Britain and Argentina stick to their guns; Argentina feels war moves in its favor

Argentina's prospects in the war with Britain took a big leap when an Argentine missile, fired from 20 miles, honed in on the modern British destroyer HMS Sheffield Tuesday and knocked out the sophisticated craft.

That, at least, is the view here in Buenos Aires.

Moreover, prospects for a negotiated settlement of the conflict -- but on Argentine terms -- also seemed to improve. With the disabling of the Sheffield, the Argentines reason, the British will want to negotiate.

''The government of La Thatcher,'' said Radio Rivadavia, ''is on its knees.''

Argentine commentators speculate that this will lead to ultimate British recognition of the Argentine claim to sovereignty over the Falkland Islands, and over the South Georgia and South Sandwich Islands as well.

Argentine Foreign Ministry spokesmen are encouraged by the possibility of United Nations mediation to end the fighting and the conflict. And Argentine Foreign Minister Nicanor Costa Mendez is flying northward to the United States for talks at the United Nations -- and in particular, with UN Secretary-General Javier Perez de Cuellar.

Gone are any hopes here that the United States could again be useful in the mediation. The US is tarred, in the Argentine view, by siding with Britain and by its failure to recognize Argentine sovereignty over the Falklands.

Sovereignty, for Argentina, is what the whole war is all about -- and for Argentina it is a nonnegotiable issue.

It is felt here that Mr. Perez de Cuellar may be more understanding of the Argentine position than is the US. After all, he is a Peruvian, and Peru, among Latin American nations, has been Argentina's most ardent ally in the current crisis.

Peruvian President Fernando Belaunde Terry is trying to mediate in the conflict. In the Argentine view, Peru fully understands and supports the Argentine claim to the Falklands.

''Our claim is the only legitimate claim'' to the islands, said a Foreign Ministry spokesman here.

Do such flat assertions leave room for mediation?

The Argentines think they do - as long as Britain yields. Mr. Costa Mendez has said on several recent occasions that Argentina is willing ''to negotiate, negotiate, negotiate'' within this context.

''The British must realize they have no legitimate claim to the islands,'' an Argentine Foreign Ministry spokesman said this week. ''We have sovereignty. They are ours.''

That assertion of sovereignty over the Falklands, which the Argentines call the Malvinas, underscores everything here. And the increasingly violent war now under way in the South Atlantic has not changed that position one iota. If anything, it has firmed Argentine resolve.

Argentines are taught from the time they can talk that ''the Islas Malvinas are ours.'' And if you stop Argentines in the street, or at their places of work , or in their homes, they will tell you so.

After 149 years of British rule, which ended April 2, Argentina has no intention of yielding its ''reclaimed territory,'' as newspapers and radio proclaim.

So, if there is to be a move toward new negotiations, it must recognize this basic Argentine position.

Argentina would, nevertheless, like to end the war. It is proving costly. Few here will hazard a guess as to its monetary cost, but it is soaring. An Economy Ministry spokesman at midweek said, ''We cannot estimate the cost, but it will be high, mcuh higher than anyone thought even a week ago.''

Economy Minister Roberto Teodoro Alemann has suggested that the military budget of $4.5 billion is being increased by a billion dollars.

''What the military wants,'' the Economy Ministry spokesman said, ''the military will get.''

Argentina this week announced it was purchasing some Brazilian coastal patrol planes in an emergency deal. The cost is estimated at more than $50 million.

Other costs here are mounting -- and their impact will soon be felt on Argentina's 28 million people. Young men born in 1961, whose obligatory one-year military service was completed two years ago, are being recalled. Other age groups are also likely to be recalled shortly.

Shortages of some consumer items are being reported on a spot basis around the country. Flour was missing from shelves in some provincial cities last week - in a country where wheat grows in abundance. Another indication of economic trouble is government's devaluation of the Argentine peso Wednesday by almost 17 percent against the dollar. The government also is preparing to increast export taxes.

But for many Argentines the war is far away. Here in Buenos Aires, the public has yet to fathom the loss of the cruiser General Belgrano together with the loss of one submarine and possibly another, the loss of a patrol boat and the damaging of another, and the loss of half a dozen or more airplanes.