U.S. State Department tends to use economic sanctions on Argentina to derive a larger gain from PM Thatcher, e.g., agreement to negotiate with Argentina over the final disposition of the Falklands

I read a memorandum of the declassified documents from Foreign Relations of the United States, 1981–1988, Volume XIII, Conflict in the South Atlantic, 1981–1984, Document 359)

The sanctions on Argentina should be lifted without delay. As you know, the European Community has already done so.2 From the U.S. perspective the sanctions are symbolic. The de facto ceasefire between the two belligerents probably will hold, as there seems to be little disposition on the part of Argentina again to take up arms. State’s position is to use the sanctions issue to derive a larger gain from Prime Minister Thatcher, e.g., agreement to negotiate with Argentina over the final disposition of the Islands. Additionally, State would like to deal with a functioning government. Both of these are good points; State does not expect much success with Thatcher, however.

I don’t understand why the sanctions issue can derive gains from Thatcher. Please enlighten me.
Thank you.

Thatcher wanted the US to maintain its sanctions on Argentina. The NSC’s view, set out in the memo you quote, was that it was in the best interests of the US to lift its sanctions. The State Department’s view was that it was in the best interests of the US to maintain its sanctions, since this might give it leverage over Thatcher — she would, to some extent, be attentive to US views, or attach weight to US wishes, in order to keep the US sweet and keep the sanctions in place.

The NSC and the State are divided on the sanctions issue, but deliberations from both are in the interests of the US. The former could reduce strains between the U.S. and Argentina. The latter might produce a chance of negotiation with Argentina over the final status of the Falklands. Which is better for the U.S. in the longer term?
Thank you.

I think that’s pretty much it. The memo suggests that there’s actually not much difference between the NSC and State. Everyone accepts that the sanctions should be lifted; the question is one of timing. NSC thinks there’s no merit to delay; State suggest that there might be merit in that maintaining the sanctions might give the US influence with Thatcher; NSC agrees that influence with Thatcher would be a good thing but is sceptical that maintaining the sanctions will actually deliver much of that; State agrees that, yeah, it might not, but it’s worth a try.

Neither really seems to be focussed on the US’s long-term interests; the consequences of lifting or of not lifting the sanctions will play out in the relatively short term, so they think this has implications for the US’s short-term interests rather than its long-term interests.

Much obliged.