Argentina may try to buy out Falklands: Each islander could be offered 475,000 pounds

ARGENTINA'S government is considering offering the inhabitants of the Falklands Islands between dollars 600,000 and dollars 700,000 ( pounds 475,000) each in compensation to buy an end to their long-standing opposition to the long-term transfer of sovereignty to Argentina.

A report in the English-language Buenos Aires Herald which prefaced an article by Sir Alan Walters, former economic adviser to Baroness Thatcher, said that President Carlos Menem's diplomats had suggested figures of up to dollars 600,000 to dollars 700,000 for each of the 2,500 or so islanders

The article by Sir Alan, written in April but published in August, suggested that 'I am inclined now to think that a sum of dollars 100,000 per capita' should be offered by Argentina to the islanders if it 'wished to ensure gaining sovereignty'. Sir Alan's article in the newspaper says that 'Britain is spending between dollars 100-200m a year in fortifying against another invasion'.

According to the newspaper article, a referendum on a cash settlement should be called. Argentina and Britain should name bankers, place compensation cash in an escrow account, and if the vote is to accept, the money would be paid out directly to each islander.

Argentina's Foreign Minister, Guido di Tella, a fellow of St Antony's College, Oxford, has tried actively to establish direct links with the 'Kelpers' in Port Stanley.

He and President Menem are understood to favour a cash settlement and diplomats have mentioned figures six times those suggested in Sir Alan's article.

Mr Di Tella's attempted contacts with the islanders started with greetings by fax at Christmas.

The BBC World Service programme Calling the Falklands invited Mr Di Tella to a phone-in from Bush House on 18 June. Only three islanders talked to the Argentine foreign minister.

The islands' councillors rejected the telephone discussion. Two of the callers questioned Argentina's ability to respect and maintain democracy. The headline in the 19 June edition of Port Stanley's Penguin News quoted one caller saying the essence of the phone-in was that they should 'be free to differ'.

The Buenos Aires Herald article quoted Sir Alan as saying that the initiative would have to come from Argentina.

'The British foreign Office would tend to shrug off any such proposals - after all the status quo is peaceful and it avoids any of the emotional trauma that would accompany, inevitably, I fear, a transfer of sovereignty,' he said.

'And the last thing Major wants, after all the gaffes of the last six months, is yet another hot potato on his plate'.