London — The search for a settled peace in the Falklands stirs and keeps making headlines. But, so far at least, the basic impasse remains.
The two sides have exchanged messages through intermediaries (the Brazilians in Buenos Aires, the Swiss in London). Both seem ready to edge toward a more normal relationship. But it is clear that more time is needed.
Step by gradual diplomatic step, London wants full diplomatic relations restored with the elected Argentine government of President Raul Alfonsin.
According to Foreign Office officials, the government of Prime Minister Margaret Thatcher would like an end to the state of war still formally maintained by Buenos Aires.
It wants normal trade and financial relations. Under the right conditions it would order its ships to lift its 150-mile protection zone around the islands.
(Reuters reports that Argentina says it would also like an end to the state of war. It is preparing an offer to restore diplomatic relations in exchange for a lifting of the exclusion zone around the South Atlantic archipelago, a drastic reduction in British military forces on the islands, and a British commitment to discuss the islands' relationship with Argentina.)
The British view is that no talks with Argentina can achieve much unless President Alfonsin first declares an end to the ''state of hostilities.''
If Alfonsin does confirm that there is no more ''hostile intent,'' as a British official puts it, then the British make it clear they will be willing to discuss removal of the restricted zone, restoring commercial ties, and perhaps exchanging ambassadors.
The British are under some financial pressure. The cost of keeping 4,500 troops 8,000 miles away at the other end of the world, and of supporting the 1, 800 islanders, is about $1.4 billion a year - a large figure for a country with more than 3 million unemployed at home.
British newspapers, radio, and television have been having a field day with the revelation that by the time 54 prefabricated houses reached Port Stanley from London, the erected cost of each one had soared from $25,900 to $186,666.
The building company said no one told it about unloading bottlenecks at Port Stanley or of the lack of roads or plumbing there.
The Thatcher government, embarrassed, says the houses are much needed. Labour Party spokesman Denis Healey criticizes planning errors and the ''fecklessness'' with which, he alleges, the government approaches Falklands costs.
Yet on the central issue of the conflict, London is adamant. Officials insist it will not even talk about what Argentine President Alfonsin really wants: an end to British sovereignty.
''We have a dual-track policy,'' a Foreign Office official says. ''We seek realistic ways of restoring relations with Argentina, but we stand firmly by our commitments to the islanders.''
(The Argentine offer reportedly may include guarantees for the 1,800 Falklanders under an eventual Argentine administration.)
President Alfonsin told a British newspaper early in January that he would consider leasing the islands back to Britain if Argentine sovereignty was recognized. In an exchange of messages with London on his inauguration in early January, he added, ''Where there's a will, there's a way.''
He indicates he is looking for Britain to show its flexibility by ending its protection zone and by freezing construction of a new, $280 million, long-range airport at Port Stanley.
The British Foreign Office sources told this newspaper that work on the airport will go ahead. Although its short-term use was to allow larger planes to land with troops and supplies, its long-term purpose was to benefit the civilian economy.
British officials confirm that Argentina has shown signs of flexibility in other areas: on settling its Beagle Channel dispute with Chile, with removing its nuclear program from Navy control, and in looking into the human rights cases of those who disappeared under military rule.
''The next move,'' an official says firmly, ''is up to them - the ending of their state of hostilities. Then we'll see.''
Each side appears to be waiting for the other to make a move that could lift the 150-mile restriction zone.
The British intend to keep their diplomatic efforts alive.
Sir Geoffrey Howe, the foreign secretary, remarked on the radio the other day that Britain would be ''giving thought'' to them in the next few months.