t SUkUSAU U ' UI'l f LLIGi Nc E ANDR E SEA CH CqRRENT REPORTS April 7 1982 1o THE FALKLAND ISLANDS CRISIS A The British Political Battle _ C IJt --- -II The immediate objective for the Tory leadership is to establish i1 S authority by quickly filling the gaps left by the resignations minimizing the reshuffling of posts and whipping the backbenchers into line According to Embassy London however Tory moderates and the Foreign Office are concerned that Prime Minister Thatcher has'been listening largely to the Ministry of Defense especially senior naval officers and may not adequately be considering non-military options Meanwhile the opposition Labor Party has charged the government with incompetence demanded protection for the Falklanders and backed the dispatch of the fleet though without taking a position on the use of force Should force thus be used and fail Labor would be well positioned to call for Thatcher's resignation SECRET EXDIS B Britain Seeks Trade Sanctions In addition to appeals to the US and the Commonwealth Britain has asked the EC for a total ban on Argenttne imports the US Mission to the EC reports No decision will be reached before the end of next week because of 'the need to consult with governments Embassy London Comment The 'British remain skeptical about the efficacy of sanct onsJ but believe it necessary to try every reasonable gambit in order to enhance the prospects 'for a nonmilitary outcome In any case the British are convinced as the US was during the Iranian hostage crisis that joint action by all their allies is the only effective way to bring the point home to their adversary They therefore regard the US as a touchstone o fa J lied support Although they might accept a US decision to -refrain from joint action in order to act as a mediator such a decision would complicate the outlook for British cooperation on us initiatives in other areas 'such as Poland the USSR and Cuba CONFIDENTIAL EXDIS' C Galtieri's Negotiating Room 'Second thoughts are surfacing among Argentine oliticiansabout e wisdom of 'President Galtieri's adventure as it becomes clear that 'the cheap victory so confidently -expected 'may -still elude them mbassy Buenos Aires reports 'Though sovereignty over the Falklands has been an Argentine goal for generations 'the people dQ'not want a war Nevertheless a frenzied nationalism is likely to eclipse the doubts as the British fleet moves closer ' Embassy Comment British ressure has made the Argentines 'more disposed to negotiate than 'they were four days ago Asthe British fleet approaches the fear of appearing cowardly could ' make the Argentine's position intractabl l o ssion on the rig ts' and rivileges of the Falklanders t' h e agreement to w1thdraw 1n return for renewed negotiaxon n t e transfer of sovereignty would be unlikel th conce1va le he Argentines would 'be unlikely to ac Pt hu t1ll e me1 T X s1articiPatein the British sanctions against