President Reagan yesterday lifted the economic sanctions he imposed on Argentina in response to its invasion of the Falkland Islands in an effort, he said, to repair relations damaged during the war and "put the past behind us."
Reagan, however, continued the ban on arms exports to Argentina that was also imposed when the United States decided to support Great Britain in the Falklands crisis after former secretary of state Alexander M. Haig Jr.'s shuttle diplomacy to mediate the dispute had failed.
The major impact of the economic sanctions was political and symbolic. Administration officials indicated that lifting them, in turn, was a signal to the new Argentine government and other Latin American countries of the United States' determination to begin patching up relations that were frayed during the war.
European countries that had also imposed military and economic sanctions against Argentina also announced they are lifting economic sanctions, but not the restrictions on military sales, as Reagan did.
A White House spokesman said Reagan decided to lift sanctions yesterday morning after discussing the matter last week.
"I have made this decision after a thorough review of the situation in the South Atlantic following the cessation of hostilities," Reagan said in a one-paragraph statement. "It is important now for all parties involved in the recent conflict to put the past behind us, and to work for friendship and cooperation. The United States, for its part, will do all it can to strengthen its historic ties among nations of this hemisphere."
The new Argentine government had pressed to have the sanctions lifted, arguing that failure to do so quickly would fuel anti-American sentiment in Argentina and give a boost to left-wing political forces there.
The Argentines had also sought American support in getting negotiations started with the British on the question of sovereignty for the Falklands, a request Reagan did not act on.
"Our position is we don't take any position on sovereignty," an administration official said.
The official said the administration was concerned about the resurgence of the Peronista left in Argentina and had acted to remove economic sanctions now because of the feeling here that some of the anti-American attitudes were lessening as the Argentines debated the question of who was to blame for the failure of the Falklands invasion.
"If you have any influence at all," said the U.S. official, "it's going to be better exerted sooner rather than later."
The administration, however, withheld a decision on whether military sanctions should be lifted. One consideration, an administration official said, was that the United States did not want to be providing military aid so soon after a war that cost the lives in one of our closest allies.
The United States, he added, intends to wait for a suitable cooling-off period and to see what kind of government emerges from the efforts of Reynaldo Bignone to restore unified military rule following the collapse of the junta.
The economic sanctions included withholding of new Export-Import Bank credits, insurance and guarantees and new Commodity Credit Corp. guarantees. Only one contract, worth $2 million in softwood lumber, was held up because of the ban on Commodity Credit guarantees.
The sale of arms to Argentina had been forbidden by amendments in 1978 to the Foreign Assistance Act, halting new arms deliveries. However, sales that had been approved before then continued to flow to Argentina until the full Reagan ban on April 30.
Meanwhile, Agriculture Secretary John R. Block yesterday urged Reagan to lift the freeze on negotiations with the Soviet Union for a new grain agreement and allow American farmers to sell as much grain as the Soviets can buy.
"The granary door is open if they want to pay cash on the barrelhead," Block told reporters after he left a White House meeting with Reagan.
Reagan is not commited to any course of action on a new agreement since suspending negotiations in retaliation for the military crackdown in Poland. The current five-year grain agreement which provides limits on the amount of grain that U.S. farmers can sell the Soviets was extended one year and expires Sept. 30.