Muted Menem still has 'Malvinas' in his sights

Argentina faces economic crisis and the Falklands have not left the political agenda. Phil Davison reports from Buenos Aires

It is no casual graffiti. "The big blue roadside sign stating that "the Malvinas are Argentinian" is as official as the adjacent traffic signs outside Buenos Aires international airport.

Thirteen years after the Falklands war, Argentina still wants the islands back. The re-elected President, Carlos Menem, says he is not prepared to fight for them but he is prepared to pay hard cash. His Foreign Minister, Guido Di Tella, this week reiterated an offer made last year by Mr Menem to buy the islanders' sovereignty with cash - reportedly between $500,000 (pounds 312,000) and $1m a head for every one of the 2,200 inhabitants.

After his re-election last weekend, Mr Menem repeated Argentina's claim to the islands, but only when pressed. British diplomats saw his post- election remarks as "less strident" than his previous references, in which he pledged to return the islands to Argentine sovereignty by 2000.

At a press conference, Mr Menem said: "We will pursue our claims through diplomatic and peaceful means in all international forums. The armed option is not an option. We're not in a position to do it and even if we were, we wouldn't do it."

Quite a turn-around from 1988, when Mr Menem, campaigning for the presidency for the first time, told Argentines: "I don't know how much blood we'll have to spill but our territory will once again return to the Argentinian people."

Less strident he may be, but someone close to Mr Menem said this week he is "privately very optimistic" about seeing the Argentine flag fly over Port Stanley before he ends his second term in 1999. Those friends refuse to spell it out but drop strong hints that he would be content, at least initially, to see it fly alongside the Union flag as part of a joint sovereignty deal that saved face on all sides.

British diplomats were relieved by the lack of bellicose Falklands rhetoric in Mr Menem's campaign. They had been concerned by his having formalised Argentina's claim to the islands for the first time last year as one of the changes he forced through in the country's constitution.

From Mr Menem's point of view, the changes were pragmatic. They gave him the right to run for a second term. When the Falklands clause was added, however, the Foreign Office and the islanders got jittery.

In the two-paragraph clause, Argentina re-stated its claim to the islands while undertaking to respect the islanders' culture and way of life. The message to the islanders: become Argentine and you can keep drinking pints and using red phone boxes.

Tracking progress in Falkland negotiations is a bit like Cold War Kremlin-watching but there are signs that both sides have far from given up on Mr Menem's suggestion of buying the islanders' agreement on Argentine sovereignty.

When Mr Menem floated the idea, it got the expected reception from the islanders. Publicly, at least, they were outraged. Talk in Stanley pubs, however, not surprisingly swerved from outrage to what you could do with $1m.

Argentina's Economy Minister, Domingo Cavallo, has expressed the hope that international bank loans might be forthcoming to pay the Falklanders off. All of that, however, was last year when Argentina, like Mexico, was basking in economic stability.

The Mexican bubble burst. Argentina has not reached the same stage but faces crippling foreign-debt repayments as a result of its dollar-peso parity. Few poor Argentinans would look kindly on handing out $1m each to British sheep farmers on the windswept islands.

British diplomats are concerned that a looming economic crisis in Argentina could threaten Mr Menem's hold on power. Everyone is quick to recall the fact that the 1982 invasion of the Falklands was largely a diversionary tactic, the last desperate attempt at survival by a soiled military regime.

Now, the Falklands conflict is almost a generation on. Embarrassment over the fiasco, interwoven with the fact that it coincided with the dying months of the military dictatorship, remains stronger than any feeling of nationalism over the islands' sovereignty.

The flame over the marble Buenos Aires monument to the Fallen of the Malvinas, a smaller version of the Washington memorial to its Vietnam dead, burns eternally. Unlike the US monument, however, you rarely see Argentines stroll close enough to read any of the 650 names inscribed.

"They used to ram it down our throats at school. 'The Malvinas are ours'," said Ernesto, a 40-year-old taxi-driver. "Maybe they are ours. Fine. Now, though, they're pushing it less in the schools, according to my kids. Let's face it, I've never met an Argentinian who's been to the Falklands. I personally wouldn't give this to defend the Malvinas," he said, pointing to the tip of his little finger.

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