Menem hopes for a meeting with Major

John Major may meet the Argentine President, Carlos Menem, at the United Nations next month in the first encounter between the leaders of Britain and Argentina since the Falklands war of 1982.

But the rapprochement between the two countries could yet fall foul of their mutual sensitivities over the disputed South Atlantic islands.

Mr Menem yesterday predicted the meeting after Britain and Argentina agreed to sign a joint agreement regulating oil exploration around the Falkland Islands. But the Foreign Office said there were "no fixed plans" for talks between the two men, indicating that the Prime Minister might not want to meet Mr Menem if Argentina sought to make political capital out of the deal.

British officials were quick to deny suggestions in Argentina that the oil agreement represented a compromise regarding British sovereignty over the islands. "There is no question of any `surrender' of sovereignty," the Foreign Office said.

Mr Menem, however, told radio listeners in Argentina that the agreement "constituted the first real legal step in the continuing struggle to recover sovereignty." He said it was "the best achievement in 163 years since our islands were usurped in 1833".

Sir Nicholas Bonsor, a Foreign Office minister, responded by saying: "I'm afraid the Argentinian President is speaking to his own electorate here." But the Labour MP Tam Dalyell said: "Anyone who thinks that Argentine aspirations for the Falkland Islands ended in 1982 is living in Cloud- cuckoo-land." Mr Dalyell, a critic of the Falklands campaign, added: "It just shows what some of us were trying to show all along - that Margaret Thatcher's war was absolutely useless, for all of South America agrees with Argentina on this."

Britain's assent to a joint declaration on oil exploration was conveyed to Argentina by Sir Peter Hall, the British ambassador in Buenos Aires. Sir Peter, known locally as "el duro" for his blunt style, is not the sort of diplomat to leave his interlocutors in a genteel haze of misapprehension.

No details have been released by Britain, but the agreement is understood to contain a binding clause excluding any question of sovereignty. It will be signed in New York next Wednesday by the Foreign Secretary, Malcolm Rifkind, and his counterpart from Argentina, Guido di Tella.

The deal opens the way to a possible oil bonanza for the islanders. It also offers rewards to Argentina - according to President Menem, his country will gain 50 per cent of revenues achieved west of the Falklands and 33 per cent of revenues east of the islands.

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