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Whatever the outcome of the Falklands crisis, the dispute has already cost both nations dearly. The price to Argentina of its invasion of the Falklands is estimated at some $500 million to $600 million. That is close to the levels of the country's entire liquid foreign currency reserves, which have plummeted from $6.5 billion a year ago. In Britain, the price of the naval expedition is of course unknown. Indeed, Defense Secretary Nott told a cheering House of Commons that money did not matter. But the House was also warned by a senior Treasury official that the bills might well have to be paid by higher taxes and deeper cuts in the country's already austere public spending budget. One consequence: the London Stock Exchange was hit by near panic selling as the fleet set sail; the market lost $4.4 billion in a single day.
Such waste, and the danger of war, makes clear that the only logical resolution of the Falklands crisis is a negotiated settlement. One possible outcome for the islands is an agreement similar to that between the Chinese and the British that is known as the "Hong Kong solution." China claims sovereignty over the adjacent British colony of Hong Kong. The British no longer argue that point, but continue to administer the territory as though it were their own. The leases with the Chinese that are the basis of Britain's jurisdiction in Hong Kong expire on June 27, 1997. Whether or not the area will then revert completely to the Chinese depends upon negotiations that the British hope will start this year. Under these hazy conditions, life goes on, much as before.
If the Argentine troops leave the Falklands, the British have quietly and privately indicated that they would be willing to begin negotiations that would grant sovereignty over the islands to Argentina some time in the future. If London were allowed to administer the territory for a number of years, nothing would change in the lives of the inhabitants of the islands until Argentina could claim sovereignty, and even then the agreement might allow Britain to keep on running the area. But Prime Minister Thatcher this week also reaffirmed publicly that any Falklands settlement would have to be "acceptable to the islanders, the British Parliament and British people."
In 1981, the British and the Argentines came close to working out a Hong Kong-type solution for the Falklands, but the proposal was vetoed by the Falkland Islanders, who held Britain to its promise that it would respect their right of self-determination. Even if the British were able to come to a new agreement with Argentina, they probably would still face the problem of persuading a group of their countrymen to accept the fact that some day they—or their children, or their grandchildren—would be living in a corner of a distant land that was no longer Britain. But such discussions lie in the future. The immediate question is more direct: What will keep Great Britain and Argentina from going to war? —By George Russell. Reported by Bonnie Angela and Frank Melville/London and Gavin Scott/Buenos Aires