from the Reagan administration and her own Foreign Office, Prime Minister Margaret Thatcher appears determined to turn the Falkland Islands into a British-defended fortress if they are recaptured from Argentina.
After already having spent about $2 billion, by rough government estimate, in the war to regain the islands, Thatcher is considering long-term defensive measures that could cost $500 million a year unless Britain diverts significant military resources from its contribution to the NATO alliance.
Although she has insisted that she still hopes eventually to persuade the United States and some Latin American countries to join in a multinational security arrangement for the Falklands, Thatcher has made clear her intention that otherwise Britain will go it alone. She emphatically has ruled out of her plans negotiations giving Argentina any say in the islands' future.
In a letter yesterday to opposition Labor Party leader Michael Foot, Thatcher said Britain would not demand an "unconditional surrender" and Argentine forces would be allowed to "withdraw . . . with dignity and in good order" if they lay down their arms. She added, however, that mounting British losses made it "unthinkable" to negotiate without an Argentine withdrawal, because "that would be a betrayal of those whom we have called upon to make such great sacrifices."
British diplomats have cautioned that numerous options are still being considered here for the Falklands after the war ends and that no decisions have been made. But Thatcher has raced ahead of her government in recent public statements and interviews in an apparent attempt to ensure that her unyielding vision becomes reality.
She has talked about guarding the islands with warships and submarines, antiaircraft missile systems, and jet fighters and bombers, using an extended runway at Stanley Airport.
"It will mean that we will have to make a number of considerable expenditures," Thatcher said earlier this week in an American television interview. "Freedom is expensive to defend. It is worth defending."
Military analysts here said this would mean leaving a British garrison of 3,000 or more troops on the Falklands, protected by Phantom fighter-bombers, Rapier antiaircraft missiles, Nimrod early-warning radar planes, transport aircraft, combat and transport helicopters, several warships and one or two nuclear-powered, hunter-killer submarines. They estimated that this would cost at least $200 million a year above the normal cost of maintaining these resources elsewhere in the British military.
But this would mean removing those troops, planes, ships and armaments from NATO defense roles in the North Atlantic, mainland Britain and possibly West Germany. To replace them instead would increase the annual bill to about $500 million, the analysts estimated. More money also would have to be spent on necessary capital expenditures, such as lengthening the Stanley Airport runway for Phantoms and other large planes.
British government sources estimated that it already has cost nearly $1 billion for the fuel, ammunition, ship requisitions and other expenses of fighting the Falklands war above the amount that would have been spent anyway to pay the troops involved and maintain their equipment.
The ships, planes and other equipment that have been lost in the fighting so far add at least another $1 billion to the bill, according to these sources. This brings the total to about $2 billion before the start of the battle for Stanley this weekend.
British officials have insisted that the running costs of the war can still be absorbed by a large contingency fund in the government budget. If more money is needed, they have said, taxes would be raised to avoid damaging Thatcher's efforts to hold down budget deficits and government borrowing. It already appears that the war may prevent the government from making intended income tax cuts next year.
The cost of replacing lost ships, planes and equipment will force a reassessment of Britain's long-term defense spending plans. This year's defense spending white paper already has been withheld for revisions because of the Falklands war, and many analysts here believe many of its basic assumptions--shrinking British armed forces, phasing out many Royal Navy surface ships and modernizing Britain's independent nuclear deterrent with the expensive submarine-launched Trident missile system--will have to be reexamined before a revised white paper is issued.
Thatcher also has indicated that she is willing to spend sizable sums of money developing the Falklands' economy and attracting new settlers there before offering the islands' inhabitants some form of British-protected self-government. She has asked for an update of a 1976 government report that advocated spending about $15 million on a pilot program for developing commercial fishing around the islands and rejuvenating wool and mutton exploitation.
Lack of cooperation from Argentina probably would rule out exploration of potentially lucrative oil reserves believed to lie underwater off the Falklands, according to the report's author, Lord Shackleton.