Falklands fallout in Europe

The Falklands dispute may seem to be an isolated drama in a far corner of the earth. But it is having adverse repercussions elsewhere, not least in Western Europe where Britain's relations with the Common Market have come under increasing strain. This is but one more reason to urge a speedy diplomatic resolution of the conflict.

Margaret Thatcher cannot but be dismayed that the early solidarity of the European Community for her tough policy has eroded. Economic sanctions against Argentina were renewed this week -- but only for seven days. Ireland on principle opposes the British military option to settle the dispute and refused to support continued sanctions. Italy did, too, no doubt motivated by its strong ethnic ties with Argentina.

Moreover, the Falklands crisis has spilled into the economic sphere, politicizing the debate over the Common Market budget. Britain's partners feel that, because of their support on the Falklands, Britain should be more flexible on its demands for larger budget rebates and the issue of increased farm prices. Britain has stood firm, however, and when it moved to block the price increases, the Common Market refused -- for the first time -- to let a member exercise its power of veto on grounds of ''vital national interest.''

No one can be pleased by the heightened tensions all this has caused within the community, which has wrangles enough as it is. Britain, although it pays a price for having joined the Common Market late in the day, nonetheless can legitimately complain that it puts more into the budget (about $1.8 billion) than it gets out even though it is one of the poorer EC countries in per capita income. Hammering out an acceptable compromise on the budget becomes even more difficult, however, with the prospect of full-scale fighting in the Falklands. This is a factor London cannot ignore.

Then there is NATO. To their credit, the Atlantic allies have strongly backed the British, giving firm moral support to the UN's condemnation of Argentine aggression and call for a withdrawal of Argentine forces from the islands. But there are indications of growing concern about the diversion of large numbers of ships and aircraft to the South Atlantic. The sooner a negotiated settlement, as also called for by the UN, the better for the alliance.

Wars, in short, however ''minor'' they may seem, can have major consequences -- political as well as military. It would be an irony if Britain recovered some tiny islands near the Antarctic -- and in the process lost political and economic ground in the heart of Europe. The possibility of such an undesirable outcome should spur British diplomacy to find a peaceful way out.

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