Argentina Reshapes Foreign Policy

Lower profile on regional affairs, opening to Britain seen as bid for more economic assistance. REACHING OUT - SOFTLY

MIRED in the deepest economic crisis Argentina has ever experienced, the new government is cutting its foreign-policy suit to fit its cloth. The new directions that President Carlos Sa'ul Menem has chosen, officials say, are shaped by the desire for economic relief. Less than two weeks into President Menem's term of office, those directions are aimed at making overtures to the world's economic and financial power centers. Already there are signs that Buenos Aires will take a lower profile in Central American affairs, where the previous government's stance was starkly at odds with Washington, and that a desire for closer links with the European Community (EC) has softened Argentina's position on the Falkland Islands dispute with Britain.

But perhaps the clearest indication of the primacy of economic issues in Mr. Menem's foreign policy is his choice of foreign minister: Domingo Cavallo, a prominent conservative economist, had been tipped for the post of economy minister before he was named to the Foreign Ministry.

``Argentine national interest here and now depends on resolving the extremely grave economic and social problems,'' Mr. Cavallo says. ``Menem thought that naming an economist to the Foreign Ministry would give it the role of contributing to the solution of those problems.''

In his inaugural speech to Congress, Menem said that his government would ``recognize no ideological frontier in the management of our foreign policy,'' which diplomatic observers take as a sign that the government will play down the ``third-world'' approach that former Foreign Minister Dante Caputo had made the hallmark of Argentine international policy.

President Ra'ul Alfons'in's government played a prominent role in the ``Group of Eight'' Latin American countries, which often forcefully challenged President Reagan's policy toward the region's guerrilla wars. Although Menem has said that he will keep Argentina in the Group of Eight, his ambassador-designate to Washington, Guido di Tella, says he sees no reason why Buenos Aires should involve itself in issues that ``serve only to anger the United States.''

Argentina's desire for closer ties with Western Europe has also provoked a dramatic opening in Buenos Aires's longstanding dispute with London over the Falkland Islands, known here as the Malvinas.

EC officials who attended Menem's inauguration told the incoming government that better relations with the community could blossom only if Argentina meets British grievances over trade barriers erected in the aftermath of the 1982 Falklands war.

``Argentina needs to have full relations with the EC with no obstacles,'' Cavallo says, ``and this is one of the fundamental reasons why we are interested in advancing toward a normalization of relations'' with Britain.

To that end, President Menem has offered to put on hold the issue of who has sovereignty over the South Atlantic archipelago while the two sides ``get on with conversations aimed at reestablishing diplomatic relations.'' London and Buenos Aires have been at loggerheads over Britain's insistence that its sovereignty is not negotiable, and Argentina's refusal to negotiate anything unless sovereignty was at least implicitly on the agenda.

The new Argentine approach, says one Western diplomat here, has led to ``more movement on this issue over the past five days than we had seen in the previous five years.''

But if the new Peronist authorities are seeking to break new ground in their relations with Washington and London, they are also hoping to plow the traditional field of Latin American cooperation more fruitfully than their predecessors.

Menem and Cavallo have both stressed their intention of pushing for closer Latin American integration on the trade front, and as the third largest debtor on the continent Argentina has a clear interest in cooperating with neighboring countries in similar straits.

A pariah nation under the 1970s' military dictatorship, Argentina took its place on the world stage again under President Alfons'in: Dante Caputo's election last year as president of the United Nations General Assembly crowned that achievement. But the new authorities wonder whether the previous administration's success was not more personal than national.

``Alfons'in and Caputo managed to insert Alfons'in and Caputo into the world panorama, not Argentina,'' complains a new Foreign Ministry aide. ``What we have to do is to give Argentina a new role in world affairs.''

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