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Argentina and the Falkland Islanders themselves.

29. Recognise that Britain and Argentina have different positions over sovereignty over the Islands. That was why we went to such

lengths earlier this year to try to find an agreed basis for talks about normalisation of relations that took account of the legitimate requirements of both sides. It was the Argentines themselves who proposed the formula agreed upon for the talks in Berne in July. But when the talks began, Argentina took a position at variance with the agreed basis. It was their insistence that progress on

normalisation of relations had to be linked to a mechanism for

addressing sovereignty that brought the talks to a premature end.

30. No doubt that Berne was an important opportunity missed. Greatly disappointed by the outcome. Still more disappointed that

since then President Alfonsin had publicly reiterated his

Government's insistence on linking normalisation and sovereignty. This unrealistic approach does not make things any easier.

31. I repeat, we remain prepared to rebuild confidence with Argentina by means of a dialogue on practical ways of improving bilateral relations. See this as the only sensible way forward. Hope the Argentines will soon agree to set sovereignty aside and work with us to mend the good relations between us so brutally

shattered in 1982.

EAST/WEST

32. I would like to conclude my talk this evening with some personal observations on East/West relations:

(1)

(2)

(3)

(4)

Like Everest Soviet Union is still there

Recognition that we share one world is at heart of rethinking of Government policy following 1983

election.

Made clear wish for better relations made start at long

road of creating better mutual understanding

confidence.

Principal means to hand is increase of contacts at all

/levels

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