UNCLASSIFIEDSECRETPAGE 01 LONDON 07892 01 OF 04 1010292ACTION NODS-00E10INFO OCT-00 ADS-00 /000 W------------------144141 101032Z /100 1010172 APR 82 ZFF-6FM AMEMBASSY LONDONTO AMEMBASSY BUENOS AIRES IMMEDIATE RELEASED IN FULLINFO SECSTATE WASHDC IMMEDIATE 8891S E C R E T SECTION 01 OF 04 LONDON 07892NOD I SDECAPTIONEDFOR GOLDBERG FROM STREATORUSDEL SECRETARYE.O. 12065: RDS-1 4/10/12 (STREATOR, E.J.) OR-MTAGS: UK, US, XFSUBJECT: MEMCON: SECRETARY'S MEETING WITH PRIMEMINISTER THATCHER APRIL 8: FALKLAND ISLANDSCRISISSECRET - ENTIRE TEXT. THE SECRETARY MET AT 6:00 P.M.APRIL 8 AT NO. 10 DOWNING STREET WITH PRIME MINISTERTHATCHER TO DISCUSS THE FALKLAND ISLANDS CRISIS. ALSOPRESENT WERE FOREIGN SECRETARY FRANCIS PYM, PRIVATESECRETARY JOHN COLES AND U.S. CHARGE EDWARD STREATOR.1. THE PRIME MINISTER WELCOMED THE SECRETARY ANDTHANKED HIM FOR THE APRIL 7 MESSAGE SHE HAD RECEIVED.2. SHE SAID THE U.K. HAD BEEN HAVING GOOD TALKS WITHARGENTINA AND WAS EXTREMELY SURPRISED BY THE ACTIONS OFTHAT GOVERNMENT. NO ONE HAD ANTICIPATED THEM. AFTER THESECRETARY SAID THAT THE U.S., TOO, WAS SURPRISED, THEPRIME MINISTER SAID CARRINGTON HAD BEEN IN ISRAEL ANDSECRETSECRETPAGE 02 LONDON 07892 01 OF 04 101029ZTHUS OUT OF TOUCH. THE ONLY HOPE OF STOPPING THEARGENTINES WAS THROUGH THE PRESIDENT'S GOOD OFFICES. SHEWAS MOST GRATEFUL FOR HIS ACTION. THE MOOD IN BRITAINWAS VERY DEEPLY FELT, SHE SAID, BECAUSE OUR SOVEREIGNUNITED STATES DEPARTMENT OF STATEREVIEW AUTHORITY: FRANK H PEREZDATE/CASE ID: 02 APR 2009 200703786 UNCLASSIFIED

TERRITORY WAS INVOLVED AND WE WERE UNABLE TO DEFEND IT.THE DISCUSSION IN PARLIAMENT WAS THE MOST DIFFICULT SHEUNCLASSIFIEDHAD SEEN IN 25 YEARS. A MAJORITY FELT BRITAIN HAD BEENHUMILIATED AND HAD BETRAYED THE PEOPLE OF THE FALKLANDS.THE DEBATE LEFT NO DOUBT ABOUT THE DEPTH OF FEELING INTHE COUNTRY. AS SHE INFORMED THE PRESIDENT, SHE HAD DIS-PATCHED SUBMARINES, PUT THE FLEET ON ALERT AND ANNOUNCEDIT WOULD SAIL. THE DEBATE YESTERDAY HAD BEEN SOMBRE, BUTTHE GOVERNMENT HAD FULL SUPPORT. MOREOVER, HOPE HAD BEENEXPRESSED THAT THE SITUATION COULD BE RESOLVED BY DIPLO-MATIC MEANS. THERE IS TOTAL DETERMINATION TO USE MILITARYSTRENGTH IF NEEDED. JOHN NOTT'S SPEECH HAD BEEN GOOD ANDHE HAD ANNOUNCED THE EXCLUSION ZONE AROUND THE FALKLANDS.BRITAIN HAD NOT PUT A FOOT WRONG IN INTERNATIONAL LAW.3. THE PRIME MINISTER CONTINUED THAT SHE HAD BEEN HEART-ENED BY THE SUPPORT FROM ELSEWHERE. MITTERAND HAD TELE-PHONED AND AGREED TO GET SUPPORT FROM TOGO AND ZAIRE.THE KING OF JORDAN HAD SUPPORTED BRITAIN IN THE UN ASWELL. SCHMIDT HAD CALLED TO EXPRESS HIS SUPPORT, AND HADSAID THAT UNPROVOKED AGGRESSION IF NOT TURNED BACK COULDLEAD TO PROBLEMS EVERYWHERE WHERE THERE ARE BORDER DIS-PUTES. UNLESS WE STOP THE ARGENTINES FROM SUCCEEDING,WE ARE ALL VULNERABLE. MULDOON AND FRASER ALSO HADEXPRESSED SUPPORT AND FRASER HAD CUT OFF ARGENTINE TRADE.4. THE PRIME MINISTER RECALLED THE LENGTHY NEGOTIATIONSWITH ARGENTINA THAT HAD BEEN HELD ON THE BASIS THAT NONEGOTIATIONS COULD TAKE PLACE UNLESS IT WAS WITH THESECRETSECRETPAGE 03 LONDON 07892 01 OF 04 1010292AGREEMENT OF THE ISLANDERS AND NO SCHEME WOULD BE PUT FOR-WARD THAT WAS UNACCEPTABLE TO THEM.5. THE PRIME MINISTER MADE CLEAR HER VIEW THAT IT WASIMPOSSIBLE TO BE NEUTRAL IN THE FACE OF UNPROVOKED AGGRES-SION. IN REVIEWING THE BIDDING, SHE SAID THE FLEET WASEN ROUTE, AN EXCLUSION ZONE HAS BEEN ESTABLISHED ANDBRITAIN HOPES FOR A DIPLOMATIC SOLUTION. HOWEVER, THERECOULD BE NO NEGOTIATIONS UNLESS ARGENTINA LEAVES THEISLANDS. UNPROVOKED AGGRESSION DOES NOT CHANGE LEGALSTATUS. SHE SAID BRITAIN SOUGHT TO RESTORE BRITISHADMINISTRATION TO THE FALKLANDS AND CANNOT NEGOTIATE UNDERDURESS AND WITHOUT THE PARTICIPATION OF THE ISLANDERS.SHE NOTED THAT CONCERN HAD BEEN STIRRED BY THE PRESIDENT'SOFF THE CUFF REMARKS ABOUT NOT TAKING SIDES. SH SAIDUNCLASSIFIED

SHE, UNDERSTOOD IT WAS OFF THE CUFF @MI SME.ILYCONCEIVED REMARK. AT THE SAME TIME, SHE EXPRESSED APPRE-CIATION FOR U.S. COOPERATION IN INTELLIGENCE MATTERS ANDIN THE USE OF ASCENSION ISLAND.6. THE SECRETARY SAID THAT HE WAS CERTAIN THE PRIMEMINISTER KNEW WHERE THE PRESIDENT STOOD. WE ARE NOTIMPARTIAL. CERTAINLY WE WERE NOT IMPARTIAL ON THE UNRESOLUTION AND THE PRESIDENT WAS NOT IMPARTIAL IN HISTELEPHONE CALL TO GALTIERI. HE SAID HE DID NOT NEED TOELABORATE HIS FEELINGS TOWARDS THE PRIME MINISTER. THESPECIAL FRIENDSHIP OF THE PRIME MINISTER OVER FIFTEENMONTHS WAS DEEPLY APPRECIATED; THERE IS NO ISSUE ON WHICHTHE PRIME MINISTER HAD NOT BACKED THE U.S.7. THE SECRETARY SAID THAT WE FACE A CRITICAL COMMONPROBLEM: "WE MUST DO ALL WE CAN TO STRENGTHEN YOUAND YOUR GOVERNMENT."8. HAVING ANALYZED THE SITUATION VERY CAREFULLY, THESECRETARY SAID HE THOUGHT THERE HAD BEEN AN INTELLIGENCESECRETSECRETPAGE 04 LONDON 07892 01 OF 04 1010292FAILURE. THE ONLY INFORMATION AVAILABLE WAS ABOUT SUB-UNCLASSIFIED

UNCLASSIFIEDSECRETNNNSECRETPAGE 01LONDON0789202 OF 04 101031ZACTION NODS-00INFO OCT-00ADS-00/000 W------------------144171 101035Z /100 1010172 APR 82 ZFF-6FM AMEMBASSY LONDONTO AMEMBASSY BUENOS AIRES IMMEDIATEINFO SECSTATE WASHDC IMMEDIATE 8892S E C R E T SECTION 02 OF 04 LONDON 07892NOD I SMARINE RECONNAISSANCE BY THE ARGENTINES. WHEN HENDERSONHAD PROVIDED SENSITIVE INTELLIGENCE, HE CONCLUDED THATTHERE HAD BEEN A FAILURE OF CONCENTRATION RATHER THAN.MANAGEMENT. THE SECRETARY ALSO SAID THAT DELAYS HAD BEENMANIPULATED IN BUENOS AIRES. FOR EXAMPLE, THE ARGENTINESHAD STONEWALLED ON THE ISSUE OF SOVEREIGNTY. MOREOVER,THE PRESIDENT HAD BEEN KEPT WAITING TO SPEAK TO GALTIERI,WHO USED THE SAME TALKING POINTS EARLIER DEPLOYED. INTHE SECRETARY'S VIEW THE OPERATION HAD BEEN PLANNED FORMONTHS.UNCLASSIFIED

UNCLASSIFIED9. THE SECRETARY SAID WE WERE WATCHING THE ARGENTINESITUATION CLOSELY.- THE ARGENTINES HAD BEEN ARROGANTLY CONFIDENT THATTHE U.K. WOULD NOT BE ABLE TO CHALLENGE THE INVASIONAND THUS THEY WERE NOT DETERRED. THE SECRETARY ALSOREFERRED TO HIS CONCERN THAT THE SOVIETS WERE BEGINNINGTO POSITION THEMSELVES FOR MISCHIEF. AT THE SAME TIME,HE SAID THAT THE INCUMBENT PRESIDENT IS IN SOME JEOPARDYAND WOULD BE FOLLOWED BY SOMEONE MORE INTRANSIGENT IF HEFELL. THE FOREIGN MINISTER HAD TOLD THE SECRETARYTHAT EVERYTHING WAS NEGOTIABLE. THE SECRETARY HADRESPONDED THAT HE WOULD NOT GO TO BUENOS AIRES IF HESECRETSECRETPAGE 02 LONDON 07892 02 OF 04 101031ZWERE GOING TO BE TOLD THE SAME THINGS AS PREVIOUSLY.THE FOREIGN MINISTER HAD MADE IT CLEAR HE WANTED THESECRETARY TO COME. THE SECRETARY SAID WE WOULD NOT ACCEPTA CHANGE IN STATUS QUO BY FORCE. HE UNDERLINED THAT THEDEMEANOR OF THE ARGENTINES WAS DIFFERENT FROM THAT OFANGLO-SAXONS: THESE ARE PEOPLE WHOSE WHOLE ETHOS ANDHISTORY ARE LESS THAN RATIONAL. AT THE SAMETIME,THE SECRETARY CONTINUED, WE HAVE A WINDOW NOW, WE BELIEVE.WHEN THE BRITISH FLEET REACHES THE 50TH PARALLEL ITWILL BECOME AN EMOTIONAL ISSUE AND PROGRESS THEREAFTERWILL BE DIFFICULT. SIMILARLY, THE OAS, WITH ITSTHIRD WORLD PROBLEMS, WILL NOT BE OBJECTIVE WHEN IT MEETSAND ULTIMATELY WILL FORM AN ANTI-COLONIALIST CONSENSUS.THE SECRETARY RECALLED THAT THE ARGENTINE FOREIGNMINISTER HAD SAID HE HAD TWO OPTIONS: THE OAS AND THESOVIET UNION, AND WOULD USE THEM. WHILE HE DIDN'T WANTTO OVERDRAMATIZE, THE ARGENTINES WOULD BE STRENGTHENEDIN THEIR MACHO BY THE OAS. EVEN IN THE'U.K.HE SAID, THE SITUATION WILL BECOME MORE DIFFICULT WITHHEAVY EXPENDITURES OF RESOURCES.10. THE SECRETARY SAID HE VIEWED THE NEXT 72 HOURS ASVERY IMPORTANT IN ARGENTINA. WHILE WE NEED TO DEMANDWITHDRAWAL AND ACHIEVE IT, WE NEED TO DO IT BY MONDAY.LONDON WAS CHOSEN TO VISIT FIRST BECAUSE THE BRITISHARE OUR CLOSEST FRIENDS AND ALLIES AND WE WISHED TOSTART DISCUSSIONS WITH THEM; IT WAS POINTLESS TO GOTO BUENOS AIRES FIRST AND LISTEN TO MACHO RHETORICWITHOUT A FUNDAMENTAL FEEL FOR BRITAIN'S LIMITS. AND THESECRETARY SAID HE WANTED TO BE ABLE TO SAY HOW STRONGUNCLASSIFIED

U.K. VIEWS ARE. HE HOPED TO BE ABLE TO FORCE A WITH-DRAWAL. HE ADDED, "WE AGREE WITH WHAT YOU ARE DOING."SECRETSECRETPAGE 03 LONDON 07892 02 OF 04 101031ZUNCLASSIFIED11. THE PRIME MINISTER SAID THAT THE CURRENT EFFORT WAS"MORE IMPORTANT THAN US." "WE ARE ROLLING BACK THE TIDEOF SOCIALISM," SHE SAID. MOREOVER OUR SUCCESS WILL BEIMPORTANT TO FRANCE, LATIN AMERICA AND THE CARIBBEAN.SHE RECALLED THAT BRITAIN HAD HAD EXPERIENCE WITHAPPEASEMENT AND NOTIONS OF "PEACE WITH HONOR." ITCOMES TO A POINT, SHE SAID, WHERE ONE CANNOT COMPROMISE.THE SOVIETS WERE AFRAID OF THE U.S. GETTING INVOLVED ASIT IS. THEY ARE STRETCHED AND SHE WOULD BE SURPRISED IFTHEY GOT INVOLVED.12. THE SECRETARY SAID THAT HE DID NOT FEAR A MAJORINVOLVEMENT, BUT IF THE BRITISH CARRIED OUT A MILITARYACTION HE COULD ENVISAGE SOVIET MILITARY INVOLVEMENT.HE FORESAW THAT THE BRITISH COULD SUCCEED IN MILITARYTERMS IN A LIMITED WAY. HOWEVER, THE ARGENTINES WOULDGO INTO PORT AND LAND-BASED AIR WOULD BECOME A PROBLEM.THE PRIME MINISTER SAID THAT HER GOVERNMENT WAS CORRECTAND LAW-ABIDING AND NEEDED TO GIVE TIMELY NOTICE ON THEEXCLUSION ZONE. SHE RECALLED THAT THE WHOLE ARGENTINEEFFORT WAS MINUTELY PLANNED DOWN TO GETTING THE NAMES OFALL THE BRITISH MARINES. SHE RECALLED THAT THEARGENTINES KNEW THE NAMES OF THE FIVE MISSING MARINES.DOUBTLESS THE 20 ARGENTINES ON THE ISLAND WERE INVOLVED.IT WAS AMAZING THERE HAD BEEN NO INTELLIGENCE ON THEIRACTIVITIES. THE ARGENTINE COMMANDER ON THE ISLAND HADSAID THE U.K. WILL DO NOTHING. WE HAD TRIED TO NEGOTIATEIN A CIVILIZED WAY. CLEARLY, THERE WAS A DIFFERENCEOF VIEW BETWEEN THE POLITICIANS AND THE MILITARY INARGENTINA. HOWEVER, WE WERE LOOKING AT CONSTRUCTIVEPROPOSALS IN OUR NEGOTIATIONS IN NEW'YORK WHICH WEREFRIENDLY. PYM SUGGESTED THAT THE ARGENTINES HADBEEN CARRIED AWAY IN A MACHO WAY. GALTIERI HADSECRETUNCLASSIFIED

UNCLASSIFIEDNNNSECRETPAGE 01 LONDON 07892 03 OF 04 101033ZACTION NODS-00INFO OCT-00 ADS-00 /000 W------------------144230 1010392 /10O 1010172 APR 82 ZFF-6FM AMEMBASSY LONDONTO AMEMBASSY BUENOS AIRES IMMEDIATEINFO SECSTATE WASHDC IMMEDIATE 8893S E C R E T SECTION 03 OF 04 LONDON 07892NODISTAKEN CARE OF HIS PREDECESSOR, BUT APPARENTLY HEWAS LESS TOUGH THAN THE NAVY CHIEFS.13. THE SECRETARY ASKED WHAT PRESSURES BRITAIN COULD BRINGTO BEAR, NOTING THAT EUROPE KNOWS THAT THE REPUTATIONOF THE WEST IS AT STAKE. THE U.S. HAD STOPPED MILITARYEXPORTS. THE PRIME MINISTER RESPONDED THAT THE ARGENTINESCAN FEED THEMSELVES; HOWEVER, THEY HAVE NO CREDITWORTHINESS LEFT. IT WILL BE DIFFICULT FOR THEM TOBORROW MORE ON THE EURO DOLLAR MARKET. THEY MIS-CALCULATED IN HER VIEW AND SHE SAID SHE WANTED TO SOLVETHE PROBLEM BY DEMOCRATIC MEANS. TO DATE BRITAINWAS GETTING A LOT OF HELP BECAUSE MOST REALIZED THATTHE WEST IS ON TRIAL.14. IN RESPONSE TO THE PRIME MINISTER'S QUESTIONS ABOUTGALTIERI, THE SECRETARY SAID HE IS REPUTED TO BE ARELIGIOUS MAN AND SOMETHING OF A DRINKER. HE HAD AREPUTATION AS WELL FOR BEING A "TOUGH GUY" AND A POKERPLAYER. THAT IS WHY THERE MAY BE A WINDOW NOW. HEWILL UP THE ANTE IF FORCED AND HE WILL CONTINUE THESTRUGGLE EVEN IF HE WON'T SURVIVE. HIS FLEET CAN BEDAMAGED SEVERELY AND THE ISLANDS PUT IN A COCOON. BUTLANDING ON THE BIG ISLAND WOULD BE VERY COSTLY AND IT WILLSECRETUNCLASSIFIED

UNCLASSIFIEDSECRETPAGE 02 LONDON 07892 03 OF 04 1010332PUT THE POPULATION IN JEOPARDY. IN THE FINAL ANALYSISONCE ENGAGEMENT STARTS IT WILL BECOME AN INCREASINGLYDIFFICULT BURDEN TO PROTICT PRINCIPLE. PEOPLE WILLBEGIN TO ASK QUESTIONS LIKE WHY THEY ARE MAKING SUCH ASACRIFICE FOR A THOUSAND SHEEP HERDERS. U.S. OPINIONNOW SUPPORTS THE PRINCIPLED POSITION BRITAIN HAS TAKENBUT WE CANNOT BE SURE IT WILL LAST TOO LONG IF THE ISSUEIS NOT SETTLED.15. THE PRIME MINISTER SAID THERE IS NO BORDER IN THEFALKLANDS; THE SITUATION IS MORE LIKE MALAYSIA THANVIETNAM.16. THE SECRETARY SAID HE WANTED TO FIND SOME APPROACHTHAT PROTECTED PRINCIPLE AND ACHIEVED A SUCCESS BEFORETHERE IS A BACKLASH SO THAT THE THATCHER GOVERNMENT WILLBE STRENGTHENED AND WE WILL ALL COME OUT BETTER. THEPRIME MINISTER EMPHASIZED THAT THIS COULD HAPPEN AFTERWITHDRAWAL. SHE NOTED THAT THE ISLANDS ARE SHORTOF WATER, COLD, AND THAT THERE IS NOTHING BUT SHEEPTO EAT. THE SECRETARY SAID THE HOPE WAS TO WORK FORWITHDRAWAL IN SUCH A WAY THAT GALTIERI IS NOT TOPPLEDAND REPLACED BY SOMEONE MORE RIGID. HE EMPHASIZED WITH-DRAWAL OF MILITARY AND SECURITY RELATED FORCES; TO GETTHAT STEP HE THOUGHT THE ARGENTINES NEED TO BE CONVINCEDTHAT THEY ARE NOT LOSING FACE IN THE PROCESS. AT THESAME TIME, THERE MUST BE A VICTORY FOR PRINCIPLE. THEPRIME MINISTER THOUGHT THESE APPROACHES CONTRADICTORY.17. THE SECRETARY OUTLINED A THREE-STEP APPROACHINVOLVING WITHDRAWAL OF FORCES, RESTORATION OFADMINISTRATION AND NEGOTIATIONS ON NEXT STEPS. THETOPIC OF SOVEREIGNTY WOULD ARISE. THE PRIME MINISTERSE CRE TSECRETPAGE 03 LONDON 07892 03 OF 04 101033ZEMPHASIZED THAT THE U.K. IS SOVEREIGN, THE PEOPLE WEREFREE BEFORE AND CLEARLY GAVE ALLEGIANCE TOTHE CROWN UNDER LAW. THE SECRETARY SAW THE NEED TOAVOID A PRIORI JUDGEMENTS; IT WAS NECESSARY TO GO BACK TONEGOTIATIONS. THE PRIME MINISTER SAID THIS WAS VERYDANGEROUS GROUND WITH PUBLIC OPINION. BRITISH ADMINISTRA-UNCLASSIFIED

TION MUST BE RESTORED: WE CANNOT AGREE A DICTATORCAN CHANGE THAT. BRITAIN NEGOTIATED POLITELY. THUNCLASSIFIEDARGENTINES ARE NEO-IMPERIALISTS. AND FORCE MUSTBE WITHDRAWN AND PRESSURE MUST BE APPLIED TO THAT END.AFTER WITHDRAWAL WE COULD TAKE UP WHERE WE LEFT OFF.THE SECRETARY SAID THAT IF BRITAIN WENT THAT ROUTE,FORCE WILL BE REQUIRED AND THERE WILL BE WAR:THE PRIME MINISTER REPLIED THAT IT WILL BE A GREATTRAGEDY IF FORCE IS REQUIRED. BRITAIN IS WORRIED ABOUTITS PEOPLE'THERE.18. THE SECRETARY SAID THAT IF THE FUTURE FREEDOMOF CHOICE CAN BE ASSURED AND IF THE FORCES AREWITHDRAWAN AS A FIRST STEP AND IF CHANGE IN LOCAL AUTHORITYIS BROUGHT ABOUT IMMEDIATELY SOME PROGRESS MIGHT BEPOSSIBLE. THE PRIME MINISTER SAID SHE WOULD NOTNEGOTIATE UNDER DURESS. SHE WAS UNABLE EVEN TOHAVE ACCESS TO THE FALKLANDERS NOW. SHE WAS PLEDGEDTO THE HOUSE OF COMMONS, AS ARE THE FOREIGN SECRETARYAND JOHN NOTT. THE SECRETARY SAID HE WAS NOT SUGGESTINGNEGOTIATING UNDER DURESS. HE HAD IN MIND THE RETURN OFTHE BRITISH PRESENCE. IN ADDITION HE ENVISAGED A U.S.AND CANADIAN PRESENCE. THE PRIME MINISTER SAID SHEWAS PLEDGED TO RESTORE BRITISH ADMINISTRATION AND TOEFFECTIVE RESTORATION OF SOVEREIGNTY. SHE BELIEVED THESECRETARY'S PROPOSAL VIOLATED THESE PRINCIPLES. THESECRETARY SAID HE SAW WITHDRAWAL OF THE ARGENTINE FORCESAND THE SUBSEQUENT APPLICATION-OF A TEMPORARY ARRANGEMENT.THATCHER INSISTED THE PEOPLE HAVE A RIGHT TO STAY INTHE ISLANDS. THE SECRETARY REPLIED THAT WAS WHAT HESECRETSECRETPAGE 04 LONDON 07892 03 OF 04 101033ZWAS SEEKING TO ACHIEVE IN CONFORMITY WITH THE UN CHARTER.UNCLASSIFIED

UNCLASSIFIEDSECRETNNNSE CRE TPAGE 01 LONDON 07892 04 OF 04 1010342ACTION NODS-00INFO OCT-00 ADS-00 /000 W_------------------144252 1010412 /10O 101017Z APR 82 ZFF-6FM AMEMBASSY LONDONTO AMEMBASSY BUENOS AIRES IMMEDIATEINFO SECSTATE WASHDC IMMEDIATE 8894S E C R. E T SECTION 04 OF 04 LONDON 07892NODISTHE PRIME MINISTER SAID RIGHTS UNDER THE CHARTER WEREUNCLASSIFIED

REMOVED BY FORCE. SHE INDICATED THE SECRETARY WAS UNCLASSIFIEDSUGGESTING THE ARGENTINES GET BY FORCE WHAT THEYFAILED TO GET BEFORE. THE SECRETARY SAID HIS INTENTIONWAS TO ACHIEVE WITHDRAWAL OF THE FORCE, RESTORATIONOF AN ADMINISTRATION THAT COULD GUARANTEE THE FREEDOM OFTHE PEOPLE WHILE NEGOTIATIONS GO ON. THE PRIME MINISTERSAID THE PEOPLE HAD EVERYTHING THEY WANTED BEFORE.SHE SOUGHT WITHDRAWAL AND RESTORATION OF BRITISH ADMIN-ISTRATION -- WHICH MERGED WITH SOVEREIGNTY. THEN THERECOULD BE NEGOTIATIONS. AS A GUARDIAN OF THEIR RIGHTS,SHE CANNOT PUT UP SOMETHING THESE PEOPLE TURNED DOWN,SHE SAID. PYM SAID PRESERVING THE RIGHT OF SELF-DETERMINATION WAS INVOLVED. THE SECRETARY SAID ONE MUSTFIND A WAY ON THE ISSUE OF ADMINISTRATION. IF WEINSIST ON WITHDRAWAL AND GO BACK TO THE STATUS QUO ANTETHE CONSEQUENCES WILL BE CONFLICT. THE PRIME MINISTER-SAID THAT THIS APPROACH WOULD MEAN THE VENEZUELANS CANGO INTO GUYANA, THE SOVIETS INTO BERLIN AND THEARGENTINES INTO CHILE. IS THAT THE MESSAGEWE WANT TO GIVE THE WORLD, SHE ASKED. THE SECRETARYSAID PRINCIPLES WOULD BE PRESERVED; BUT THE ONLY WAYTO GET THE PROBLEM TURNED AROUND IN THE SHORT TERM ISTO ACHIEVE AN INTERIM ARRANGEMENT ON AUTHORITY IN THESECRET. SECRETPAGE 02 LONDON 07892 04 OF 04 1010342ISLAND.19. PYM ASKED IF THE SECRETARY ENVISAGED A RETURN TOU.K. ADMINISTRATION AND THE PRIME MINISTER SAID THATISSUE COULD.NOT BE PUT IN JEOPARDY. SHE ADDED THATSHE NEEDED TO DEMONSTRATE THAT SHE WAS NOT OPERATINGUNDER DURESS AT THE INTERIM STAGE. THE SECRETARYRECALLED THAT THE PROCESS PREVIOUSLY UNDERWAYINCLUDED PROPOSALS FOR LEASING THAT WOULDHAVE BEEN A DIRECT CONCESSION OF SOVEREIGNTY. THEPRIME MINISTER RECALLED THAT LEASING HAD NEVER BEENPROPOSED TO THE ARGENTINES. THE SECRETARY SAID THATIT HAD BEEN WIDELY DISCUSSED AND ALL WERE AWARE OF IT.THE SECRETARY ASKED WHAT HAPPENED IF WE DON'T FINDA SOLUTION AND CONFLICT DEVELOPS. THE PRIME MINISTERSAID IT HAD DEVELOPED AND WAS INITIATED BY THEARGENTINES. THE FIRST PRINCIPLE OF AMERICA, SHE SAID,IS THE RIGHT TO USE FORCE TO RECOVER YOUR OWN HOME.ONCE BRITISH ADMINISTRATION IS RESTORED OF COURSEBRITAIN WILL NEGOTIATE. THE ARGENTINES FLOUTED EVERYCANON OF LAW. OUR FRIENDS AGREE. SHE DID NOT,WANT AUNCLASSIFIED

SHOT TO 13E FIRED. BUT SHE COULD NOT TOLERATE THEIRGETTING BY FORCE WHAT THEY FAILED TO GET OTHERWISE.20. THE MEETING ADJOURNED FOR DINNER. STREATORUNCLASSIFIEDSECRETNNNUNCLASSIFIED